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July 22, 2017

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EU or Russia? Economic dilemma for Transnistra

TIRASPOL, Moldova--Founded under the tsars, the Kvint brandy distillery has survived three wars and the upheavals of history from Communist rule to the collapse of the Soviet Union.

Today, the wine and spirit producer operates from Transnistra, a breakaway region in Moldova whose economy faces a tough choice between Russia and the European Union.

The pro-Russian strip of land wedged between Ukraine and the Dniestr river proclaimed independence from Moldova in 1990.

Although it has not been recognized by any state, it has its own parliament, currency, and exists in a state of de-facto independence after a war that left 800 people dead.

"Kvint was founded in 1897 and of course it lived through all the ups and downs of history in this region," Anna Kozyrina, the distillery's PR-manager, told AFP in Tiraspol, the "capital" of Transdniestr.

The famous spirit produced by Kvint — Russians, Ukrainians and Moldovans call it "cognac" — has had its fair share of glory, making it to the Vatican and even into space, thanks to Russian cosmonauts.

But it was hit hard by Soviet leader Mikhail Gorbachev's anti-drinking campaign in 1986: vineyards were uprooted and for a year Kvint had to produce fruit juices instead of spirits.

Since then, Kvint has replanted more than 1,500 hectares of vineyards. It produces 20 million bottles a year and has revenues of US$50 million.

Kvint's Divines — the name given to the top-end brandies — are exported to Italy and China, although Russia, Moldova and Ukraine remain the company's main markets.

But as tensions soar between Russia and the West over Ukraine, Kvint and the main players of the Transnistra economy face two nagging challenges.

Caught in the Middle

The first is a potential erosion of trade with Kiev.

"The crisis has not affected us so far, but if it continues, it will impact our exports," Kozyrina said.

But the main bone of contention lies with the association agreement Moldova is due to sign in June with the EU, a move the pro-Kremlin authorities in Tiraspol fiercely oppose.

"What is happening in Chisinau, these moves towards the European Union are counter-productive," the president of Transnistra, Yevgeny Shevchuk, told AFP.

He wants the enclave to join the Kremlin-led Customs Union, a nascent alliance at the heart of Russian President Vladimir Putin's bid to extend Moscow's influence.

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