Transdniestria: the country that did not come in from the cold

Drive two hours east out of Chisinau, Moldova’s capital, through an uninspiring landscape of undulating hillocks and tumbledown villages, and you come to a border crossing decorated with the arms of the Pridnestrovian Moldavian Republic, still topped with a red star.

On filling out your forms and handing over your passport for inspection, you pass, so the legend goes, into a lawless twilight world beyond the protection of any embassy. This is Transdniestria, neither a country nor a province, but a sliver of land no more than 50km across between the Dniester river on the eastern side of Moldova and the Ukrainian border.

Immediately after border control, you see billboards advertising the services of customs brokers specialised in the art of securing exports from a country whose customs stamps nobody else in the world recognises. This, everyone understands, is a time-warped zone decorated with statues of Lenin, a haven for people-trafficking, gun-running and all other kinds of lawlessness.

There is enough truth in this picture to make it stick. Always a provincial place, a Russian-speaking corner within Romanian-speaking Moldova, this tiny break-away region has had neither the time nor the resources to acquire the outward trappings of a state. With a population of just 150,000, Tiraspol, the capital, is a city of gloomy tower blocks punctuated by modest administrative buildings. Perhaps this is why the government of Igor Smirnov is so keen to emphasise its statehood. Outside the Supreme Soviet, the parliament, is a giant photograph of Smirnov, the strongman who has ruled the province since its secession in 1992, locked in fraternal embrace with the presidents of Abkhazia and South Ossetia, two other misfit enclaves left beached by the receding Soviet Union.

With its communist symbols, and oddities than run to parties that take inspiration from Che Guevara, the South American revolutionary, the place is decidedly odd. It is tacitly supported, or at least tolerated, by Russia, which maintains a military base here, but long-time observers are unsure about the idea of Transdniestria as a smugglers’ haven. “Much of the stuff about smuggling is disinformation from Chisinau,” an EU diplomat notes wryly. “Quite a lot of things in this region have a whiff of skulduggery about them.”

A look at Tirotex, one of Europe’s largest textiles factories, or Kvint, a cognac manufacturer, shows that there is indeed a real, legitimate economy that is not dependent on illicit trade.

Kvint’s cognac is drunk throughout the Commonwealth of Independent States, the Russiandominated alliance of former Soviet republics, and exported to western Europe and North America. The company employs 1,200 people, owns 3,200 acres of vineyards and has a turnover of $27m. It is a serious company with a real product.

Walking around the plant in Tiraspol is a heady experience, and not only because of the dizzying effect of the alcohol fumes. The factory is highly automated, delivering thousands of bottles of the golden, treacly liquid every hour. Since it was privatised in 1997, its owners have invested $37m in the increasingly profitable concern.

Sheriff, the company that owns it, at times seems to encompass the entire economy of the territory. It was founded in the early 1990s by Ilya Kazmaly and Viktor Gushan, former mid-ranking officers in the province’s interior ministry – though where the initial capital came from is a closely guarded secret. “They are very astute businessmen,” says the diplomat. “It is not clear where they got the capital to buy up businesses at their initial privatisation. There must be another shareholder, though it is not clear if that shareholder is in Kiev or in Moscow.”

Throughout the province you can shop at Sheriff supermarkets, fill up at Sheriff petrol stations and dine in Sheriff pizzerias, before settling down to watch Tiraspol’s FC Sheriff play in the giant Sheriff stadium, which also hosts Moldova’s teams, since the country has no other stadium large enough for international matches.

Having built up a substantial enterprise, the duo are keen to protect their investment, which is a large part of growing pressure for change. A simmering, unresolved dispute between Moldova and Transdniestria over the status of the province is bad for business.

Political uncertainty offers great opportunities for building up wealth, but to preserve it you need stability.

A case in point was the 2006 spat between Russia and Moldova. Russia banned Moldovan wine imports, officially because the wine was not fit for human consumption, though this was widely seen as a way of exerting economic pressure over the country. Despite its loudly proclaimed independence, Transdniestria is seen by the outside world as part of Moldova. Kvint’s exports to Russia made up 50 per cent of the company’s output before the conflict, and they still have not recovered, today making up only 10 per cent of exports, even after the factory has spent a fortune on German testing equipment to meet the new standards.

