Dear Heads of state authorities and administration, representatives of the clergy, Pridnestrovians!
Today in this hall I welcome representatives of law enforcement authorities, social protection, health, education, civil society organizations and representative authorities!
At present citizens of Pridnestrovie are particularly concerned about two major issues – security and socio-economic well-being, that is directly affected by the foreign policy situation around the republic and the country’s own resources.
2014 was a year of important political events at our neighbors.
It should be noted that these events in the Republic of Moldova and Ukraine have not ever had such a clear impact on all spheres of life of Pridnestrovians: this blocking of possibilities of Pridnestrovian citizens and citizens of the Russian Federation to move through the Pridnestrovian-Ukrainian and Moldovan-Pridnestrovian border, as well as through the airport of Kishinev. Often without explanation Pridnestrovians, possessing Russian passports were denied even to transit.
There are still actions going on which lead to the direct undermining of budgetary possibilities of the republic through introduced, under the slogans of changing the order of foreign trade activities, by Ukraine and the Republic of Moldova additional restrictions on the export and import of Pridnestrovian products.
In the field of international law postulates on the right to freedom of choice, self-determination and on the inviolability of borders are still in force and applied selectively in various regions: for example, the famous decision of the International Court of Justice on Kosovo.
- From the opinion of the International Court dated July 22, 2010:
“79. The practice of States does not point to the emergence in international law of a new rule prohibiting the making of a declaration of independence in such cases”.
“81. No general prohibition against unilateral declarations of independence may be inferred from the practice of the Security Council”.
“84.For the reasons already given, the Court considers that general international law contains no applicable prohibition of declarations of independence”.
- The USA
From the Written Statement of the United States from April 17, 2009:
“A. Principles of territorial integrity do not preclude the emergence of new states on the territory of existing states” (page 79).
“Declarations of independence may, and often do, violate domestic legislation. However, this does not make them violations of international law” (page 51).
“At the same time, the reference to the Helsinki Final Act underscored that the commitment to territorial integrity should not be read in isolation, but rather in a broader context in which other principles must be given equal consideration, and in which human rights and other considerations are of particular importance” (page 71).
From the oral statement of Legal Adviser of the U.S. State Department Harold Koh in the Court on December 8, 2009:
“International law does not regulate every human event, and that an important measure of human liberty is the freedom of a people to conduct their own affairs.
In many cases, including Kosovo’s, the terms of a declaration of independence can mark a new nation’s fundamental respect for international law”.
- Great Britain
From the oral statement of representative of Great Britain James Crawford on December 9, 2009:
“The UN Charter says nothing about the legality or illegality of the declaration of independence of individual nations or groups within a state”.
For example, the will of Gibraltar residents expressed in a referendum was taken into account when making decisions in Britain and the will of the residents expressed in a referendum in Pridnestrovie was repeatedly left outside the decision making on the settlement.
The question is how this is fair. How fair is the imposition on Pridnestrovie of rules of foreign economic activity, transport operation and so on, that in fact is an act of coercion by force (“force” means without the will of the citizens) to spread Moldovan legislation on the territory of the Pridnestrovian Moldavian Republic. This happens against our will, contrary to the fundamental documents of the United Nations on the right to carry out economic activities to meet the requirements of any resident, regardless of political affiliation and place of residence.
Based on the foregoing, we offer primarily to the neighboring countries to escape from the ideology of sanctions, blocking of economic opportunities, provoking poverty among Pridnestrovians by their actions.
We propose good-neighborliness, cooperation, opening of opportunities for the republic in the long run in order to provide the needs on the basis of its own economy.
Last year we sent a lot of signals to our partners in Moldova to ensure the maintenance of our dialogue at the appropriate level on the basis of an accelerated resolution of economic problems in the relations between Kishinev and Tiraspol. Unfortunately, most of these initiatives left unheard. Meanwhile, on a number of issues we managed to get closer to the understanding of mutual respect of interests. This is the case of the cancellation of discriminatory excise tax on imports introduced suddenly and unilaterally by Moldova. I cannot but noting the progress in resolution of the railway communication problem, cancellation of fees for customs clearance of import and export for the Pridnestrovian economic agents, as well as the cancellation of the environmental fee. We had negotiated for years, and a solution was found. Pridnestrovie considered this approach of the Moldovan side a positive and constructive step that can improve cooperation in the economic sphere.
