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Transnistrian “House of Cards”

With the presidential election planned for December 11th, the political situation in Transnistria is becoming increasingly tense. Holding the majority of seats in the Supreme Council (the local parliament), the opposition, which is closely connected to the main economic force in the region, a corporation named “Sheriff”, has focused its efforts on criticising current president Yevgeny Shevchuk. The opposition has accused the unrecognised republic’s leader of misappropriation of 100 million USD from public funds and also of high treason. In his defence, Shevchuk has portrayed the opposition as a tool in the hands of the oligarchs and looked to the Kremlin for support. However, it seems unlikely that Russia will back Shevchuk, who has been widely unpopular. The disastrous economic situation of the republic, largely due to his policies, has not worked in his favour. Meanwhile, it seems that the opposition has already chosen his successor.

June 7, 2016 - Kamil Całus - Articles and Commentary

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Image by Clay Gilliland

Shevchuk vs. Sheriff

An open conflict between the current presidential administration in Transnistria and the Supreme Council, although increasingly tense, is nothing new and constitutes a political expression of the rivalry between Yevgeny Shevchuk and Sheriff, which has existed since at least 2009. The enterprise, thanks to the help of the friendly administration of the republic’s founder and first president, Igor Smirnov, has within the past two decades managed to take control over the majority of profitable sectors of the local economy. The company’s political arm has been the Obnovlene party (Renewal), which since 2005 has been filling most posts in the Transnistrian parliament.

During the last decade, Shevchuk had a strong position in the Obnovlene Party’s structures and was one of the most important people within Sheriff. The fact that in 2006 he was chosen to be the head of the corporate-controlled party and speaker of the Supreme Council testifies to the importance of his position back then. In 2009, the future president fell into an open conflict with Smirnov, which was a direct result of the attempt made to reduce the parliament’s competencies by the latter. This, in consequence, made Shevchuk resign from his role as the head of the Council. Not long afterwards, as a result of the conflict with his own party, Shevchuk also lost the function of its chairman. Ever since, as an independent politician, Shevchuk has become an open adversary of Sheriff. When at the end of 2011 he unexpectedly won a presidential election against Igor Smirnov and Obnovlene’s candidate, Anatol Kaminsky, he almost immediately took a number of actions aimed to weaken and later subjugate the Sheriff holding. It was meant to become the basis for his political position on the one hand and a source of enormous material gains on the other. Against such a background, Obnovlene, representing Sheriff’s interests on a political level, has naturally taken sides in the conflict.

Shrinking ratings and the first lost election

Despite Shevchuk’s initial successes in the struggle for influence against the Sheriff camp, his positon began to shake over the past couple of years. It was mainly the result of the region’s worsening financial situation, which was the consequence of both the administration’s bad economic policy and a number of external factors. The conflict in eastern Ukraine, the banking crisis in Moldova and a rapidly falling Russian rouble, Moldovan leu and Ukrainian hryvnia led to the collapse of Transnistrian export, the fall of crucial remittances to the local economy from Russia and a significant decrease in internal consumption.

Maintaining the Transnistrian rouble at an artificially high rate, which affected the competitiveness of export products, reduced local trade and encouraged people to shop in much cheaper Ukraine or Moldova,  did not help the economy. Finally, in 2015, the state of public finances became so severe that authorities were forced to impose temporary cuts in pensions and public sector salaries, in both cases by about 10-30 per cent.

The worse the state of the economy became, the stronger the attacks launched by the opposition upon the presidential camp were. In the second half of 2015, the political conflict significantly intensified, just prior to the upcoming Supreme Council election. During the election campaign, Shevchuk explained the bad economic situation not only with external factors and the “blockade” of Transnistrian products imposed by Moldova and Ukraine, but also with internal actors’ actions. He directly accused Sheriff of attempting to build an oligarchic system in Transnistria. He also accused the company of moving significant sums of money from the republic to tax havens, which was meant to directly affect the state budget. In response to these accusations, Obnovlene’s candidates ceded all the responsibility for economic problems directly to Shevchuk, accusing him, among other things, of inefficiency and incompetence.

