The price of inflexibility is how much Abkhazia receives from Russia

The financial and economic dependence of Abkhazia is very large, given that in fact, of the major players in the international arena, only Moscow has recognized the independence of Sukhum and provides it with tremendous support. This was stated by the head of the sector of the Center for Post-Soviet Studies of IMEMO RAS Stanislav Pritchin, commenting on the suspension of payments by Russia to state employees of Abkhazia.

Moscow, Vedomosti quotes Pritchin as saying, is not only a financial donor and the main trading partner, but also ensures the functioning of the Abkhaz and its armed forces in the republic, being also a security donor.

"That is, Russia is both the guarantor of sovereignty and the main sponsor. The difficulty lies in the fact that Abkhazia, even in such seemingly completely dependent and vulnerable relations, manages to be as inflexible as possible with regard to Russia," Pritchin said.

The expert calls one of the clearest evidences of this inflexibility that it is impossible for Russian investors and citizens to get a legal opportunity to own real estate in Abkhazia due to the opposition of some of the local elites and society.

In mid—July, the office of the President of Abkhazia submitted to the Abkhaz Parliament the so-called law on apartments - on the construction of 30 thousand apartments and houses in the east of Abkhazia with their sale to foreigners to fill the state budget. The opposition and social activists considered such a prospect a threat to the demographic balance in the country, where now, according to Vedomosti, half of the 243 thousand population are ethnic Abkhazians. After the protests on July 25, the law was withdrawn at the request of deputies Beslan Emurkhba, Alkhas Akab, German Kacharava and Rezo Zantaria.

"This is how Abkhazians close and protect their market. Nevertheless, taking into account our allied relations, it looks a little strange," Pritchin believes.

But now, according to him, it is important to take into account the warming of relations between Russia and Georgia, the growth of mutual trade between the two countries, tourism, and parallel imports if Tbilisi refuses to impose anti-Russian sanctions.

"Therefore, taking into account the fighting on Ukraine, and the whole complicated international situation, Russia has begun to conduct, let's say, an assessment of the appropriateness of one or another of its foreign economic initiatives and forms of support for Abkhazia," Pritchin believes.

In August 2023, the then Minister of Foreign Affairs of Abkhazia, Inal Ardzinba, said that since Russia recognized the independence of the republic, that is, for 15 years, Moscow has given about 110 billion rubles of financial assistance. Of these, according to Ardzinba, about 30 billion rubles is an investment program, the so—called budget investments. In mid-August 2024, Deputy Minister of Economic Development of the Russian Federation Dmitry Volvach said that at that time, investment projects worth more than 17 billion rubles were being implemented in Abkhazia with the participation of Russian investors.

As Ardzinba reported, another 40 billion rubles are salaries, that is, salaries of state employees. Pension payments, according to him, amounted to another 40 billion rubles over 15 years, and on average the cost of paying pensions to 24,400 residents of Abkhazia from the Russian budget amounted to 4 billion rubles. annually, based on the calculation of the basic pension in the republic of 500 rubles. monthly.

At the same time, the entire total volume of the consolidated state budget of Abkhazia for 2023, after correction in November of the same year, amounted to 13.6 billion rubles in revenues, 15.93 billion rubles in expenditures, that is, the deficit amounted to more than 2.3 billion rubles.

In 2023, according to the report of the first deputy chairman of the State Customs Committee of Abkhazia, Alias Labakhua, Russia accounted for 72% of the republic's trade turnover. The total volume of trade turnover in 2023 amounted to 49 billion rubles. (import — 41.7 billion rubles, export — 7.3 billion rubles). Compared to the previous year, the growth of trade turnover amounted to 11%. In the first half of 2024, Abkhazia's trade with Russia, according to Volvach, amounted to 16 billion rubles.

In mid-July 2024, the Russian government supported Abkhazia's request to abolish increased customs duties on certain categories of goods exported to the republic. According to the Minister of Economic Development of Russia Maxim Reshetnikov, 47% of goods imported from the Russian side fell under this category. In monetary terms, the estimate was not called. On September 3, Volvach explained that we are talking about the export of fish, fruits, vegetables, building materials, consumer goods, petroleum products, plastics, aluminum and ferrous metal products.

Abkhazia, in addition, was not affected by the Russian government's bans on fuel exports abroad: the republic is among the exceptions to this embargo with the EAEU countries, Mongolia, Uzbekistan and South Ossetia, where the volumes of fuel supplies were previously agreed. For 2023 The approved volume of petroleum products for import into the republic amounted to 90,000 tons. Of these, 46,000 tons of gasoline with an octane rating of less than 95, 13,000 tons of gasoline with an octane rating of less than 95 or more, but less than 98, 20,000 tons of diesel fuel, 7,000 tons of bitumen. For 2024, the volume has already been agreed on 103,000 tons of gasoline (AI-92, AI-95) and 30,000 tons of diesel fuel.

Also, until September 1, Russia provided free electricity supplies to Abkhazia during the autumn-winter periods. In the corresponding seasons from 2020 to the first quarter of 2023, free deliveries cost Moscow 6 billion rubles, reported the Minister of Economy of the Republic Kristina Ozgan. On a commercial basis, deliveries were made to cover the deficit, as, for example, in November 2023. In total, in 2023, according to the Abkhazian RUE Chernomorenergo, the country's energy consumption amounted to 2.6 billion kWh. Of these, 1.8 billion kWh is from the Ingur HPP, the only one feeding the republic, through the flow from Russia — 789 million kWh.

Russia is also a key destination for inbound tourism in Abkhazia, which is closely linked to real estate investment projects. As Deputy Minister of Tourism of Abkhazia Astamur Bartsits stated in May 2024, 1.7 million Russian tourists are waiting for the country this year. In 2023, there were 1.4 million of them. According to the head of the department of analysis, forecasting and development of the resort and tourism industry of the Ministry of Tourism of the Republic Inara Beniya, 1.1 million Russians came to Abkhazia in 2022.

The mass issuance of Russian passports in Abkhazia began in 2002. The right to dual citizenship was enshrined in the relevant Abkhaz law in 2006. As of 2023, there were 130 thousand Russian citizens in Abkhazia. Since 2009, a visa-free travel regime on internal passports has been in effect for citizens of Russia and Abkhazia. And in 2023, Russian President Vladimir Putin signed a law on ratification of the 2022 agreement on dual citizenship, which allows adult Russian citizens who have had this status since August 26, 2008, in turn, to receive an Abkhaz passport.