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Reference ID Created Released Classification Origin
06MOSCOW4198 2006-04-20 11:46 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #4198/01 1101146
P 201146Z APR 06

C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 004198 
E.O. 12958: DECL: 04/20/2016 
Classified By: Minister Counselor for Political Affairs Kirk Augustine. 
  Reason 1.4 (b, d) 
1. (C) Summary:  "3 2" talks on Transnistria took place in 
Moscow April 19 including the mediators -- Russia, Ukraine 
and the OSCE -- and observers -- U.S. and EU.  Russia tried 
to focus discussion on the customs regime between Moldova and 
Ukraine.  All other sides pushed back, hardest of all 
Ukraine, whose negotiator noted sharply that the new regime 
"has been decided."  Russia introduced a draft protocol to 
roll back the new customs regime; the others agreed to study 
it.  Ukraine proposed that the next negotiating round focus 
on the OSCE's draft delimitation of competencies between 
Chisinau and Tiraspol as well as on creating monitoring 
groups on militarization and an evaluation mission on the 
feasibility of democratic elections in Transnistria.   The 
group agreed to include the delimitation paper in the 
negotiating agenda.  An unofficial translation of the Russian 
draft protocol is in para 13.  End summary. 
2. (C) Russia (Nesterushkin) led off by complaining about the 
effects of the Moldovan-Ukrainian customs agreement.  In a 
departure from previous Russian statements, he focused not on 
the "humanitarian crisis" but on the budgetary effects of 
depriving the Transnistrian authorities of customs revenues. 
The consequent inability of Transnistria to provide social 
services to its people was causing "radicalization" and cast 
the future of the peace process into doubt. 
3. (C) OSCE (Hill) replied that the customs issue had a long 
and complex history.  Different sources are giving 
contradictory information about what is now happening on the 
ground.  Hill ascribed this to an attempt by Transnistrian 
leader Smirnov to put pressure on Russia and Ukraine.  Hill 
noted that the Moldovan steps needed to be understood in the 
context of the last five years of negotiating history, which 
have convinced Moldova that Transnistria is not interested in 
creating a single economic space as previously agreed. 
Convincing Moldova to take steps to attract the 
Transnistrians back to the peace process meant first 
convincing Moldova that there was a peace process to return 
to.  "This is a chicken-and-egg problem," he said.  Hill 
believed that the registration process under the new regime 
was not working with perfect transparency, and could be 
4. (C) Ukraine (Veselovskiy) agreed that the situation is 
abnormal.  He blamed this on Transnistria, whose 
"unconstructive position" has "gone beyond the bounds of the 
reasonable."  Veselovskiy agreed that some details of the 
functioning of the new customs regime could be improved.  He 
noted that President Yushchenko had proposed a new initiative 
of Transnistria one year ago, and its goals remain 
unrealized.  Veselovskiy proposed the creation of expert 
monitoring groups, one to look at Transnistria's military 
industry and the other to evaluate weaponry.  He also 
proposed moving forward on an international evaluation by 
OSCE of the feasibility of democratic elections and on the 
new OSCE paper delimiting responsibilities between Chisinau 
and Tiraspol. 
5. (C) EU (Jacobovits) suggested a new round of negotiations 
in May.  There had been some more positive elements to Hill's 
last interaction with Transnistrian negotiator Litskai, and 
those needed follow-up.  While the simple solution to the 
customs issue would be for the Transnistrians to allow 
exports again, the next round needed to include agenda items 
each party wanted (such as customs) even if the other did 
6. (C) U.S. (Kramer) noted that the G-8 political directors 
had requested a more detailed discussion of regional issues 
such as Moldova at their next meeting on June 7, and they 
would be formally included in the agenda of the June 29 
Ministerial.  Undersecretary Burns had called for less 
assigning of blame and more effort to get the sides working 
7. (C) Nesterushkin insisted once again that there can be no 
discussion of politics until there is a unified customs 
space, to which Veselovskiy retorted that the form of 
required documentation has been decided.  He suggested 
sending an OSCE mission -- Ukrainian expertise would be at 
its disposal -- to Moldova and Transnistria to work on 
smoothing out issues related to obtaining the new 
documentation.  Hill agreed that if this were considered part 
of the negotiating process, the OSCE can undertake such a 
mission.  The principles have already been decided; the 
question is how Transnistrian enterprises can register. 
8. (C) Nesterushkin insisted yet again that there will be no 
negotiations until the resolution of the "current crisis," to 
MOSCOW 00004198  002 OF 004 
which Kramer replied that the majority opinion within the G-8 
was that Tr
ansnistria had created the crisis itself. 
Nesterushkin sarcastically asked whether "Japan and Canada" 
were now going to be invited in as observers.  At this point 
Nesterushkin distributed a Russian draft protocol on customs. 
