Category Archives: Moldova-Ukraine Relations

Former Transnistrian Leader Finds Refuge in Moldova Amid Growing Tension in the Region

Yevgeny Shevchuk, the former “president” of the separatist region of Transnistria, escaped prosecution by the current Transnistrian leadership on June 28, finding refuge in Moldova of all places. Despite speculation of his departure to Malta, Shevchuk appears to be living comfortably with his family in Moldova’s capital, Chisinau (Newsmaker.md, July 11). As the new leadership in Transnistria consolidates power in what is an intra-elite power struggle, the Russian State Duma approved a declaration on what it views as negative developments around Transnistria. Specifically, the Duma resolution blames Moldova and Ukraine for allegedly jeopardizing the security and stability of the region by introducing joint checkpoints on the Transnistrian segment of the Moldovan-Ukrainian border and by obstructing Russia’s regional military presence (Duma.gov.ru, July 7). Soon after, reports revealed that Ukrainian counter-intelligence arrested Russian Army Colonel Valeri Gratov, who had been training separatists in Donbas and was about to be appointed to a leadership position in the Transnistrian security sector (Obozrevatel.com, July 9). All these developments point to growing volatility in the Transnistrian region.

After winning the “presidential” race in Transnistria last December (see EDM, December 16, 2016), Vadim Krasnoselski—who is backed by the most powerful local oligarch, the head of Sheriff Company, Victor Gusan—has been seeking to do away with any potential challengers. Despite losing the election to Krasnoselski, former “president” Shevchuk has retained some popular support and remains the leader of the weak but vocal political opposition in Transnistria. Shevchuk has a long and acrimonious history with Sheriff, having served as the company’s deputy director and then leader of its political wing, Obnovlenie (Renewal Party). Shevchuk was once a young and promising politician who brought Sheriff its first major political success in the “national legislative” elections of 2005. However, Shevchuk later fell out of favor with Gusan. Nonetheless, Shevchuk was able to win the 2011 “presidential” election as an anti-system independent against Gusan’s candidate, Anatolii Kaminski, who was also backed by the Kremlin’s United Russia Party.

Shevchyk pres_s

Once in power, Shevchuk challenged Gusan’s economic grip over the separatist region, but fell short of significantly weakening his opponent. Instead, Gusan was able to undermine Shevchuk’s own power by employing his vast wealth, control over the Transnistrian “legislature,” and capitalizing on Shevchuk’s own failures, particularly when it came to improving the worsening economic conditions in Transnistria. Yet, pulling Transnistria out of the downward economic spiral is a tall order, given the structure of its economy and the adverse regional context.  Thus, blaming Shevchuk for all of Transnistria’s woes, along with Moldova and Ukraine, is their default option. Still, the fact that Gusan and Krasnoselski allowed Shevchuk to flee Transnistria after stripping him of his “parliamentary” immunity most likely indicates Moscow’s reluctance to see Shevchuk convicted. Some of the charges levied against him cast a dark shadow over Russia’s Deputy Prime Minister Dmitry Rogozin, who serves as Putin’s special envoy for Transnistria and has been, in effect, overseeing Shevchuk’s alleged criminal activities, including the embezzlement of Russian assistance (Europaibera.org, July 2).

Against this background, the timing of the Russian Duma declaration comes as no surprise. The strong rhetoric against Moldova and Ukraine is, at least in part, aimed at deflecting attention from the intra-elite power struggle in Transnistria as well as from Russia’s own failed record in maintaining the pretense of political stability and economic prosperity in this separatist territory. After the Moldovan Ministry of Foreign Affairs rejected the Russian accusations of a “blockade” of Transnistria  (Mfa.gov.md, July 7), backed by an equally strong message from Ukraine calling for the withdrawal of Russian troops from the region (Mfa.gov.ua, July 11), Moldova’s pro-Russian President Igor Dodon predictably tried to have it both ways when reacting to the declaration of the Russian parliament. Dodon faced domestic ridicule after telling an insistent journalist to read between the lines of his rather vague statement (Newsmaker.md, July 7). Dodon’s Russian benefactors are not making his life any easier when Russian lawmakers threaten a Donbas-like scenario in Moldova (Newsmaker.md, July 7). Moreover, taking into account the latest incident of the Russian Federal Security Service (FSB) sending a seasoned Donbas operative to take a leading role in the Transnistrian security apparatus (see above), the threats coming from Russian lawmakers no longer seem empty.