February this year we again put forward an initiative to the negotiation process, aimed at lifting restrictions in mutual trade. It is based on mutual consideration of interests and is designed to alleviate the plight of both Pridnestrovian and Moldovan economic agents. We believe that the time dictates the need for taking such decisions.
We remain open to the dialogue as we believe that there is no alternative. We presume that the dialogue requires proper atmosphere that cannot be created within the constraints of sanctions, blockades. We have already passed the proposal to the new team of our partners in Moldova on the need to abandon the practice of criminal prosecution of Pridnestrovian officials as a matter of priority, to close the initiated politically motivated criminal cases. Otherwise, it would be difficult to imagine any significant progress on other vital problems.
At the same time we emphasize that the negotiation process – it is not only the official rounds of the “5 + 2”. And it is not only the wishes of the Pridnestrovian and Moldovan side, but as we believe it is, first and foremost, the desire to compromise. This includes bilateral and multilateral consultations through the “shuttle diplomacy”, work of expert groups, meetings of political representatives of Pridnestrovie and Moldova, the so-called “1+1” format.
The Ministry of Foreign Affairs is mandated to work in all directions, including auxiliary ones, for proper preparation for the work in the “5 + 2” format, as soon as the existing obstacles are removed. Such work should focus on results rather than on meetings for declarations of intentions, which are often not implemented afterwards.
Our negotiating position is based on a positive ideology: do no harm, favor, be a reliable partner, we have agreed - means we perform.
Important factors that have a destabilizing impact on the Pridnestrovian economy are the processes of global and regional economic instability and currency devaluation, for example, in Ukraine – more than 197.3%, in the Republic of Moldova – more than 119.6%. A factor of inflation in these countries signifies as well: in Ukraine – more than 124.9%. This, in its turn, has largely determined the decline of business activity and the Pridnestrovian economy, including in connection with a reduction in effective demand in the countries, which are traditional markets for Pridnestrovian economic agents.
Internal factors keep affecting as well; the factors demonstrate the existing imbalance in the number of employed individuals in active economy: in 2011 – more than 137.3 thousand and in 2014 – more than 142.5 thousand. The number of state employees: in 2011 – more than 70.3 thousand and in 2014 – more than 66.4 thousand. The number of pensioners: in 2011 – more than 138 131 individuals and in 2014 – more than 141 288 individuals.
In 2014 the state spent 3.9 billion PMR rubles on social support for various funds (pensions, benefits, maintenance of health and education institutions, social protection institutions); this is 96% of the collected tax revenues of the republic, showing the unprecedented level of citizens support on these indicators in comparison with the neighboring countries and the excessive burden on the budget in this part.
In 2014 about 2.5 billion PMR rubles was sent for pensions that is 600 million PMR rubles more (about 60 million US dollars) or almost in one and a half times more than 3 years ago – in 2011 – 1.87 billion PMR rubles.
For comparison, I would like to state revenue collection figures in the extrabudgetary funds and expenditures in 2014, broken down by districts.
mln. rubles
|
Name of the city (district) |
Incomes |
Expenditures |
% coverage |
|
Tiraspol |
1 030,3 |
859,3 |
119,91% |
|
Bendery |
266,5 |
543,1 |
49,07% |
|
Slobodzeya |
114,8 |
448,5 |
25,59% |
|
Rybnitsa |
215,5 |
405,0 |
53,21% |
|
Dubossary |
66,6 |
202,8 |
32,85% |
|
Grigoriopol |
64,0 |
214,3 |
29,85% |
|
Kamenka |
41,0 |
139,3 |
29,4% |
Here disparities and trends are obvious; they determined the redirection of state resources to substantial direct subsidies for social areas.
On the other hand, the factors of technological backwardness, high energy consumption and low productivity, regional and global competition in open markets have created a number of prerequisites of economic instability for the majority of industrial enterprises, and a risk of stoppage in production for some enterprises.
