The Obnovlenie (Renewal) party, the main rival of Transnistria’s president Yevgeny Shevchuk, took the majority of seats in the Moldovan separatist republic’s November 29 parliamentary elections according to local media reports.

The elections are seen as a trial run for the more important presidential elections next December, but they also have a direct impact on the self-declared republic’s domestic policy and, to some extent, its external orientation. In brief, the results will likely create a political deadlock as they will give Obnovlenie the power to block initiatives from the government, which is controlled by Shevchuk. This political deadlock will potentially have deeply negative economic consequences.

Obnovlenie won at least 31 of the 43 seats in the parliament, dniester.ru reported quoting unofficial sources. State news agency novostipmr.com announced the names of the winning candidates, with no comment on the political composition of the parliament. Turnout was 47%.

Obnovlenie is informally backed by holding company Sheriff, which dominates the country’s economy. Its companies include the second largest European textile producer Tirotex, major spirits producer Kvint, petrol stations, hypermarkets, a TV channel, bakeries and the Sheriff Tiraspol football club. Naturally it advocates for more flexible business regulations and lower taxation. However, in 2012 the group lost the privileges it had enjoyed during the regime of Shevchuk’s predecessor, Igor Smirnov.

Sheriff was established in the early 1990s, formally by Transnistrian military officers turned entrepreneurs Viktor Gushan and Ilya Kazmaly. Now it is formally owned by Gushan alone. The real owners behind the two have never been disclosed.

The president’s candidates, running as independents in the parliamentary elections, paid the cost of Transnistria’s recent economic hardship in the polls. Since this spring, the government has been paying only 70% of public wages, pensions and other social benefits amid economic difficulties and weaker subsidies from Russia.

Meanwhile, the opposition - which anyway held a blocking minority of 18 of the 43 parliament seats before the elections - benefitted from the public frustration.

If confirmed by official results, Obnovlenie’s victory will further obstruct Shevchuk’s efforts to achieve an economic recovery by strengthening the centralised economy at a time when the country faces major recession.

Conflicts between government and lawmakers are expected at least until Shevchuk’s term expires. Shevchuk is head of the government as well as president, and parliament cannot dismiss the government without resorting to, for example, a constitutional court ruling that the government was in breach of the law.
 
On the upside, Obnovlenie MPs might impose a more flexible line of negotiation in the talks with Moldova on the continuation of the free trade regime with the European Union. This regime will expire in January 2016, unless Transnistria agrees to join the Association Agreement signed by Moldova and the European Union in 2014.

Sheriff would benefit from such a change in Transnistria’s political orientation. In fact, the benefits of the free trade regime are obvious not only for Sheriff companies, but also for the population as a whole, as Russia is increasingly reluctant to support the regime in Tiraspol.

Shevchuk has lost the robust support of Russia, which was critical in defeating Smirnov in the 2011 presidential elections. It is, however, still premature to conclude a shift in Transnistria’s external orientation as this largely depends on Russia’s attitude.  

The republic’s external policy was not on the election agenda, which was dominated by the domestic economic problems. But the economic problems require political solutions.

Given the small size of the republic, Russia could afford to subsidise it, but this depends on the credibility of the regime in Tiraspol. Shevchuk and particularly his partners appear to have lost Russia’s confidence in regard to the transparent use of funds provided for the stabilisation of the region. But if the alternative is seeing Transnistria seeking to normalise relations with the European Union, Russia could reconsider its position and support one of the parties in Tiraspol – possibly Obnovlenie.