Despite the anti-Sheriff campaign, Shevchuk did not manage to convince those voters who were deeply disappointed with worsening living conditions. In the November 2015 parliamentary election, 33 out of 43 seats were won by candidates formally belonging to Obnovlene or who had connections with the party. It meant that the party not only kept control over the Supreme Court, but also – more importantly – that it strengthened its grip by receiving a constitutional majority of votes.

Treason, the ”Transnistrian billion” and a new candidate

Empowered by its victory and increased influence, the opposition could have tightened the fight against Shevchuk and de facto begun the campaign before the presidential election planned for the end of 2016. Thanks to its full control over the parliament, Obnovelene started taking concrete steps aimed at constraining the president’s prerogatives and increasing the Council’s competences. The opposition has also started formulating very serious accusations against Shevchuk. On April 11th, the leader of Obnovlene, Galina Antyufeyeva, speaking from the parliament’s tribune, accused Shevchuk that during his time in office he created a net of intermediary companies, through which he siphoned around 100 million USD from public enterprises – equivalent of more or less 1 billion Transnistrian roubles. Apart from serious misappropriation of funds, Antyufeyeva also accused Shevchuk of making too far-reaching concessions towards Chișinău, which she directly referred to as “treason”. The appearances of the anti-Shevchuk politicians have been additionally supported by the Sheriff-owned media group, taking the lead in a wide-scale campaign which has discredited Shevchuk.  

At the same time, the opposition began to prepare its candidate for the position of ”president”. Although Obnovlene has not formally nominated anyone yet, it is almost certain that the current speaker of the Supreme Council, Vadim Krasnosielski, will seek the function of the head of state as a representative of the party. The reason to believe this claim is valid is the creation of a special group of advisers whose aim is to support Krasnosielski. The group has been headed by Igor Smirnov, and co-formed, along with other politicians, by two of his former ministers of foreign affairs and members of his administration: Valery Lickay and Vladimir Jastrebchak. Igor Smirnov and his cabinet’s members have been associated with a relative stability characteristic of the first president’s time in office. Smirnov himself, although he lost the last election, remains a widely respected person, and in the memory of many he still functions as the “father of the republic.”

Another reason to believe in Krasnosielski’s candidature is the fact that the functions of Obnovlene’s leader and the speaker of parliament have been separated, although they have traditionally been performed by one person. Such a step enabled the removal of Krasnosielski (the speaker) from direct political confrontation, which is currently led in his name by the party leader, Galina Antyufeyeva. The latest accusations against Shevchuk are a case in point. Having planned the election campaign, Obnovlene probably wanted to protect itself from the mistake it made in 2011. At the time, Anatoly Kaminsky, the party candidate, who simultaneously performed the function of the speaker and leader of Obnovlene, got involved in a dirty campaign, which was often reduced to the exchange of compromising materials and a fight against Igor Smirnov, which eventually hurt his image and enabled the victory of the third candidate, Shevchuk.  

Yevgeny Shevchuk is trying to defend himself against his political opponents’ attacks, but his options are relatively limited. Moreover, all his recent actions have been rather reactive and defensive. The current leader of Transnistria reacts to accusations and gives explanations; however, he is not able to begin a counteroffensive. Shevchuk’s recent attempts to deny accusations of cooperating with Chișinău have been rather desperate. He accused Moldova of attempting to “conduct a dialogue with the language of threats and blackmail” and placed the Transnistrian anti-aircraft units in combat positions in a response to cartographic flights conducted above the republic’s territory at Chișinău’s request.

Big brother is watching… and waiting

Moscow has so far failed to actively engage in Shevchuk’s or Krasnosielski’s support. It can be observed on a diplomatic level. During their visits to Moscow, both politicians have been equally received by Russia’s Vice-Prime Minister and a special representative of the President for Transnistria, Dimitry Rogozin, or Grigory Karasin, the vice-minister of foreign affairs. The pro-Kremlin media has also refrained from attacking the Transnistrian leader, although it did engage in the local political campaign back in 2011. At the time, Russian journalists openly targeted Igor Smirnov, accusing his son of misappropriating vast sums of money from Russian aid to Transnistria, and promoted Kaminski’s candidature. Now, neither the Kremlin nor the Russian media have commented on the formerly mentioned accusations directed against Shevchuk by Antyufeyeva.

