Will Moldova respect the ownership of privatized firms in Transnistria?

President Vladimir Voronin has declared that Moldova guarantees inviolability of property to all individuals and legal entities of Transnistria. According to him, a special procedure has been developed for this purpose in the form of a law, which is very simple and is based on the declarative principle.

"We are not going to delve into the history of the change of ownership or carry out other investigations", Mr. Voronin assured, noting that the law can be passed only together with accepting the full status of Transnistria.

The reason brought by him is that if passed now "the law just will not work" because "it will not be able to protect from abuse of power and expropriation on the part of various obscure structures in the region".

A guarantee of the rights of ownership is indeed one of the most important issues and its settlement could undo the entire knot of the Transnistrian conflict. Businessmen and owners on both sides of the Dniester River are tired of the mutual attacks of Moldovan and Transnistrian leaders aimed at impeding normal economic activity.

The new treatment of the transit of goods across Moldo-Ukrainian border implemented by Moldova eighteen months ago could hardly be seen as concern for legalizing business in the region. However, the improved mechanism has activated the external economic activity of Transnistrian enterprises, in particular to the EU countries, where they benefit from the same facilities as Moldovan exporters do.

In fact, transportation of goods is the only problem left, because if "playing the Moldovan game" they have to be carried through the customs posts of Moldova, which implies extra charges.

If politicians of both banks came to an agreement this problem could be removed, as well as the useless and humiliating migration fee for transiting Transnistria and the 100-percent customs duty on the goods imported from Moldova.

Since 2002 more than 130 big businesses have been privatised in Transnistria for the amount of almost 111 million USD. Due to judicial instability [caused by non-recognition of Transnistria's statehood, ed.], which causes lack of confidence in the future, the property has been sold to far from the best owners. It is enough to recall the Moldovan GRES [state regional power station] purchased by the Russian-Belgian company "Saint Gidon Invest" at the price of 29 million USD, when the real price of it is over 1 billion USD. However, the promised money never reached the budget of the region. And within a year, after having multiplied the debts of the station, the "investor" re-sold it to its current owners, subsidiaries of the Russian company RAO EES, at the price of 100 million USD.

Russian capital owns the majority of businesses in the region and is extremely interested in the stability and predictability. Should it believe the guarantees of Chisinau now, the investment flow will increase and these privatized enterprises will start developing. The registration of ownership in a recognized state is something completely different from the registration in Transnistria, which is recognized only by Nagorno-Karabakh, South Ossetia, and Abkhazia, which are in the same situation.

Perhaps, the Russian "Sevkabel" JSC that owns the Tiraspol "Moldavkabel" would fulfill its investment obligations better. And for the time being it is among the debtors, and the local Ministry of Economy does not exclude the possibility of terminating the purchase-and-sale agreement, while the investor explains the debts by the instable situation and the "economic sanctions" applied by Moldova.

The Moscow Machine Building Production Plant "Salyut" is in a better situation in Moldova. It has bought three companies in the republic, including the Plant 'Pribor" in Bender, and it is much easier for it to coordinate their activity. And if "extra kilometres" and customs barriers between the two banks of the Dniester were removed it would be even better.

The issue of the Moldovan GRES is almost settled - the licenses obtained from Chisinau allow the new owner to export energy to Russia, Romania, and Belarus. It gave the opportunity to activate four station blocks out of twelve, compared to one in 2006. Most probably, the investor is also interested in the Moldovan market, which used to consume more than half of the produced energy. But due to disagreements of the official Tiraspol and Chisinau, the Moldovan GRES tries to sell energy to Moldova like to a foreign country at 4.08 cents per 1 kW/hour, while Transnistria gets it four times cheaper.

Transnistria will have another big investor in the nearest future: the Federal State Unitary Enterprise "Russian Television and Radio Broadcasting Network", which has recently bought the Transnistrian Radio and TV Center. It has not been an immediate decision for this enterprise. And now, taking into account Voronin's guarantees, they feel much more confident.

The main thing is for actions to follow the words. Then, despite intractability, Tiraspol's authorities will have to make advances to Chisinau in order not to be discredited before Transnistrian business and the entire population of the region. No one believes declarations and slogans anymore. It is time to proceed to concrete things and legal business.

Moreover, Tiraspol itself is disposed to treat temporary investors, who fail to fulfill their investment obligations and have come just to snatch on the rims, more strictly: Starting in 2008, a fine of 5% of the amount of unfulfilled obligations will be applied to the owners of such privatized enterprises.

Chisinau-based Gheorghe Lupu is a Moldovan political commentator who is opposed to the independence of Pridnestrovie. He considers Pridnestrovie a part of Moldova, and supports the official Moldovan position of wanting to eliminate the statehood claims of the residents living east of the Dniester river.