Moldova at the crossroads: tensions with Transnistria ahead of EU membership referendum

Europe – yes, or no? On October 20, Moldovans will vote in a referendum on putting EU membership as a national objective into the Constitution. Ahead of the people’s vote Euronews reporter Hans von der Brelie travelled through this country sandwiched between Romania and Ukraine. He spoke with both, pro-Europeans in the West and also with pro-Russian separatists in the east, in the Moldovan breakaway region of Transnistria. He found a still deeply divided country.

How could EU membership impact the economy and everyday life of the Moldovan people? Let’s start in Ungheni, close to the Romanian border, on the site of an industrial carpet producer. The giant buildings are relics from Soviet times when some 2,000 workers produced carpets for the Eastern Bloc. The economic collapse of the Soviet Union brought painful changes and the country has witnessed turbulent times since; political turmoil, a financial crisis, the pandemic, skyrocketing energy prices and Russia’s invasion of Ukraine have all added further problems. Today, the carpet factory’s staff roster is down to 150.

But Ghenadie Podgornii, the technical director of Covoare Ungheni, shares an explicitly optimistic outlook: “Joining the European internal market means getting rid of all the export/import related bureaucracy”, he says. Some 70% of the carpets are sold to EU clients. And there is further potential, believes financial director Aliona Tiuticov: “Becoming a EU member is an added value”, she says, “it’s good for our image as a country and as a company.”

Looking West

The management is seeking a further 30 employees, but many Moldovans are working in western Europe. Joining the EU could bring economic stability to Moldova and thereby slow down the exodus of people, Podgornii believes. “EU-membership will be an advantage for our company, it will help us to keep the workers in Moldova. To earn money, they are no longer obliged to leave to work abroad,” he says.

Podgornii went through this experience himself: “I lived abroad, during 12 years I worked in Italy. I came back to Moldova, because I wanted to achieve something in my own country. But mostly I went back because here I feel at home.”

What do the employees think about the European Union? Maria is an industrial carpet weaver: “It is good to enter the European Union, because then the salaries will be higher.” Her colleague Andrei agrees: “We will sell more goods in Europe and therefore we will earn more money and our salaries will rise.”

Not all working on the factory floor share this pro-European enthusiasm. Another weaver, also called Maria, is sceptical about EU membership: “The prices in the shops could go up even more”, she says. But most Moldovans are in favour of EU-membership, opinion polls indicate. Already today, Moldova has access to EU financed support programmes. That’s how the carpet company was enabled to put photovoltaic panels on their rooftop, helping to bring down the electricity bill.

A first step to EU membership

Lets move on to a village in the centre, close to the capital Chisinau. Moldova is a big exporter of agricultural products such as plums, apples, nuts and wine. Igor Golbian launched a start-up producing dried bio-fruit and sunflower oil. He did not find enough locals, so he hired contract workers from India.

Golbian has plans to export to Romania, Belgium, Germany and the Netherlands, but it requires a lot of preparation. “As an exporter you should be well-informed about technical requirements regarding packaging rules, storage conditions, logistics, labelling, lab sampling. Right now, Moldova is in a very important move. This is our last chance to jump on the last wagon of this train running towards the European Union!”

In the upcoming October referendum, Moldovans will take a first decision about EU membership. But the 27 member States of the EU have a decisive word to say, too. And this could take some time. And then there is still the “frozen conflict” in the Moldovan east: Transnistria.

The Republic of Moldova is a divided country. In the east, pro-Russian separatists rule. As a western European journalist, I needed a special accreditation to pass the checkpoints. Around 2,000 Russian soldiers are still present in Transnistria. 34 year ago, the Russian-speaking region declared independence. But the tiny pseudo-State is not recognised, not even by Moscow – so far.

We talked to people in the separatist capital Tiraspol to find out what they thought about Moldova possibly becoming an EU member, and what it would mean for Transnistria. Daria, a young woman, likes the idea: “That’s a good initiative and it would bring advantages for both, for Transnistria and for Moldova.”

Tatiana, an middle-aged woman, disagrees: “We are waiting for Russia. With Russia our future will be better, beautiful and most joyful! Because we will be recognised as part of Russia. Or at least Russia will recognize us as an independent State.”

Economic tug-of-war

Transnistria’s heavy industry depends on free Russian gas. At the end of December this could stop. The transit agreement with Ukraine will not be extended. No more Russian gas for Transnistria? That could be fatal for many big factories. There are alternative sources and pipelines, but who is going to pay? The separatists? The Moldovan government?

Since the beginning of this year, Moldova collects export/import duties, VAT and environmental pollution fees from Transnistrian companies and stepped up the fight against money laundering. From an EU perspective this looks like ordinary procedures just following common rules. But it’s a tough blow for the Transnistrian oligarchs pulling the political and economic strings in the separatist region.

Moreover, there is suspicion that electronic pieces “made in Transnistria” are being used in Russian weapons systems, in so-called “dual use”. Big companies such as Elektromash, Moldavisolit and Bender Potential are among the suspects.

The head of the Transnistrian industry federation, Yuriy Mikhaylovich Cheban, denies the allegations and criticises the strict export controls introduced by the Republic of Moldova, calling them “politically motivated”. Euronews met him in his office in Tiraspol: “More than 40,000 people went to the streets to protest. Due to all those measures, we lost already some 70 to 80 million euros, this money is lacking now in our budget.”

The so-called ‘president’ of Transnistria labelled the Moldovan taxes an “aggression”. And the ‘economy minister’ of Transnistria, Sergei Obolnik, told Euronews: “Those goods became some 15 to 20 percent more expensive, due to those taxes, so now they are more expensive than the Moldovan products. Moreover, all the needed instruments to continue to interact with the West are disappearing, because of this double taxation and the closure of some of our bank accounts in Moldova. This leads to a situation where economic collapse has almost happened.”

With or without EU

Back in the capital of the Republic of Moldova, Chisinau, I have an appointment with the country’s economy minister and deputy prime minister, Dumitru Alaiba. Preparations to integrate the Moldovan economy into the European internal market are on track and going at full speed. But what about Transnistria?, we ask him.

Euronews:

You have a separatist region in the east. How will the integration of Moldova into the European Union impact Transnistria?

Dumitru Alaiba:

This [Transnistrian] part of our economy is quite well integrated [into the European internal market], with around 80 percent of the exports going into the European Union.

Euronews:

The Transnistrian ‘government’ is complaining, saying it’s not fair to put big companies under ‘embargo’.

Dumitru Alaiba:

When a Moldovan company producing this dual use goods is intending to export them to Russia, then we do not authorise it. Full stop.

Euronews:

Will Transnistria be part of the European Union?

Dumitru Alaiba:

Of course.

Euronews:

When?

Dumitru Alaiba:

This is something that is yet to be settled…

Euronews:

When Moldova will be member of the European Union?

Dumitru Alaiba:

Click on the video above to see Hans’ report in full.