 He said the basic deal was that Transnistrian companies 
would register in Moldova, and Transnistria will keep all the 
revenues (but see analysis, para 11, and unofficial 
translation, para 13). 
9. (C) All agreed they would study the Russian draft. 
Veselovskiy promised Hill Ukrainian legal analysis within two 
days.  Hill said this was a two-stage process:  the 
negotiators had to reach consensus before going on to seek 
agreement of the parties on this complex issue.  Hill 
switched topics to the delimitation paper, saying that 
Moldovan negotiator Sova confirmed to him three times 
Moldova's willingness to discuss status and democratization 
issues.  All agreed to support inclusion of the paper in the 
agenda for upcoming negotiating rounds, though Nesterushkin 
expressed the reservation that since the new document is an 
abridgement of a February, 2004 document, the negotiators 
would have to disavow the earlier document to proceed on to 
this one. 
10. (C) The meeting concluded by setting the next negotiating 
round for the week of May 17 and agreeing that Hill would 
signal the group's determination to the Parties when he meets 
with COE ambassadors in Strasbourg next week. 
11.  (C)  Highlights of the Russian protocol are: 
-- By making itself a signatory (along with Ukraine, Moldova 
and Transnistria), Russia is implicitly claiming a say in 
affairs on the Ukrainian-Moldovan border. 
-- The third and fourth preambular paragraphs -- on the 
"unacceptability" of economic pressure and the 
"impermissibility" of administrative barriers to trade hint 
at a Russian offer of quid pro quo to the Moldovans:  this 
protocol in exchange for a repeal of the ban on imports of 
Moldovan wine. 
-- According to Para 2, the form of any customs stamps must 
be agreed by the Transnistrians (who can therefore refuse all 
Moldovan stamps without contradicting the protocol). 
Transnistrian freedom from tax liability is not dependent 
upon further agreement with Moldova. 
-- Both Parties must make changes in their internal 
legislation; failure to do so does not prevent the Protocol 
from entering into force; rather, it gives Russia and Ukraine 
full rights to do whatever they deem necessary to ensure free 
movement of goods into and out of Transnistria. 
-- While waiting for the Protocol to enter into force, the 
new customs regime is to be rolled back, creating a new 
base-line favorable to Transnistria. 
12. (C) Comment:  All the above points indicate that Russia 
understands this paper is a non-starter.  It appears to us in 
Moscow that the reaction of the U.S. (in close cooperation 
with Ukraine and the EU) can be a) to call the draft a 
non-starter and refuse to discuss it; b) try to amend it to 
make it more acceptable; or c) get the Ukrainians -- the 
other "State-Guarantor" -- to introduce a competing draft 
that shuts the Russians out of the Ukrainian-Moldovan border 
operations, binds the Transnistrians to more transparent 
procedures that the OSCE works out with Moldova, and 
addresses in some way the budgetary issues.  All the options 
have drawbacks.  Option (a) will have the Russians constantly 
raising this text as the first order of business at any 
Transnistria meeting, and complaining about the 
obstructionism of the other negotiators.  Option (b) is a 
reasonable option if we are willing to negotiate the text for 
months or even years -- an advantage being that during those 
negotiations the current regime holds.  Both Options (a) and 
(b) could lead to the irrelevance of the 5 2 format that 
includes the U.S. and EU -- which may be the real aim of the 
Russian paper.  Option (c) is reasonable if Ukraine is 
willing and able to lead the charge against the Russians -- 
at a time when its own government is still in formation.  End 
13.  Begin text of unofficial translation of Russian draft 
Mechanism for the Conduct of Foreign Economic Activity of 
MOSCOW 00004198  003 OF 004 
The Republic of Moldova and Transnistria, hereinafter "the 
Parties," as well as the Russian Federation and Ukraine, 
hereinafter "the States-Guarantors," in the presence of the 
plenipotentiary representatives of the OSCE, EU and USA, 
Striving to create an international-juridical mechanism for 
the unhindered conduct by Transnistria of foreign economic 
activity on the basis of international standards and of the 
obligations of the Parties, 
Recognizing the unacceptability of measures of economic, 
political or other pressure and considering that all 
questions must be resolved in the framework of a constructive 
dialog of equals, 
Recognizing the impermissibility of imposing administrative 
barriers that could artificially hinder the free economic 
activity and conditions for the broadening of international 
economic activity, 
Confirming their commitment to agreements reached in the 
course of the negotiating process, including the Memorandum 
"On the Bases for Normalization of Relations between the 
Republic of Moldova and Transnistria" of 8 May 1997, 
Viewing the resolution of the issue of a mechanism for the 
conduct of foreign economic activity of Transnistria as an 
important component of the process of elaborating a stable 
model of a comprehensive and just normalization of relations 
between the Republic of Moldova and Transnistria, 
Striving to strengthen the regime of transparency and 
openness on the Transnistrian sector of the border with 
Conscious of responsibility for the welfare of the 
population, and for securing the socio-economic rights of the 
inhabitants of Transnistria, 
Have agreed on the following: 
1.  Transnistria has the right to autonomous conduct of 
foreign economic activity in accordance with the present 
Protocol, considering as well the agreements of the 
negotiating process. 
