C O N F I D E N T I A L SECTION 01 OF 02 KIEV 000365

SIPDIS

E.O. 12958: DECL: 01/27/2016
TAGS: PREL PBTS PARM PINR MD UP OSCE
SUBJECT: UKRAINE/TRANSNISTRIA: MFA DEFENDS DELAY IN CUSTOMS
PROTOCOL ENFORCEMENT

REF: A. CHISINAU 81


B. KIEV 336

C. DAS KRAMER-CARLSON TELCON 1/27/06

Classified By: Ambassador for reasons 1.4(b,d).


1. (C) Summary: Briefing EU/G7 representatives January 27,
Deputy Foreign Minister Veselovsky claimed the Ukrainian
government had delayed implementation of the May 15, 2003,
customs protocol with Moldova because the GOM's
implementation of simplified registration procedures for
Transnistrian business entities disadvantaged them relative
to situation existing before Moldova's implementation of
"Resolution 815." Ukrainian and Moldovan representatives
planned to meet in Odesa January 30 to resolve the problem.
The OSCE, EU, and U.S. would be invited to participate in the
Odesa meeting. The assembled diplomats treated Veselovsky's
statements with notable skepticism. End summary.

Reciprocal Actions
--------------


2. (C) Deputy Foreign Minister Andriy Veselovsky briefed us
and representatives of EU/G7 member embassies January 27 on
the status of the December 30, 2005 joint declaration
regarding cross-border trade between Ukrainian Prime Minister
Yuri Yekhanurov and his Moldovan counterpart, Vasile Tarlev.
Veselovsky said the Ukrainian government remained interested
in resolving the Transnistria situation and wished to do
everything in its power to ensure that Transnistrian goods
crossed the Ukrainian border with Moldova/Transnistria in a
fair and transparent way. He said the joint declaration,
however, always had envisaged reciprocal actions by the two
parties. Ukraine would begin enforcement of the May 15,
2003, customs protocol requiring Moldovan government customs
seals on all goods imported into Ukraine across the
Moldova/Transnistria border. In turn, the Moldovan
government would implement a simplified system for
registration of Transnistrian business entities as provided
in the August 2, 2005 "Resolution 815."

Unintended Consequences
--------------


3. (C) Veselovsky said the Ukrainian government had called a
meeting January 24 with Ukrainian, Moldovan, and
Transnistrian business representatives to brief them on its
efforts. During this meeting, the Transnistrian businessmen
raised three principal concerns regarding implementation of
Resolution 815 that, rather than simplifying procedures, made
their situation more complicated.

-- Before August 2, 2005, Transnistrian businesses received
temporary licenses of one year's duration. Under Resolution
815, temporary licenses only lasted six months.

-- Transnistrian companies that had temporary registration
could only receive "simple" or certificates of origin Type C
that do not provide certain advantages regarding re-export.
Under Resolution 815, only permanently registered companies
could receive certificates of origin Type A, Rm, EUR, and CT1
(note: which allow goods to receive benefits of Moldova's
trade agreements with EU and CIS countries). To receive this
benefit and be permanently registered, Transnistrian
businesses would need to be current on payment of all
Moldovan taxes, which would subject them to double taxation
for payments to both the Moldovan government and
Transnistrian authority.

-- Before August 2, 2005, only some Transnistrian shipments
were inspected. Now, all were inspected.


4. (C) Veselovsky said Ukrainian Special Negotiator for
Transnistria Issues Dmytro Tkach had discussed the matter
with Moldovan Minister for Reintegration Vasile Sova.
Ukrainian and Moldovan representatives would meet in Odesa
January 30 to resolve issues regarding the joint declaration;
the Ukrainian government hoped OSCE, EU, and U.S.
representatives would take part in the meeting.

A Skeptical Reaction
--------------


5. (C) The assembled diplomats reacted with skepticism and
coolness to Veselovsky and subjected him to probing
questions. Austrian Ambassador Michael Miess expressed the
hope of the Austrian EU Presidency that the follow-on talks
with the Moldovans would successfully lead to Ukraine's
speedy implementation of the customs protocol. German
Embassy DCM Johannes Regenbrecht launched sharp questions on
the manner in which the decision was reached and executed,
and seemed generally dissatisfied with Veselovsky's
evasiveness.


6. (C) After the meeting, Kiev-based EC Senior Adviser for
Moldova Sabine Stoehr said Transnistrian authority "Foreign
Minister" Litskai had been in Kiev January 21 and had made
exactly the same case that Veselovsky had just made during
the meeting. She was doubtful that the Ukrainian government
had really taken its decision as a result of the January 24
meeting in Odesa. She said the EU Border Assistance Mission
had detected Transnistrian leader Igor Smirnov crossing the
Moldova/Transnistria border into Ukraine. (When Regenbrecht
asked whom Smirnov had met when he was in Kiev, Veselovsky
smiled embarrassedly and said he was not at liberty to
comment.) Despite Veselovsky's assurances that the Moldovan
government had been consulted, Stoehr said she understood the
Moldovan ambassador in Kiev had simply been called in to the
MFA late on January 24 and informed of the Ukrainian
government's decision.

Follow-up
--------------


7. (SBU) Per ref C, Embassy will follow up with senior GOU
officials to urge GOU implementation of the agreed stiffened
border controls as soon as possible.


8. (U) Visit Embassy Kiev's classified website:
www.state.sgov.gov/p/eur/kiev.
HERBST