I would like to emphasize that the actual competitive advantages for Pridnestrovian enterprises in the 20-year period of state subsidies on energy, unfortunately, did not encourage the majority of enterprises, with few exceptions, for serious technical and technological re-equipment. However, some enterprises, even after being seriously re-equipped, are still experiencing an acute noncompetitiveness in comparison with similar productions of Asia, China, including due to the low productivity of labor at the domestic production and problems with access to reasonable credit sources. Of course, problems of imposed, politically motivated additional nontransparent non-tariff regulation of foreign economic activity by the Republic of Moldova and Ukraine have a significant influence.
Despite the difficulties, some positive changes should be noted: for example, the amount of tax revenues in 2014 amounted to over $ 4 billion PMR rubles and increased by 70% (in 1.7 times) in comparison with 2011. The amount of external debt decreased by 400 million PMR rubles in comparison with 2012, which demonstrates the increasing capability of state functions self-sufficiency. But it is extremely insufficient to balance income and expenditure.
Indicators of the Pridnestrovian Moldavian Republic on inflation and devaluation, being the best in the region, only confirm the statements by some experts that the economy of Pridnestrovie is non-self-sufficient economy, but viable, and when the possibilities are released, it has the potential to dynamic recovery.
The figures of industrial production volume are demonstrative: in 2014 the volume of industrial production (at current prices) was estimated at 10.7 billion PMR rubles (more than 963.6 million US dollars) and in 2013 – 8.8 billion PMR rubles (more than 795, 8 million US dollars). The growth rate was 117.2% (in dollar terms – 121.1%).
Объем внешнеторгового оборота за январь – декабрь 2014 года составил 2,4 млрд. долларов США (в том числе 1,6 млрд. долларов США – импорт товаров, 0,7 млрд. долларов США – экспорт товаров) и превысил соответствующий показатель 2013 года на 118,3 млн. долларов США, или 5,3%.
The volume of foreign trade turnover in January – December 2014 amounted to 2.4 billion US dollars (including 1.6 billion US dollars – imports, 0.7 billion US dollars – exports) and exceeded the corresponding figure of 2013 by 118.3 million US dollars, or 5.3%.
However, it should be stated that this increase is caused basically by the I half-year indicators, while II half-year and IV quarter were failed due to the decisions and the situation in Ukraine and Moldova, that is confirmed by the figures of the first two months of 2015.
Foreign trade turnover as by February 20, 2015 amounted to 211 million US dollars and in comparison to the same period of 2014 decreased by 30%.
The amount of budget revenues decreased as well: by February 20, 2015 the amount of tax and non-tax payments amounted to 205.4 million PMR rubles and it is 44.8 million PMR rubles less or 18% lower than in 2014.
It should be noted that under the current circumstances the domestic market fills the budget, according to experts, only with 10 - 15%; other income is the income from foreign economic activity. This indicator demonstrates the high sensitivity of the Pridnestrovian budget to external markets and to the degree of freedom of foreign economic activity.
Conclusions of a number of competent experts in the economy are of some interest that the share of the tax burden on the GDP between 2009 - 2013 decreased by almost half, to 5.1 % of GDP, without reaching an annual average of 2004 - 2008 - 7.5%, that indicates positive changes and conditions that ensured macroeconomic stability of 2012 - 2014, through the efforts of both economic entities and state authorities. For example, the income from foreign trade in 2014 exceeded revenues of 2011 by 4.7 times.
Upward trend in the share of imports in contribution to GDP in relation to the contribution of exports, especially to the share of the trade deficit, increases the vulnerability of national economy and the potential financial risks. This fact is indicative in the III, IV quarters of 2014, demonstrating the fall of payments from foreign trade. Receipt of payments in the IV quarter of 2014 amounted to 183.9 million PMR rubles, for the same period of 2013 - 220.5 million PMR rubles.
Key basic constraints of perspective development of the Pridnestrovian economy still remain:
-internationally unrecognized character of the state reflected in the status of ownership relations, conditions of foreign economic activity, attracting investment, freedom of access to external low credit resources;
- high dependence on external markets (high degree of openness);
- growing negative trade balance and the lack of own sufficient resources to overcome it;
- growing imbalance in the strategic need for increasing social benefits, life-sustaining activity of the population and the inability to fully funding from its own resources.
