Economy of Abkhazia

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The economy of Abkhazia is heavily integrated with the economy of Russia and uses the Russian ruble as its currency.

Contents

Economy of the Republic of Abkhazia
Аԥсны Аҳәынҭқарра (Abkhaz)
Apsny Ahwyntqarra
Республика Абхазия (Russian)
Respublika Abkhaziya
Flag of the Republic of Abkhazia.svg
CurrencyRussian Ruble
Statistics
GDP $439.6M (2020)
GDP per capita
$1,795 (2020)
All values, unless otherwise stated, are in US dollars.

Abkhazia has experienced a modest economic upswing since the 2008 South Ossetia war and Russia's subsequent recognition of Abkhazia's independence. In 2011, about half of Abkhazia's state budget was financed with aid money from Russia. [1] In 2021 43.6% of Abkhazia's state budget was financed by aid money from Russia, while 56.4% of the budget came from local income.

Tourism

Tourism is a key industry and, according to Abkhazian authorities, almost a million tourists (mainly from Russia) came to Abkhazia in 2007. [2] Since Abkhazia and Russia have signed a visa-free travel agreement, Russian passport-holders do not require a visa to enter Abkhazia. Holders of European Union passports require an Entry Permit Letter issued by the Ministry of Foreign Affairs in Sukhumi, against which a visa will be issued upon presentation of the Letter to the Ministry. [3]

Transport

Abkhazian railway is a rail operator in Abkhazia. Under a monopoly agreement, it is fully managed and partially owned by Russian Railways for a ten year contract from 2009-2019. In 2016, 307,748 people traveled between Abkhazia and Russia by rail. [4] There is also the New Athos Cave Railway, an underground electric railroad serving the New Athos Cave in the town of New Athos.

Sukhumi Babushara Airport is the main airport of Abkhazia, located some 20 kilometres (12 mi) from Sukhumi.

Agriculture

Abkhazia's fertile land and abundance of agricultural products, including tea, tobacco, wine and fruits (especially tangerines), have secured a relative stability in the sector.

Electricity generation

Electricity is largely supplied by the Inguri hydroelectric power station located on the Inguri River between Abkhazia and Georgia proper and operated jointly by Abkhazia and Georgia. Inguri generation capacity is frequently insufficient due to low water levels and its poor technical state, so for years the Abkhazian grid was supplemented by Russia at a discount price, which was discontinued in late 2024 after the Abkhazian parliament refused to sign an agreement that would allow Russia to buy land in the republic. As a result, Abkhazia faced a severe electricity crisis with electricity available only 4-5 hours per day. [5] [6] The crisis is aggravated by cryptocurrency mining businesses that are using up to 50% of the deficit and did not stop in spite of the crisis. [7]

Trade

The exports and imports in 2006 were 627.2 and 3,270.2 million rubles respectively (appx. 22 and 117 million. US dollars) according to the Abkhazian authorities. [8]

In July 2012, the State Customs Committee for the first time published trade statistics. It reported that in the first half of 2012, imports had been worth 6.748 and exports 1.48 billion ruble, resulting in a 4.6518 billion ruble trade deficit. At the same time, while imports had stayed virtually the same (decreasing by 0.2%), exports had risen by 25.8%. Abkhazia's main trading partners were Russia (64%), Turkey (18%), the Baltic states (5%), Moldova (2%), Germany (2%), Ukraine (1%) and China (1%). [9]

Foreign investment

Many[ quantify ] Russian entrepreneurs and some Russian municipalities have invested or plan to invest in Abkhazia. This includes the Moscow municipality after the former Mayor of Moscow, Yury Luzhkov (in office 1992–2010), signed an agreement on economic cooperation between Moscow and Abkhazia. [10] Both Abkhazian and Russian officials announced intentions to exploit Abkhazia's facilities and resources for the Olympic construction projects in Sochi in the run-up to that city hosting the 2014 Winter Olympics. The government of Georgia warned against such actions, however, [11] and threatened to ask foreign banks to close the accounts of Russian companies and of individuals buying assets in Abkhazia. [12]

