Losses mount as firms resist Chisinau's "registration trap"

65% of last year: Formerly a highly active and industrialized region, pressure from Moldova now causes losses

TIRASPOL (Tiraspol Times) - Sales are down, and local companies are taking huge losses, as a result of new customs rules introduced by Moldova and Ukraine on 3 March of this year. Since that date, exporters were forced to register in Moldova - which they consider a foreign country - in order to export from landlocked Pridnestrovie. To make matters worse, Moldova also started what some see as a "train war", refusing to send its trains on the shortest and most logical route - through Pridnestrovie - but instead insisting that they do not cross the unrecognized country. This isolates Pridnestrovie even more, and makes it comparingly harder for local companies to ship their exports abroad.

Moldova claims that Pridnestrovie's companies are pleased with the new customs regimes. But according to PMR vice minister of industry, Yury Ganin, the numbers tell a different story. As reported by PMR's state news agency Olvia Press, current output now stands at barely 65% of last year's levels.

" - Our most important companies are the ones which suffer very heavy losses. For instance, the MMZ Steel Plant in Rybnitsa has already suffered over US$150 million in lost earnings, and keeps on incurring losses because this huge enterprise is not able to dispatch its produce directly to Ukraine. First, trains loaded with Rybnitsa metal items have to call to the Moldovan territory, and only after this - to other countries. As a result, the trains have to make a gigantic loop at least 500 kilometers long. I am not even speaking here about the carrying capacity of the Moldovan northern railroad branch, which is in terrible condition and much worse than what we have in Pridnestrovie. Only very few, lighter-weight trains with metal are able to travel that route, through Moldova territory", said the vice minister.

" - Others keep losing money, too. GRES Moldavskaya lost more than US$50 million," says Ganin. "Therefore it is possible to say that now find outselves in an extremely dangerous situation, when compared to the time before this economic blockade exists. At any moment, companies can be forced to shut down because of these losses."

Local exporters have been reluctant to register with Moldova, but many have been forced to do so in order to continue to export. In such cases, many choose to only register on a short-term, temporary basis; hoping that what they see as an economic blockade will soon be lifted and they will return to their normal production and export levels. Many companies fear that permanent registration with the Moldovan customs structures means that they come under Moldovan jurisdiction.

Fear of tax trap, no trust in Moldova

Yury Ganin stated to local journalists that he did not believe in the Moldovan authorities' assurances that with such registration the companies will not have to pay taxes to Moldova, a country which economically ranks at the same level as Sudan, in Africa.

" - This so-called 'tax-free regime' is a classical example of a trap having both a bait and an illusion of safety. This trap is intended for those who have not yet obtained permanent registration certificates from Chisinau. The Moldovan Government is waiting: as soon as most of the major companies from the left bank of the Dniester get registered with Chisinau on a permanent basis, the second phase of the planned Chisinau trap is to be launched - full taxation of these companies", explains Ganin.

In his opinion, the only way to avoid such situation is to restore the right to free foreign trade, in compliance with Moldova's 1997 memorandum obligations; co-signed by the OSCE. He reiterated that due to the economic blockade imposed by Moldova, the volume of production in Transnistria in January through October 2006 reached barely 65% of that achieved in the equivalent period of last year. This is making everyone poorer, costing jobs and causing hardship in the region, and not earning Moldova any goodwill points among the locals.

Ganin also laid blame on Chisinau that the GRES Moldavskaya Power Plant (near Tiraspol, and the biggest energy producer in the region) is not able to export electricity to the rest of Europe.

" - Due to Chisinau's unyielding position, the Plant cannot export energy any longer. But we know that Moldova siphons off electricity from our networks. As a result, we are entering a new winter season with the Moldavskaya being in an extremely unsafe condition. If Moldova keeps on stealing electricity, the energy system as a whole may collapse at any moment".

Electricity theft is common in Sudan, and comparable parts of Africa, but is less common in Europe where only Moldova engages in the practice.

Separate behind its own borders on the other side of the Dniester river, Pridnestrovie (also known as Transnistria or Transdniester) has been functioning as a de facto independent country since 1990. It has a government which analysts consider more efficient and coherent than the main government in Moldova, officially Europe's poorest country. Moldova lost a brief war in 1992 in an attempt to take control of Pridnestrovie, but was unable to do so in the face of fierce resistance by the strongly independent-minded population.

Pridnestrovie exercises sovereignty within a clearly defined territory of 4,163 square kilometers; approximately twice the size of Luxembourg. (With information from Infotag)

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