Moscow’s lack of support for either candidate does not mean, however, that Russia is not interested in the developments in the region. In light of much more serious problems on the international arena, the purpose of the Kremlin is currently to maintain stability in the unrecognised republic and prevent any possible escalation of the political conflict. Dimitry Rogozin spoke about it directly on April 14th during a meeting with Shevchuk in Moscow, and expressed the hope that the upcoming election campaign will be conducted in a “proper and lawful way”. He also directly called the regional political elites to “make every effort to maintain internal stability”. It seems that from the Kremlin’s perspective the return to talks (frozen for over two years) between Chișinău and Tiraspol would be the best case scenario. In the short-term, it could improve the region’s economic situation, which in return would lower the costs bared by Russia to help maintain Transnistria.  

The last speech?

On Friday, May 20th, Yevgeny Shevchuk gave the traditional annual address to the nation. It was commonly assumed that he would use this occasion to criticise the opposition in the form of pre-election agitation. This, however, did not happen. The relatively short speech was very balanced and – in comparison with his previous ones – soft. As a matter of fact, the current leader highlighted his administration’s successes and pointed to the threats resulting from the influence of business on politics, which was a reference to the Sheriff-controlled opposition. Nevertheless his words sounded more like a farewell summary of his political career than a charismatic speech to mobilise voters. The impression was enhanced by Shevchuk’s expression of gratitude to the secret services and state institutions at the end of the speech.

It seems that Shevchuk accepted the fact that he will not manage to win another presidential term. Although there are no publicly available pre-election polls in Transnistria, there are reasons to argue that the support for the current leader is very low. The November parliamentary elections clearly proved this point. In addition, the evidence coming from private discussions with the local population also seem to support this claim. The only hope for Shevchuk would be unequivocal support from Moscow expressed both at a political and a media level. It is no secret that Shevchuk’s visits to Moscow in the first months of 2015 were an attempt to win the Kremlin’s support. Nevertheless, there is no reason to believe that Moscow would promote an unpopular politician who was not supported by it in the previous election.

The final, almost symbolic, blow to the current president’s image was his acceptance at the beginning of May of a proposal from a Sheriff-owned bank to support the budget with a low-interest loan for 30 million USD. Shevchuk tried hard to avoid such a scenario, but given Transnistria’s empty currency reserves and the lack of additional support from Moscow, he had to give up. It was doubly painful for him. Firstly, thanks to the loan, Sheriff had the opportunity to present itself as a philanthropist, selflessly helping the republic in need and rising above the conflict with the authorities. Secondly, accepting support has reduced criticism against Sheriff, as it is impossible to criticise an enterprise which offers a helping hand to a republic in need.

There will be no revolution

Although the fear of a possible exacerbation of the situation due to pre-election competition exists, it is unlikely. Shevchuk realises that every attempt to forcefully neutralise the opposition would not be welcomed by Moscow. This is probably the reason why his Friday speech took such a soft tone. Moreover, in light of very likely defeat, the head of Transnistria cannot be sure of how loyal his administration apparatus and the secret services would prove to be. It can be observed that an increasing number of state employees facing uncertain electoral results assume a neutral position or actively seek contact with Obnovlene’s environment. It should not be ruled out that Shevchuk, who formally has not yet announced his candidature, will decide not to run in the election.

The victory of Obnovlene’s candidate in the presidential election seems to be expected. The concentration of all the power in the hands of people connected with the holding will inevitably lead to the political stabilisation in the region. It will probably positively influence the economic situation of the republic, as there is no doubt that Sheriff – at least in the initial period of Krasnosielski’s time in office – will seek to improve the budgetary situation of Transnistria. Almost certainly its relations with Chișinău will improve as well. The Sheriff camp is clearly not interested in Transnistria’s reunification with Moldova, but will undoubtedly be keen to enhance cooperation with the latter in order to receive an easier access to EU markets for business members of the corporation.

Kamil Całus is an analyst with the Warsaw based Centre for Eastern Studies.

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