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Yevgeny Shevchuk, leader of the reform-oriented opposition, is PMR's 38 year old Speaker of Parliament

TIRASPOL (Tiraspol Times) - Pridnestrovie's native-born Yevgeny Shevchuk, an ethnic Ukrainian from Rybnitsa in northern Pridnestrovie, faces an uphill task: As Speaker of Parliament and leader of the country's main opposition party, he led a group of MP's who in late 2006 passed a budget with a hole in it.

They counted on promises of foreign financial aid, specifically from Russia, which failed to materialize. Although Russia supported the unrecognized country in the recent past, no aid is currently being provided and no money seems to be on its way either, putting Shevchuk and the rest of the parliament in the difficult spot of having to explain why basic programs are being cut.

Answering questions from journalists at a 20 April 2007 press conference, he does his best. Here's a transcript:

Russia is not rendering us any help. What are our chances of getting financial aid?

" - We prepare ourselves for a situation of being given no money. We should be ready for the worst. Certain structures are likely to render financial aid, and if they do this it will ease the situation and we’ll reallocate extra money to fund programs which have now been suspended."

What are the measures being taken to stabilize the situation in the republic?

" - This issue is of great interest to all citizens of PMR, for all of us understand that Pridnestrovie is in a difficult economic situation. It has arisen for many reasons which include new customs regulations on the Pridnestrovian-Ukrainian border, causing Pridnestrovian companies to suffer losses. And as a result, Pridnestrovie’s economy doesn’t function at the full rate of before March 2006. Of course, this affects the budget as long as the issue on free foreign trade of Pridnestrovian companies remains unsettled.

It’s obvious that if there is no money, we should find extra sources. The first possible way is to raise taxes, so we raised taxes in 2006. We initiated in fact a 30% increase in the tax rate for all companies. It was done in the circumstances when the goods are exported through the Republic of Moldova. So it was decided to send all proceeds to the Pension fund of PMR to ensure its stability and to fund it in full in 2007. Unfortunately, even after that the Pension fund lacked 10 million US dollars. The lack of balance is abnormal and when it became obvious in March that there was shortage of funds for various reasons, we had arrears of salaries mostly in subsidized regions. The arrears amounted to 5 million PMR Rubles and it was clear that emergency measures must be taken to stabilize the economic situation, first of all, to fund pensions, salaries and social programs.

In late March 2007 the President initiated emergency measures to provide funding of social programs in full from our own sources and resources. Of course, it could not be done without suspension or cutting the spending on other programs, so the bill was drafted to introduce amendments to the 2007 republican budget; it was then under consideration at the Parliament’s session on April, 4, 2007 and approved in two readings. The bill proposed to set up the Stabilization fund within the framework of the republican budget, which funds can be reallocated by the President to pay salaries, pensions and other social benefits. It’s a small fund with the budget of 7.5 million US dollars but we also made a decision to issue treasury bonds as a way to fund salaries for teachers and other public sector workers for the period of May and June 2007.

As a result of these measures by Parliament, Pridnestrovie's national budget deficit has been reduced to 52 million US dollars. The deficit on social spending has been reduced from 33 million to $1.9 million dollars. It means that Pridnestrovie will be able to fund 2007 social articles in full provided that no external circumstances influence Pridnestrovie’s economy. I mean salaries, social benefits and pensions. It won’t be easy.

I’d like to reassure the citizens of PMR, budget sector workers and pensioners that measures are being taken to fund salaries, pensions and benefits on time.

Considering the information from Chisinau about changes to the customs regulations for economic agents of Pridnestrovie, possibly, we’ll make some amendments. But at the moment the situation is still the same. If any changes happen, we’ll react immediately and notify the our citizens about the situation in these spheres which are of great importance for our people."

How about asking Ukraine or, maybe, international organizations for assistance?

" - Certainly, the issue is still high on the agenda and the issue to draft appeals to international organizations is still under discussion. I think soon we’ll make a final decision whom to appeal to and when to appeal. As for Ukraine, unfortunately, Pridnestrovie’s difficult economic situation concurred with the events happening in Ukraine now and there’s hardly any chance that a government agency in Ukraine has time or opportunity to consider Pridnestrovie’s appeals. But even so, we'll approach Ukraine with an appeal for aid."
[Editor's note: Yevgeny Shevchuk is an ethnic Ukrainian, as are approximately 30% of the citizens living in Pridnestrovie. For centuries, Pridnestrovie was part of Ukraine. It was never part of Moldova.]

The European Union could help Pridnestrovie in this situation. Would this help be accepted?

" - The point is that it is a noble cause to provide help. Such money is usually sent for humanitarian purposes. For instance, we have already received help for boarding schools. I think we are ready to receive any help from any source if it is first of all aimed at supporting the needy."

