TRANSNISTRIA: "THREE PLUS TWO" TALKS IN MOSCOW

C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 004198

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/20/2016
TAGS: PREL PBTS ETRD OSCE UP MD RS
SUBJECT: TRANSNISTRIA: "THREE PLUS TWO" TALKS IN MOSCOW

Classified By: Minister Counselor for Political Affairs Kirk Augustine.
Reason 1.4 (b, d)


1. (C) Summary: "3 2" talks on Transnistria took place in
Moscow April 19 including the mediators -- Russia, Ukraine
and the OSCE -- and observers -- U.S. and EU. Russia tried
to focus discussion on the customs regime between Moldova and
Ukraine. All other sides pushed back, hardest of all
Ukraine, whose negotiator noted sharply that the new regime
"has been decided." Russia introduced a draft protocol to
roll back the new customs regime; the others agreed to study
it. Ukraine proposed that the next negotiating round focus
on the OSCE's draft delimitation of competencies between
Chisinau and Tiraspol as well as on creating monitoring
groups on militarization and an evaluation mission on the
feasibility of democratic elections in Transnistria. The
group agreed to include the delimitation paper in the
negotiating agenda. An unofficial translation of the Russian
draft protocol is in para 13. End summary.


2. (C) Russia (Nesterushkin) led off by complaining about the
effects of the Moldovan-Ukrainian customs agreement. In a
departure from previous Russian statements, he focused not on
the "humanitarian crisis" but on the budgetary effects of
depriving the Transnistrian authorities of customs revenues.
The consequent inability of Transnistria to provide social
services to its people was causing "radicalization" and cast
the future of the peace process into doubt.


3. (C) OSCE (Hill) replied that the customs issue had a long
and complex history. Different sources are giving
contradictory information about what is now happening on the
ground. Hill ascribed this to an attempt by Transnistrian
leader Smirnov to put pressure on Russia and Ukraine. Hill
noted that the Moldovan steps needed to be understood in the
context of the last five years of negotiating history, which
have convinced Moldova that Transnistria is not interested in
creating a single economic space as previously agreed.
Convincing Moldova to take steps to attract the
Transnistrians back to the peace process meant first
convincing Moldova that there was a peace process to return
to. "This is a chicken-and-egg problem," he said. Hill
believed that the registration process under the new regime
was not working with perfect transparency, and could be
improved.


4. (C) Ukraine (Veselovskiy) agreed that the situation is
abnormal. He blamed this on Transnistria, whose
"unconstructive position" has "gone beyond the bounds of the
reasonable." Veselovskiy agreed that some details of the
functioning of the new customs regime could be improved. He
noted that President Yushchenko had proposed a new initiative
of Transnistria one year ago, and its goals remain
unrealized. Veselovskiy proposed the creation of expert
monitoring groups, one to look at Transnistria's military
industry and the other to evaluate weaponry. He also
proposed moving forward on an international evaluation by
OSCE of the feasibility of democratic elections and on the
new OSCE paper delimiting responsibilities between Chisinau
and Tiraspol.


5. (C) EU (Jacobovits) suggested a new round of negotiations
in May. There had been some more positive elements to Hill's
last interaction with Transnistrian negotiator Litskai, and
those needed follow-up. While the simple solution to the
customs issue would be for the Transnistrians to allow
exports again, the next round needed to include agenda items
each party wanted (such as customs) even if the other did
not.


6. (C) U.S. (Kramer) noted that the G-8 political directors
had requested a more detailed discussion of regional issues
such as Moldova at their next meeting on June 7, and they
would be formally included in the agenda of the June 29
Ministerial. Undersecretary Burns had called for less
assigning of blame and more effort to get the sides working
together.


7. (C) Nesterushkin insisted once again that there can be no
discussion of politics until there is a unified customs
space, to which Veselovskiy retorted that the form of
required documentation has been decided. He suggested
sending an OSCE mission -- Ukrainian expertise would be at
its disposal -- to Moldova and Transnistria to work on
smoothing out issues related to obtaining the new
documentation. Hill agreed that if this were considered part
of the negotiating process, the OSCE can undertake such a
mission. The principles have already been decided; the
question is how Transnistrian enterprises can register.


8. (C) Nesterushkin insisted yet again that there will be no
negotiations until the resolution of the "current crisis," to

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which Kramer replied that the majority opinion within the G-8
was that Transnistria had created the crisis itself.
Nesterushkin sarcastically asked whether "Japan and Canada"
were now going to be invited in as observers. At this point
Nesterushkin distributed a Russian draft protocol on customs.
He said the basic deal was that Transnistrian companies
would register in Moldova, and Transnistria will keep all the
revenues (but see analysis, para 11, and unofficial
translation, para 13).


