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DE RUEHCH #0556/01 1980600
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R 170600Z JUL 09
FM AMEMBASSY CHISINAU
TO RUEHC/SECSTATE WASHDC 8170
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 CHISINAU 000556 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EUR/UMB 
 
E.O. 12958: N/A 
TAGS: PBTS ELTN ETRD RS UP MD
SUBJECT: NO LIGHT AT THE END OF THE RAILROAD TUNNEL IN TRANSNISTRIA 
 
Sensitive But Unclassified.  Please Protect Accordingly. 
 
¶1. (SBU) Summary:  In contrast to other, more successful working 
groups between Chisinau and Transnistrian authorities, the newly 
created Working Group on Railroads, which met for the first time on 
July 7, has revealed the greatest difficulties:  Transnistria wants 
the railroads to resume service, for political and economic reasons, 
but Chisinau does not recognize Transnistrian Railroads as a legal 
entity.  End Summary. 
 
Railroads:  Most Contentious of Working Groups 
--------------------------------------------- - 
 
¶2. (SBU) The newly created Working Group on Railroads met on July 7, 
2009 at the OSCE offices in Bender.  As expected, Chisinau and 
Tiraspol failed to make any progress in resolving the complex 
problem of railroad transportation in the region, but agreed to meet 
again in early September.  While Tiraspol wants a resumption of 
full-scale railroad transportation in the Transnistrian region, 
Chisinau does not recognize Transnistrian Railroads as a legal 
entity and maintains that the railroad lines and cars are still the 
property of Moldova Railroads.  Of all the various working groups 
that have met to date, including roads, health, ecology and economy, 
this meeting was by far the most contentious, a reflection of the 
intractable nature of the problem underlying the discussions. 
 
 
Confidence-Building Process Resumed 
----------------------------------- 
 
¶3. (SBU) This was the first meeting of the railroad working group, 
though the same group of Chisinau and Tiraspol railroad operators 
and transportation authorities had met once before in April 2008, 
under the aegis of the European Union, to discuss railroad 
transportation issues.  In addition to the railroad specialists from 
the two sides, the meeting was also attended by the mediators and 
observers in the 5+2 format, i.e. OSCE, Russian Embassy, Ukrainian 
Embassy, EU, and U.S. Embassy.  The July meeting was the first out 
of four meetings of confidence-building-measures working groups 
proposed by Tiraspol, following informal 5+2 consultations in Vienna 
on June 22.  The other three working groups (on roads, health care 
and ecology) are scheduled to meet on July 9, 13, and 15, 
respectively. 
 
Tiraspol's Three Demands 
------------------------ 
 
¶4. (SBU) After a brief exchange of opinions on whether this was the 
first or the second meeting of the railroad working group (i.e., 
whether the meeting chaired by the EU should be counted as part of 
the Working Group process), the sides presented their positions. 
The Tiraspol delegation listed three issues for discussion:  1) 
resumption of passenger transportation between Chisinau and Odessa, 
Ukraine (through Bender and Tiraspol); 2) allowing shipment of cargo 
to and from Tiraspol and Bender stations; and 3) resumption of 
traffic on the Rybnitsa-Slobodka, Ukraine line.  (Note:  this line 
is closed and not fully functional, but Ukrainian trains use it to 
cross the border and ship scrap metal to the Rybnitsa Steel Plant. 
End note.) 
 
Tiraspol and Chisinau: Status Quo Vs Status Quo Ante 
--------------------------------------------- ------- 
 
¶5. (SBU) The Moldovan delegation put property issues in first place. 
 Chisinau does not recognize Transnistria Railroads as a legal 
entity, and maintains that its assets all still belong to Moldova 
Railroads (CFM).  Chisinau argued that CFM is the only 
internationally recognized party to the relevant international 
treaties and agreements.  As such, CFM is the only entity which can 
bear responsibility for traffic security and passenger/cargo safety 
on the entire territory of Moldova.  The Chisinau delegation 
proposed that the status quo ante be restored, i.e. that the sides 
resume the activity of the joint Chisinau-Tiraspol Technical and 
Economic Council, where the sides had previously cooperated in joint 
management of Transnistrian segment of the railroad.  The Chisinau 
delegation proposed that Tiraspol submit its proposals to amend the 
Regulation of the Council to meet Transnistria's new demands 
relating to distribution of the company's revenues.  Tiraspol 
rejected Chisinau's proposals, arguing that the Council did not 
respond to the new realities that a new legal entity--Transnistria 
Railroads--had been created.  Chisinau does not recognize 
Transnistria Railroads, and hence the interaction between the two 
sides periodically degenerated into a shouting match. 
 
