Tensions around the Transnistrian conflict in Moldova: early signs of an escalation scenario and future prospects

The issue of Moldova’s reintegration came to the fore again after the authorities in Chisinau began the transposition of the new Customs Code, starting in January 2024. The political focus of this exercise is on the Transnistria region and is a first attempt to improve economic integration with the rest of Moldova. More precisely, the updated Moldovan customs provisions, aligned with European legislation, are applied uniformly throughout the country, with no exception offered for companies under the fiscal control of the separatist regime. This comes after almost ten years of easy access to the EU market for companies in the Transnistria region (today more than 2,300 companies), achieved thanks to the deepening of the liberalized trade regime between the EU and Moldova in 2014. According to 2023 data, around 70% of global exports of companies in the Transnistrian region were destined for the EU market. At the same time, imports from EU countries to the Transnistria region account for almost 56%.

Taking into account the growing dependence on the European market, the Tiraspol administration will be compelled to make a risky transition for the survival of the separatist regime. In practice, interest groups in Tiraspol must return sovereignty functions in the fiscal-commercial sphere that Chisinau lost after, with the diplomatic-military support of Russia, a separatist regime was established in the Transnistrian region. Thus, the revision of the current status quo through the application of the new Customs Code of Moldova aims at the legalization of commercial activities in the Transnistrian region. Due to its authoritarian and semi-criminal character, the Transnistrian administration must, in fact, find a new balance of forces to coexist with the new conditions put in place by Chisinau. It is not only about customs provisions but also about the changes introduced last year in the Penal Code, which punishes offenses linked to separatism. The alternative to the situation in which Tiraspol will refuse to comply with the unconditional implementation of the new Moldovan customs rigors is the escalation of pre-existing tensions, in which the greatest risk for the separatist regime may be the justified reaction, including of a military nature from the side of Ukraine.

The intersection of reintegration, securitization and European integration objectives

In a turbulent regional context, in which the Moldovan authorities try to take advantage of the opportunities brought up by the security crisis caused by Russia’s war against Ukraine, Moldova has the political-diplomatic support of Ukraine, the EU (Romania) and the USA. All these state actors are interested in creating functional and sustainable mechanisms that allow the economic reintegration of the two banks of the Dniester River, both in order to secure the Ukrainian borders against Russian threats and to facilitate the integration process and accession to the EU.

The realization of the objective of EU accession will be in correlation, or even in a causal relationship, with the level of reintegration of Moldova, which must reach maximum levels to be credible and sustainable in the long term.

From a political point of view, the EU member state status, which Moldova pursues, allows for a possible repetition of the “Cypriot model”. However, the realization of the objective of EU accession will be in correlation, or even in a causal relationship, with the level of reintegration of Moldova, which must reach maximum levels to be credible and sustainable in the long term. Getting closer to that outcome will also benefit regional security, as it will lead to the elimination of a “frozen conflict” and reduce the “gray zone” in Eastern Europe, which Russia has exploited over the past three decades. Finally, the reintegration process can considerably reduce one of the main levers of Russian influence in Moldova.

Status quo with a paralyzed “5+2” format

The new customs provisions mean that Chisinau can impose customs duties on the import and export activities of companies registered in the Transnistria region. In addition, according to the changes introduced in the regulatory laws in 2001, the differential treatment for companies in the region was annulled, which will also have to pay taxes for environmental pollution like the rest of Moldovan companies. Even under these conditions, the idea is circulating that the constitutional authorities would deliberately resort to gradual implementation of the new customs rigors in the region, postponing some fiscal aspects to avoid a likely socioeconomic shock. Chisinau’s hesitation seems logical since, in the Transnistrian region, there are more than 357,000 inhabitants with Moldovan passports.

Given the widespread nature of disinformation in the Russia-leaning separatist region, any significant deterioration in the living conditions of the vulnerable population can lead to an eventual humanitarian crisis. This will create complications in maintaining the current status quo, ruling out escalation scenarios for now. However, Tiraspol resorts to mini-escalation tactics by adopting countermeasures. The latter provides for the introduction of “customs taxes”, incompatible with Moldovan legislation, which Tiraspol wants to apply to producers in the territory controlled by the constitutional authorities, but who own agricultural land in the Transnistrian region (the Dubăsari district).

