RUSSIA AT A LOSS ON HOW TO BREAK IMPASSE IN

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 004828

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/01/2017
TAGS: PREL PINR PBTS MARR OSCE MD RS
SUBJECT: RUSSIA AT A LOSS ON HOW TO BREAK IMPASSE IN
TRANSNISTRIA TALKS

REF: MOSCOW 674

Classified By: POLITICAL M/C ALICE G. WELLS FOR REASONS 1.4 (B,D).


1. (C) Summary: Although Russia has observed an improvement
in its bilateral ties with Moldova, the GOR remains
frustrated with its inability to pressure Chisinau into a
compromise on the Transnistria conflict. Russia's de facto
import ban on Moldovan wine and Putin's increasingly frequent
one-on-one talks with Voronin have failed to produce any
measurable results. Russia places the blame for the
stalemate on the shoulders of Voronin and the West. MFA
Transnistria Negotiator Nesterushkin, who had just returned
from his meetings in Washington with EUR DAS David Kramer,
told us that Russia was pleased with the USG's recent
decision to allow a meeting between Ambassador Kirby and
senior Transnistrian leaders in Tiraspol, but attributed
Voronin's "hardened negotiating position" to perceived
unwavering support from the U.S. and EU. Noting OSCE CiO
Moratinos' planned October 7-8 trip to Chisinau and Tiraspol,
Nesterushkin argued that the USG and EU should encourage
Voronin to accept Tiraspol's demand for economic independence
and a confederate political arrangement. Until a political
settlement is reached, the MFA reaffirmed that Russia will
not withdraw its peacekeeping forces, as envisioned under the
CFE parallel action plan. End summary.

Positive Trends in Bilateral Ties
--------------


2. (C) MFA Moldova Section Chief Oleg Rogoza told us on
September 27 that Russia's relationship with Moldova revolves
around two issues -- development of economic ties and
resolution of the Transnistria conflict. On the bilateral
track, Rogoza noted some positive developments. The
Russia-Moldova Intergovernmental Commission will meet in
October, although the level of representation -- i.e., at the
level of president or foreign minister -- has yet to be
determined. The aim of the next IGC meeting is to develop
ways to boost trade and Russian investment in Moldova.
Noting that trade in 2006 was around $900 million and is
expected to reach $1 billion in 2007, Rogoza said there is
great potential for further economic cooperation. Russian
capital in Moldova remains a paltry $200 million, but the GOR
is optimistic that the next IGC meeting will also stimulate
movement in this area.


3. (C) The MFA expects Moldova will raise the thorny issue
of Russia's import ban on Moldovan wine. Russia says it has
already re-registered 17 Moldovan wine companies since the
ban went into effect in Spring 2006, but Rogoza maintained
that the re-registration of these companies was only because
"the GOR had thoroughly inspected the quality of these
companies' products" (and not because these 17 companies
belong to Russian nationals). The remaining 83 or so
Moldovan-national wine producers have yet to meet Russian
requirements. (Note: Approximately 80% of Moldovan wine was
exported to Russia prior to the ban. End note.) Moldova
refuses to allow the 17 Russian-national wine producers to
export their wine to Russia until Russia certifies all
Moldovan wine producers, but Rogoza said such "stubbornness"
only hurts Moldova, as the GOR has already observed a
significant reduction in Moldova's niche in the Russian wine
market.

But Nothing Like What They Used To Be
--------------


4. (C) Since Voronin rejected the Russian-backed Kozak Plan
and made a strategic decision to strengthen ties with the
West in 2003, MFA officials said Russia's relationship with
Moldova quickly moved from brotherly to adversarial, and only
recently has shifted to "pragmatic." Russia regrets the
fundamental shift in the relationship with Chisinau, but
Rogoza said the GOR is learning to adjust to "the new
realities." For example, Putin, who "was deeply
disappointed" with Voronin's rejection of the Kozak Plan, has
met with Voronin three times in the past year, and they will
probably meet again on the margins of the upcoming CIS Summit
in Dushanbe. Rogoza hesitated to describe the relationship
as strong, noting that "Voronin has yet to regain Putin's
full confidence and trust." Instead, Rogoza said that Putin
and Voronin focus their conversations on specific issues of
mutual concern, which mainly include economic cooperation and
Transnistria.

Chisinau's Handling of Transnistria Sours Bilateral Ties
-------------- --------------


5. (C) Despite Russia's efforts to separate the bilateral
ties from disagreements over Transnistria, MFA officials do

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not hide the clear linkage. "Now that Voronin and Putin are
talking again," Rogoza said Putin's main talking point is to
pressure Chisinau to reach an agreement with Tiraspol on
Transnistria. Russia blames Chisinau, the EU, and USG on the
lack of progress in the 5 2 negotiations. MFA Transnistria
Negotiator Ambassador Nesterushkin, who had just returned
from his meetings with EUR DAS David Kramer in Washington,
told us on October 1 that Chisinau and Tiraspol have not
returned to the negotiating table, mainly because Voronin is
only interested in "sabotaging" the talks. Nesterushkin was
not optimistic about Spanish FM and OSCE CiO Moratinos'
planned October 7-8 trip to Chisinau and Tiraspol, in part
because of Voronin's "likely behavior." When pressed, Rogoza
and Nesterushkin acknowledged that Smirnov is a "tough and
stubborn interlocutor." Even though Tiraspol walked away
from the 5 2 negotiations, the MFA insists that Voronin needs
to take the first step to normalize relations with Smirnov
(and with Russia).

