Publication:  N33 / Review period:  January 1 – February 29, 2024 / Author:  Arsen Araqelov 

Review of Russia’s Economic Relations with Abkhazia and the 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 and the Fuel Crisis

On January 30, the de facto President of Abkhazia, Aslan Bzhania, together with the de facto Minister of Economy, Kristina Ozgan, and the de facto Minister of Energy and Transport, Jansugh Nanba, left for Moscow. The purpose of the visit was to resolve the fuel crisis in Abkhazia.

During his visit to Moscow, Bzhania met with the Russian Foreign Minister, Sergey Lavrov, and many other high-ranking officials. More detailed information about the visit has not been disclosed. On February 21, Bzhania gave an interview to the Russian state news agency TASS, where he touched on several issues, among which he made public the details of his visit for the first time.

The fuel crisis arose after Russia decided to grant the right to import petroleum products to Abkhazia only to Rosneft. According to Bzhania, as a result of the negotiations, fuel will be supplied to the de facto republic regularly, there will be no shortage, and in the future, the parties will agree on the optimal solution.

Meeting between Aslan Bzhania and Sergey Lavrov

Car Insurance

In occupied Abkhazia, they are considering increasing the fine for the absence of an insurance policy for cars with Russian license plates crossing the border of the so-called republic to RUB 5,000 from the current RUB 600. 

The ”law” on compulsory car insurance in Abkhazia was adopted back in 2006, but its implementation began only 16 years later. The small amount of the fine does not seem to be a sufficient “incentive” for car owners with Russian license plates to insure their cars when entering the de facto republic.

Currently, four companies are operating in Abkhazia that insure cars with “foreign license plates.” All four are public-private. The cost of insurance for 15 days is RUB 1,000, and for one month – RUB 1.5 thousand.

One of the largest insurance companies, Garant-Insurance, insured about 90 thousand cars in 2023, which is twice as much as in 2022.

Crisis in Wine Production

The largest winery in occupied Abkhazia, Wines and Beverages of Abkhazia, owned by the Achba family, has not been operating for more than a month. According to the company, the de facto government has decided to impose a 30 percent excise tax on materials needed to produce wine. This complicates production and increases the cost. Distributors told the company that if the wine price increases, they will not be able to sell the product. The company is currently in negotiations with the de facto government. The company is the largest exporter of Abkhaz wine to Russia.

Jobs at Sokhumi Airport

The de facto government of the Republic of Abkhazia announced vacancies at the V. Ardzinba Sokhumi International Airport. The airport restoration work is being carried out by the company owned by Rashid Nurgaliev, the son of the Deputy Secretary of the Russian Security Council. Reportedly, technical flights from the airport will begin no later than July 2024, and the airport will start full operation on December 31, 2024, if “the international military situation does not escalate.” Due to the ban, international flights will not be operated from the airport, and flights will only be possible in the direction of Russia.

New Year Holiday Tourism Statistics

According to the de facto Ministry of Tourism, during the 2024 New Year holidays, occupied Abkhazia was popular among Russian tourists and entered the top ten of the most visited destinations. According to the agency, 5% more Russian tourists visited Abkhazia this year compared to the data for the 2023 New Year holidays, which is due to the better service offered by hotels.

Ritsa National Park was popular among Russian tourists. From January 1 to January 10, a total of 10,127 people visited the park. The financial benefit from the tickets sold amounted to RUB 6 million 525 thousand. For comparison, during the same period in 2023, the park was visited by 10,077 people, and the financial profit amounted to RUB 6 million 531 thousand.

The New Athos Cave was no less popular, which was visited by 7,324 people from January 1 to January 10, and the financial benefit amounted to RUB 5 million 126 thousand. For comparison, during the same period in 2023, the cave was visited by 6,395 visitors, and the profit amounted to RUB 4 million 476 thousand.

Tangerine Export

A representative of the de facto Ministry of Agriculture spoke about the citrus season and said that a total of 25 thousand tons of tangerines were exported from Abkhazia to Russia as of January 25. According to the same source, despite the fact that 39 thousand tons were exported in 2022, the harvest this year was of good quality, which also affected its price - increasing to RUB 80 per kilogram of tangerines.

Economic Relations between Russia and the Tskhinvali Region

Cancellation of Export Duty on Fuel and Lubricants

On January 10, an agreement signed between Russia and the occupied Tskhinvali region on the abolition of export duty on fuel and lubricants came into force. The Russian government has limited fuel exports from September 21, 2023, and from October 1, those countries, including occupied regions, to which fuel is still exported from Russia under the agreement, are subjects to additional tax.

At the end of 2023, the de facto President, Alan Gagloyev, said at his end-year press conference that Russia would abolish the export duty on fuel and lubricants for the occupied region. Gagloyev discussed this issue with the Deputy Prime Minister of the Russian Federation who supervises the occupied regions of Georgia, Alexander Novak, after which a protocol on the abolition of the tax was signed on December 30 in Moscow. The agreement came into force on January 10.

Meeting of Alan Gagloyev and Igor Maslov

On February 1, Gagloyev met with the Head of the Directorate for Interregional Relations and Cultural Contacts with Foreign Countries of the Russian Presidential Administration, Igor Maslov. Maslov visited the region on a two-day working visit. At the meeting, Gagloyev thanked Maslov for facilitating the Russian government’s decision to abolish the export duty on fuel and lubricants. Maslov got acquainted with the ongoing work as part of the investment program promoting the socio-economic development. The program was developed by the Russian government and aims at providing economic and infrastructural support to the occupied regions of Georgia - Abkhazia and the Tskhinvali region.

Meeting Between Alan Gagloyev and Igor Maslov

Prodexpo 2024

On February 5-9, Prodexpo 2024, the largest exhibition of food and beverages produced in Russia and Eastern European countries, was held in Moscow. Representatives of occupied Abkhazia and the Tskhinvali region also took part in the exhibition.

On the part of Tskhinvali, like previous years, participation in the exhibition was organized by the so-called Trade Representative in Russia, Teimuraz Goginov. According to him, the „Ambassador“ of the occupied Tskhinvali region in Russia, Znaur Gasiev, also made a big contribution to the organizational process.

Various goods such as wine, mineral water, tea and honey were presented at the exhibition. Companies operating in the Tskhinvali region such as Ironsan Winery and Highland Keli Brewery presented their products (wine, brandy, beer and mineral water).

It should be noted that products produced in the occupied Tskhinvali region have been presented at Prodexpo in Moscow for the sixth year in a row. This is the third year for Ironsan Winery and the second for Brewery. In recent years, representatives of the occupied regions actively participate in Prodexpo exhibitions. Products from occupied Abkhazia (including alcoholic beverages) were also presented at the exhibition.

Tskhinvali Region’s Stand at the Exhibition

Ossetian Beer in the Annexed Crimea

On February 2, the Chairman of the so-called parliament, Dzhambolat Tadtaev, visited the Russian-annexed Crimea where he met with representatives of the de facto government of Simferopol. A number of issues were discussed at the meeting, including the appointment of the Tskhinvali-Simferopol bus line for the summer period. Reportedly, the parties also agreed to export Ossetian beer from the Tskhinvali region to Crimea. The beer is bottled in a brewery located in Akhalgori. Following the meeting, the parties signed two agreements on trade and professional cooperation.

Meetings Between the De Facto Governments