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Trouble in the economy are causing hardship, with a number of private businesses being forced to close their doors.

TIRASPOL (Tiraspol Times) - A de facto blockade that is damaging the economy has put the screws on companies in Pridnestrovie, causing a slowdown in output and exports, and forcing an increase in unpaid wages. As of October, the salary indebtedness in Pridnestrovie exceeded 92.63 million PMR Rubles ($11.16 million USD), an increase of more than 12% compared to the beginning of the year.

According to the Ministry of Economy of the new and emerging country, the salary indebtedness in the authorities accounted for 642 thousand rubles. This was reduced by 62% from the beginning of 2006, in contrast to private industry where the debt was going up. It increased by 35.9% compared to the start of the year.

The bad numbers are in contrast to a much rosier report released right before the country's recent 17 September independence referendum. Just two days before the vote, Minister of Economy Helen Chernenko assured the electorate that the economy was still strong in spite of sanctions, referring to the measures which the country sees as an economic blockade by Ukraine and Moldova aimed at forcing them to their knees and to shatter their dreams of statehood.

A border customs conflict with Ukraine started on March 3, 2006, when Ukraine imposed new customs regulations on its border with Pridnestrovie by declaring that it will only import goods from Pridnestrovie with documents processed by Moldovan customs offices, in effect leaving exporters from Pridnestrovie at the mercy of what they themselves consider to be the customs office of a foreign country - in this case, Moldova. Within the first month, the local economy lost $65 million, a significant amount for a small unrecognized nation. About 10,000 personnel had their jobs suspended without pay because the mechanism for receiving raw materials and dispatching exports was disrupted.

Some factories halted

Following the moves by Moldova and Ukraine, a total of twenty eight companies are idle. They include a baby food cannery, once the largest in Eastern Europe, as well as a biochemical plant, the Bender iron concrete plant, the Bender vegetable oil refinery, the Rybnitsa textile factory, the Dubossary meat factory and Pridnestrovie's local tobacco fermentation factory.

Others have slowed down, with almost a half of the local companies having been forced to reduce their output, compared with the same period of 2005. Percentage-wise, the largest losses are seen at the Dubossary bread factory (down 77.4% as a result of hard competition), the "Bouquet" winery (with a loss in production of 61.9%), the Rybnitsa pump plant (off by 59,8%), the privatized Regional Power Station (by 57.8%), the Evrostil furniture factory (by 57.0%), and the famous local company Elektromash (half of last year's output). Of even more concern is the decrease in production at Rybnitsa-based MMZ, Pridnestrovie's largest company (by 44.3%). The losses at MMZ are particularly hurtful to Pridnestrovie. Although the company is in a private ownership, its taxes provide nearly half of local revenues. With a loss in output, the effect on state finances is damaging - a concern already raised in parliament's budget committee - and is not offset by any company of a similar size.

The biggest economic asset of the region is the Rybnitsa steel works, or MMZ, which allegedly accounts for almost half of Pridnestrovie's GDP and over a half of the country’s budget income.

At the same time, nearly twice the number of companies have managed to increase their output. Most have only recorded modest increases, but four companies stand out in terms of the production increase. One of them, Bender's starch products factory, increased its output by a whopping 4.5 times. The Tiraspol meat factory managed to more than double its ouput: To 2.2 times of 2005 levels. Meanwhile, production at the Rybnitsa cement-sheeting plant - a regional leader in construction materials - increased by 59.1%, and Bender's Floare Tighina footwear company, a leading exporter, saw its 2006 output increase by 42.1%.

Many large companies, such as Moldavizolit, Moldavkabel, Tighina, Floare, Tirotex, Odema, MMZ, and Vestra have established relations with Western partners. There are at least eighteen German joint ventures set up in Pridnestrovie. The Chambers of Commerce and Industry of Tiraspol and Leipzig have direct ties and are actively working to break the economic blockade.

" - The referendum was a reaction to the blockade that has effectively been imposed on Pridnestrovie, an economic blockade that is hurting the region's economy and, needless to say, hurting its people," Russian Foreign Minister Sergei Lavrov said in September, adding that it was also hurting Ukraine, one of the unrecognized country's largest trading partners.

Pridnestrovie, also known as Transnistria, declared independence in 1990 in an act which rendered Moldovans laws null and void. Chisinau has not been able to enforce or impose its authority on the self-proclaimed country since that date.

Moldova sees things differently. Never accepting the validity of a unilateral declaration of independence, it considers the country a part of Moldova and stubbornly refuses to even use the word Pridnestrovie; instead calling it "the eastern regions of Moldova." Regions which are de facto independent and which in the past sixteeen years have severed all ties with Chisinau, to the point that economic links to Moldova now represent only 1% of Pridnestrovie's total trade numbers. (With information from Infotag)

See also:
» Economy still strong in spite of sanctions [1]