Although Chisinau shows caution in sensitive aspects related to the application of excise taxes and VAT, the separatist regime in Tiraspol still accuses the constitutional authorities of “economic blockade”. Consequently, the propaganda of the separatist administration projects the central constitutional authorities as the enemy, a message also echoed by forces with pro-Russian sympathies in Chisinau. However, the radicalization of the region’s population is not the only challenge for Chisinau, which is preparing for presidential elections and a referendum on EU membership in 2024. There are premises that the new customs rules may affect Transnistrian economic agents operating autonomously from the oligarchic conglomerate “Sheriff”.

At the same time, both the breakaway region and its protector Russia are seeking diplomatic avenues to discuss the new Customs Code within the “5+2” negotiation format. The Tiraspol administration’s approach has an extremely weak echo among Western actors, who coordinate their reactions with Moldovan and Ukrainian decision-makers. Following the start of Russian military aggression against Ukraine in February 2022, Kyiv categorically rejects high-level meetings in the “5+2” format. The viability of this format depends directly on the evolution of security situation in Ukraine. The observers in the negotiation process – the United States and the EU – are on Ukraine’s side. The geopolitical configuration in which the Transnistria region is isolated and weakened as a party in the negotiation process benefits the authorities in Chisinau wanting to obtain concessions, although it depends on Tiraspol for the supply of cheap electricity.

Maintaining the security status quo around the Transnistria conflict is a priority for Moldova, but even more so for its Western partners seeking to prevent the spread of Russian military aggression outside Ukrainian territory.

In any case, although the “5+2” format is paralyzed at a high level, all external stakeholders involved express interest in closely monitoring the “1+1” dialogue between Chisinau and Tiraspol. Maintaining the security status quo around the Transnistria conflict is a priority for Moldova, but even more so for its Western partners seeking to prevent the spread of Russian military aggression outside Ukrainian territory. This goes hand in hand with supporting Kyiv’s defense capabilities against Russian occupation forces.

From the principles of “game theory”, in particular the “escalation game”, the following main scenarios can be put forward.

Scenario 1: Change of the Chisinau’s status quo position followed by concessions by the Transnistria region. Such a scenario is implausible because it seems that Tiraspol rejects any attempt by Chisinau to change the balance of forces in its favor. The region’s political and economic elites perceive that the new Customs Code puts the region’s budget revenues at risk, undermining their influence over decision-making processes within the region. Furthermore, the approval of the new rules of the game will encourage Chisinau to continue its reintegration through legitimate coercion, which could jeopardize the survival of the regime and its minimal maintenance in its current configuration and in all the security ambiguity linked to the Russian against Ukraine.

Scenario 2: The status quo is revised, resulting in an escalation of the situation by Tiraspol, which refuses to budge. The measures applied by the separatist administration against farmers in the territory under constitutional control with land in the Transnistria region reveal a first phase of escalation. This scenario is increasingly likely because the central authorities in Chisinau have a critical vulnerability in relation to Tiraspol. Chisinau’s weak point lies in the supply of electricity from the Transnistria region, which is cheaper than what Moldova can buy from Romania and more stable than that of Ukraine, where Russia is attacking critical energy infrastructure. Tiraspol understands that an escalation could also attract the attention of Chisinau’s Western partners, which do not want to see another “hot point” before the presidential year. The separatist regime is also aware that the Ukrainian factor is currently a deterrent that reduces the military risks from Tiraspol for the rest of Moldova.

Scenario 3. The escalation caused by the separatist region is followed by a response from Chisinau, with measures that could lead to the degradation of the situation and, respectively, destabilization on a larger scale. The scenario of a “war” or escalation is unlikely due to external and internal constraints: the Ukrainian propensity to act preemptively against threats coming from the Transnistria region and the electoral costs for Moldovan political actors. There is a speculation that the thawing of the Transnistria conflict could make it easier for the current Moldovan president to win a second term. However, any destabilizing situation could be penalized by the electorate on both banks of the Dniester River, including Western partners, who advocate a peaceful status quo. Furthermore, the destabilization scenario will have a negative effect on Moldova’s European integration agenda. Finally, the escalation scenario may develop worse events, if Russia recognizes the independence of the Transnistria region and its annexation to Russia, similar to Russian actions against Ukrainian territorial integrity: Crimea in 2014 and the occupied territories in 2022. In this case, Moldovan territory under the control of the constitutional authorities could become a target for Russian missiles, which have already crossed Moldovan airspace on several occasions in 2022-2023, as well as kamikaze drones.

The current analysis represents a revised and updated version of an article previously published in Romanian language on EVZ.ro.