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.
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."
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.
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.