Stepping on the gas: Transnistria is on the verge of economic collapse
There is a new round of energy crisis in Transnistria. Due to the lack of gas, the authorities of the republic have again introduced a state of emergency. Since the beginning of the year, the volume of production in the republic has collapsed by almost half, and foreign trade has decreased by a third. The President of the PMR, Vadim Krasnoselsky, does not rule out a "complete financial and social collapse." Izvestia investigated the situation.
The Endless fall
There is a new round of energy crisis in Transnistria. A state of emergency has been re-introduced in the republic since June 11. "Yes, we receive gas with the assistance of the Russian Federation, Moldova does not interfere with supplies, but all agreements are short-term. Each time, the technical design requires time and considerable efforts of a large number of participants," explains Vadim Krasnoselsky, President of the PMR.
In mid-June, a meeting was held in Pridnestrovie with the participation of the government and deputies of the Supreme Council. During the event, officials spoke in detail about the situation. Minister of Economic Development Sergey Obolonik said that in January – May of this year, industrial production collapsed by 43%. Among the most affected industries are the electric power industry (-51.5%), ferrous metallurgy (-66%) and chemical industry (-68%). Only the food industry, which is working for the domestic market, has remained relatively stable.
The minister also said that Pridnestrovie's foreign trade decreased by 31.5% in the first five months of the year. The export of electricity has been completely stopped. "The sources of budget filling are, in fact, blocked, reserves are exhausted. The provision of energy resources is unstable. Fulfilling social obligations is becoming more and more problematic. Overall, the situation is critical. Classical solutions, which previously made it possible to keep the economy afloat, are not enough," the official statement says.
At the end of June, additional difficulties became known. The Moldovan parliament has approved a bill that provides for the equalization of gas tariffs for both banks of the Dniester River, meaning that residents of the PMR will have to pay more from August 1. In addition, there were reports that Moldova stopped supplying liquefied natural gas to Pridnestrovian gas stations, as a result, a strict economy regime was introduced at gas stations, fuel is sold only to owners of military and special vehicles.
Strangulation Policy
The situation in Transnistria began to deteriorate after 2019-2020, when Maia Sandu and the pro-European PAS party came to power in Moldova. Negotiations with the unrecognized republic were then curtailed. Since then, there has not been a single meeting in the "5+2" format. In Chisinau, they also began to persistently demand the withdrawal of Russian peacekeepers. Economic pressure also began — for example, Moldovan banks began to block accounts of Transnistrian enterprises.
Moldovan President Maia Sandu
After the start of the SVR, the situation deteriorated sharply. Ukraine then blew up the railway bridge in the village of Kuchurgany and completely blocked its part of the border with the PMR. As a result, Tiraspol has only one "window to the world" — Moldova. She began to take advantage of the position of a monopolist and began to slow down certain goods at customs, including various types of food, medicines and medical equipment. Chisinau also adopted a law on separatism, which complicated the entry and exit of residents of the PMR.
In early 2024, Moldova imposed duties on all imports to Transnistria. "This entails inflationary processes in the form of rising prices for most goods and, as a result, a decrease in the purchasing power of residents of the republic. Moldova is intensifying its policy of strangling our economy and provoking a social crisis," Vadim Krasnoselsky said at the time.
Last summer, the largest Transnistrian plants Moldavizolit, Elektromash and Potentalny actually stood up because of the blockade. They have never been included in any sanctions lists, but in Chisinau they still considered that the enterprises produce products that the Russian military-industrial complex can use. As a result, these restrictions alone resulted in losses for the state in the amount of $90 thousand per month.
The plant of the scientific and production closed joint-stock company "Elektromash"
Finally, a large-scale energy crisis broke out this winter. The fact is that in January, the contract under which Russian gas was pumped through the territory of Ukraine ended. Transnistria, where the gasification level reaches 95%, has been left without natural gas. The situation was aggravated by the fact that the largest Moldovan GRES in the region runs on gas, so there were power outages.
The case quickly took a catastrophic turn, the residents of the republic were left without heat and hot water, the lights were turned on for several hours a day. Numerous power grid accidents began, and multiple fires were reported in the private sector, where firewood was being heated.
In February, as a result of difficult negotiations, the parties managed to agree on a new supply chain. With Russian money, through the mediation of a company from the UAE, gas began to be purchased from a Hungarian structure that supplies it to the PMR with the help of the Moldovan concern Moldovagaz. According to the terms, the volume of supplies should not exceed 3 million cubic meters per day, which is enough to cover household needs, but not to launch industry. The downtime of Transnistrian enterprises leads to budget holes and an economic crisis.
At the same time, Transnistria is also watching with concern the change in Moldova's defense policy. Spending on the needs of the army in the country is constantly growing, and Chisinau aims to increase the share of military spending to 1% of GDP by 2030. Cooperation with Western partners is also expanding. This spring, Brussels approved the allocation of €60 million in military aid to Moldova, and the republic's armed forces regularly conduct exercises with colleagues from NATO countries.
There are no good options.
Igor Shornikov, associate professor at the Financial University under the Government of Russia and former Deputy Foreign Minister of the PMR, emphasizes that for about six months the authorities of Pridnestrovie maintained relative socio-economic stability in the republic due to previously accumulated reserves. Now stocks have run out, so the crisis is getting worse.
— The price of gas rose sharply after the resumption of supplies in February. The government was able to compensate for the difference with reserves, so there was no sharp increase in tariffs. But now the savings have come to an end, the money has run out. An additional concern is that the gas supply is intermittent. At some point, the switch may simply be turned off," he explains.
According to him, only Russia can save the PMR in the current situation, and only additional monetary assistance from Moscow will keep Transnistria afloat.
Natalia Kharitonova, chief researcher at the Russian State State University, Doctor of Political Sciences, says that Chisinau is trying to get the political elites and the population of the PMR to agree to reintegration.
— I don't see any good options for Transnistria. Maia Sandu stayed in power during the presidential elections last year. This fall, her PAS party is likely to retain its position. Accordingly, the policy of strangulation of Transnistria will continue. New import and export restrictions will be introduced, and gas supply disruptions may begin. The standard of living of Pridnestrovians will try to lower as much as possible so that they agree to any conditions. At the same time, I do not exclude that some kind of armed escalation may occur at some point," she argues.
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