By Achilles Skordas, Adjunct Fellow

Western Policy Center

Washington, DC, USA

December 2004

     In the shadow of the Ukraine crisis, the Moldovan
province of Transnistria, part of a wider pattern of structural instability
in the region at the heart of the Eurasia bridge between NATO and Russia, is
the looming flashpoint of the Black Sea region. On the east bank of the
Dniester River, Transnistria is legally part of the Republic of Moldova but
seceded from it in 1992 with the open support of Russia.


The security concerns of Western policy-makers regarding the
spill-over consequences of the Transnistrian conflict are justified due to
the proximity of the conflict to Romania, a NATO member state that will
enter the EU by 2007, and to the explosive Caucasus region, as well as the
existence of porous borders between Ukraine, Transnistria, and Moldova. The
crisis in Ukraine is a perfect example of the potential for an explosive
situation behind the facade of normality in Russia's impoverished,
post-Soviet "near abroad."

      Transnistria's self-declared independence 12 years ago has not been
recognized by any state, and no solution is in sight. Unilateral, but
concerted, diplomacy and action by the United States and the European Union
could advance resolution of this marginalized conflict.

      In the last 12 months, important developments have taken place. First,
the Russian effort to definitively incorporate Moldova into its sphere of
influence has failed. On November 25, 2003, under pressure of the United
States and the OSCE, the president of Moldova refused to sign a plan drafted
by Russian envoy Dmitry Kozak, called the Kozak Memorandum, which would have
put an end to the Transnistrian conflict at the price of a contemporary
version of the "Finlandization" of Moldova.

      The second major development has been the judgment of the European
Court of Human Rights of July 8, 2004, in the case of Ilascu v. Moldova and
Russia. The Court determined that political opponents of the Transnistrian
regime had been submitted to torture, including mock executions and other
extreme forms of physical and psychological abuse. The judgment stressed
that the Transnistrian regime "set up in 1991-1992 with the support of the
Russian Federation . . . remains under the effective authority, or at the
very least under the decisive influence, of the Russian Federation, and in
any event that it survives by virtue of the military, economic, financial,
and political support given to it by the Russian Federation."

      Third, the so-called "pentalateral process," involving negotiations
among Moldova, Transnistria, Russia, Ukraine, and the OSCE that began in
1997, seems to have lost its momentum. Finally, on November 4, 2004, the
Supreme Soviet in Tiraspol, the Transnistrian capital, called for a
referendum leading to formal, legal independence for Transnistria.

      Moldova is a very poor society, by any standard. The 2004 Human
Development Report of the United Nations Development Program (UNDP) ranks
Moldova 113th among 177 countries. In comparison, Albania ranks 65th.
Moldova's annual per capita GDP for 2003 is estimated to be $460. Rampant
corruption is the other side of the coin. The Transparency International
Corruption Perceptions Index for 2004 ranks Moldova in position 114 among
146 countries, with corruption being one of the fundamental features of
Moldova's social and economic strata.

      The volume of the annual narcotics business in Moldova is estimated to
be about $200 million to $250 million, a figure that is nearly four times
the country's annual direct foreign investment. One of the main factors
generating corruption and fueling the actions of criminal networks in the
country is customs activity. Trafficking, contraband, and tax evasion are
flourishing across Transnistria's borders with Ukraine and Moldova.

      What will happen next? There are three possible strategies: First, the
continuation of the pentalateral process, with the eventual cosmetic
addition of the EU as an observer; second, recognition of the independence
of Transnistria; third, unilateral policies of the United States and the EU
in the form of economic diplomacy, which would have as their ultimate goal
the re-incorporation of Transnistria into Moldova and the integration of the
whole country into the European architecture.

      The first strategy would probably prove ineffective. Moreover, the
post-September 11 world is more actively engaged in preventing crises and
markedly less tolerant of potential threats to peace. There are three main
concerns with respect to regional stability that argue against the
continuation of the present situation regarding Transnistria: the
proliferation of weapons from Transnistria, the illegal migration and
trafficking of human beings, and the smuggling of goods, including drugs.
Arms production, in particular, is one of the most important economic
activities in Transnistria. Although some observers believe that the risk
that Transnistrian weapons will fall into the hands of terrorists should not
be overestimated, the key question is how effectively arms trade routes can
be monitored under conditions of complete lack of transparency.

