Collateral Victim or Separate Target? Russia's Tactics Against Moldova

Russian actions aimed at destroying Ukraine’s energy infrastructure through premeditated missile and drone strikes have immediate repercussions for Moldova, which as of October obtained about 30% of its electricity imports from Ukrainian suppliers. Since 11 October, Ukraine has suspended its exports of electricity to Moldova. To cover the electricity deficit, the Moldovan authorities sought the help of Romania, which modified its legislation to be able to supply electricity at a price of €90/MWh, a value lower than the market price. Subsidising the price of electricity sold to Moldova is a manifestation of solidarity in the context of the pressure exerted by Russia, but also a pragmatic policy towards Moldova, where more than a third of the population already has Romanian citizenship.

In addition to the collateral effects to which Moldova is exposed due to Russian aggression against Ukrainian energy infrastructure, Moscow is exploiting the conditions around the delivery of natural gas. Given Moldova's dependence on not only Russian gas but also electricity produced from Russian gas in the Transnistrian breakaway region, the lack of consistent gas flows to Moldova is accentuating the consequences of the energy crisis which began in 2021.

To start with, citing supposed problems relating to the transportation of gas through Ukraine, Gazprom reduced the volume of deliveries to Moldova by 30% to 5.7 million m3 per day. This represents only 70% of the gas contracted by the Moldovan operator Moldovagaz (in which Gazprom has a 50% share). As a result, the separatist region of Transnistria has reduced the production of electricity at the Cuciurgan power plant, the export of which to Moldova is controlled by the constitutional authorities. Against the background of the increased gas deficit of about 40 million m3, the Tiraspol administration announced that the electricity supply to the rest of Moldova would be reduced by up to 27%. This meant that Moldova had to seek a replacement for more than half of the electricity imported from Transnistria, which accounted for 70% of the country’s total electricity imports at about €60 MWh. As a result, Moldova started buying electricity from Romania to make up for the lack of power supplied before October from Ukraine and the Transnistrian region. Approximately half of the electricity supplied by Romania has a ceiling below €90/MWh, while the rest is based on the spot market price change – which, for example, was €415/MWh on 30 November. The ability to purchase electricity from Romania is due to Moldova's accession to the European Network of Transmission System Operators for Electricity together with Ukraine in March. Although the electricity purchased from Romania guarantees energy security, it is almost twice as expensive as that sold by the Transnistria region – which does not pay for the gas it uses to produce electricity – meaning that Moldova is accumulating new debts on top of existing ones (some $7 billion). In other circumstances, purchasing electricity at market prices from Romania would allow Moldova to abandon importing it from Transnistria, a process that continually exacerbates the debt problem and creates dependency and unpredictability. The current energy and geopolitical crisis requires a more cautious approach towards the commercial and political price of electricity.

The second problematic aspect relates to the historical debt of the constitutional territory of Moldova (including the separatist zone of Transnistria), which amounts to about $700 million dollars, accumulated in the period between 1994 and 2016. According to the assessment of the Court of Accounts of Moldova, half of this debt was accumulated in the period of 2011–2015. According to the contract signed by the current Moldovan government in October 2021, the debt situation was supposed to be resolved in the spring of 2022, with an international audit to verify the authenticity of the debt. Although it conditioned the maintenance of its contract on the clarification and payment of the debt by the end of October, Gazprom confirmed gas deliveries for the month of November. However, Russia can decide at any time to break the current contract, which is considered advantageous by the Moldovan authorities. Due to the price formula, the current contract with Gazprom offers a price some $400–500 lower than the European market ($785 compared to €1,200 for 1,000 m3 and above for November futures). One factor that may cause Russia to abandon the contract is the result of the audit carried out by the companies Wikborg Rein Advokatfirma AS (Norway) and Forensic Risk Alliance (UK), which are due to present their findings in January 2023 (around eight months after the period originally agreed with Gazprom).

Finally, in addition to the reduction in the volume of gas and the effect on electricity supply, as well as the risks arising from the non-resolution of the historical debt, another dimension of the energy crisis consists of the disputes between the government in Chisinau and the Tiraspol administration. Moldova needed about 120 million m3 of gas for the month of November. Of this total, some 41 million m3 could be replaced by fuel oil for the production of thermal energy; another 54 million m3 was expected to be imported under the contract with Gazprom; and it was anticipated that the state company Energocom would purchase the remaining 23 million m3 from other markets. In this regard, a contract was recently signed with the Bulgarian transmission network operator (Bulgartransgaz). Furthermore, Moldova has about 200 million m3 of natural gas in the form of strategic reserves, 52 million m3 or about 25% of which is stored in Ukraine and the rest in Romania – enough for about a month in case Russia cuts off deliveries.

The authorities want to stop the increase in energy prices, which is inevitable if electricity from the Transnistria region is not supplied at full volume. Otherwise, the anti-government protests in Moldova – orchestrated so far by the Shor Party – may expand and gain legitimacy among a larger number of citizens, who have so far avoided them for credibility reasons. Under recently introduced US sanctions, Ilan Şor and his party are identified as Russian agents. In addition to this, other kleptocratic groups controlled by the fugitive oligarch Vladimir Plahotniuc – who is also sanctioned by the US and has promised to return to Moldovan politics – could also join the protests. Moreover, there are opposition parties inside and outside parliament (at least eight entities) that oppose the Chisinau’s stance over the war and are mobilising to exert political pressure on the government. In this fragile political context, there is increasing scope for mutual blackmail, in which the Chisinau government could reduce the volume of gas to Transnistria if the region does not supply more electricity. For its part, the Tiraspol administration suggests direct negotiations with Moscow and refuses to coordinate energy consumption with Chisinau. At the same time, the breakaway region is demanding more gas, which it cannot provide for reasons of security and scarcity, especially if Moldova is buying it at market prices.

Given the enormous threat that the military failures in Ukraine pose to the political regime in Moscow, the winter of 2022–2023 represents a strategic moment for Russia, in which its energy tools could be used to their full potential to apply additional socioeconomic and political pressure on the national governments of EU states.

In parallel, Russian attacks on Ukraine's energy infrastructure continue, representing a new facet of the ‘war of attrition’. Thus, Russia is revealing its intention to force peace negotiations, which would in reality be an indirect form of Ukraine capitulating to Russian aggression.

The aggression against Ukraine also indirectly targets Moldova, which has thus become a collateral victim. In addition, Russia is taking advantage of the energy sector to put pressure on the Moldovan authorities, who face serious dilemmas due to their dual dependence on Russian gas and electricity supplied from Transnistria.

This contribution is adapted from an original study published by the IPN Press Agency in Chisinau, Moldova.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

Have an idea for a Commentary you’d like to write for us? Send a short pitch to commentaries@rusi.org and we’ll get back to you if it fits into our research interests. Full guidelines for contributors can be found here.