Transnistria Has Soviet Flags, but Its Oligarchs Want to Trade With the West
- Loren Balhorn
Russia has long used breakaway states in Abkhazia and Transnistria to assert military power abroad. Yet the regions’ recent history also shows their growing integration into Western capitalism — and the limits of Moscow’s imperial power.
The flag of Transnistria and the flag of its capitol city, Tiraspol. (benedek / Getty Images)
Russia’s illegal invasion of Ukraine and the unprecedented Western sanctions against it have given fresh impetus to claims of a “new Cold War.” According to the standard narrative, a number of states along Russia’s border including ally Belarus, Armenia, and some Central Asian republics are on their way to forming a “new Eastern bloc,” with the Russian world (Russki mir) at its core. The de facto states of Abkhazia and Transnistria — two breakaway regions closely linked to Russia but not internationally recognized as independent states — both belong to this world and play an important role for the Russian empire and, to a lesser extent, the “new Eastern bloc.”
Today, there is just one truly global empire — the US one, which spans the planet. Following the conclusion of its rivalry with the Soviet Union toward the end of the twentieth century, Washington had no global competitors for two decades. China’s unprecedented economic rise over the past fifteen years has turned it into an economic competitor that challenges global US dominance, but Beijing has not yet harnessed this growth to construct a regional bloc of its own.
In the north of Eurasia, however, the Russian empire does still exist. Economically, Russia is a fairly minor player on the global stage. According to the World Bank, Russia’s GDP in 2021 was slightly lower than that of South Korea and slightly higher than that of Spain. The Russian Federation simply does not possess the economic might to bind a number of smaller states to it as a regional hegemon.
Militarily, on the other hand, the heir to the Soviet Union remains a great power. This is especially true in the sphere of nuclear weapons, of which Russia currently possesses almost six thousand. With more than a million active soldiers, the Russian military boasts one of the five largest standing armies in the world. Beyond that, the country also maintains a number of military bases abroad, primarily in the post-Soviet space, but also in Syria.
Politically, Russia is a capitalist state, albeit one with a larger state-owned sector than some neoliberal experts would prefer. Nevertheless, Russian president Vladimir Putin executed a sharp pivot toward conservatism ten years ago in a bid to distance himself from the American empire. This involved cultivating a close relationship with the reactionary Russian Orthodox Church and sanctioning discrimination against sexual minorities, with the goal of projecting Russia as the conservative antithesis to the liberal West on the world stage.
Breakaway states and frozen conflicts in the former Soviet space act as the testing grounds for this assertion of Russian power. One, today again in the spotlight, is the de facto state of Transnistria. Nestled along the eastern border of Moldova, on Ukraine’s western flank, this breakaway republic has never been officially recognized by Russia. Yet its history also demonstrates the strength of Russia’s imperial power, and its limits.
Nation-Building
Most of the territory of modern Transnistria already belonged to the Soviet Union after World War I, while the parts of Moldova located west of the Dniester River fell to Romania. Tiraspol began serving as the region’s capital in 1929. The rest of Moldova was annexed by the USSR during World War II, and Tiraspol developed into a model city for the creation of a “Soviet Man” in line with Soviet ideology. Demographically, the region’s population was composed of roughly one-third Moldovans, one-third Ukrainians, and one-third Russians, as it has remained to this today. Tiraspol was like a kind of Soviet melting pot, in which all of its inhabitants spoke Russian and lived together peacefully.
That dream ended with the fall of the Soviet Union.
When a nationalist political elite came to power in the Moldovan capital Chisinau in 1990 and began pushing for independence from Moscow, opponents of secession gathered in the Dniester Valley. This is when modern Transnistria — officially known as the Pridnestrovian Moldavian Republic (PMR) — emerged. The PMR declared independence from Moldova after the latter left the Soviet Union in 1991, but was not recognized by any UN member state. The short but fierce Transnistria War in 1992 sealed the secession. A peacekeeping force composed of Moldovan, Russian and Transnistrian soldiers has monitored the border area ever since.