You referred to the situation as difficult, should it be regarded as a crisis?

" - I don’t regard the current situation as an economic crisis. It is not hopeless. And I believe that due to the joint efforts of executive, legislative and local government we’ll manage to stabilize the situation in the near future. Salaries, pensions, etc are currently paid, and there are no arrears so we don't have any grounds to refer to it as a crisis. A crisis, to me, means three-month arrears. In our situation we can smooth out the negative effects."

Was it a mistake to pass a budget with a deficit, considering that Pridnestrovie currently gets no foreign aid?

" - In relation to the 2007 republican budget, it is up to you to decide if it was a mistake or not. We lawmakers considered it the right thing to do under the circumstances. And, you know that statements were made by Russia that aid would be provided. Besides, the executive authorities were focused on the presidential election campaign so there wasn't any real opportunity to discuss the budget. Everybody understood that a new cabinet would be appointed. So, under the circumstances, I believe it was probably the best solution at that time."

Will any measures be taken and solutions be found to help our economy? What long-term programs are planned?

" - First, we should be realistic in this situation; everybody understands that we need sufficient financial resources to implement long-term programs and to offer low-interest credits, to buy equipment, etc. Unfortunately, we have no resources, so the republic will be unable to provide financial support as other states do. So all the statements that we can make a decision to boost agriculture are not true; it’s an attempt to mislead the people.

As for domestic resources, of course, we have them as well as those one mentioned by you. It’s a tough control over fulfillment of investors’ obligations, stiffer tax administrative measures against juridical and physical persons.

I’d like to note that the economy and the companies located in PMR are in the most difficult conditions when compared to other CIS states. Our railroad junction “Bender-Tiraspol” doesn’t function in full, most firms are unable to export goods by rail via short routes to reduce cost price. Right now, in fact, our exporting companies pay taxes to the budgets of two states. It is not a secret that it is necessary to payoff money to settle certain issues in Moldova.

In these difficult circumstances we should demand implementation of investment commitments from those companies which are functioning and making a weighty contribution to the budget, and we should be grateful to them and should welcome such manufacturers and businessmen who do not leave PMR and continue working even in these circumstances."

Companies registered with Moldova are entitled to foreign trade, so what blockade are we talking about and where is the tax revenue from exports?

" - As for the companies having Moldova’s permanent or interim registration, everybody realize that the registration in Moldova is a emergency measure to prevent stoppages at enterprises. In relation to our current situation, you remember the series of events and the original promises by Moldova that the flows would be transparent, that no other actions would be taken. Well, we are offered certificates and appropriate permissions for foreign trade but, in fact, these measures are aimed at routing the traffic of all goods – both exports and imports – via Moldova with further imposition of taxes there.

We don’t see this as being profitable for Pridnestrovian manufacturers, for they have to spend lots of money and time to deliver goods on new routes. For example, the MMZ steelworks in Rybnitsa now suffers an extra transportation expense of 15 million US dollars per year. So we can't say that the scheme which Moldova has proposed to our companies is acceptable. It is an emergency measure to collect taxes in Pridnestrovie to fund social programs. Otherwise stoppages at enterprises could result in a financial crisis; I’d rather say a collapse. Unfortunately the situation is unstable and we can’t be sure that we face no new crisis [provoked by Moldova] in the future. The worsening of the situation for our companies is still possible. I’d like to warn our colleagues in Ukraine and Moldova that by acting this way and by trying to route freight traffic via Moldova, they in fact undertaking a blockade of financial and economic activity of Pridnestrovian companies. We don't want to predict the after-effects of this. Of course, this is not an appropriate platform to build talks on a normalization of Moldovan-Pridnestrovian relations upon.

As for your question on where the tax payments went, under Pridnestrovian legislation our taxes and dues enter the Pridnestrovian budget. But under Moldovan laws, they enter the budget of Moldova when transported through Moldova. We also pay a value added tax if goods are imported via Moldova, then currency is converted and then we suffer losses again. Anyway, the current scheme proves that Chisinau prefers to settle the issue of Pridnestrovie not through negotiations but through direct economic pressure. I have to emphasize again that this is not the way to demonstrate a readiness for constructive dialogue." (With information from vspmr.org)

See also:
» Yevgeny Shevchuk: "This situation doesn't help constructive dialogue and a search for solutions" [1]
» Building a viable state, budget decifit cut in half says Speaker of Parliament [2]
» Moldova gets €254 million handout from EU; Pridnestrovie gets zilch [3]

On the web:
» Supreme Council of the Pridnestrovian Moldavian Republic (official website) [4]