How Moldova's ties to Europe hold key to ending reliance on Russian gas

Moldova has worked its way through tough choices on what to do with its energy sector, nearly one year since the former Soviet state ended its dependency on Russia, its Energy Minister Victor Parlicov told The National . He spoke of Moldova's efforts to become closer to the European Union . “Now, the big battle is not for the security of [electricity] supply. Now, the battle is for people’s minds,” said Mr Parlicov, sitting in his office in the capital Chisinau’s large rectangular concrete government building after last week's unprecedented European Political Community (EPC) meeting of close to 50 European leaders near Moldova's border with Ukraine. Russian destabilisation attempts pose a constant danger, only months after Moldovan President Maia Sandu accused Moscow of a foiled coup. Debris from Russian missile strikes on Ukraine has been found at least four times on Moldovan soil since November. Mr Parlicov believes Russia may have tried to disrupt the country’s electricity supplies before the summit “to make a point”. He said: “The day before the event, there was a disconnection on the line that is absolutely unclear." Moldova’s Energy Ministry plays a central role in discussions with Brussels because a key aspect of the country’s rapid shift towards the West involves its complicated relations with the breakaway Russia-backed region of Transnistria. Transnistria is not officially recognised as an independent country and Moldova has long hoped for its peaceful integration while allowing the pro-Russian region to keep a degree of autonomy. To join the EU, Moldova would normally be expected to have full control of its territory, though the EU's top diplomat Josep Borrell signalled at the EPC summit that this might not be necessary, referring to Cyprus as a precedent. Transnistria also houses more than 2,000 Russian soldiers in addition to Moldova’s largest electricity production plant. Due mainly to Russian military support, separatists took control of the area in 1992 after a war with Moldovan forces in which about 500 people were killed. The following decades witnessed an increasing interdependence between Transnistria and Moldova, which previously received 90 per cent of its power from the disputed region. Chisinau imported Russian gas and sent most of it to Transnistria, which would then generate electricity and sell it back to Moldova. Mr Parlicov highlighted the fact that Russia launched its invasion of Ukraine last year only hours after Ukraine and Moldova had disconnected their electricity grids from Russia and Belarus as part of a two-day pre-planned synchronising exercise with continental Europe’s power grid Entso-E. “I am sure the Russians knew this disconnection was planned,” said Mr Parlicov. Moldovans have witnessed a seven-fold increase in energy prices in the past two years but the EU has financed compensation for vulnerable households. The government’s job is to “change the narrative from bad news to good news”, said Mr Parlicov. “We want to build this narrative about Europe being about efficiency and investments.” Before the invasion of Ukraine, the Russian-backed separatist Transnistria region was able to yield leverage over Chisinau, through its exports of electricity generated with gas imports. Russia never asked Transnistria to pay for the gas. But last March, Moldova managed to connect a formerly idle transmission line to Europe’s power grid via its southern border with Romania. “That was a huge game-changer,” said Mr Parlicov. Instead of only one transmission line outside Transnistria, Moldova now had two. These had sufficient capacity to power Moldova with electricity should Transnistria decide to disconnect its supplies. “The Russians, through their proxies in Transnistria, lost their major leverage to blackmail Chisinau via electricity supplies,” said Mr Parlicov. “Our entire security of electricity supply was hanging on their infrastructure. Since last year, it’s actually a matter of choice.” The war has also led to the closure of the Ukraine-Transnistria border, cutting off Tiraspol, the de facto Transnistrian capital, from the nearby Ukrainian port of Odesa and increasing its reliance on the rest of Moldova. “Today, with the war in [Ukraine], the region only exists because all trade supplies go through Moldova,” said Iulian Groza, executive director of the Institute for European Policies and Reforms (Ipre), a Chisinau-based think tank. The shift in the balance of power has caused an uneasy stalemate described by Mr Parlicov as an “unstable equilibrium”. Tiraspol has sent clear signals to Chisinau that it wants to keep the situation calm and that it does not represent a threat, said Mr Groza. “The region’s leadership has an interest in maintaining the status quo,” he said. Chisinau continues to buy most of its electricity from Transnistria after an unsuccessful attempt at cutting all ties in November, which caused electricity prices to quadruple amid a world surge in gas prices caused by the war. But for the past six months, Chisinau has ceased all imports of Russian gas for local use – except for the gas that is rerouted to Transnistria. This is a first since Moldova gained independence. "Since the beginning of December 2022, we stick to the same model," said Mr Parlicov. "Both politically, because we want to depend less on Gazprom and Russian Federation, and for economic reasons – Gazprom prices are simply higher that what we can get on international market." The head of public natural gas distributor Moldovagaz in March said Gazprom imports had resumed but the resumption lasted only four days because Mr Parlicov asked the utility company to stop, according to the Energy Ministry. The minister’s priority is to focus on energy efficiency to reduce bills. Moldova’s Soviet-era housing stock is inefficient, with a loss of energy from buildings of about 50 per cent, Mr Parlicov said. Yet the unresolved issue of Transnistria continues to linger. If Moldova succeeds in ridding itself entirely of its electricity dependency on the breakaway region, Chisinau’s leadership also fears the consequences of its economic collapse. Without Chisinau’s electricity payments, Transnistria’s government would be unable to honour its social obligations “within months”, said Mr Parlicov. There is no clear plan about what would happen to the region’s 300,000 inhabitants, most of whom are pro-Russian. “We need to make sure we can take care of them,” said Mr Parlicov. “I don’t want us to find ourselves in a situation where we have to address this issue in a context where you call Tiraspol, and no one picks up the phone.” Yet Moldova is only now seriously reflecting on a long-term vision to reintegrate Transnistria. This includes concrete social, fiscal and legal questions, a process that has been accelerated by the war in Ukraine, said Mr Groza. Negotiations used to take place within a framework known as 5 + 2, which included the two parties in the frozen conflict, Russia, Ukraine, the EU, the Organisation for Security and Co-operation in Europe (OSCE) and the US. This 5 + 2 format has collapsed since Russia went to war in Ukraine.

How Moldova's ties to Europe hold key to ending reliance on Russian gas

Ex-Soviet republic with strong European aspirations is in state of 'unstable equilibrium', its energy chief tells The National