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Carrots and sticks in Moldova: Russian peacekeepers, big loans and the need for reforms

Louis O’Neill
7 October 2009

Moldova hosts the Summit of the Commonwealth of Independent States this week and hopes to have a better turnout than President Medvedev did in July, at the annual "summit-at-the-races". Back then, only five CIS leaders made it to Moscow, but the Russian horse, Monomakh, did win the day.  Moldova will preside over an expansive multi-lateral agenda on social and economic anti-crisis measures, wrap up its CIS presidency and attempt to prepare a raft of joint CIS agreements for ratification by heads of government in November in Yalta. 

However, what's really on the new Moldovan leadership's mind, is a couple of vital bilateral issues with the Russian Federation.  The first is the continuing presence of Russian troops  ("peacekeepers" in an artificially maintained "conflict") and armaments (thousands of tons of Soviet-era ordnance and bullets at Colbasna that need guarding) in Transnistria, despite Moldova's constitutional neutrality and long-standing request for their withdrawal.  The second concerns trade with, and economic support from Russia, including the still-open question of a $500 million loan promised before the July 29 repeat Moldovan elections. 

Russian president Medvedev is expected to attend on the second day, October 9, and this will provide the first opportunity for contact between him and Moldova's new pro-European leadership. But in contrast to the positive pre-Summit sounds coming out of Azerbaijan and Armenia over Nagorno-Karabakh, both Russia and Moldova have already transmitted signals and laid down markers which make it unlikely that significant progress will be made regarding the troops and the loan.

While Sergei Naryshkin, chief of the Russian president's apparatus, was in Chisinau recently to check on preparations for the Summit, acting Moldovan president Mihai Ghimpu, prime minister Vlad Filat and other members of the majority Alliance for European Integration (AEI) publicly insisted on a Russian withdrawal from Moldova.  This of course comes as no surprise, as it has been the consistent position of all Moldovan governments since the Transnistrian conflict. 

At the same time, however, the Moldovan leadership downplayed and downgraded the importance of its own reintegration efforts.  While organizing its new government, the AEI eliminated the Moldovan Ministry of Reintegration, which had garnered a good deal of institutional experience in dealing with the vexing questions that arise - or are provoked - on the left bank of the Nistru.  Perhaps more significantly, an individual relatively inexperienced in separatist matters, albeit one of four new Deputy Prime Ministers, was put in charge of the reintegration effort, while the well-regarded (and non-political) former deputy minister of reintegration was overlooked.  

These changes quickly elicited a snide statement from Transnistria's "foreign ministry" that it really didn't much matter what the Moldovans did with their Ministry of Reintegration, because the breakaway region didn't - and wouldn't - interact with it anyway.  The unsurprising subtext here was that any change in the status quo was unlikely and that Moldova's internal political struggles will simply provide another convenient argument for Transnistria to avoid negotiations, regardless of the formal exhortations of the "3+2" - mediators Russia, Ukraine, the OSCE along with the EU and U.S. as observers + which met yesterday in Vienna.

Eternal Transnistrian strongman Igor Smirnov was, as usual, more direct, declaring categorically just before the Summit that "Transnistria is ready to join the Russian Federation" and that the self-proclaimed republic has no intention of improving ties with Moldova. Smirnov added, that it would, of course, accept good neighborly relations, as between sovereign equals, following Moldova's overdue election of a president.  However he warned that political instability on the right bank could lead to "military provocations," the "danger" of which, naturally, justifies the on-going Russian military presence.

No change in peace-keeping operation

Nor was there any pre-Summit good news on the long-standing effort to transform the Russian "peacekeeping" operation into a more transparent - and finite - civilian observer mission.  Here, the new Moldovan leadership cannot help but trip over former President Vladimir Voronin's efforts to secure pre-election Russian support for his Communist Party.  On March 18, just days before the first Moldovan election, Voronin signed a joint "1+2" declaration with Russian president Medvedev and Smirnov in Moscow.  In the future, this document will remain one of the many contradictory and chaotic "ratified agreements" that are trotted out as needed to stymie progress or avoid negotiations. 

In it, Voronin agreed that the current Russian-dominated peacekeeping operation in Transnistria could not be transformed (let alone withdrawn) until a final settlement of the conflict is reached.  Voronin's deal served to formalize what was indeed the long-standing state of affairs on the ground.  Certainly, without Russian consent, there is no way to withdraw or transform the peacekeepers, but until March 18 Moldova's policy had been to continue advocating for a re-formatting and de-escalation before settlement and to resist recognising an obvious, but imposed, condition. 

Chisinau and the EU

Acting president Mihai Ghimpu was in Brussels on October 6 and 7 in an attempt, among other things, to move EU officials away from the now-official "1+2" formula - this is a losing battle.  The European Union has never had any appetite whatsoever for peacekeeping transformation before settlement and is surely not going to expend any political capital with Moscow over this issue now.  OSCE Secretary General Marc Perrin de Brichambaut wisely pointed out during his own visit to Bucharest on October 6 that "we have to accept the reality [that] we need the support of all involved parties in order to make this suggestion [peacekeeping transformation] effective."