The CIS economic sanctions imposed on Abkhazia in 1996 formally remain in force, although Russia announced on 6 March 2008 that it would no longer participate in them, declaring them "outdated, impeding the socio-economic development of the region, and causing unjustified hardship for the people of Abkhazia". Russia also called on other CIS members to undertake similar steps, [13] but met with protests from Tbilisi and with lack of support from the other CIS countries. [14]

The European Union has allocated more than €20 million to Abkhazia since 1997 for various humanitarian projects, including the support of civil society, economic rehabilitation, help to the most vulnerable households and confidence-building measures. The EU's single largest project involves the repair and reconstruction of the Inguri power station. [15]

In April 2011, the government of Georgia summoned the Israeli ambassador for clarifications over an Israeli visit to Abkhazia and AP reported that the Israeli ambassador officially denied that Israel would provide arms to Abkhazia. [16]

In 2024 Abkhazian parliament rejected an agreement that would allow Russian investors to buy out land in the republic, which led to a political crisis as Russia has cut subsidised electricity and pensions payments. [6]

Corruption

According to a 2007 report by US-based organisation Freedom House, the region continues to suffer considerable economic problems owing to widespread corruption, the control by criminal organisations of large segments of the economy, and the continuing effects of the war. [17]

Related Research Articles

Anri Mikhail-ipa Jergenia had been one of the leading politicians of the internationally unrecognised Republic of Abkhazia since it achieved de facto independence from Georgia. From June 2001 to November 2002 he was the republic's Prime Minister and for a time Jergenia looked to be the favourite to succeed Abkhazia's first president Vladislav Ardzinba.

<span class="mw-page-title-main">Sergei Bagapsh</span> President of Abkhazia from 2005 to 2011

Sergei Uasyl-ipa Bagapsh was an Abkhaz politician who served as the second President of Abkhazia from 12 February 2005 until his death on 29 May 2011. He previously served as Prime Minister of Abkhazia from 1997 to 1999. He was re-elected in the 2009 presidential election. Bagapsh's term as prime minister included the 1998 war with Georgia, while he oversaw both the recognition of Abkhazia by Russia and the Russo-Georgian War during his presidency.

<span class="mw-page-title-main">Politics of Abkhazia</span>

Politics in Abkhazia is dominated by its conflict with Georgia. Abkhazia became de facto independent from Georgia after the 1992–1993 war, but its de jure independence has only been recognised by a few other countries. Abkhazia is a presidential representative democratic republic with a multi-party system, wherein the President is both head of state and head of government. Executive power is exercised by the government of the Republic of Abkhazia. Legislative power is vested in both the government and the People's Assembly of Abkhazia.

<span class="mw-page-title-main">Abkhazia conflict</span> 1989–present conflict between Georgia and the partially recognized Abkhazia

The Abkhazia conflict is a territorial dispute over Abkhazia, a region on the eastern coast of the Black Sea in the South Caucasus, at the intersection of Eastern Europe and Western Asia. The conflict involves Georgia, the Russian Federation and the Russian-backed self-proclaimed Republic of Abkhazia, which is internationally recognised only by Russia, Venezuela, Nicaragua, Nauru, and Syria; Georgia and all other United Nations members consider Abkhazia a sovereign territory of Georgia. However, as of 2023, Georgia lacks de facto control over the territory.

<span class="mw-page-title-main">Alexander Ankvab</span> Abkhaz politician

Aleksandr Zolotinskovich Ankvab is an Abkhaz politician and businessman who was the president of Abkhazia from 29 May 2011 until his resignation on 1 June 2014. He previously served as prime minister from 2005 to 2010 and as vice-president from 2010 to 2011 during the presidency of Sergei Bagapsh. He was appointed prime minister again on 23 April 2020 and resigned following the 2024 Abkhazian protests.

<span class="mw-page-title-main">Sukhumi</span> Capital city of Abkhazia

Sukhumi is a city in a wide bay on the Black Sea's eastern coast. It is both the capital and largest city of the Republic of Abkhazia, a partially recognised state that most countries consider a part of Georgia. The city has been controlled by Abkhazia since the Abkhazian war in 1992–93. The city, which has an airport, is a port, major rail junction and a holiday resort because of its beaches, sanatoriums, mineral-water spas and semitropical climate. It is also a member of the International Black Sea Club.

