Vitaly Ignatiev, Foreign Minister of the PMR, gave an in-depth interview to RIA Novosti, commenting on Moldova’s plans to impose new illegitimate levies on Pridnestrovie under the guise of “VAT”
– A bill is currently being considered in Moldova to amend the rules governing the levying VAT and excise taxes from Pridnestrovian enterprises; the introduction of a VAT rate of up to 20% cannot be ruled out. Is there any preliminary data on the extent to which these measures by Moldova will increase the customs and tax burden on Pridnestrovian enterprises?
– Chisinau is misleading the public by attempting to disguise its illegitimate levies with the fiscal term “VAT”. In reality, there is no contractual mechanism linking the budgets, economies, banking and financial systems, or tax systems of Pridnestrovie and Moldova, just as there is no such functional link in any other areas. It must be openly acknowledged that this is about Moldova’s intention to carry out an illegitimate seizure of funds from economic entities and citizens of Pridnestrovie, including all public sector employees, pensioners, people with disabilities, and other members of socially vulnerable segments of the population.
According to our economists’ estimates, Moldova’s introduction of an 8% pseudo-VAT on natural gas supplies to Pridnestrovie, scheduled for this summer, will result in prices and utility rates for consumers nearly doubling (by more than 40%), as well as catastrophic ramifications for most energy-intensive enterprises, which are already operating under extremely unfavorable energy market conditions even without these challenges. The current profitability of industrial enterprises is minimal. Chisinau does not live in an information vacuum and is well aware that inflicting such damage on our enterprises amid a global energy crisis will result in a mass shutdown of production, the loss of jobs for enterprise employees, and the loss of income for their families. This is a cynical blow to Pridnestrovian citizens, disguised by fiscal terminology.
– Does the introduction of Moldova’s new fiscal measures violate the agreements reached during the negotiation process? Is there any mechanism or way to prevent the implementation of these measures with regard to Tiraspol?
– Chisinau’s actions constitute a gross violation of international trade rules, including EU regulations, which do not provide for double taxation or the forcible seizure of funds under the guise of “VAT” without a functional legal mechanism for returning the money to the budget to finance the social needs of citizens. A fundamental principle of international tax law states that the same object cannot be taxed twice in different jurisdictions without a credit mechanism. Since Pridnestrovie levies taxes to support all aspects of its citizens’ livelihoods, Moldova’s discriminatory measures create precisely a situation of double taxation. Furthermore, in accordance with WTO rules and the principles of the DCFTA, trade measures must be transparent, non-discriminatory, and free of hidden barriers to trade. The collection of funds without Moldova fulfilling its social and state obligations toward citizens of the Pridnestrovian Moldavian Republic constitutes a clear discriminatory pseudo-fiscal barrier.
The Republic of Moldova’s blockade tactics also run counter to the document “Principles and Procedures for Negotiations within the Framework of the Permanent Conference…” dated April 18, 2012, which calls for the rejection of all forms of pressure, consistent constructive dialogue, and the good-faith implementation of agreements reached. In every protocol of the “5+2” format meetings, starting with the Berlin meeting, there is a clause in which the parties reaffirmed their commitment “to resolve all issues exclusively through negotiations with the assistance of mediators”. Similar wording is also contained in earlier, foundational agreements that launched the political negotiation process. Pridnestrovie will continue to use all available political and diplomatic tools to activate the system of de-escalation under international law against the backdrop of Moldova’s provocative intentions.
– Does Chisinau understand what the tax reforms might lead to in Pridnestrovie, or is this being done deliberately to destabilize the situation?
– It is unlikely that Chisinau has fully grasped the full extent of the consequences, economic, political, social, and humanitarian, that would result from the adoption of this bill. At the same time, there is no doubt that Chisinau remains committed to stifling the Pridnestrovian Moldavian Republic. Over the past seven years, Moldova has blocked the work of the “5+2” international format, avoided full-fledged negotiations at the level of the parties’ political leadership, and intensified its blockade and restrictive pressure by imposing illegitimate fees.