Neither Moldovan politicians, be it Speaker Andrian Candu or President Dodon, nor the country’s Prosecutor General (Independent.mdZiarulnational.md, June 30; Agora.md, July 10), have shown any interest in Shevchuk. Despite enjoying immunity from criminal charges of separatism based on the standing agreements in the Transnistrian conflict settlement negotiations, Shevchuk could, nonetheless, be prosecuted in Chisinau for economic crimes and other offenses. However, it is widely known that each former Transnistrian leader has only been able to accumulate and siphon off large amounts of money due to cooperation with either Moldovan or Ukrainian authorities. It is, in part, thanks to this “support network” that Shevchuk was granted refuge in Moldova. He is reported to reside in a luxury apartment complex in central Chisinau under heavy protection, thought it remains unclear whether the unmarked guards are protecting a high-value asset or holding a high-priced hostage. Meanwhile, speculation is mounting about Shevchuk’s future not just in Transnistrian politics, but also in Moldova proper: he may run for parliament if Moldova’s de facto ruler, billionaire Vlad Plahotniuc, is successful in pushing the controversial electoral system reform introducing single-member districts. Finally, the handling of Shevchuk’s case potentially sends a powerful signal to Transnistrian elites that they are increasingly at the mercy of the Moldovan leadership. In reaction, Moscow is likely to increase direct control over the region, which can only lead to escalation of an already precarious situation.

Shevchyuk Filat

Photo: Moldovan Prime Minister Vladimir Filat and Transdniestrian leader Yevgeny Shevchuk met on 20 June 2012 on the margins of an OSCE conference on confidence-building measures held by the OSCE Mission to Moldova, with the support of the German Government, in the German town of Rottach-Egern.

 

Note: The article was written for the Jamestown Foundation and can be accessed here.

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Moldova-Ukraine Energy Deal Upsets Russia by Cutting Transnistria Out

Ukraine’s DTEK Trading, owned by Rinat Akhmetov, and Moldova’s state-owned intermediary Energocom signed a one-year contract, on April 1, for the supply of electricity to Moldovan distributors. Energocom/DTEK’s only competitor was the Kuchurgan Power Station, which is located in Transnistria and belongs to the Russian state-owned electricity giant Inter RAO. According to Moldova’s Ministry of Economy, the winning bid offered to sell power at $50.20 per megawatt/hour (MWh), compared to Kuchurgan’s offer of $54.40 per MWh (MEC.gov.md, April 1). However, questions remain as to why DTEK had to go through the Moldovan intermediary and did not submit a bid directly. Moreover, there are concerns about DTEK’s capacity to cover Moldova’s energy needs in full (Exprt-Grup.org, March 31). The arrest of the deputy minister of economy in charge of the energy portfolio on the day of the auction deadline added further intrigue, despite, so far, corruption charges not being connected to the bidding process. Speculation mounted as the auction deadline was extended repeatedly without a clear justification. Nonetheless, the fact that Moldova switched from the Russian supplier in Transnistria to a Ukrainian company is significant in ways that go far beyond market economics.

The decision took many by surprise, as the key figure in Moldovan politics—the head of the ruling Democratic Party, oligarch Vlad Plahotniuc—had a vested interest in maintaining the old contract despite accusations that importing energy from Transnistria not only legitimates, but also, in effect, sponsors separatism. Moldovan independent experts as well as politicians accused Plahotniuc of benefiting from the shell-company that had served as a middleman between Moldova and Kuchurgan Power Station since January 2015 (Adevarul.ro, April 1). The Tiraspol-based offshore-owned intermediary Energokapital (second-largest taxpayer in Transnistria) is considered the brainchild of Transnistria’s former leader Yevghenii Shevchyk and Moldovan leaders Vlad Filat and Plahotniuc (Ecfr.eu, July 7, 2016; Jurnal.md, July 24, 2016). Maintaining the existing deal was Plahotniuc’s preferred option following Filat’s arrest; but the status quo did not sit well with either Ukraine or Moldova’s Western partners.