<span class="mw-page-title-main">Community for Democracy and Rights of Nations</span> Organization of unrecognized states

The Community for Democracy and Rights of Nations, also commonly and colloquially known as the Commonwealth of Unrecognized States, rarely as CIS-2, is an international organization in Eastern Europe and the South Caucasus of three breakaway states in the territory of the former Soviet Union, all of which have limited to no recognition from the international community.

<span class="mw-page-title-main">Georgia–Russia relations</span> Bilateral relations

Contacts between Russia and Georgia date back to the 15th and 16th centuries, and the most important stage started in the 1580s, when the Georgian kingdom of Kakheti and the Russian Empire signed a treaty of alliance in 1587. Relations between the two countries developed vibrantly and culminated in the Treaty of Georgievsk, which established eastern Georgia as a protectorate of Russia. At that time, Georgia saw Russia as a powerful Christian and modernizing neighbor, capable of protecting Georgia from invading Muslim empires and North Caucasian raiders.

<span class="mw-page-title-main">History of Abkhazia</span>

The history of Abkhazia, a region in the South Caucasus, spans more than 5,000 years from its settlement by the lower-paleolithic hunter-gatherers to its present status as a partially recognized state.

<span class="mw-page-title-main">War in Abkhazia (1992–1993)</span> War between Georgia and Abkhaz separatists

The War in Abkhazia was fought between Georgian government forces for the most part and Abkhaz separatist forces, Russian government armed forces and North Caucasian militants between 1992 and 1993. Ethnic Georgians who lived in Abkhazia fought largely on the side of Georgian government forces. Ethnic Armenians and Russians within Abkhazia's population largely supported the Abkhazians and many fought on their side. The separatists received support from thousands of North Caucasus and Cossack militants and from the Russian Federation forces stationed in and near Abkhazia.

<span class="mw-page-title-main">Foreign relations of Abkhazia</span>

The Republic of Abkhazia is a partially recognized state in the South Caucasus which declared independence from Georgia during the War in Abkhazia (1992–1993). At the time, the Soviet Union had recently collapsed (1991).

<span class="mw-page-title-main">Abkhazian railway</span> State-owned railway company in Abkhazia

Abkhazian railway is a rail operator in the partially recognised state of Abkhazia. Under a monopoly agreement, it is fully managed and partially owned by Russian Railways for a ten year contract from 2009 to 2019.

<span class="mw-page-title-main">Outline of Abkhazia</span> De facto independent state in Eurasia

The following outline is provided as an overview of and topical guide to Abkhazia:

<span class="mw-page-title-main">Background of the Russo-Georgian War</span> Overview of the background of the war

This article describes the background of the Russo-Georgian War.

<span class="mw-page-title-main">Abkhazia</span> Partially recognised state in the South Caucasus

Abkhazia, officially the Republic of Abkhazia, is a partially recognised state in the South Caucasus, on the eastern coast of the Black Sea, at the intersection of Eastern Europe and West Asia. It covers 8,665 square kilometres (3,346 sq mi) and has a population of around 245,000. Its capital and largest city is Sukhumi.

<span class="mw-page-title-main">Igor Akhba</span> Abkhaz diplomat and politician (born 1949)

Igor Muratovich Akhba is an Abkhaz diplomat and politician. From 2008 until 2021 he was the first ambassador of the Republic of Abkhazia to the Russian Federation, and in 2004 he was for a short time the Minister for Foreign Affairs of his country.

<span class="mw-page-title-main">Abkhazian Orthodox Church</span> Eastern Orthodox church

The Abkhazian Orthodox Church is an Eastern Orthodox church outside the official Eastern Orthodox ecclesiastical hierarchy. It came into existence when the Sukhumi-Abkhazian Eparchy declared on 15 September 2009 that it no longer considered itself part of the Georgian Orthodox Church and that it was "re-establishing the Catholicate of Abkhazia disbanded in 1795". Vissarion Aplaa is the Primate of the Abkhazian Orthodox Church since 2009 and is the self-proclaimed catholicos of the Church. It has two eparchies (dioceses) in Pitsunda and Sukhumi.

