Publication: Monitor Volume: 6 Issue: 181

Ahead of another cold season, Moldovan Prime Minister Dumitru Braghis spent three days in Moscow as a supplicant for gas, electricity and debt relief. Moldovan political concessions also entered the picture, apparently at Braghis’ initiative, during his September 25-27 discussions with Russia’s Prime Minister Mikhail Kasyanov, Duma Chairman Gennady Seleznev and other Russian officials.

–Natural Gas. Moldova owes Russia a staggering US$800 million for past deliveries of natural gas. On a per capita basis, Moldova’s arrears are approximately four times higher than those of heavily indebted Ukraine. Moldova’s Transdniester region, with less than 20 percent of the country’s population, accounts for approximately two-thirds of Moldova’s overall gas debt. Gazprom bills Transdniester (left-bank) and the rest of Moldova separately, and it presses only Chisinau–not Tiraspol–to pay up.

Earlier this year, after Moscow had cut off deliveries to right-bank Moldova, a solution of sorts was implemented. Chisinau turned over to Gazprom 51 percent, and to the “unrecognized” Transdniester 14 percent, of ownership shares in Moldova’s gas transit and distribution system. The government had never seriously attempted to privatize the gas sector. It now lost control in favor of the Moscow-Tiraspol tandem. Ironically, Transdniester–the main debtor–continued receiving Russian gas all along and was even rewarded with equity in the system. At present, Chisinau considers turning over additional equity and retaining only a 10 percent stake. It has also issued promissory notes to Russia for another portion of Moldova’s arrears.

This year, Chisinau has managed to pay 91 percent of the gas bill to Russia through August. It fears, however, that the approaching cold season may again cause the arrears to increase. In Moscow, Braghis tried in vain to persuade Gazprom to lower the price from the current one of US$80 per thousand cubic meters. That amount has been set in a long-term bilateral agreement, signed in 1993, which insulates the price against market fluctuations.

–Electrical Power. During his visit, Braghis proposed to United Energy Systems of Russia to create a joint enterprise for the production and export of electrical power in Moldova. The enterprise would consist of Moldova’s sole large-capacity power plant, located at Cuciurgan in Transdniester, smaller power plants in right-bank Moldova and the Soviet-era power transmission lines which run via Moldova to Romania and Bulgaria. Under this scheme, the Russian monopoly would finance the overhaul of all those decaying assets; the Moldovan state would become a minority shareholder in that system; and the Moldovan budget would receive a portion of the export revenue. United Energy Systems of Russia has taken the proposal under consideration. Braghis’ scheme would preempt the privatization of those assets and enhance Russia’s economic and political leverage over Moldova.

–Rail Transit and Other Arrears. Moscow has suddenly rediscovered, and is now calling in, a Swiss franc-denominated debt of 29 million owed by Moldovan Railways to Russia’s counterpart state company. The debt, dating back to 1993, represents the share accepted by Moldova from external debts of the former Soviet Union railways. Why Moldova had in the first place accepted responsibility for that debt is not something that Chisinau can now explain.

After some haggling, Moscow agreed to demand 29 million instead of the 34 million it wanted before Braghis’ visit. Cash-poor Moldova is to pay in three forms. First, by turning over to Russia more than 300 railroad cars that Moldova had inherited as its due share of the former Soviet Union Transport Ministry’s property. Second, by giving up transit fees on Russian cargoes bound for the Balkans via Moldova. The Russian firms will pay those transit fees directly to Russia’s Transport Ministry, instead of Moldova’s. Third, by supplying Moldovan “material resources” to Russia’s North Caucasus. “Material resources” is a catch-all term which can–and, in this case, probably will–include agricultural products. The vague reference to the North Caucasus may signify reconstruction aid and/or food deliveries to Chechnya. If past experience is any guide, repayment schemes of this nature seldom work.

After nine years of independence, Chisinau was finally inching this year toward privatizing Moldovan Railways with bona-fide foreign investors. The company’s suddenly rediscovered indebtedness may, however, interfere with its privatization. Moreover, the cash-poor country will lose the transit revenue until the debt is repaid.

In what looks like another desperate move, Braghis proposed that Moldova give up the fees for relaying Russian Public Television programs on Moldovan territory. The waived sums would be deducted from Moldova’s state debts to Russia. Kasyanov accepted that proposal.

–Transdniester Issue Intrudes. Probably exceeding his authority, Braghis submitted proposals on the resumption of Russian-mediated negotiations between Chisinau and Tiraspol. Under normal circumstances, the prime minister’s brief does not include those issues. But the current political situation in Chisinau is not a normal one. The presidency has recently been deprived of most of its powers in favor of the Communist-dominated parliament; a new, essentially figurehead president will be elected in November to replace the incumbent Petru Lucinschi; and the Braghis government itself will soon be reshuffled as part of the redistribution of power.

In that confused situation, Braghis took the initiative of proposing that negotiating rounds be held every third month by Chisinau and Tiraspol under the mediation of Yevgeny Primakov, chairman of Russia’s State Commission for Transdniester settlement. Braghis’ public statements, as cited by Russian and Moldovan media, did not include references to the Organization for Security and Cooperation in Europe (OSCE). That omission would only be consistent with Lucinschi’s move last month, when he entered into separate negotiations with Russia and Transdniester, excluding the OSCE. Rather than reaching for that safeguard, Braghis declared that Primakov’s commission will be the one to settle the conflict. Braghis called for the signing of three documents concurrently: one on Transdniester’s status, one on the guarantees of its implementation and one on the status of the troops in the area. This latter, elliptic reference evidently covers Russian troops.

In April of this year, Braghis–as a loyal subordinate of Lucinschi at that time–publicly recommended that Moldova confer basing rights on Russian troops in Transdniester in return for guaranteed supplies of natural gas. Confusion and defeatism among Moldova’s governing class are growing dangerously, against the backdrop of resistance to reforms and consequent urge to sell Moldova’s depreciating national assets to the Russian state (Flux, Basapress, Infotag, Itar-Tass, RIA, September 25-28; see the Monitor, June 20, July 10, 21, 27, September 11, 19).

1″‘We have no right to solve military tasks strictly on the basis of people’s enthusiasm and heroism.'”

“The goal, ultimately, is to end the current practice of using most government defense funding primarily to feed and maintain bloated and ineffective defense structures.”

2″Putin, through his spokesman, expressed surprise and “outrage” over the fact that Press Minister Mikhail Lesin added his signature in July to a document co-signed by Gusinsky and Gazprom-Media chief Alfred Kokh.”

3″According to one observer, Promstroibank virtually privatized Russia’s second city during the 1990s and is today a multibillion-dollar empire which controls St. Petersburg’s ports, airports, transportation and communications companies.”

4″Moldova owes Russia a staggering US$800 million for past deliveries of natural gas.”

“In what looks like another desperate move, Braghis proposed that Moldova give up the fees for relaying Russian Public Television programs on Moldovan territory. The waived sums would be deducted from Moldova’s state debts to Russia. Kasyanov accepted that proposal.”

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