Amid the global energy crisis, Russia reaps the benefits as a dominant supplier of natural gas on the European market. Russia hurries to maximally use the favorable conjuncture on the gas market not only in economic, but also in geopolitical interests. Among the main geopolitical objectives are to destroy the solidarity of the EU member states by manipulating the prices of the gas supplied from country to country, to compromise the European Third Energy Package that is aimed at demonopolizing the energy market and to hasten the authorization of the Nord Stream 2 gas pipeline. Ukraine has a special place in Moscow’s strategy as, if Ukraine is not constrained, Russia risks losing the perspective of effectively restoring its domination in the post-Soviet area. In this complicated mosaic of Russian geopolitics, Moldova’s case appears as a small part of the general picture.
Russian monopoly or Alliance of corrupt politicians from Tiraspol, Chisinau and Moscow
But for the Republic of Moldova, the gas supply crisis took the proportions of an existential problem. Leaving systemic corruption aside, the energy sector is one of the greatest vulnerabilities of Moldova. The Russian company Gazprom plays the role of monopolist in the gas sector of Moldova, both as a supplier and as a distributor. Russia covers almost 100% of the gas needs of Moldova. Gazprom’s monopoly on the republic’s gas market is ensured by its capacity as the main shareholder of Moldovagaz (with a holding of 50% plus a share), which imports and distributes gas in Moldova. The Russian gas giant also manages a 13.4% holding in Moldovagaz, which belongs to the breakaway region of Transnistria, through the agency of a company called Tiraspoltransgaz. This way, Gazprom indirectly controls a part of the distribution networks of Moldova.
Moldova’s electricity dependence on Russia is also considerable, reaching 70% of the amount needed by the right side of the Nistru, making Moldova extremely vulnerable to power disconnections. The Russian company Inter RAO controls the Kuchurgan Power Station situated in Transnistria, which is the largest producer of electrical energy in the republic and which can generate electricity based on alternative sources - coal, oil and gas. But Inter RAO prefers to use only the Russian gas to produce electricity. It receives gas in Transnistria at a price that is lower than that for business entities operating on the territory controlled by Chisinau. The cheap gas ensures the production of electricity not only for the consumers from the right bank of the Nistru, but also for the crypto-mining industry that is expanding on the left side (Transnistria), with the owners being oligarchs from Russia. This considerably increases the amount of gas imported by Moldovagaz, a daughter company of Gazprom, and takes its debt to US$8 billion on the Transnistrian segment. This astronomic debt accumulated because, even if payments are collected from local consumers in Transnistria, this money is transferred to the accounts of Moldovagaz, but is partially used to finance the separatist regime in Tiraspol, while the other part goes to the offshore accounts of beneficiaries of corruption schemes. This way, corruption and energy dependence in Moldova go hand in hand, joining corrupt politicians from Tiraspol, Chisinau and Moscow into an alliance.
For Moscow, Gazprom is a powerful geopolitical weapon
Since President Maia Sandu and PAS took over in Moldova on the wake of a pronounced anticorruption commitment, the whole well-adjusted system based on relations of corruption and the status-quo of Moldova’s dependence on the former metropolis have been in danger. Therefore, Moscow’s reaction came swiftly, being supported by the global energy crisis that favored Russia’s geopolitical interests. In such conditions, Moscow’s attitude to Chisinau became predictable. The energy dependence offers Russia a powerful diplomatic instrument that it didn’t hesitate to use in Moldova. The Moldovan Government’s attempt to imprint a purely economic character on the talks with Gazprom on the provision of the republic with gas looked like political naivety. For Moscow, Gazprom is a powerful geopolitical weapon and only after this it is a commercial instrument. This way, the Russia-Moldova gas blockage of 2021 wasn’t a behavioral defect, but the most recent iteration of a corrupt phenomenon.
As it was expected, Russia without hesitation resorted to the shock tactic in the relations with Moldova, raising the price of the supplied gas to the level of the speculative market price. To strengthen its positions at the talks, Gazprom in October reduced the natural gas shipments to only 67% of the needs, forcing Moldova to diminish its gas consumption. Taken by surprise, Chisinau in October paid an exaggerated spot price and negotiated a long-term contract with Gazprom. The major objectives of Gazprom at the talks became clear. After a break that lasted for years, Moscow suddenly asked to transform Moldovagaz’s historical debt (approximately US$709 million lei, the sum being disputed by Chisinau), which was accumulated by end users from the right bank, into government debt and to repay it during three years. It is noteworthy that Transnistria’s debt of billions of dollars was neglected. They asked to introduce in the contract a new gas price formula in which the spot market prices prevailed throughout the year. They also asked to put off the separation of the energy sector that was undertaken by the Republic of Moldova by the EU’s Third Energy Package, keeping this way the quasi-monopoly of Moldovagaz on the import and distribution of gas.