Depreciation of industrial and social infrastructure to 80 - 100% requires major public investment. Real resources of the owners of industrial enterprises provide social function of maintaining employment in order to prevent galloping migration. Systemic measures and adequate solutions to risk for real stabilization require injections of 2 to 3 billion US dollars into the economy and social sphere (not only according to the PMR’s government estimates, but also in highly professional experts’ opinion in the field of the economy).
In terms of regional instability, the global economic turbulence, we have to a partial increase in utility tariffs. Definitely - cheap and free are better, but it is when there is an opportunity and resources.
Constant underfunding of the industry, 1 billion PMR rubles of various benefits, not really financed from the budget, forced the Government of the PMR to take unpopular decisions:
1) infrastructure is destroyed and requires investment;
2) the owners of property in apartment buildings get more benefits than the owners of private houses;
3) housing stock in apartment buildings is actually private;
4) citizens in apartment buildings can refuse themselves the services provided by municipal enterprises, to create their own HOA (Homeowners Association) and solve the problem of the amount of fees, but most of them prefer to be administered by municipalities, requiring lower tariffs.
In these circumstances, the Government of the PMR took the right measure on finding additional sources of funding the growing infrastructure needs of utilities, since it is impossible, everyone understands, to increase the amount of work in utilities without real means. Therefore, on September 10, 2014 on the proposal of the Government a project to identify additional source was launched – the Law of the PMR “On the property tax of legal entities” which was supposed to set a minimum rate of about 0.1% of the property and collect as many as 16 million PMR rubles into the utilities re-equipment and development Fund that beforehand would cover about 50 % of the required planned injections, the remaining 50 % was supposed to be collected by raising tariffs for the population.
That option was proposed precisely because all, without exception, legal entities actually get the economic benefits from the established energy supplies. It was supposed that legal entities understanding the need to find resources would share the burden between legal entities and organizations where our citizens work and the citizens themselves.
However, perhaps, careless reading or purely mathematical account of corporate interest and their own incomes of commercial organizations actually created the conditions for rejection of the proposal of the Government of the PMR and the untrusting of increase in tariff only to citizens. Alas, there is no constructive alternative to the proposals of the Government of the PMR.
Majority of realistic people understand that the absence of progressive steps and economically justified tariffs creates conditions where the increase may in the near future become precipitous in tens of times, such as our neighbors have. Therefore, in this area, as in matters of state, rational steps of the state are important, albeit unpopular, but without populism, lies and demagoguery.
Today the international situation and the economic situation in the world and the region as a whole change in different directions and dynamically more than ever. Various risks change and intensify, and the risks become tougher. There are about 800 million hungry people, approximately 200 million of constantly migrating in search of work or a better life. And we, comparing the situation in the world and the region should say thanks to God, friends, partners - everyone who lives and works for the development of the country in incredibly difficult conditions. Thank you for your faith, diligence and perseverance.
I would like to emphasize that in the context of social and economic difficulties “defenders of the people”, “patriots”, multiplying gossip and sowing additional uncertainty, “float”. They try to rise on the problems of people through lies and manipulations using objective difficulties as a step to improve their self-worth or maintain in the ranks of the same government or local authorities, as well as, perhaps, to destabilize the country as a whole. I propose to citizens to be more careful and cautious in this difficult period for the country and catch on the motives of those who speculate with slogans without offering anything constructive in return, sow hatred and discord.
In the context of external pressure on the country, with a clear effort of our partners in Kishinev and Kiev to change the political course of the republic we should expect a number of provocative actions and within the country.
According to the special services of Pridnestrovie, information sabotage, disturbing the public, against the country and its leadership, are well-funded both outside and inside the country by those, perhaps, who were forced by the current government to pay more than 100 million US dollars in the budget in addition for the past three years.
