Monthly Review

Review of Russia's Economic Relations with Abkhazia and the Tskhinvali Region

2023 / 03 / 01

Publication:  N23 / Review period:  February 1-28, 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

Bzhania's Visit to Moscow

The President of the de facto Republic of Abkhazia, Aslan Bzhania, has been in Moscow since February 14. During the visit, he met with the Minister of Economic Development of Russia, Maxim Reshetnikov, and the Deputy Chairman of the Government, Alexander Novak, who supervises the direction of the occupied regions in the government.

The meeting discussed the issue of cooperation in the field of energy, harmonization of “legislation,” gasification and protection of Russian investments in the de facto republic. In addition, the importance of restoring air traffic between the de facto republic and Russia was also discussed.

Meeting with the Russian Deputy Minister of Economic Development

The Prime Minister of the de facto Republic of Abkhazia, Alexander Ankvab, held a meeting with the Deputy Minister of Economic Development of Russia, Dmitry Volvach, who oversees the direction of the occupied regions in the ministry. Issues related to the program of forming a common socio-economic space between Russia and the de facto republic were discussed at the meeting. Volvach noted that at this stage, one of the main aspects of mutual cooperation is the monitoring of the implementation of the new Russian-funded investment program for 2023-2025. Special attention was also paid to the issue of co-financing salaries of “public officials,” which, together with the de facto government, is provided by Russia.

Visit to the Republic of Tatarstan

A delegation of the de facto Republic of Abkhazia, headed by the de facto Minister of Economy, Kristina Ozgan, paid a working visit to the Republic of Tatarstan. The delegation was given an introductory excursion to the KAMAZ automobile factory. The purpose of the visit was to study the experience of the Republic of Tatarstan. The guests were also hosted by the Head of the Republic, Rustam Minikhanov.

Cash Transactions

According to information published by the so-called National Bank of Abkhazia (Банк Абхазии), the cross-border monetary turnover through the banking system of Abkhazia amounted to RUB 123.7 billion (approx. USD 1 billion 650 million) in 2022, which is a 27% increase compared to the same period of 2021.

Abkhaz Wine in Moscow

The exhibition center Expocenter in Moscow hosted a large exhibition - Prodexpo which represented food products and beverages produced by Russia and Eastern European countries. The Wines and Beverages of Abkhazia wine company represented the de facto Republic of Abkhazia with its products.

Economic Relations Between Russia and the Tskhinvali Region

Unified Customs Tariff

The Federal Customs Service of Russia signed a protocol according to which the customs tariff and customs fee at the so-called border of the de facto republic of the Tskhinvali region will be identical to Russia and the member states of the Eurasian Economic Union. The agreement was signed by the Heads of the Customs Service of Russia and the de facto Tskhinvali, Vladimir Bulavin and Murat Tskhovrebov. The protocol is valid for a 3-year term and its validity will be automatically extended after the expiration. 

Meeting of the “Intergovernmental Commission” in Moscow

On February 8, a meeting of the “Intergovernmental Commission” of the de facto republic of the Tskhinvali region and Russia was held in Moscow. A delegation of the de facto government was headed by the de facto President, Alan Gagloyev, and a Russian delegation was represented by the Deputy Chairman of the government, Alexander Novak. The meeting discussed issues related to the Russian-financed investment program for 2023-2025 which is aimed at promoting the socio-economic development of the de facto republic.

According to Novak, Russian banks are ready to give a RUB 2 billion credit to entrepreneurs who will implement projects in the occupied Tskhinvali region. The meeting approved the investment program for 2023-2025 which provides for the realization of 46 projects in the de facto republic. A total of RUB 3.5 billion (approx. USD 47 thousand) has been allocated for this purpose.

Debt for Russian Electricity

As per the data of February 2023, the de facto republic of the Tskhinvali region has accumulated a debt of RUB 527 million (approx. USD 7 million) for electricity from Russia.

According to the Minister of Economy of the de facto Republic, Dzambolat Tadtaev, the debt must be repaid by 2025. As he noted, currently the de facto government can allocate only RUB 232 million (approx. USD 3 million). In addition, Tadtaev said that in 2022, the collection of electricity tax from the population amounted to 68% which is a 1% decrease compared to 2021. That is why Tadtaev called on the population to be more responsible in this matter and noted that the 2023-2025 investment program financed by Russia includes the installation of a new automated electricity metering system.

Ossetian Products in Moscow

According to the so-called Trade Representative of the de facto republic of the Tskhinvali region in Russia,Teimuraz Goginov, two companies - Highland Celi Brewery (Akhalgori Brewery) and Ironsan Winery, represented the occupied Tskhinvali at a large exhibition – Prodexpo which was held at the Expocenter exhibition center in Moscow.

The Brewery presented two types of traditional light-colored beer and one dark beer with trademarks - Iryston, Border star and Alano-va. Ironsan Winery presented several types of wine.

Products produced in the occupied Tskhinvali have been demonstrated at the Prodexpo exhibition for the fifth year. This is the second time for Ironsan, and - the debut for Brewery.

The exhibition was visited by a government delegation of the de facto republic of the Tskhinvali region under the leadership of the so-called President, Alan Gagloyev, who was in Moscow to participate in an Intergovernmental Commission meeting.