Publication:  N22 / Review period:  January 1-31, 2023 / Author:  Arsen Araqelov

Overview of Russia’s Economic Relations with Abkhazia and Tskhinvali Region is being prepared within the framework of the project - Roadmap to Kremlin's Policy in Abkhazia and the Tskhinvali Region. The purpose of the publication is to provide an overview of economic relations between Russia and Abkhazia and the Tskhinvali region. The review is a monthly publication and will be useful for everyone – decision-makers, public employees, media representatives and other people who are interested in the Kremlin policy in the occupied regions of Georgia.

 

Economic Relations Between Russia and Abkhazia

Round Table on Cooperation Between Entrepreneurs

On January 31, 2023, Sokhumi hosted a round table - Economic Cooperation. Compatriots and Regions of Russia. The meeting discussed the perspectives of cooperation between the small and medium entrepreneurs of the de facto republic and Russia.

Photo 1:  Round Table

Meeting with the Representative of the Russian Customs Service

The Prime Minister of the de facto republic of Abkhazia, Alexander Ankvab, met with the Representative of the Customs Service of the Russian Federation in Abkhazia, Konstantine Kozlov. The meeting discussed the development of bilateral cooperation as well as noted the importance of the so-called border customs points for the development of relations between the de facto republic and Russia.

Wine Export to Russia

Wines and Beverages of Abkhazia, the largest wine producer and exporter company of the de facto republic of Abkhazia,  reduced its exports to Russia by 25% and sold 50% more products within the “republic” than in 2021. According to the General Director of the company, Nikolai Achba, it has become difficult for the enterprise to solve logistical issues, operate and export wine to Russia due to the ongoing war in Ukraine. According to him, the enterprise did not work for three months, the company sold 1 million 900 thousand bottles of wine in the de facto republic, although the year 2022 turned out to be difficult. Achba noted that he is not dissatisfied with the 2022 harvest despite the fact that heavy rainfall destroyed 10% of it.

The area of vineyards in occupied Abkhazia is increasing every year. In the last two years, additional 250 hectares were planted and vineyards on an area of over 1000 hectares produces the harvest.

Citrus Export to Russia

Export of agricultural products from occupied Abkhazia to Russia continues. As per existing data, a total of 35 thousand tons of tangerines have been exported so far, while this number in the same period of the last year equalled to 19 thousand tons.

In addition to tangerines, 200 tons of oranges and 500 tons of lemons were also exported. In total, after the start of the season (October 2022), 37 thousand tons of citrus were transported from Abkhazia to Russia. This process will continue until the end of February.

For comparison, a total of 22 thousand tons of tangerines were exported from occupied Abkhazia to Russia in 2021-2022 (October-February).

Locomotives for Abkhaz Railway

Abkhaz Railway purchased two locomotives. This is the first acquisition for occupied Abkhazia after the 1992-93 war. The acquisition should contribute to the increase in the volume of cargo transportation through the railway.

Economic Relations Between Russia and the Tskhinvali Region

Konstantin Jusoev Visits Moscow

The Chairman of the government of the de facto republic of the Tskhinvali region, Konstantine Jusoev, is on a working visit to Moscow.

Jusoev met with heads of VTB Bank. The meeting discussed the partnership between the bank and the de facto government within the framework of the new Russia-financed investment program for 2023-2025. In addition, Jusoev met with heads of the state development corporation “ВЭБ.РФ.”

During his working visit to Moscow, Jusoev also met with the Russian Minister of Agriculture, Dmitry Patrushev. Jusoev spoke about the importance of the Russia-financed 2023-2025 investment program for the de facto republic and expressed hope that the Russian Ministry of Agriculture will help in the development of the agricultural sector within the framework of the program.

According to Patrushev, over the last two years, the turnover between the de facto republic and Russia has doubled, and both exports and imports have increased.

Photo 2:  Meeting with the Minister of Agriculture

Progress of the Investment Program

The construction of two buildings within the framework of the Russia-financed investment program for 2020-2022 was completed in Tskhinvali. The completion of the construction of two more buildings is expected in 2023.

According to the Minister of Construction, Architecture, Housing and Utilities of the de facto republic, Eduard Dzagoev, the restoration/construction of five facilities planned for 2020-2022 will be implemented in 2023. According to him, the construction planned for 2022 was completed in half a year.

The active working phase of the 2023-2025 investment program will begin either in March or April.

Winemaking in the Tskhinvali Region and Export to Russia

According to the Head of the de facto Customs Committee of the Tskhinvali region, Murat Tskhovrebov,  the export of wine from the Tskhinvali region to Russia increased 2.5 times, and brandy - 3.5 times in 2022 compared to 2021.

In 2022, over 2.9 million liters of wine and over 1 million liters of brandy were exported from the occupied region to Russia while in 2021 wine export equalled to 1.2 million liters and brandy export – to 297 thousand liters.

Ironsani Winery is the main exporter of wine from the Tskhinvali region to Russia. This is the only enterprise producing wine and brandy. With the support of Russian investors, the factory was opened in 2018 on the basis of a canning factory, and in February 2019, the first batch of the drink was sent to Russia in the amount of 14 thousand bottles.

The winery produces a variety of wines, including Shiraz, Cabernet, Merlot, Sauvignon, Saferavi, Lomiauri and Mtsvane, and exports brandy aged from 3 to 12 years.