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| Dionis Cenuşa | |
On September 7, 2016, the Transnistrian leader Yevgheny Shevchuk issued a decree on the implementation of the results of the republican referendum of September 17, 2006, which initiates a formal process of transposing Russia’s legislation to the Transnistrian region. In the context of the election campaign prior to the so-called ‘presidential elections’ set for December 11, 2016, Shevchuk resorted to the political instruments and imagination that he still possesses so as to strengthen his very weak positions. A year ago, in the elections to choose the separatist region’s legislative body (Supreme Soviet), of November 2015, Shevchuk’s company lost to the party “Obnovlenie” (“Renewal”), which won 31 of the 43 seats. Also, the recent polls show that only 11% of the voters would support Shevchuk, as opposed to 24% of those who would vote for the opposition’s representative, the head of the region’s legislative body Vadim Krasnoselskii.
Under the decree, a state commission will be set up to work out a plan of concrete actions and objectives, with implementation deadlines, for adopting the Russian legislation from different areas (economic, customs, fiscal, social and other sectors). The plan of action is to be finished by the start of November 2016 (about one month of the so-called presidential elections of the region). The decree implies the comprehensive transposition of the Russian legislation, renouncing thus the selective and accidental borrowing of Russian laws. The decree also provides that any legal act that will be adopted by the Supreme Soviet in the future should be annulled if it runs counter to the Russian legislation.
Even if Shevchuk’s decree accelerates the legislative integration into Russia, this could create preconditions for the start of particular reforms in areas that were later considered sensitive, such as fiscal policy. The transposition of the Russian model of legislation implies, among others, the introduction of the VAT that varies between 10 and 18% in Russia, but is inexistent in the separatist region. This would enable to compensate for particular losses that the region would sustain if it renounces the import duties on products made in the European Union, as part of the agreement on the partial implementation of the DCFTA in the region. The technical agreement on the DCFTA was agreed by the EU, Chisinau and the Transnistrian region in the course of 2015, but this wasn’t made public. The main conditions of the accord include the elimination of tariff barriers on the way to EU exports.
Shevchuk’s decree – why?
The harmonization of the region’s legislation with Russia’s, proposed by Shevchuk’s decree, has a number of undertones. First of all, Shevchuk wants to convince the voters that the process of integrating into Russia depends on his remaining in power.
Secondly, by this move Shevchuk wants to exert additional pressure on Chisinau. This would force the latter to make particular concessions of those discussed in Berlin in June 2016 (concerning the recognition of diplomas of education, registration of Transnistrian units of transport, etc.) so as to discourage Tiraspol from taking measures to integrate the Transnistrian legislation with Russia’s. Evidently, Shevchuk’s decree repeatedly shows that Tiraspol ignores the negotiation process and the intentions to identify solutions for reunifying the country.
Least, but not last, Shevchuk’s decree could create conditions for pushing painful reforms, such as the adjustment of the region’s fiscal policies to the Russian ones. This would also raise the subject of introduction of VAT that has been opposed so far owing to the risks to which the consumers (higher prices) and business entities (decline in internal consumption, at least in the short term) will be exposed as a result. However, in order to stabilize the region’s economy that has been in recession, the transposed Russian legislation can be used as a source of ideas for urgent structural reforms. For now, no one in Tiraspol has commented on this possibility, but such a scenario is imminent if the harmonization with the Russian legislation really takes place. Moreover, some of the reforms will become acceptable for the voters in the region, if these lead to integration into Russia.
Shevchuk’s decree – advantages and risks for DCFTA
The acceleration of the pace of trans positing the Russian legislation to the region creates a conflict framework for the European legislation, which is to be implemented partially in the process of applying the DCFTA in Transnistria. Consequently, the only possibility is to ‘insularly’ apply particular European directives and only in the case of particular exporters from the region (Tirotex, the Metallurgical Plant). Moreover, it won’t be possible to implement important aspects from the directives concerning the customs procedures, quality and safety standards or environmental standards given the presence of the Russian legislation.
At the same time, the legislative integration with Russia will impose, among others, changes (reforms) related to the fiscal policies and this can justify the necessity of introducing the VAT. Evidently, when the VAT is introduced, the discussions about the implementation of the DCTFA all over Moldova, including in the Transnistrian region, will gain more substance as the VAT makes the elimination of tariff barriers to the exports from the EU possible.
Ultimately, the application of the DCFTA in the region will depend on the interests of the Russian businesses in Transnistria and on how these will demand that Moscow should accept particular elements of the DCFTA. Anyway, even if the tariff barriers are eliminated, the Transnistrian administration will have non-tariff instruments available (technical regulations), deriving from the Russian legislation and the legislation of the Economic Eurasian Union.
Instead of conclusion...
In general, the initiative to harmonize the region’s legislation with the Russian one is used by Yevgheny Shevchuk to show more loyalty to Russia. But this anyway risks to be ‘removed’ by the parry “Obnovlenie”, which holds enough seats (constitutional majority) in the so-called Supreme Soviet. Consequently, the political fate of Shevchuk depends on Moscow’s calculations and if this wants or not the whole political power in the region to be controlled by the giant company Sheriff, through the agency of “Obnovlenie”.
Surely, the transposition of the Russian legislation to the region reduces the chances of implementing the DCFTA because this will maintain and deepen the conflict areas between the provisions of the European legislation and those of the Russian one. At the same time, the possibility of reforming the fiscal policies in the region, on the pretext of coming closer to Russia at legislative level, would change the quality of the attitude to import duties.
The participation by Transnistrian exporters in the DCFTA implies the elimination of the tariff barriers as a first condition, but this is not the only condition. In other words, besides ensuring non-discriminatory access for the EU goods, the Transnistrian administration will also have to fulfill other mandatory technical conditions to be able to supply goods to Europe based on a liberalized regime.
The harmonization of the Transnistrian region’s legislation with the Russian one makes the extension of the implementation of the European legislation in the region (even partial) less possible. This initiative leads to the delimitation of a normative-geopolitical border on the Nistru, between the left pro-Eurasian side and the right side that is actively transposing the European legislation (Community acquis) through the Association Agreement with the EU.
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