      The recognition of Transnistria's independence would be unacceptable
for good reasons. It would amount to the surrender of a population of about
600,000 to an authoritarian regime. This recognition would not be in
Moscow's best interests, either, considering the example it would set for
Chechnyan and other secessionist movements within Russia. In addition, it is
questionable whether Moldova could remain a viable state if it were deprived
of its industrial base in Transnistria. The impoverished population on the
west bank of the Dniester River could then seek to resolve its problems
through a chaotic union with Romania, which would be the worst possible
scenario because it would create a single regional zone of instability from
Albania to the Ukrainian border and beyond.

      Can unilateral diplomacy by the U.S. and the EU acting in concert
succeed in the case of Transnistria? It is clear that no military solution
or any other solution that would directly challenge Moscow's geopolitical
interests in the region would be viable. The moderate version of
unilateralism is economic diplomacy. Only strong external economic pressure
can break the cycle of poverty, corruption, and separatism, while also
destabilizing dominant interests by creating a "gravitation center" that
will initiate a socio-economic process that pulls the country toward the

      Washington can take the first major step by offering Moldova a
generous free-trade agreement on a provisional basis, with the aim of
triggering a follow-up move by the European Union. Such a proposal by the
U.S. would open a new window of opportunity for the Moldovan economy and
would provide an alternative to the obscure environment of the black market,
shadow economy, and inefficient bureaucracy.

      The U.S. proposal should be followed by a fundamental reversal of the
EU's policy toward Moldova. The main point of the EU's current policy is
that a negotiated solution of the Transnistrian conflict is seen as a
precondition for the further development of the bloc's relations with
Moldova. This position is fundamentally flawed because it perpetuates and
cements the status quo, while also giving free rein to dominant interests at
the expense of the reformers in the Moldovan capital of Chisinau and in

      Brussels should radically change its position toward Moldova by
proposing that consultations begin with Chisinau with the goal of initiating
a three-step process: conclusion of an association agreement as soon as
possible, assistance with reforms in preparation for accession negotiations,
and the launching of negotiations within the next two or three years. The
effect of such a process would be enormous on both banks of the Dniester
River, and reformers would acquire an agenda overnight. Russia would be
warned to avoid any temptation to impose a solution based on electoral
fraud, as in Ukraine, and, instead, would be called upon to cooperate with
the reformers in Chisinau and Tiraspol and support them. Europe and the
United States should advise Moscow that any effort to keep its grip on the
region through the use of force would only prolong the crisis without
solving its root causes.

      To make its proposal more attractive to Moldovans and Transnistrians,
the EU should lift its visa ban against the Transnistrian leadership, if
they participate constructively in the negotiations following the conclusion
of an association agreement with Moldova. This process would focus on the
full implementation of the Copenhagen criteria, which include democratic
reforms and the establishment of the rule of law, and would lay the
institutional framework for accession negotiations. In a parallel step, the
EU could establish relations with the Transnistrian regime and request that
its representatives be included in the Moldovan delegation in Brussels. Even
if the hardliners in Tiraspol refused to cooperate, the integration process
would exercise enormous pressure for reform. Moreover, the option would
remain open for the Transnistrians to join the negotiation process at any
stage, under the condition that they recognize the previous steps and

      As an intermediate step, Moldova, which cooperates with NATO in the
Partnership for Peace, could be admitted to the alliance as a full member.
Such a development could constitute a guarantee for the stability of the
country's democratic institutions and for its orderly integration into the

      The European Union and the United States can cooperate effectively to
promote settlement of the Transnistrian question. As successfully
demonstrated in the Ukraine crisis, unilateral diplomacy of this kind, as an
expression of the West's "soft power," can be effective and can contribute
to the normalization of the situation in an area suffering from chronic
instability and ethnic conflict.