TRANSNISTRIAN BUDGET BATTLE

UNCLAS CHISINAU 000190

SIPDIS

SENSITIVE

SIPDIS

STATE FOR EUR/UMB

E.O. 12958: N/A
TAGS: ECON PBTS PGOV PREL MD
SUBJECT: TRANSNISTRIAN BUDGET BATTLE

REF: CHISINAU 48

SENSITIVE BUT UNCLASSIFIED; PLEASE PROTECT ACCORDINGLY


1. (SBU) SUMMARY: On February 20, the Transnistrian (TN) Supreme
Soviet (parliament) voted to override the Executive's partial veto
of the 2008 budget law (reftel). The Supreme Soviet stood firm on
measures which limit the Executive, forcing the transfer of revenues
generated by ministries and executive agencies to the state budget
and taking partial control of state-owned media. Given TN economic
difficulties, the two sides agreed on a special business tax to
support the state pension fund. END SUMMARY.

2008 BUDGET BATTLE: ROUND TWO
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2. (SBU) On December 30, TN President Smirnov signed the 2008 budget
law, vetoing 21 articles, mainly those that limited funding for the
Executive. The budget law was published on December 31 with
asterisks noting the vetoed items. According to media reports,
Smirnov opposed the Supreme Soviet's measures which reduced the
processing time for customs clearances, prohibited staff increases
for certain ministries and executive agencies, and required the
transfer of all fees collected by ministries and executive agencies
to the state budget, instead of remaining under the Executive's
control. The Supreme Soviet also insisted that TN state-owned
broadcasters could not be funded by the state budget unless control
of TN television and radio was shared by the Executive and Supreme
Soviet.


3. (SBU) Following the end-of-year recess, appropriate committees in
the Supreme Soviet examined the Executive's vetoes. According to
media reports, the Supreme Soviet attempted to work with the
Executive, requesting proposals to amend the contentious articles in
the budget. However, the Executive continued to argue that the
Supreme Soviet's actions were unconstitutional. The two sides did
agree on a special business tax to support the state pension fund.
The Supreme Soviet hopes to generate USD 20 million in 2008 to
bolster the pension fund.


4. (SBU) On February 20, the Supreme Soviet voted to override 16 of
the 21 articles vetoed by Smirnov, mainly those that limit the
Executive's authority. However, Smirnov was successful in
maintaining his veto of the Supreme Soviet's populist provision
establishing a "voter's request fund." This measure, an Obnovlenie
campaign promise, would have created a slush fund for parliament to
provide direct social assistance based on citizens' petitions.


5. (SBU) COMMENT: Conceding on minor issues, Speaker Shevchuk and
the Supreme Soviet stood firm on increasing control over the
Executive, limiting the (financial) power of certain law-enforcement
agencies (supervised by his opponents),and gaining access to
state-owned media outlets. END COMMENT.

KIRBY