Tourism in Abkhazia has been an important part of its economy. Visiting Abkhazia for non-Georgian citizens is technically illegal under the Georgian law, by which the Georgian government prohibits most foreigners from entering the disputed territory except from the Georgian side, which in turn is not usually allowed by the Abkhaz authorities. Abkhazia continues to be accessible for tourists coming from the Russian side of the Abkhazia–Russia border which is not under Georgian control. Low prices and an absence of any visa requirements attracts Russian tourists especially those who can not afford the vacations in Turkey, Egypt, Bulgaria and other popular Russian touristic directions.

<span class="mw-page-title-main">Visa policy of Abkhazia</span> Policy on permits required to enter Abkhazia

Visitors to the Republic of Abkhazia must obtain an entry permit unless they are citizens of one of the visa-exempt countries.

References

  1. Nikolaus von Twickel (26 August 2011). "No Clear Frontrunner as Abkhazia Goes to Poll". The Moscow Times.
  2. Kommersant-Dengi, Тяжелая экономическая независимость Archived 13 September 2008 at the Wayback Machine (Hard Economical Independence), 08.09.2008 (in Russian)
  3. Ministry of Foreign Affairs of the Republic of Abkhazia :: Consular Service Archived 15 June 2008 at the Wayback Machine . Mfaabkhazia.org (2011-04-25). Retrieved on 30 May 2011.
  4. "Long-haul transportation infrastructure". 2016 Annual Report. Russian Railways. Retrieved 6 October 2018.
  5. nikama (9 December 2024). "Energy crisis in Abkhazia: Daytime power cuts loom". English Jamnews. Retrieved 12 December 2024.
  6. 1 2 Caucasus, RFE/RL's Echo of the. "Georgia's Abkhazia Lawmakers Reject 'Enslaving' Investment Deal With Russia". RadioFreeEurope/RadioLiberty. Retrieved 12 December 2024.
  7. JAMnews (11 December 2024). ""If cryptocurrency mining isn't stopped, Abkhazia will sink into darkness." Opinion". English Jamnews. Retrieved 12 December 2024.
  8. National Bank of the Republic of Abkhazia,Основные показатели развития экономики и банковского сектора Республики Абхазия за 2006 год(Main indicators of the economy and banking industry of the Republic of Abkhazia, 2006) (in Russian)[ dead link ]
  9. "Основными торговыми партнерами Абхазии продолжают оставаться Россия и Турция". Apsnypress . 27 July 2012. Archived from the original on 2 February 2014. Retrieved 28 July 2012.
  10. Compare: "Moscow Mayor Yuri Luzhkov will visit Abkhazia". News.az. Ria Novosti. 13 November 2009. Archived from the original on 9 June 2015. Retrieved 8 June 2015. Moscow Mayor Yuri Luzhkov will visit Abkhazia on Friday in order to hand over humanitarian aid and sign an agreement on food supplies to the former Georgian republic, an Abkhaz presidential spokesman said.
  11. Statement of the Ministry of Environment Protection and Natural Resources of Georgia Archived 21 January 2016 at the Wayback Machine . OSCE Economic and Environmental Summit, Prague, May 2008.
  12. Moscow Mayor Pledges More Investment in Abkhazia, Civil Georgia. 9 July 2007.
  13. "Russian Federation Withdraws from Regime of Restrictions Established in 1996 for Abkhazia". Ministry of Foreign Affairs of Russia. 6 March 2008. Archived from the original on 1 September 2008. Retrieved 6 March 2008.
  14. Russia expands economic ties with Abkhazia, Georgia angry, CIS idle. Itar-Tass, 09.04.2008. Archived 29 July 2009 at the Wayback Machine
  15. The European Commission's Delegation to Georgia, Overview of EC Assistance in Abkhazia & South Ossetia Archived 2 January 2009 at the Wayback Machine
  16. News, Taiwan (16 April 2011). "Israeli ambassador: no arms sales to Abkhazia". AP. Retrieved 30 December 2020 via Taiwan News. Israel's ambassador to Georgia says his country has no intention to supply weapons to Georgia's separatist province of Abkhazia. Ambassador Yitzhak Gerberg made a statement Friday following a visit to Abkhazia earlier this week by representatives of an Israeli security firm.{{cite web}}: |last1= has generic name (help)
  17. Country Report 2007: Abkhazia (Georgia). The Freedom House. Retrieved 3 October 2007.