Having lost control over its large coal mines in the east (see EDM, February 28, March 29), Ukraine is eager to compensate as much as it can by exporting power generated by its nuclear power stations. DTEK Trading bought the export rights from Energoatom—a Ukrainian state enterprise that operates the country’s four nuclear power stations. Coincidentally or not, the day before the deadline of Moldova’s energy import auction, the Washington Times featured a piece titled “Ukrainian Corruption Casts Nuclear Pall Over Europe,” stoking fears about Ukraine’s alleged inability to ensure the safe operation of its nuclear facilities (Washington Times, March 30). The article leans in favor of Russia. Of course, Ukraine had long sought to replace Russia on the Moldovan energy market, but to date, Chisinau had only used this as leverage with Moscow and Tiraspol. Moreover, the lucrative kickbacks from Energokapital (about $19 million a year) were likely difficult to pass up (Jurnal.md, July 24, 2016). Yet, several factors had been making it increasingly difficult for the Moldovan government to continue with business as usual. For one, Transnistria does not pay Russia back for the Russian natural gas it consumes to produce electricity, passing the debt onto Moldova. Second, the Russian aggression in Ukraine had alarmed the small country with a separatist region. And, last but certainly not least, the election of a pro-Russian president has compelled Moldova’s government to forgo “business as usual” in order to mollify pro-Western Moldovans and the country’s development partners.

It remains unclear why Kuchurgan decided to submit a price higher than the $49 per MWh they had been charging last year. Given that the intermediary Energokapital was no longer in the picture, the price should have been lower still. Yet, the bigger question now is what Transnistria does with its energy surplus. In 2005–2009, when Moldova had a contract with Ukraine and not Inter RAO, Transnistria was able to sell part of the electricity generated by the Kuchurgan Power Station to Romania. Currently, Romania is unlikely to help Tiraspol out and neither is Ukraine. Losing such a significant revenue stream puts incredible pressure on an already austere Transnistrian budget. Spending cuts in Russia will also make it difficult for Moscow to pick up the tab (see EDM, June 29, 2015). Therefore, Moldova’s decision has even larger geopolitical implications.

Due to increased domestic contestation by the opposition, Plahotniuc has been trying desperately to boost his legitimacy by proving himself to the West, yet without antagonizing Russia directly. The Moldovan leadership has gone to great lengths to avoid linking the Russian government to the actions of its intelligence services. This is despite accusations of Russian special services harassing Moldovan officials traveling to Russia, their sabotage of a Moldovan law enforcement investigations into a major transnational money laundering scheme, and the recruitment of a former Moldovan Democratic Party legislator as a spy for Moscow (Adevarul.ro, March 9). But following the election of a pro-Russian president in Moldova, Moscow is now focused on ensuring that pro-Russian forces secure a majority in Moldova’s next parliamentary elections, scheduled for 2018. Consequently, Russia has diminished its space for maneuver. It cannot retaliate against Moldova without undermining the chances of the pro-Russian parties in the next election. Vladimir Putin recently made President Igor Dodon several token concessions regarding Moldovan exports and labor migrants. Dodon is also creating expectations about progress in the Transnistrian conflict settlement (see EDM, January 26). If the Kremlin were to retaliate on any of these fronts, it would undermine its own political projects in Moldova.

The politically agile Plahotniuc may have hoped to persuade the European Union that cutting Transnistria out of the energy deal would be detrimental to the conflict settlement process, but Plahotniuc has lost the battle, even while saving face for now. Clearly, the deal is a major win for Ukraine. Apart from the much-needed cash inflow and a snub at Russia, Ukraine is also hoping to access the EU energy market via Moldova. The new contract may ultimately prove to be a big win for Moldova if DTEK is able to ensure supply and price stability, since Plahotniuc is likely to use any hitches as a pretext to go back to his preferred option. In light of the difficult economic conditions in Transnistria and Russia’s increasingly limited leverage over Moldova, there is some hope that pressure for a positive development in the conflict settlement may emerge at the grassroots level to the point when it can no longer be ignored or stifled by the authorities.

Bus-Tiraspol-Chisinau-Moldova

Note: The article was written for the Jamestown Foundation and can be accessed here.