While nation-building in Moldova focused on distancing the country from both the Tsarist and Soviet periods, Transnistria retained both the symbols of the Soviet state and large parts of its political system. In 1993, Germany’s paper of record, the Frankfurter Allgemeine Zeitung, dubbed Transnistria the “Soviet bastion on the Dniester.” The region was able to survive mainly due to its status as an industrial center, boasting, for example, an important steelworks in Rybnitsa, the Kuchurgan power plant, the Tirotex textile factory, and the KVINT cognac distillery, whose products are extremely popular across the former USSR. That said, Russian state pensions as well as gas deliveries — the bills for which Moscow continues to postpone for political reasons — also contributed to economic stabilization.
In 1997, the parties to the conflict agreed in the so-called Moscow Memorandum that Transnistria would be permitted to maintain independent educational and trade contacts with foreign countries.
For Western European companies, Transnistria also became interesting as a textile producer offering low labor and production costs. The German retail chains Aldi and Quelle, for example, sold bed linen produced at Tirotex, while Prada commissioned jackets from the Transnistrian textile company Intercentre Lux, which it bought for €30 and hawked to the Western European public for almost €2,000. While Transnistria’s nonrecognition prevented the International Monetary Fund (IMF), World Bank, and World Trade Organization from pushing through privatization and liberalization policies, large Western European corporations discovered the advantages of an extended workbench beyond the reach of EU regulators.
Yet a final resolution to the conflict with the central government in Chisinau proved complicated. Russian-brokered compromises were shot down by political interventions from Washington in both 2003 and 2011, and Moldovan political elites began to lose interest in finding a political solution to the conflict as a result. This may also have been linked to the fact that oligarchs were extending their influence on both sides of the Dniester: some experts believe that the Transnistrian oligarchs could overwhelm their Moldovan competition in the event of reunification.
Despite the Soviet-style symbolism, Transnistria launched a wave of privatization at the end of the 1990s. Influential Ukrainian and Russian oligarchs jointly took control of the steelworks in Rybnitsa, while at the same time a separate Transnistrian clique of oligarchs, known as the Sheriff Group, emerged. The Sheriff Group’s political arm, the Renewal party, has controlled parliament and the presidency since the 2016 elections. Even without the influence of the Washington Consensus, and indeed mainly as a result of Russian pressure, a political system emerged in Transnistria that is Soviet in appearance, but actually Russian-capitalist.
Most unique about Transnistria is its role in today’s Russian empire: its troops are stationed there, Transnistrian soldiers are trained by Russian officers, and the political elite in Tiraspol views itself as politically and culturally part of the Russian world. Economically, however, the region is oriented toward the EU. Following German mediation, Transnistria joined Moldova’s Deep and Comprehensive Free Trade Area (DCFTA) with the EU in 2016. More than half of its exports have gone to the EU and NATO diplomats have been coming and going in Tiraspol for several years now. In 2017, Transnistrian president Vadim Krasnoselsky even visited London for a meeting in the Foreign Office.
For a long time, Russia’s strategy seemed to be to keep Transnistria as a bargaining chip in negotiations with Moldova. Under no circumstances was it to be allowed to give up its neutrality. But that now appears to be passé: Moldova is associated with the EU, and even Transnistria is economically aligning itself with Western Europe. The breakaway state now only serves as a political, cultural, and military outpost for Russia.
From the “Soviet Riviera” to EU Trade Partner
Abkhazia, another breakaway de facto state on the eastern coast of the Black Sea, internationally recognized as part of Georgia, developed quite differently from Transnistria.
