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Georgia: Abkhazia Unveils New Economic Development Concept

  • Liz Fuller --> President Sergei Bagapsh, Prime Minister Aleksandr Ankvab, parliament speaker Nugzar Ashuba, together with government ministers, parliamentary deputies, and district administrators attended the presentation in Sukhum on 9 September of a new draft program for the socioeconomic development of the unrecognized Republic of Abkhazia, reported. That desired economic upswing is not, however, seen as an end in itself but as part of the broader process of strengthening Abkhaz statehood.

Speaking at the presentation, the program's author, Artur Mikvabia, who is Bagapsh's economic adviser, acknowledged the magnitude of the problems Abkhazia faces 12 years after the end of the civil war in which it won de facto independence from Georgia. He described the present level of socioeconomic development as "comparable with the least developed countries of the world," but added that unlike many of those countries, Abkhazia "has considerable economic potential."

Abkhazia's population is believed to be in the region of 220,000; the republic's budget for 2005, belatedly passed in April, is 643 million rubles ($22.78 million), according to Apsnypress on 20 April. That is over 200 million rubles more than in 2004, when the budget amounted to 432 million rubles, according to Apsnypress on 6 February 2004.

In an interview carried by on 30 August, Mikvabia singled out raising living standards and improving social conditions as one of the primary tasks facing Bagapsh's leadership. And on 9 September, he stressed that solving that problem requires mobilizing all available resources and using them effectively. Given the limits of the domestic market, he continued, this entails "building an export-oriented model of development aimed at making use of our comparative advantages, in the first instance in the spheres of agriculture and tourism." At the same time, Mikvabia stressed that Abkhazia will continue to "integrate" its economy with that of Russia, a process that he said will be facilitated by the continued use of the Russian ruble as Abkhazia's national currency.

Development Priorities

Bagapsh for his part focused at the 9 September meeting on the need for a long-term strategic vision of economic development to replace what he termed "economic improvisation" from year to year on the part of individual ministries. "We need to know what reserves we have, [we need] to define clearly the priorities for the country's economic development, achieve the optimum allocation of resources in all spheres, and create mechanisms" to ensure the changes introduced cannot be reversed, Bagapsh said. To that end, he advocated a long-term program of economic development for at least the next five years, and he said a special working group will be tasked with drafting it.

Bagapsh listed as spheres with particular development potential communications, energy resources, and tourism. (On 15 August, Bagapsh announced that some 1.5 million Russian tourists have visited Abkhazia so far this summer, Apsnypress reported. That compares with a total of 400,000 in 2004.) He made it clear that the hoped-for resumption of rail traffic from Russia via Abkhazia to Tbilisi and Armenia would serve as a huge boost to the Abkhaz economy.

It is not clear, however, from his published comments whether Bagapsh touched on the possibility of developing Abkhazia's putative hydro-carbon resources. Interfax on 5 September quoted Bagapsh as having told journalists that Russia's LUKoil has expressed an interest in developing offshore oil fields off Ochamchira Raion.

But Bagapsh's predecessor as president, Vladislav Ardzinba (who according to a poll conducted by the newspaper "Chegemskaya pravda" and cited by on 20 July remains the fourth-most-popular politician in Abkhazia after Bagapsh, Ankvab and Security Council Secretary Stanislav Lakoba), argued last month against doing so, according to Caucasus Press on 18 August. Ardzinba reasoned that drilling for offshore oil would not only seriously impact on tourism, but that as long as Abkhazia is not internationally recognized as an independent state it will be powerless under international law to protect its legal interests in the event of the inevitable protests by the Georgian government against any such development.

On 5 September, Interfax quoted Kote Gabashvili, chairman of the Georgian parliament's Foreign Relations Committee, as saying that Georgia would not only call for sanctions against any Russian oil company that concluded an agreement with the Abkhaz leadership, but would demand the withdrawal of the Russian peacekeeping force currently deployed in the Abkhaz conflict zone under the CIS aegis.

Social, Political Side Of Development

Bagapsh pledged that his administration will do all in its power to attract foreign investment to Abkhazia. He also pledged, in line with his election promise, to raise wages for budget-sector employees by between 30-35 percent in January 2006 and by a further 20 percent by the end of next year. Apsnypress on 4 November 2004 gave the minimum monthly wage as 1,828 rubles and the "average" wage as 1,087 rubles. On 31 March, "Russkii kurer" quoted Ankvab as saying that the official monthly pension is 100 rubles, a sum on which he admitted it is impossible to live.

In addition to outlining purely economic provisions and priorities, the draft concept, which is to be published soon for public discussion, stresses the role of economic development in strengthening the Abkhaz nation and statehood. A democratic Abkhaz state, Mikvabia told, must be based on a market economy: he acknowledged that "forming a market economy is a complicated process that will take time," but added that "there is no alternative."

At the same time, Mikvabia stressed in his interview with that the draft program affirms that all citizens of Abkhazia, regardless of their ethnicity, nationality, or religious faith, should have equal economic, political and social rights. He explicitly denied that the Abkhaz would enjoy any special privileges not extended to other nationalities. That pledge is clearly intended to counter the fears of some Georgian politicians that Georgian displaced persons who fled Abkhazia during the war in 1993 and now decide to return may encounter problems in taking possession of their former homes, or in finding employment.

See also:

Visiting Abkhaz Leader Continues To Court Russia

Can Moves Toward Abkhaz-Georgian Rapprochement Continue?