2.  The transportation of cargoes across the 
Transnistrian-Ukrainian sector of the border  by enterprises 
registered in Transnistria, with the aim of exporting to 
Ukraine and/or for transit through Ukraine to a third country 
shall be carried out on the basis of accompanying 
("tovarosoprovoditel'nyy") commercial or other documents on 
which are affixed customs stamps, the form of which shall be 
agreed and implemented by the Parties with the advice of 
authorized foreign ("zarubezhnyy") and international 
3.  The customs clearance of cargoes destined for export to 
Ukraine and/or for transit through Ukraine to a third country 
shall be carried out on co
ndition of presentation by 
Transnistrian exporter-organizations of documents confirming 
the listing (vneseniye) of these economic agents in special 
registers for the statistical accounting of juridical persons 
authorized to conduct foreign economic activity. 
4.  The form of the special registers for statistical 
accounting, the rules for their book-keeping, and the 
agencies of the Republic of Moldova and Transnistria 
authorized to keep them will be determined by separate 
agreement of the Parties no later than ten days after the 
signing of the present Protocol. 
5.  The listing of economic agents of Transnistria in special 
registers for statistical accounting of juridical persons 
authorized to conduct foreign economic activity shall be 
carried out free of charge on the basis of copying out from 
registration (founding) documents given out by the agencies 
of Transnistria for registration of juridical persons no 
later than ten days after application to the authorized 
The listing of economic agents of Transnistria in the special 
registers for statistical accounting of juridical persons 
authorized to carry out foreign economic activity shall be 
carried out in strict accordance with the 
organizational-legal form and the form of property of the 
applying juridical person which exist at the time of the 
presentation of the necessary documents. 
The listing of economic agents of Transnistria in the special 
registers for statistical accounting of juridical persons 
authorized to carry out foreign economic activity shall be 
MOSCOW 00004198  004 OF 004 
confirmed by appropriate witness. 
6.   The listing of economic agents of Transnistria in the 
special registers for statistical accounting of juridical 
persons authorized to carry out foreign economic activity 
shall not give rise to any sort of tax or other obligation by 
these economic agents to the budget or tax system of the 
Republic of Moldova and cannot serve as the basis for payment 
of any taxes or fees. 
7.  The listing of economic agents of Transnistria in the 
special registers for statistical accounting of juridical 
persons authorized to carry out foreign economic activity may 
not serve as a basis for reviewing property rights with 
regard to the property of those enterprises, as well as with 
regard to their shareholdings, obligations or other property 
8.  Oversight of the fairness and timeliness of the movement 
of Transnistrian cargoes on the Transnistrian-Ukrainian 
sector of the border shall be carried out on the basis of 
exchange of information between the authorized customs 
agencies of the Republic of Moldova and Ukraine with regard 
to customs documentation ("obespecheniye") issued and with 
regard to the volume of the movement of cargoes for export to 
Ukraine and/or transit through the territory of Ukraine to a 
third country. 
9.  The entry of import cargoes into Transnistria shall be 
carried out without hindrance in accordance with contracted 
obligations of the economic agents of Transnistria, without 
the levying of any taxes, fees, or other liabilities for 
payment into the budget of the Republic of Moldova.  By 
agreement with the Republic of Moldova and in accordance with 
the national legislation of Ukraine, Ukrainian customs 
agencies have the right to present to the Moldovan side 
information concerning the volumes and descriptions of 
imports into Transnistria. 
10.  For the implementation of the present Protocol, the 
Parties shall within one week adopt necessary changes and 
additions to their internal legislation. 
In the event that necessary changes are not adopted by one of 
the Parties, the States-Guarantors shall make every effort 
and take all necessary measures to secure the unhindered 
conduct of export-import operations by Transnistria. 
11.  From the day of the signing of the present Protocol and 
until its entry into force, the Parties and the 
States-Guarantors shall return to the regime of movement of 
cargoes across the Ukrainian-Transnistrian sector of the 
border which existed on 28 February 2006. 
12.  The guarantee (garantiynyy) elements of the present 
Protocol will be determined in the framework of further 
interaction of the plenipotentiary representatives of the 
Parties, States-Guarantors and other participants in the 
negotiating process for Transnistrian Resolution in the 5 2 
13.  The present Protocol shall enter into force 14 days 
after signing and shall remain in force until the coming into 
being of a final model of political resolution of relations 
between Moldova and Transnistria and the conclusion of an 
agreement in international law on a higher level of 
cooperation between the Parties in the indicated districts. 
The refusal of one of the Parties to bring its internal 
legislation into agreement with the present Protocol shall 
not hinder its entry into force. 
End text. 


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