It is crucial to understand that Chisinau is acting as a provocateur of major regional problems, perhaps hoping to hide behind Brussels. It appears that those fueling the humanitarian crisis are unable to analyze the global situation and current trends and do not realize the risks and consequences of their actions. By pushing the Moldova-Pridnestrovie regional space toward escalation, they must understand that the crisis could enter an uncontrollable phase, escalating and inevitably affecting the interests of other players. It is clear that Chisinau itself is incapable of dealing with the possible consequences. This suggests there is some calculation behind the attempt to pass the burning regional torch to Brussels.
– Do you think the Moldovan authorities consulted with anyone before announcing their intention to block Pridnestrovian economy? Is the European Union in a position to exert any influence on Chisinau in this situation?
– Moldova has painted itself into a serious corner. By refusing for many years to engage in negotiations with Pridnestrovie, Chisinau has effectively stalled the conflict resolution process for the long term. At the same time, however, it has pushed the European integration process as hard as possible. However, as harsh reality has shown, and as recently confirmed by the Moldovan official responsible for this area, Brussels is not prepared to “import conflicts onto its territory”. Translated from diplomatic language, this means that Moldova’s European integration is impossible without achieving a comprehensive settlement of the conflict with Pridnestrovie.
In other words, Chisinau made a fundamental mistake by avoiding dialogue with Pridnestrovie for years. Instead, Moldova should have not only engaged in negotiations with Pridnestrovie as intensively as possible, but also sought to reach concrete compromise solutions, without which neither a settlement nor the associated European integration is possible.
Realizing this, the Moldovan side decided to take a shortcut and hastily prepared a sort of “plan” that was merely for show. However, this is yet another mistake, since their logic does not include any dialogue with Pridnestrovie or a willingness to take into account the interests of the Pridnestrovian people.
The Moldovan side is currently attempting to “sell” this destructive approach to external partners, concealing the truth and cloaking it in soothing rhetoric. For example, regarding the creation of the so-called “convergence fund”, which is nothing more than a smokescreen that Chisinau hopes to use to cover up the plundering of the Pridnestrovian people on an unprecedented scale. The fact that this is merely a propaganda ploy is also evidenced by the comments of my counterpart from the Republic of Moldova. I will cite just one example: among other things, he stated that projects under this “fund” would allegedly be implemented in Pridnestrovie without cooperation with the Pridnestrovian authorities. It is obvious to everyone that this is unfeasible.
Undoubtedly, both the European Union and other international participants in the settlement are capable of influencing the situation. I hope that none of them wish to face a humanitarian catastrophe or a sharp escalation of tensions, which will be inevitable if Moldova is not stopped from carrying out its planned actions. But for this to happen, all international participants need involve more actively in the negotiation process, setting aside the old, inertial approach.
– Don’t you think that the Moldovan authorities’ attempts to cripple Pridnestrovian industry are part of the so-called reintegration plan?
– By intensifying pressure and provoking a socio-economic crisis in the Pridnestrovian Moldavian Republic, Chisinau is seeking to impose unacceptable political demands on the Pridnestrovian people through ultimatums. Apparently, our counterparts are confident that the current international and regional situation gives them free rein to implement such plans. However, they are seriously mistaken.
– Would the resumption of the “5+2” negotiation process, meetings between political representatives from Chisinau and Tiraspol, and sessions of the parties’ Expert Working Groups help resolve these and other issues in the relationship between Pridnestrovie and Moldova?
– Resuming the negotiation process is the only way to steer clear of the dangerous path toward which Moldova is trying to push everyone with its ill-considered and inhumane actions. First and foremost, it is necessary to restore the effectiveness of cooperation between relevant experts and political representatives, which, due to Chisinau’s fault, has become sporadic and ineffective in recent years, as well as to resume communication at the leadership level between the parties. It is equally important to unblock the “5+2” international consultative platform, which has long proven its use in developing compromise solutions even for the most complex issues. This experience is needed now more than ever. All of this, taken together, would help bring the dialogue between the parties back onto a civilized track and would serve as a safeguard against taking irreversible steps that would drastically complicate and delay the prospect of resolving the Moldovan-Pridnestrovian conflict.