Can we afford to stimulate the economy, and whether there is a resource base for this which is adequate to the needs? Are the internal stimulation resources adequate to external existing conditions, risks, destabilizing effect at the traditional markets of raw materials and goods? What is the impact of these markets on economic activity within Pridnestrovie under the conditions where the uncertainty of economic outlook of neighboring countries is growing? To develop an investment plan that can change the situation, stimulate job creation adjusting to new markets or to goods for the local market, it is necessary to answer the questions: what is the investment component, where are the obvious motives and incentives of the investments, how realistic is profit in business and exactly what kind of in this situation, what business has high profit (what production is competitive, profitable for the domestic and export markets), how clearly and precisely has the competitive environment been regulated, and how effective is protection against monopolies and excessive state control.
These issues are on the agenda of state authorities and are reflected in the decisions only partially so far, and this has the potential to mitigate the impact of negative regional developments.
Stimulating factors of the European economy – it is a cheap euro, stimulating the buying of the ECB securities, low refinance rate and low-cost loans, low cost of fuel. What tools set forth above are at the disposal of the Government of PMR?
The political appeal of retaining low cost prices and tariffs for housing services, health services lower than the real cost without real adequate to charges and required amortization of fixed assets, investments and subsidies to the industry (for compensations) resulted in an outflow of professionals from the industry, high energy intensity, economic inefficiency, aging of infrastructure.
Injection of additional extrabudgetary resources in health and education areas for the 2012 - 2014 years amounted to about 120 million US dollars (the most significant investments for the entire period of existence of the PMR). This is in 12 times higher than the volume of the corresponding capital expenditure budget for the previous periods. However, this is only about 10 % of our needs.
At the same time, the positive impact of these projects on the formation of the sphere for the lives of our citizens is tangible. I take this opportunity to thank those whose efforts have made possible the implementation of serious humanitarian projects on the territory of Pridnestrovie. On the scale of the volume of financing this is, first and foremost, the Russian humanitarian project through NGO “Eurasian Integration”, and the projects of the Pridnestrovian Humanitarian Fund, and international organizations, including under the auspices of the UN, and private investment of the Pridnestrovian economic agents in the social infrastructure.
Slogans without real economically justified proposals, costed benefits for the state and citizens, the consequences for all spheres of life, whether voiced by the state authorities, whether by economic actors, being more like political speculations in order to obtain economic benefits at somebody's expense or to enhance political appeal based on, for example, the same political pre-election period.
And such calls from the series “give everything to everybody for free or cheaply and without necessary means are more inspired by romanticism of good past or the urge to mislead people about the real possibilities of the state today and therefore close the need to be aware of the objective situation, which sets the task to earn as much as the state needs, and not to spend as much as you want! Conscious actions are the key to success. Proposals and initiatives put forward discounting the knowledge, without application of economic laws, lead to degradation of the entire state system.
The word “crisis” is on the lips of many, is still on the agenda of most Pridnestrovians and causes concerns and insecurity about the future. Crises in the world, and in particular at the neighbours, often make us to look around and bestir, to develop a new course, continue optimal stabilization steps and create basis for development. Peace and regional cooperation of countries will have radical change in the paradigm of development.
According to the figures of economic indicators in our traditional partner countries markets of raw materials and markets for our finished goods, 2015 will be complicated. It is confirmed by the figures of Pridnestrovian budget in the 4th quarter of the previous year and by indicators of two months of the current year. The situation will change; it will influence our economy, each Pridnestrovian citizen. It is important to give state ideology a big positive impetus in order to unite intellectual potential, to release those, who are not capable to express constructive positivism in real life, due to the absence of knowledge and professional experience, from populism. Deficit of positive suggestions, including that, experienced within the state authorities should not be filled with shallow knowledge, opinions and rumors. This important understanding should promote unity of constructive ideas of Pridnestrovian professionals!
There is great necessity sensed in the society to separate the wheat from the chaff, opinions from knowledge about state and corporate management. And here we need more far-reaching work of both governmental bodies and mass media in order to define priorities of support of intellectual potential of our state. The more conscious this work is, the more effective the crisis management will be. And I believe that new growth will follow this crisis. Thus are the laws of the social community.