9. (C) All agreed they would study the Russian draft.
Veselovskiy promised Hill Ukrainian legal analysis within two
days. Hill said this was a two-stage process: the
negotiators had to reach consensus before going on to seek
agreement of the parties on this complex issue. Hill
switched topics to the delimitation paper, saying that
Moldovan negotiator Sova confirmed to him three times
Moldova's willingness to discuss status and democratization
issues. All agreed to support inclusion of the paper in the
agenda for upcoming negotiating rounds, though Nesterushkin
expressed the reservation that since the new document is an
abridgement of a February, 2004 document, the negotiators
would have to disavow the earlier document to proceed on to
this one.


10. (C) The meeting concluded by setting the next negotiating
round for the week of May 17 and agreeing that Hill would
signal the group's determination to the Parties when he meets
with COE ambassadors in Strasbourg next week.


11. (C) Highlights of the Russian protocol are:

-- By making itself a signatory (along with Ukraine, Moldova
and Transnistria),Russia is implicitly claiming a say in
affairs on the Ukrainian-Moldovan border.

-- The third and fourth preambular paragraphs -- on the
"unacceptability" of economic pressure and the
"impermissibility" of administrative barriers to trade hint
at a Russian offer of quid pro quo to the Moldovans: this
protocol in exchange for a repeal of the ban on imports of
Moldovan wine.

-- According to Para 2, the form of any customs stamps must
be agreed by the Transnistrians (who can therefore refuse all
Moldovan stamps without contradicting the protocol).
Transnistrian freedom from tax liability is not dependent
upon further agreement with Moldova.

-- Both Parties must make changes in their internal
legislation; failure to do so does not prevent the Protocol
from entering into force; rather, it gives Russia and Ukraine
full rights to do whatever they deem necessary to ensure free
movement of goods into and out of Transnistria.

-- While waiting for the Protocol to enter into force, the
new customs regime is to be rolled back, creating a new
base-line favorable to Transnistria.


12. (C) Comment: All the above points indicate that Russia
understands this paper is a non-starter. It appears to us in
Moscow that the reaction of the U.S. (in close cooperation
with Ukraine and the EU) can be a) to call the draft a
non-starter and refuse to discuss it; b) try to amend it to
make it more acceptable; or c) get the Ukrainians -- the
other "State-Guarantor" -- to introduce a competing draft
that shuts the Russians out of the Ukrainian-Moldovan border
operations, binds the Transnistrians to more transparent
procedures that the OSCE works out with Moldova, and
addresses in some way the budgetary issues. All the options
have drawbacks. Option (a) will have the Russians constantly
raising this text as the first order of business at any
Transnistria meeting, and complaining about the
obstructionism of the other negotiators. Option (b) is a
reasonable option if we are willing to negotiate the text for
months or even years -- an advantage being that during those
negotiations the current regime holds. Both Options (a) and
(b) could lead to the irrelevance of the 5 2 format that
includes the U.S. and EU -- which may be the real aim of the
Russian paper. Option (c) is reasonable if Ukraine is
willing and able to lead the charge against the Russians --
at a time when its own government is still in formation. End
Comment.


13. Begin text of unofficial translation of Russian draft
protocol:

PROTOCOL

Mechanism for the Conduct of Foreign Economic Activity of
Transnistria


MOSCOW 00004198 003 OF 004


The Republic of Moldova and Transnistria, hereinafter "the
Parties," as well as the Russian Federation and Ukraine,
hereinafter "the States-Guarantors," in the presence of the
plenipotentiary representatives of the OSCE, EU and USA,

Striving to create an international-juridical mechanism for
the unhindered conduct by Transnistria of foreign economic
activity on the basis of international standards and of the
obligations of the Parties,

Recognizing the unacceptability of measures of economic,
political or other pressure and considering that all
questions must be resolved in the framework of a constructive
dialog of equals,

Recognizing the impermissibility of imposing administrative
barriers that could artificially hinder the free economic
activity and conditions for the broadening of international
economic activity,

Confirming their commitment to agreements reached in the
course of the negotiating process, including the Memorandum
"On the Bases for Normalization of Relations between the
Republic of Moldova and Transnistria" of 8 May 1997,

Viewing the resolution of the issue of a mechanism for the
conduct of foreign economic activity of Transnistria as an
important component of the process of elaborating a stable
model of a comprehensive and just normalization of relations
between the Republic of Moldova and Transnistria,

Striving to strengthen the regime of transparency and
openness on the Transnistrian sector of the border with
Ukraine,

Conscious of responsibility for the welfare of the
population, and for securing the socio-economic rights of the
inhabitants of Transnistria,

Have agreed on the following:


1. Transnistria has the right to autonomous conduct of
foreign economic activity in accordance with the present
Protocol, considering as well the agreements of the
negotiating process.