Another sign that the Kremlin is not expecting any uncontrolled activities or sudden troubles on the left bank, was the decision last month to replace the commander of Russian forces in Transnistria, retiring Major General Boris Sergeyev, with a non-flag officer.  Colonel Vyacheslav Sitchikhin was sworn in as commander of the 1,500 Russian troops on September 11, marking the first time that a non-general officer has commanded the 14th Army or its successor force.  While there may be all kinds of unrelated internal reasons for this move, it does suggest that there is an expectation of low-simmering "controlled instability," rather than reconciliation and  withdrawal, or more serious trouble.

China becomes a new player on the Moldovan stage

Finally, there is a new player in the military mix in Moldova, a highly circumspect one, who is likely to be taking a long-term view of its involvement.  Following its intention to lend the Moldovans $1 billion on favorable terms, the Chinese government has also made a move to enhance its military cooperation with Chisinau.  As Moldovan Chief of the General Staff Ion Coropcean met with Chinese Defense Minister Liang Guanglie in Beijing late last month, the Chinese declared their willingness to "step up military ties with the National Army of Moldova."  Shortly thereafter the Chinese and Moldovan Defense Ministries signed an agreement under which China will provide a 500-thousand euro grant to the Moldovan military, for items yet to be determined.  While only a fairly small proportion of Moldova's military budget, this appears to be the most substantial aid that China has provided to the Moldovan military since the Sino-Moldovan agreement on military cooperation was signed in 2002.  Nonetheless, although the Chinese abhor separatism, it is likely that  in this case they are more concerned with looking after their own investments and bustling in a multi-polar world than rocking the boat on Transnistria, at least for now.

The return of the International Monetary Fund  

Meanwhile, the new leadership in Moldova is discovering (and possibly exaggerating for its own political purposes) just what an economic mess the previous government left behind.  If the upcoming vote in parliament for president fails and new elections are called, there will be plenty of finger pointing.  In a time of sharply declining remittances and economic contraction, the AEI urgently needs to find the resources to ensure that salaries and pensions are paid on time and basic services are not interrupted this winter. 

After a thrashing from former President Voronin, the International Monetary Fund is back in Moldova, and the EU and U.S. are also stepping up support in both the short- and long-term.  The Russian position is complex.  On the one hand, Moscow promised the Moldovans half a billion dollars on good terms before the elections, and reiterated the offer afterwards, albeit with less enthusiasm.  On the other hand, the Kremlin has announced this week that it will not give Belarus the remaining $500 million tranche of its $2 billion loan and that it will not be lending Ukraine any of the $5 billion that Kiev requested.  Finance Minister Alexei Kudrin referred these countries instead to the European Economic Community's (EvrAzEs) emergency fund, which Moscow leads, and the IMF, in which Moscow looks to increase its influence.  Many analysts believe that the decisions on Belarus and Ukraine were more political than economic, given that Moscow subsequently promised Serbia a $1 billion loan to cover its budget deficit and spur infrastructure improvements and proposed new credits for Bulgaria.

Change what you can, not what you wish you could

Moscow knows that the new Moldovan government, by making nice with the IMF and other western donors, has more latitude in obtaining emergency financial support.  Precisely for this reason, the Russians have taken an interest in working more closely with the IMF to provide input on an economic package for Moldova.  This allows them to kill two birds with one stone - playing a larger role in the IMF commensurate with their enhanced economic status and having a say on the conditions under which Moldova will receive credits.  If, moreover, the new government's western-leaning actions become too unruly for Moscow, it still retains strong levers over the Moldovan economy in the form of potential phyto-sanitary limitations on wine and agricultural imports to Russia.  These were only eased in Moldova's favor towards the end of Voronin's term as president, and are easily switched on again.

Moscow has declared that it wants to see stability and a permanent president in Moldova, and has probably already reached out to the expected candidate.  Nonetheless, the orientation and rhetoric of the new Chisinau team is not music to the Kremlin's ears, and it has little reason to make the AEI's way forward any easier.  Given the unlikelihood of any progress on a Transnistrian settlement for the meanwhile and the fact that the promised half billion dollars, if it comes at all, will likely be subject to more stringent conditions, the Moldovans will have some hard decisions to make. They need to take stock of those matters over which they have some degree of control and not expect the geo-political chessboard to miraculously tilt in their favor. After the CIS Summit concludes and the leaders depart, their best bet is to finally move ahead with the hard work of serious reform of the economy, judiciary, media and bureaucracy that will make this small country more attractive to individuals living in Transnistria and to decision-makers sitting in Brussels.

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Louis O'Neill was OSCE Ambassador and Head of Mission to Moldova from 2006 to 2008.

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