Author: Arsen Araqelov

Russia has developed an investment program named “Investment Program Promoting the Socio-Economic Development,” through which supports the socio-economic development of the Russian-occupied regions of Georgia, Abkhazia and the Tskhinvali region. The program is aimed at improving the infrastructure in the occupied regions, implementing investment projects in the real sector of the economy, creating a favorable investment climate for attracting private investments and creating more jobs.

As a result of investment programs and financial assistance provided in other forms, the occupied regions’ reliance on Russia is increasing. The “budget” and economy of the Tskhinvali region are completely dependent on Russia.

When Did the Program Implementation Start?

Russia has been actively providing financial assistance to the occupied Tskhinvali region since the 2008 Russian-Georgian war and Russia's recognition of the region's independence. In the wake of the war, Russia developed a complex plan for the recovery of the Tskhinvali region which was implemented in 2008-2010. In these years, Russia helped the de facto republic with RUB 9.61 billion. The plan provided for the restoration/construction of 868 different objects.

Investment programs under this name have been implemented since 2011. In 2011, Russia provided a RUB 6.58 billion assistance to the region. The 2012-2013 program was financed with RUB 4.59 billion. In 2014, the region received RUB 2.8 billion under a one-year program.

Three-Year Investment Programs

Three-year programs have been implemented since 2015. The format is still preserved.

In 2015-2017, a RUB 9.1 billion assistance was allocated for each region, the de facto republics of the Tskhinvali region and Abkhazia. In 2017-2019, the amount of aid decreased and totaled RUB 4.5 billion for each occupied region.

The 2020-2022 program allocated RUB 4.5 billion (equaled to USD 72 million by that time) for each occupied region. As a result of the assistance, several important projects were implemented in the Tskhinvali region such as the construction of the Dzuarikau-Tskhinvali gas pipeline through which Russia became the only gas supplier to the region. In addition, important highways - Tskhinvali-Znauri (Georgian name Kornisi) and Tskhinvali-Leningori (Georgian name Akhalgori) were rehabilitated and connected Tskhinvali to district centers.

Among the implemented important projects were the arrangement of the water supply system, the construction of the water pipeline infrastructure between Tskhinvali and the village of Edisi, and Tskhinvali and the village of Vanati which contributed to the improvement of Tskhinvali's water supply. The restoration of the de facto parliament’s building is also worth mentioning. The building was damaged during the 2008 war.

Evaluation of the 2020-2022 Investment Program

At the end of 2022, the de facto President, Alan Gagloyev, announced that 95% of the planned works under the 2020-2022 investment program were completed on time. According to the de facto Minister of Construction, Architecture and Housing and Public Utilities, Eduard Dzagoev, the restoration/construction of five objects planned in 2020-2022 will be implemented in 2023.

Facts of corruption and financial machinations related to the 2020-2022 investment program were also reported. The de facto Prosecutor's Office identified violations as a result of the audit of the Dorexpostroy “state” company which is subordinate to the “Committee” for the Construction and Operation of Highways. The de facto Prosecutor's Office accused Semyon Makiyev, the then Head of Dorexpostroy, of money laundering, namely, misappropriation of RUB 4 million 661 779 thousand (approx. USD 56 thousand), which was allocated for the purchase of bitumen under the investment program.

Investment Program for 2023-2025

On November 18, 2022, the Russian State Duma ratified a resolution on the 2023-2025 investment program promoting the socio-economic development of the de facto republic of the Tskhinvali region.

According to Dzagoev, as part of the  2023-2025 investment program, Russia will assist the Tskhinvali region with RUB 3 billion 587 million (approx. USD 52 million as of March 2023). As he stated, a total of 46 projects are planned under the new program, including those 37 projects which have been started under the previous investment program. A total of 44 of the planned activities are related to capital construction.

Road Infrastructure

The construction of the Ertso-Sinaguri highway will continue in 2023. The highway will be commissioned in 2024. The construction of the Kvemo Roka-Edisa highway is also planned.

The rehabilitation of a bridge on the Liakhvi River and the construction of bridges in Java and Znauri (Kornisi in Georgian) districts are also planned in 2023.

Improvement works on 27 streets (Putin, Medvedev, Caucasus, Gagarin, Stalin, Mayakovsky, etc.) will be carried out in Tskhinvali. A total of nine streets will be rehabilitated in 2023, twelve - in 2024, and six streets - in 2025.

Energy

It is planned to change technical equipment at the electrical substation in the Znauri settlement (Kornisi in Georgian) and reconstruct the electrical substation in the Java district.

According to Atsamaz Kabisov, the Director of the Energoresource “state” company, the installation of electricity meters will continue within the program and the process will be completed in 2026.

Engineering Networks

Among the important projects planned within the program, the restoration of damaged sections of the Edisi-Tskhinvali main water pipeline is worth noting. The water supply system providing water to the village of Khetagurov from Tskhinvali reservoirs will be reconstructed; as a result, several nearby villages will also receive water. Engineering networks will also be reconstructed in Tskhinvali.

Housing Fund

In 2023, the construction of two multi-apartment houses in Tskhinvali and Znauri (Kornisi in Georgian) will be completed. As planned, more 75-apartment buildings will be constructed in Tskhinvali until 2025.

Education

The dilapidated building of the Tskhinvali N2 school will be reconstructed. In 2023, it is planned to build a pre-school educational institution in the Tsarz microdistrict which should be put into operation in 2024.

This year, it is also planned to complete the construction of the Mziugomi camp which will accommodate 150 children and is being built on the territory of a former tourist base in the Java district.

When Will the Work Start?

The active phase of works planned under the investment program will begin in April 2023. According to Dzagoev, currently documents are being prepared.

In addition to the listed events, other, smaller works are also planned in the de facto republic, although, considering their scale and importance, even the Ossetian media does not draw attention to them.