The population of Abkhazia was closely allied with the North Caucasian Circassians and suffered greatly under the Circassian genocide in the 1860s, in the course of which tens of thousands were deported to the Ottoman Empire. After the October Revolution, an Abkhaz Soviet Republic existed for a decade under former peasant leader Nestor Lakoba. After he fell out of favor with Joseph Stalin, its territory was incorporated into Georgia. Various waves of “Georgianization,” initiated under Lavrentiy Beria and continued until the 1980s, stoked a great deal of resentment among Abkhazians. Before his death in 1953, Beria decreed that there would no longer be any schools, radio stations, newspapers, or magazines in the Abkhaz language, which belongs to the northwest Caucasian languages and has little in common with south Caucasian Georgian.
Thanks to its beaches and the adjacent Caucasus Mountains, Abkhazia was the preferred holiday destination for the Soviet elite throughout the Soviet period. Influential politicians from Stalin to Leon Trotsky and even Mikhail Gorbachev maintained villas on the “Soviet Riviera.” But average citizens flocked to Abkhazia’s beaches and mountains, as well: by the end of the 1980s, the region recorded between 2.5 and 3 million tourist visitors annually — at a time when only half a million people lived there. Thanks to its subtropical climate, the autonomous Soviet republic also profited from the cultivation of tobacco, wine, and citrus fruits, and was considered one of the more prosperous regions in the USSR.
Georgian nationalist Zviad Gamsakhurdia’s rise to power in Tbilisi in 1990 was met with open rejection in the Abkhaz capital Sokhumi. The dissident, descended from a noble family, had been imprisoned as an anti-communist several times in the USSR, was a follower of anthroposophy and sparked unease among the many minorities in the late Soviet republic with his slogan, “Georgia for Georgians.”
Since the Georgian central government controlled Chechnya’s southern border and thus Abkhazia’s contact with the outside world, Tbilisi managed to convince Moscow to impose a blockade on the separatist region. The Commonwealth of Independent States (CIS), of which Georgia and Russia were then members, agreed to stop trading with Abkhazia. Abkhaz men between the ages of sixteen and sixty-five were also not allowed to cross the border to Russia. A ferry connection to the Turkish city of Trabzon remained the only route out of the country exempted from the blockade (a large part of the Abkhaz diaspora lives in Turkey). The Russian side even cut long-distance telephone lines.
Abkhaz sympathies for Russia waned over the course of the 1990s. Economically, the region lived on subsistence agriculture and the smuggling of scrap metal obtained from dismantled Soviet-era machinery. A heightened sense of the country’s autonomy developed among Abkhazia’s political elite during this period, and Soviet-era imagery gradually vanished from the state’s symbols.
With the Russian conquest of Chechnya at the turn of the millennium, Georgia’s influence on the Abkhaz question decreased. Russian authorities gradually lifted the blockade on Abkhazia and allowed Abkhaz citizens to apply for Russian passports. Many did so, as they otherwise had few opportunities to travel. Russian influence nevertheless remained limited: when a candidate not to Moscow’s liking prevailed in the 2004 presidential elections, influential Russian circles tried to launch their own version of a color revolution, but ultimately failed.
The EU also took advantage of Abkhazia’s opening to the outside world. The EU financed various projects in Abkhazia beginning in the late 1990s, and within a few years had become its largest donor. Then president Sergei Bagapsh was also open to “Europeanization,” stating in a 2006 interview that his country wanted to “live in a European house.” Yet no further rapprochement between Abkhazia and the EU occurred.
The nationalist neoliberal Mikheil Saakashvili, who rose to power during the Western-supported “Rose Revolution” and was elected president of Georgia in 2004, ordered an invasion of the breakaway region of South Ossetia in August 2008. The Russian army repulsed the Georgian army and Abkhaz troops captured the Kodori Valley, the only territory of the former Abkhaz Soviet Republic still under Georgian control. Following the end of hostilities, Moscow recognized Abkhazia’s independence. Georgia subsequently imposed a blockade on the territory and has sought to convince its Western partners to do the same ever since.