On the last 100 meters, Moscow suddenly tempered its discourse, signing a five-year contract for the supply of gas with Moldova. Gazprom hurried to declare the signed contract convenient for both of the sides. The official Chisinau also hailed the contract with Gazprom as beneficial, invoking the elimination of the risk of being cold in winter. However, this information was overshadowed by the latest developments related to the gas rates and prices of costumer goods in Moldova. At least the Moldovan side has to sustain the social consequences of the contract signed with Gazprom at the end of this October.
“To whom it is suitable”?
Of the aforementioned, we can deduce that the validity period of the new gas contract with Moldova perfectly matches Russia’s interests, especially if we remember that one of the consistent policies of Gazprom aimed at ensuring its clients’ dependence on Russian gas is to sign long-term contracts, which runs counter to the European policy for liberalizing the energy markets. This way, Gazprom has a five-year contract with Chisinau and remains a monopolist on Moldova’s market. The price of the Russian gas is a heavy burden for the national budget and this leaves room for politically blackmailing Chisinau for reducing the price of the supplied gas in exchange for political concessions. Moldova pledged to refrain from implementing particular aspects of the Third Energy Package at least during a year if not more. This is a victory for Gazprom. Furthermore, the bilateral agreement on the energy relations that the sides undertook to negotiate and to sign next year can further limit the freedom of action of the Republic of Moldova. If Moscow and Chisinau do not manage to reach a debt repayment agreement and to sign an intergovernmental agreement in 2022, the whole gas agreement can be terminated and this will serve as a pretext for a new gas crisis. By signing this contract with Chisinau, Moscow decreased the virulence of the accusations that it uses the gas as an instrument of blackmail in interstate relations. Finally, Gazprom keeps the legality of the provision of gas to Transnistria, which is actually camouflaged financing for the separatist regime in Tiraspol, with the perspective of adding the costs of this gas to the state debt of the Republic of Moldova. Currently, Moscow does not force the discussing of this debt, but this impediment will definitely appear when the secessionist conflict is addressed.
For Chisinau, the value of this contract is much more problematic. The most valuable aspect is the guaranteeing of the provision of the right side of the Nistru with gas during at least a year. The citizens of Moldova are assured that they will not endure cold this winter. Judging by the leaked information about the talks, we can deduce that Moscow didn’t manage to impose on Chisinau political conditions related to the commercial relations of the Republic of Moldova and the EU and to the settlement of the Transnistrian conflict. But the perspective of the Third Energy Package in Moldova remains uncertain for now. The same situation refers to the Iasi-Chisinau gas pipeline that risks remaining nonfunctional. The enigmatic resignation of one of the key negotiators of Moldova at the talks – Deputy Prime Minister Vladislav Kulminski, in charge of the Transnistrian conflict, immediately after the signing of the contract with Gazprom, generates more questions than answers. His resignation when a series of the contract clauses are not made known for the reason that they represent commercial secret, as the lack of any mention about the Transnistrian factor in that part of the contract that became known leave room for suspicions about the existence of political commitments on the part of Chisinau. The version that the negotiators of Chisinau didn’t manage to fully use the vulnerability of Moscow’s position at the negotiations on the contract, which derives from the necessity of guaranteeing the provision of Transnistria with gas, remains valid.
Heat inside homes, bread on the table and diversification of sources
The signing by Chisinau of the recent contract with Gazprom further underscored the geopolitical character of the Russian gas in Moldova, which the economic and commercial aspects of the issue being thrown into absurdity. The signing of the contract didn’t solve the energy crisis in Moldova, but only put off its acute phase. The cardinal resolution of the crisis consists in the diminution of energy dependence on one supplier by diversifying the natural gas and electrical energy supply sources. Only this way, the geopolitical value of the gas in Moldova will decrease in favor of the natural economic and commercial components. The current contract with Gazprom has a pronounced geopolitical component. Therefore, the gas supply crisis swiftly turned into a crisis of gas rates. The Government managed to solve the problem of heat inside the homes of Moldovans this winter, but it is now stringently necessary to ensure bread on their tables.
IPN publishes in the Op-Ed rubric opinion pieces submitted by authors not affiliated with our editorial board. The opinions expressed in these articles do not necessarily coincide with the opinions of our editorial board.