2. The transportation of cargoes across the
Transnistrian-Ukrainian sector of the border by enterprises
registered in Transnistria, with the aim of exporting to
Ukraine and/or for transit through Ukraine to a third country
shall be carried out on the basis of accompanying
("tovarosoprovoditel'nyy") commercial or other documents on
which are affixed customs stamps, the form of which shall be
agreed and implemented by the Parties with the advice of
authorized foreign ("zarubezhnyy") and international
structures.


3. The customs clearance of cargoes destined for export to
Ukraine and/or for transit through Ukraine to a third country
shall be carried out on condition of presentation by
Transnistrian exporter-organizations of documents confirming
the listing (vneseniye) of these economic agents in special
registers for the statistical accounting of juridical persons
authorized to conduct foreign economic activity.


4. The form of the special registers for statistical
accounting, the rules for their book-keeping, and the
agencies of the Republic of Moldova and Transnistria
authorized to keep them will be determined by separate
agreement of the Parties no later than ten days after the
signing of the present Protocol.


5. The listing of economic agents of Transnistria in special
registers for statistical accounting of juridical persons
authorized to conduct foreign economic activity shall be
carried out free of charge on the basis of copying out from
registration (founding) documents given out by the agencies
of Transnistria for registration of juridical persons no
later than ten days after application to the authorized
agencies.

The listing of economic agents of Transnistria in the special
registers for statistical accounting of juridical persons
authorized to carry out foreign economic activity shall be
carried out in strict accordance with the
organizational-legal form and the form of property of the
applying juridical person which exist at the time of the
presentation of the necessary documents.

The listing of economic agents of Transnistria in the special
registers for statistical accounting of juridical persons
authorized to carry out foreign economic activity shall be

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confirmed by appropriate witness.


6. The listing of economic agents of Transnistria in the
special registers for statistical accounting of juridical
persons authorized to carry out foreign economic activity
shall not give rise to any sort of tax or other obligation by
these economic agents to the budget or tax system of the
Republic of Moldova and cannot serve as the basis for payment
of any taxes or fees.


7. The listing of economic agents of Transnistria in the
special registers for statistical accounting of juridical
persons authorized to carry out foreign economic activity may
not serve as a basis for reviewing property rights with
regard to the property of those enterprises, as well as with
regard to their shareholdings, obligations or other property
rights.


8. Oversight of the fairness and timeliness of the movement
of Transnistrian cargoes on the Transnistrian-Ukrainian
sector of the border shall be carried out on the basis of
exchange of information between the authorized customs
agencies of the Republic of Moldova and Ukraine with regard
to customs documentation ("obespecheniye") issued and with
regard to the volume of the movement of cargoes for export to
Ukraine and/or transit through the territory of Ukraine to a
third country.


9. The entry of import cargoes into Transnistria shall be
carried out without hindrance in accordance with contracted
obligations of the economic agents of Transnistria, without
the levying of any taxes, fees, or other liabilities for
payment into the budget of the Republic of Moldova. By
agreement with the Republic of Moldova and in accordance with
the national legislation of Ukraine, Ukrainian customs
agencies have the right to present to the Moldovan side
information concerning the volumes and descriptions of
imports into Transnistria.


10. For the implementation of the present Protocol, the
Parties shall within one week adopt necessary changes and
additions to their internal legislation.

In the event that necessary changes are not adopted by one of
the Parties, the States-Guarantors shall make every effort
and take all necessary measures to secure the unhindered
conduct of export-import operations by Transnistria.


11. From the day of the signing of the present Protocol and
until its entry into force, the Parties and the
States-Guarantors shall return to the regime of movement of
cargoes across the Ukrainian-Transnistrian sector of the
border which existed on 28 February 2006.


12. The guarantee (garantiynyy) elements of the present
Protocol will be determined in the framework of further
interaction of the plenipotentiary representatives of the
Parties, States-Guarantors and other participants in the
negotiating process for Transnistrian Resolution in the 5 2
format.


13. The present Protocol shall enter into force 14 days
after signing and shall remain in force until the coming into
being of a final model of political resolution of relations
between Moldova and Transnistria and the conclusion of an
agreement in international law on a higher level of
cooperation between the Parties in the indicated districts.

The refusal of one of the Parties to bring its internal
legislation into agreement with the present Protocol shall
not hinder its entry into force.

End text.


BURNS