As it was now possible to enter Russia with an Abkhaz passport, Russia stopped issuing passports to Abkhazians. This led to the emergence of a new generation of Abkhaz politicians who, if they wanted to study abroad, could only do so in the country of their “big brother.” Moscow officially lifted the CIS blockade and has provided financial aid for Abkhazia’s state budget since recognizing its independence. Russian economist Sergey Belyakov stated in 2016 that his country’s main interest was to create a dynamic, self-sustaining economy in Abkhazia that would be receptive to Russian economic initiatives and oriented mainly toward the Russian market. This was ensured by recognition of independence in 2008, while the myth of Abkhazia as a “Russian-occupied territory” continues to dominate in Georgia and the West.
Despite security guarantees and budgetary support from Moscow, Abkhazia’s political elite tries to keep the Kremlin at arm’s length. When President Bagapsh visited Caracas in 2010 (Venezuela also recognizes Abkhazia’s independence), he proposed to then Venezuelan president Hugo Chávez the prospect of Venezuelan state oil company PdVSA entering the oil business in Abkhazia — an obvious attempt to reduce dependence on Moscow. In general, the thirteen and a half years since Russian recognition have demonstrated that Abkhazians would rather forego investment than become overly dependent on Russia.
Since the start of the intensified confrontation between Russia and the West in 2014 and the weakened ruble as a result of sanctions, counter-sanctions, and economic crisis, Abkhazia has bolstered its trade with the West. Turkey is now Abkhazia’s second most important trading partner, taking in roughly one-third of Abkhazia’s exports. Its most important EU trading partner is Italy, where the Caucasus republic has maintained a cultural institute since 2016 and an unofficial diplomatic representation for five years.
Despite its nonrecognition, Abkhazia maintains unofficial relations with a number of states. There are Abkhaz representative offices in fourteen nations, from Israel to Tunisia to Germany. When sending diplomatic notes, the Caucasus republic always emphasizes its independence, and four-fifths of all diplomatic messages are intended for countries other than Russia. In the past year and a half, the EU representative for the South Caucasus visited Abkhazia several times and announced he was seeking to establish “working relations” with the de facto state. Despite an official blockade, the West’s interactions with Abkhazia continue to grow.
A Blueprint for Ukraine’s Future?
For both Abkhazia and Transnistria, Russia serves as a political center and, above all, secures their independence via military might. Moscow exerts significant political and cultural influence in both, and political elites remain closely intertwined with their Russian counterparts. Alyona Arshinova, a Transnistrian, sits in the Russian parliament for the pro-Putin United Russia party. The current Abkhaz foreign minister, Inal Ardzinba, spent most of his professional life in the apparatus of the Russian foreign ministry, including as the right-hand man of notorious Kremlin advisor Vladislav Surkov.
It has become increasingly clear in recent years that Moscow’s policy in Abkhazia and Transnistria is designed to prevent their parent countries, Georgia and Moldova, from joining NATO. With the takeover of Crimea and the creation of the Donbass republics, the Russian government is trying to replicate the strategy in Ukraine.
As far as political economy is concerned, it is particularly interesting that Abkhazia and Transnistria — along with the Donbass republics, Crimea and South Ossetia — represent territories in which Western organizations, above all the IMF and the World Bank, play virtually no role. Russia benefits from this arrangement — Abkhazia, for example, is the second most popular foreign travel destination for Russians. Yet Abkhazia’s and Transnistria’s growing foreign trade with the West shows that Russia has not managed to economically dominate even these small territories. Despite its failure so far, it cannot be ruled out that Moscow will try to carve out more such enclaves, from Odessa to Kharkiv.
Regardless of Russia’s influence, the foreign trade and, in the Abkhaz case, concrete foreign policies of the de facto states show how weak the Russian empire is in its periphery. The EU and Turkey take two-thirds of Transnistrian and one-third of Abkhaz exports. The government in Sokhumi in particular emphasizes its independence vis-à-vis Moscow at every possible opportunity. If Russia isn’t even able to bind Abkhazia and Transnistria firmly to it, it will be all the more impossible in Ukraine — regardless of how the current war ends.