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Without ideology: South Caucasian states will have to build communications

A few days ago, mass media once again reported attempts to restore the airport in Sukhum, Abkhazia. Once the biggest in the Soviet Union, the airport has been idle for as long as 25 years. It is not closed but it has just one flight – from Sukhum to the nearby mountain village of Pskhu. It is also used for official flights but all attempts to restore it as a civil airport have failed so far.

This time the initiative has come from Russia’s new Trade Representative to Abkhazia Vladimir Nekrasov, who says that some Russian companies are ready to restore the airport but there are no investors.

The estimated cost of the project is two billion rubles but there are doubts that the project will pay off.

Much has changed in the region over the last 25 years. Besides, as a rule, such projects directly depend on global economic developments.

The airport is 20 km south of Sukhum, in an area with poor demography and lots of infrastructural and social problems. The heart of Abkhazia is in the west, where the country has a couple of sea resorts and where in summer the number of tourists is sometimes bigger than the number of locals. But that area is 100 km far from Sukhum. The Russian airport of Sochi is much closer and that airport has dozens of flights and quite low ticket prices. So, even if restored the Sukhum airport will not be a match to it.

In the Soviet times, the Sukhum airport served the local area and the east of the republic, which was also a tourist center. But today it is not. Besides, in the Soviet times, the airport served the western regions of Georgia. Today, Abkhazia has no contacts with that country.

So, if restored, the Sukhum airport will have very few customers. As a result, its services will be expensive. The only profitable flight will be to Moscow. So, it turns out that the only profit the airport can give to Abkhazia is the image of a country having an international airport. The only problem is that this image costs two billion rubles – a sum the Abkhazian authorities don’t have and will hardly have in the near future.

This might be the end of the story but this example reveals the general situation in the South Caucasus.

Protracted armed conflicts have ruined the economic foundations of that region. The local countries have sustained huge losses and now after 25 years, closed borders have become the only thing local societies know – for they have never seen life with open borders and operating roads.

Big economic and infrastructure projects are good for them but they will not work out if not based on many other factors.

The head of Abkhazia’s national air company Vyacheslav Eshba says that airports generally serve as economic stimuli but if they are faced with closed roads and no transit, they give no profit.

In Georgia, they are talking a lot of global infrastructure projects, like big seaports, but in reality even such promising projects are the Baku-Tbilisi-Kars railroad are still on paper only. And even if realized, will hardly cause an economic boom in the region.

Bigger countries, like Georgia and Armenia have managed to develop their home markets and thereby to recoup the losses caused by their political conflicts. For example, Armenia has almost all the food it needs: it produces all of the vegetables, fruits and milk, almost all of the meat and half of the bread it consumes. The Armenians cultivate more than 3/4 of their arable lands.

In 2015, exports gave them $1.5bn and food and drinks had quite a big share therein. So, we can say that despite hard geopolitical conditions, Armenia has made the best of the resources it has.

But the low capacity of home market does not let Armenia to prosper and just like in Georgia, in that country, there are still regions with a very high poverty rate.

Much smaller Abkhazia and South Ossetia have no home markets and no demographic capacities for creating them.

Some people in Abkhazia believe that their country should develop home market-oriented production but the reality is that only 5.5% of land in Abkhazia is good for agriculture and that since 2004, the number of people engaged in agricultural and industrial activities have shrunk by 75%. In fact, today just 450 Abkhazian work in this sector.

That is Abkhazia has neither technological, nor land or human resources for having a home market that could help it to recover its economy.

Just one example: a few years ago, some farmers built greenhouses and began growing tomato and cucumber. Last year, it turned out that they produced much more than the domestic market could consume. As a result, the producers were forced to reorient their activities towards neighboring Russian regions.

Although quite developed, tourism is not able to help in the matter. The only options here are state support for domestic producers and restriction of imports. But if Abkhazia cuts imports, it will not be able to develop its exports to Russia – the only way for it to develop its economy.

One more bad factor for the Abkhazian food market is smuggling of Georgian agricultural goods. The nearby Georgian regions are not as urbanized as Abkhazia and have very developed agriculture. So, it is natural that they are trying to find sales markets for their goods.

Georgia, just like Armenia, has a relatively developed home market but it does not have real sector.

In the east of Georgia, there is a town called Signagi. Over the last few years, it has been turned into a tourist center. But despite thriving tourism, demography in that town is very poor. Since 1989, its population has shrunk from 3,500 to 1,500. So, we see that even serious investments are not able to stop the negative processes caused by geopolitical problems.

The inability of the South Caucasian nations to ensure stable economic growth has given rise to a bouquet of problems, like crises, social upheavals and instability. The problem here is much deeper – it is in the way those countries live.

Things will not stay as they are forever. The situation will change. Crises have already affected Russia and Turkey. Until recently, external players have not cared much for the economy of the South Caucasus. But now that they are also facing economic problems, things are changing.

On the other hand, the South Caucasian conflicts are too old to still be regarded as a groundless obstacle to big projects involving players like Russia, Turkey and Iran. Quite the contrary, those countries are beginning to show interest in the region and will force it to build more and more communications.

In other words, life is changing and the South Caucasian nations must review their agendas so as not to lose. Armenia is at an advantage here as it is the beneficiary of many transport projects. In contrast, its three northern neighbors are not ready for changes and may face serious problems as a result.

Anton Krivenyuk, specially for EADaily

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