22 CATAN AND OTHERS v. MOLDOVA AND RUSSIA JUDGMENT In its recent and largely unilateral attempts to resolve the Transdniestrian conflict, Russia has demonstrated almost a Cold War mindset. Despite comforting rhetoric regarding Russian-European Union (EU) relations and Russian-U.S. cooperation on conflict resolution and peacekeeping within the Newly Independent States of the former Soviet Union (NIS), old habits appear to die hard. Russia remains reluctant to see the EU, U.S. or the Organisation for Security and Cooperation in Europe (OSCE) play an active role in resolving the conflict because Moldova is still viewed by many in Moscow as a sphere of exclusively Russian geopolitical interest. It has not been difficult for Russia to exploit Moldova’s political and economic instability for its own interests. Despite having accepted concrete deadlines for withdrawing its troops, Russia has repeatedly back-pedalled while trying to force through a political settlement that would have ensured, through unbalanced constitutional arrangements, continued Russian influence on Moldovan policymaking and prolongation of its military presence in a peacekeeping guise. It has so far been unwilling to use its influence on the DMR [“MRT”] leadership to promote an approach to conflict resolution that balances the legitimate interests of all parties. Ukrainian and Moldovan business circles have become adept at using the parallel DMR economy to their own ends, regularly participating in re-export and other illegal practices. Some have used political influence to prevent, delay, and obstruct decisions which could have put pressure on the DMR leadership to compromise. These include abolition of tax and customs regulations favourable to the illegal re-export business, enforcement of effective border and customs control, and collection of customs and taxes at internal ‘borders’. With backing from Russian, Ukrainian and Moldovan economic elites, the DMR leadership has become more assertive. Recognising that international recognition is unlikely, it has focused on preserving de facto independence through a loose confederation with Moldova. Unfortunately, DMR leaders - taking advantage of contradictions in the tax and customs systems of Moldova and the DMR - continue to draw substantial profits from legal and illegal economic activities including reexports, smuggling and arms production. The DMR has become a self-aware actor with its own interests and strategies, possessing a limited scope for independent political manoeuvre but an extensive web of economic and other links across Russia, Moldova, and Ukraine. However, it remains heavily dependent on Russian political and economic support and does not like to put itself in a position where it must act counter to Russian policy. Russian and DMR interests often overlap but in some instances DMR leaders have been able to design and implement strategies to avoid Russian pressure, delay negotiations, obstruct Russian initiatives, and undermine Russian policies by playing up disagreements between the co-mediators and capitalising on alternative sources of external support. Russia’s most recent attempt to enforce a settlement - the Kozak Memorandum in October and November 2003 - has shown that its influence, while pervasive, has clear limits. Russia is unable to push through a settlement without the support of Moldova and the international community, especially key players such as the OSCE, EU, and the U.S. A comprehensive political settlement requires an approach that can bridge the differences between Russia and other key international actors while fairly considering the interests of both the Moldovan government and the DMR.