Chisinau Must Recognize Tiraspol's "Legitimate Concerns"
-------------- --------------


6. (C) MFA officials insist that Tiraspol does not seek
independence. When we pointed to the holding of numerous
referenda to declare Transnistria's desire for independence
or union with Russia, Rogoza and Nesterushkin argued that
these calls for referenda are only in response to Chisinau's
"unilateralist approach" to Transnistria. Nesterushkin said
that he tried to make clear to DAS Kramer and visiting U.S.
Ambassador to Moldova Kirby that if Chisinau were to address
Tiraspol's "legitimate concerns" and accord it "equal
partnership status" in the negotiation process, Tiraspol
(with Russia's prodding, if necessary) would immediately
return to the negotiating table. Nesterushkin commented that
the USG recently took a positive step in this regard by
allowing Ambassador Kirby to meet with senior Transnistrian
leaders; he suggested the USG take the next "logical" step by
authorizing a meeting with Smirnov.

Condition #1: Economic Independence
--------------


7. (C) MFA officials asserted that Transnistria's economic
independence is of utmost importance to the Smirnov
government. Tiraspol refuses to return to the negotiating
table until Chisinau adheres to the 1997 Memorandum of
Understanding on Tiraspol's independent trade policy and
annuls its 2006 agreement with Kyiv on the blocking of all
exports by Transnistrian companies that have not been
registered by Moldovan authorities. The MFA concedes that
more than 300 Transnistrian companies have already registered
with the Moldovan authorities, but Tiraspol fears that in the
absence of any written agreement Chisinau could decide to
retain all or part of the tax proceeds that it currently
returns to Tiraspol. Russia firmly supports Tiraspol's
position that Transnistria maintain its economic
independence, given that Transnistrian economic activity
allegedly accounts for 30% of Moldova's GDP and that for the
last 15 years Transnistria has not received budgetary support
from Chisinau.

Condition #2: Confederation Structure
--------------


8. (C) Rogoza posited that Chisinau's attempts to apply the
"autonomy model" of Gagauzia Autonomous Territory to
Transnistria -- i.e., a regional president and legislature
in exchange for Chisinau's full administrative and financial
control over the territory -- is unfeasible for Tiraspol.
Nesterushkin added that based on his recent conversations
with senior Transnistrian leaders, anything less than a
genuine confederate system is a non-starter for the Smirnov
government. Strongly suggesting that economic independence
is more important than political independence for the
Transnistrians, Nesterushkin said he does not understand why
the USG and EU are defending Voronin's insistence on a
unitary form of government. Nesterushkin claimed Smirnov
would be willing to return to the 5 2 talks if "any or all
variants of a power sharing scheme" was put back on the
negotiating table.

CFE Parallel Action Plan Secondary to Settlement
-------------- ---


9. (C) Rogoza and Nesterushkin said that the impasse between
Chisinau and Tiraspol has a direct impact on Russia's
acceptance of the U.S.-proposed parallel action plan for
Russia's continued observance of the CFE Treaty and the
Allied Countries' adoption of the Adapted CFE Treaty. Rogoza
said Russia will not "abdicate its responsibility" to the
Transnistrians by agreeing to any troop and munitions

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extraction plan without the consent of Tiraspol. In response
to our observation that Russia, and not Smirnov, has
jurisdiction over Russian forces and assets in Transnistria,
Nesterushkin maintained that Russia fully shares Tiraspol's
concern that in the absence of Russian PKF Chisinau could
decide to take control of Tiraspol by force. Tiraspol needed
a firm guarantee that Chisinau would not take such a step,
and the only acceptable form of assurance would be a
favorable resolution on the status of Transnistria.
Nesterushkin stressed that the GOR would seriously consider
an internationalization of the peacekeeping operation only
after a political settlement, although he doubted an
internationalized PKF would be "as effective" as the Russian
PKF.


10. (C) Moreover, the MFA officials claimed that there was a
good measure of "trickery" involved in the proposed parallel
action plan. Chisinau and the West "fail" to recognize the
1992 agreement signed between Russia and Moldova over the
presence of joint Russian, Transnistrian, Moldovan, and
Ukrainian peacekeeping forces (PKF). Rogoza argued that the
approximately 1,400 PKF and ammunition warehouse protectors
have a legal right to be there, and thus far, Moldova has not
officially pulled out of the 1992 agreement. Nesterushkin
asserted that, despite pressure from the West, Chisinau fears
the withdrawal of Russian PKF without a political settlement
with Tiraspol would undermine the "relative calm" along the
Moldova-Transnistria border.

Comment
--------------


11. (C) As we've reported earlier (reftel),Russia wants to
solve Transnistria and improve ties with Chisinau, but only
on its terms. Russia will keep calling for all sides to
return to the negotiating table, and will pay lip service to
Spanish FM and OSCE CiO Moratinos' October 7-8 trip to
Chisinau and Tiraspol, but will continue to use economic
pressure and pointed one-on-one talks with Voronin to press
Chisinau to take the first step back towards Russia.
Burns