Today we have the following realities in the regional economy: decline of business activity in Ukraine, Moldova and Russia led to fall of demand for Pridnestrovian goods and created price fork of economic disadvantageousness for export of our goods to our traditional markets due to devaluation of national currencies among other things. This situation is aggravated by the continued blockade of our exports, transport logistics, banking sphere and nontransparent methods of non-tariff regulations adopted by our Moldovan colleagues. Moldova’s blocking of opportunities of the Pridnestrovian economy is politically motivated and has a clear goal of destroying the very basis of any state – its economy.
Generally speaking, even in such negative environment of external blocking measures our state demonstrates stability. It is the vigor of our government and central bank which allowed to soften the hard blow of global and regional economic crisis. I would like to note that in 2012 our central bank received not a single dollar from outside in order to support the course of our national currency.
And here is the task to involve intellectual forces of the whole society in order to find effective solutions under the press of negative economic events and their consequences. The analysis shows that, given the reduction of resources and opportunities to regulate the internal processes, the Government of the PMR built a correct action plan. The main problem – a lack of resources adequate and comparable for the situation to stimulate the economy and the extremely narrow corridor for maneuvering with opportunities, which determines both decisions and prospects. Financial and administrative resources should not be illusory to actually minimize the negative trends in the economy. Understanding of it is a step to awareness of actions in the crisis.
Little infighting artificially provoked from within for the sake of cheap populism, for the sake of the elections, the false attraction must move to history. It is important what, who and how can really help in the crisis, rather than who louder voices slogans, requests, which, in its turn, are the tools to hide the will to self-promote on issues to preserve the ephemeral task, such as the preservation of a position in the state authorities or local government. Under these conditions, the most important merit of the law enforcement bodies is preservation of a high level of law and order, and it is important today to strengthen the fight against crime.
Law enforcement bodies and intelligence services within the law will act firmly and irreversibly, as they are acting, including in Western democracies. Citizens, businesses should feel protection of law enforcement bodies.
Great victories in the state are possible largely due to the unity, true faith and positive thoughts and actions, diligent and effective work. There are always those who benefit from discredit and collapse of the state.
Anti-crisis programme of the Government of the PMR is more administrative and technical in nature due to the lack of demanded risk-adequate resources to increase the liquidity of the banking system and to make targeted injections into strategic economy sectors.
Today, I must say that we are in the stage of implementation of a difficult, unpopular decision: either we solve the problem of lack of income through the currency devaluation and pay the owed wages and benefits at sharp inflation and skyrocketing prices or reduce expenditures and form arrears of wages and pensions and hold the devaluation and inflation in stable parameters.
For example, 1% depreciation of the ruble (devaluation) – is about 0.5% inflation rate (appreciation) of life.
I supported the proposal of the Government of the PMR on keeping costs within falling resource possibilities of incoming revenues while maintaining firm indicators at the exchange rate and low inflation.
I am asking all public authorities and society in difficult times to support the Government in making difficult and unpopular temporary decisions in the current conditions.
I would like to call for the preservation of interethnic tolerance, leniency and pragmatism in the society; we should not allow the situation heating up as on the ideological, religious, and property levels – it is a road to nowhere.
Now the state unity, professionalism and efficiency as of public authorities as well as of all economic entities are needed. In these difficult conditions, representatives of the government are aimed at not to be drawn into provocations as on the one side of the border as well as on the other one, and within the resource possibilities will minimize the negative consequences.
Internal and external negative efforts aimed at changing the perception of reality, at transcoding the ideological foundation of the Slavic and Orthodox values, as I am convinced, will not affect the majority of the constructive Pridnestrovian society.
I am confident that the most important element in any situation is preservation of the stability of the spirit, faith, development of the inner world of each of us, unity in positive thoughts and subsequent actions. It is a pledge of the great development and spirituality of every Pridnestrovian.
Time has chosen us. The destiny granted us trials and we should pass them with dignity.
I believe it will be so.
I take this opportunity to thank all those who are in the hall and in the workplace, our esteemed veterans for hard work, diligence and understanding.
Our challenge is to implement an incredible conception in the most difficult conditions – by the genuine faith and willpower to achieve our goals, independent and dynamic development of the Pridnestrovian people and each one of us.
Thank you for your attention.
Source: president.gospmr.ru