It was Smirnov who drove Transdniestria’s secession. With the break-up of the Soviet Union in the early 1990s, nationalist voices in the Moldavian Soviet Socialist Republic spoke out in favour of creating a distinctively Romanian-speaking state. More extreme voices went as far as calling for Russians, Ukrainians and Gagauz Turkish speakers to be expelled.

Smirnov, a former Red Army officer and a director of Electromash, an engineering company, organised the province’s declaration of independence in 1991, and led it through a shooting war with Moldova that was brought to an end by the intervention of Russia in 1992. Russia maintains a 1,500-strong army presence here to this day, and Moldova has had no control over the territory since.

Smirnov has been elected president four times, most recently in 2006 with an implausible 85 per cent of the vote. It is pressure from both Russia and business people such as the men behind Sheriff that is leading many to wonder if elections due this December will not put an end to the Smirnov era. The obstreperousness that was popular when many feared what they saw as Romanian nationalism is less welcome when it appears to be keeping 500,000 people frozen in an internationally isolated time capsule.

The isolation imposes costs: no other country accepts the territory’s customs stamps, meaning products for export have to be stamped by Transdniestria’s authorities first, then taken west to Chisinau to be approved by a Moldovan customs official before being taken back east, via a route that avoids the region, for export through the Ukrainian port of Odessa.

An even more salient concern for business people is that Moldova may not recognise privatisations carried out by the Transdniestrian state, which it regards as illegitimate. “There is a lot of disingenuousness about this on the part of Chisinau,” says the diplomat. “They say, ‘We de facto recognise this privatisation, but we will not do so legally,’ which is a problem if you are a foreigner thinking of buying a textile factory here.”

Many of the disputes between Moldova and Transdniestria have a theatrical element to them, as the case of Dmitry Soin, leader of Proriv, the Che Guevara-inspired youth party shows. In 2004, Moldovan prosecutors issued an international arrest warrant for him via Interpol, the international police organisation. He is wanted for “crimes against life and health”.

While Soin is not hard to find – the chairman of the foreign affairs committee of Transdniestria’s Supreme Soviet travels frequently and is almost indecently eager to give interviews – the mugshot on his Interpol rap sheet has the grainy look of a picture taken surreptitiously and faxed from one security service to another. He peers to his left, his head cocked, with a startled look on his face.

According to the UN’s human rights watchdog, the former officer of the Transdniestrian security services is alleged to have shot and fatally wounded a hitchhiker in 1994, and committed another killing the following year.

But Moldova’s prosecutors took their time, only filing charges a full decade later. Whatever the truth of the allegations, it is hard to overlook the fact that Soin is most famous for having arrested Vladimir Voronin, who was president of Moldova for eight years and Smirnov’s equally stubborn mirror image. In 1997, the leader of

Moldova’s Communist party was campaigning in Transdniestria. Shortly after Voronin had delivered his speech, Soin, then an interior ministry official, turned up and blocked the exit of Voronin’s car. He arrested the politician for breaking a Transdniestrian law forbidding activity by foreign political parties. Though Voronin was released later in the day, the episode smarted. When prosecutors filed charges, Voronin was president.

Soin is a showman who enjoys being provocative. “Moldova’s identity is an ethnic one,” he says. “Ours is civic and inclusive. We also look to Russia; they look to Europe.” For Moldova, a key demand is that Russian troops be withdrawn from what it regards as its sovereign territory. “Transdniestria is Taiwan to Moldova’s China,” he retorts with a smirk. “Russia is the United States navy protecting us from our larger neighbour.”

With Voronin gone in Moldova, replaced by a pro-European, diverse coalition government, many think Smirnov is also on the way out. Soin is certainly positioning himself for the aftermath, saying he is “a postmodern Marxist: I think political reform should come before economic reform”. This is code for an end to strong presidential government and its replacement by a parliamentary system with a prime minister to counterbalance an increasingly isolated and angry president.

Russia is also running out of patience. International talks between Russia, the EU and the two antagonists regarding the Transdniestria issue are due to resume in June after a five-year break. There are suggestions that the EU may offer sweeteners to Russia to encourage a resolution. Angela Merkel, the German chancellor, has suggested that Russia could be given a voice in certain EU decision-making forums or a softer visa regime as a reward for progress in the area.

With a gross domestic product of $1,500 per person, half that of Moldova, itself Europe’s poorest country, Transdniestria desperately needs change. Change will be incremental at best, but it looks like the province’s 20 years in the freezer may be coming to an end.