Business and Politics:  How Can Steel Bypass Moldova? 
--------------------------------------------- -------- 
 
¶6. (SBU) Tiraspol proposed that traffic be restored on the 
Rybnitsa-Slobodka line under terms similar to those in the temporary 
 
CHISINAU 00000556  002 OF 002 
 
 
agreement signed by Moldovan, Russian and Ukrainian railroad 
operators in December 2006, and extended every year.  This temporary 
trilateral agreement established the terms for transit traffic 
through Transnistria.  In particular, the agreement stipulated that 
Russia and Ukraine bear the responsibility for security and safety 
of their respective trains and cargo transiting Transnistrian 
territory where the railroad is not effectively controlled by CFM. 
The Transnistrian side presented its draft of such a trilateral 
agreement.  CFM representatives accepted the Transnistrian draft 
with little enthusiasm, and promised to examine it and present their 
conclusions at the next meeting. 
 
¶7. (SBU) Comment:  We assume that Chisinau's answer will be negative 
for both political and legal reasons, since the Rybnitsa-Slobodka 
line connects the MMZ steel plant directly with Ukraine and the 
outer world.  Even though officially this line is not functional, 
MMZ uses it for its illegal imports (i.e., imports not registered 
with Moldovan customs).  If the traffic were to be officially 
resumed there, MMZ would also be able to use it for illegal exports 
directly through Ukraine, thus avoiding Moldovan territory and 
Moldovan customs posts.  For these reasons, Transnistria considers 
it essential to have this line open, while for Chisinau it is 
essential to preserve the status quo until a broader political and 
economic settlement of the conflict is completed.  End comment. 
 
Property Is at Stake 
-------------------- 
 
¶8. (SBU) Several minor disagreements between Chisinau and Tiraspol 
were also discussed, such as Chisinau's desire to have Moldovan 
transportation police on Transnistrian territory as a pre-condition 
for resuming passenger traffic (rejected by Tiraspol), and 
Chisinau's desire that tickets be sold only in exchange for Moldovan 
currency.  However, the fundamental underlying controversy that 
makes it impossible to reach any agreement on the smaller issues 
remains whether or not Transnistria Railroads would be recognized as 
a legal entity and whether the railroad infrastructure and trains in 
Transnistria still belong to CFM or to the newly created 
Transnistrian operator.  Chisinau will not accept ceding its 
property, and under the current circumstances and leadership, 
Tiraspol will not give up on having its own railroad operator. 
 
Operations United Until 2004 
---------------------------- 
 
¶9. (SBU)  Compounding the difficulties is the fact that the Moldovan 
Railroad Company (CFM) had operated as a united operator on the 
entire territory of the Republic of Moldova, including Transnistria, 
as recently as the summer of 2004.  In 2004, Transnistrian 
authorities decided to create a railroad company of their own and 
forcibly seized all assets and trains of CFM located in 
Transnistria.  Despite this, train traffic continued to move through 
Transnistria relatively uninterrupted for another two years. 
Tiraspol suspended railroad traffic in March 2006 after Moldova and 
Ukraine enforced the new customs rules requiring Transnistrian 
exporters to register their cargo with Moldovan customs.  Since 
then, the railroad lines across Transnistria have been open only for 
transit cargo trains from Russia and Ukraine and one passenger train 
weekly running between Moscow and Chisinau.  Transnistrian 
enterprises cannot ship their cargo from any of the three stations 
in the region--Tiraspol, Bender or Rybnitsa. 
 
Leadership Revenues Also at Stake 
--------------------------------- 
 
¶10. (SBU) The other reason which feeds Tiraspol's firm stance is the 
business interest of the region's top leadership.  Transnistria's 
railroad operator provides transportation services through an 
intermediate shipping company based in Odessa, Ukraine, and owned by 
Smirnov and "Vice President" Alexander Koroliov.  Re-uniting the two 
railroads under Moldovan operation would leave Smirnov and Koroliov 
without this major source of revenues. 
 
Comment: 
 
¶10. (SBU) Given the difficulties noted above, confidence-building 
measures on cross-river railroad issues are the least likely to be 
on track in the foreseeable future. 
 
KEIDERLING