No More Dniester Nice Guy: Can a divided Moldova improve its ties with Moscow?

Guest contribution by Katherine Baughman

On 11 October, Moldovan President Igor Dodon met with Russian President Vladimir Putin on the sidelines of the CIS summit to discuss areas of bilateral economic cooperation, the second such meeting since Dodon took office in late 2016. Among the recent developments that Dodon praised were the tripling of export volumes from Moldova to Russia in some agricultural sectors and a 17 percent increase overall, as well as the granting of amnesty and work permits to tens of thousands of Moldovan migrant workers earning remittances in the Russian Federation. At a meeting late last month with the Russian Ambassador to Chisinau, Farit Mukhametship, Dodon expressed his determination to advocate for legal work status for more migrants and praised the recent admittance to the Russian market of over 150 Moldovan companies based in both Moldova proper and the Transnistrian region, though he did not in the end broach these issues in his discussion with Putin.

All of these points had been major initiatives of Dodon’s, and he advocated explicitly for their implementation in his first meeting with Putin in January. This effort comes in the aftermath of the major decline in bilateral trade brought on by Russian sanctions of the Moldovan agricultural sector, levied first in 2006 and again in 2014. Many analysts see these sanctions as a reaction to movements by the Moldovan government toward further integration with Europe. In light of these negative developments, Dodon’s recent initiatives and their apparent success could seem to indicate a turning point in Moldovan-Russian trade relations.

 


The repercussions of these multiple rounds of sanctions should not be understated. President Dodon estimated in January that Moldovan exports to Russia had fallen by 50 percent since August 2014, when nearly 80 percent of Moldova’s agricultural exports had gone to the Russian market. While the latter figure only holds true for certain agricultural products, the former is a conservative estimate. Indeed, total exports from Moldova to Russia constituted a mere $230m in 2016, nearly a third of their high point of $655m in 2012. By contrast, Russia’s imports to Moldova in 2016 were nearly twice Moldova’s export figures to Russia at over $535m, but were still down from over $800m in 2012. Clearly, trade on both sides had sunk to a dismal low.\

On the other side of the Dniestr, in the separatist region of Transnistria, trade with and dependence on Russia have likewise declined over the past several years. Between 1992 and 2014, Russia accounted for approximately 70 percent of Transnistria’s budget, subsidizing various sectors of the economy and allowing the separatist region to accrue astronomical levels of debt. Since the 2014 economic crisis, however, the Russian Federation has introduced major cutbacks, slashing its aid and subsidies to Transnistria by nearly 20 percent in some sectors. By January 2015, total Transnistrian exports to the Russian Federation had decreased to less than a third of their January 2014 levels, declining another 7.7 percent in the first three months of 2016.

No matter what “sustainable growth” has occurred since Dodon’s election, it would take extraordinarily substantial growth over an equally substantial period of time to regain the levels of bilateral trade that existed pre-2014.

 Political complications

The current political circumstances in Moldova threaten any prospects for a lengthy period of growth. Despite his progress, Dodon is currently in a systemically weak political position: the Moldovan presidency is a largely symbolic post, limited in actual power. The opposing pro-western Democratic Party controls the much more powerful prime ministership and parliament.

Despite the wave of disillusionment with the pro-Western ruling party that followed a billion-dollar corruption scandal in 2015 that carried Dodon to the presidency last year, a recent law instituting a mixed government will likely disproportionately benefit the Democratic Party in the 2018 parliamentary election.

It is also no secret that the previous rounds of sanctions against Moldova were geopolitically motivated: Dodon recognized that the nation’s signing onto the Association Agreement with the European Union along with broad free trade provisions in 2014 was the catalyst for the punitive sanctions from Moscow that followed. With the pro-West coalition’s recent expulsions of Russian diplomats, the snubbing of Russian officials and a petition to the UN to support the withdrawal of Russian troops from Transnistria – which Dodon and some regional analysts believe might lead to a thawing of the conflict there with Russia – continued steps in this direction by the Republic of Moldova would make renewed sanctions a serious possibility, if not a certainty.

Putin made clear in the 11 October meeting that “liberalization related to labor migrants, opening certain segments of the Russian market for goods that are sensitive for Moldova’s economy, and some other matters [were] done not preemptively, so to speak, but to support [Dodon’s] efforts to normalise Russian-Moldovan relations”. It is clear that the Moldovan president is determined to continue those efforts. Should Dodon and his pro-Russian party remain relegated to its current position of severely limited political power, however, any significant long-term economic rapprochement with Russia would be likewise severely limited in scope.


Katherine Baughman is a current M.A. candidate and Graduate Student Fellow at the Center for Eurasian, Russian, and East European Studies (CERES) at Georgetown University’s School of Foreign Service.

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