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Some See Gold In Investing In Chechnya, But Not Everyone Is Sold

Why aren't Chechens themselves investing in their homeland?
Why aren't Chechens themselves investing in their homeland?

Ramzan Kadyrov, the Kremlin-backed head of Chechnya, never seems to tire of telling all who are willing to listen how much he's done for Russia's volatile North Caucasus region.

Kadyrov boasts of luring foreign investment to Chechnya, with much of it coming from the Middle East.

Foreign investment in Chechnya for 2016 and 2017 amounted to approximately 23 billion rubles (some $400 million). Specifically, the money came from seven companies from the Middle East, China, and South Korea.

Kadyrov is not alone in crowing about the business opportunities offered by Chechnya. The multinational consultancy firm PwC is also bullish on the North Caucasus republic, judging by a recent research report.

And Kadyrov's appetite for foreign investment doesn't appear sated. The Chechen leader is counting on attracting investors from Germany in 2018, according to published reports.

How he'll be able to pull that off is unclear, given the less-than-chummy relations the Chechen leader enjoys with the West, which has generally been critical of the harsh rule Kadyrov has established in Chechnya.

Russia program director at Human Rights Watch Tanya Lokshina, while addressing a committee of the Parliamentary Assembly of the Council of Europe in January 2016, said that for nearly a decade, "with the blessing of the Kremlin," Kadyrov has "steadily tried to eradicate all forms of dissent and gradually built a tyranny within Chechnya."

"The repression has become especially staggering these past two years," she said at the time, "with local authorities viciously and comprehensively cracking down on critics and anyone whose total loyalty to Kadyrov they deem questionable."

Nevertheless, PwC sees the “competitive advantages” that Chechnya offers, including abundant raw materials, tourism opportunities, good transport links, a young and growing population, and cheap production costs.

Chechen leader Ramzan Kadyrov's appetite for foreign investment doesn't appear sated.
Chechen leader Ramzan Kadyrov's appetite for foreign investment doesn't appear sated.

Yet while some foreigners are sold on Chechen investment, many of Chechnya's own wealthy elite appear to be wary of sinking their money into the republic.

Speaking at a meeting of the Chechen government in 2009, Kadyrov noted that only three people -- Abubakar Arsamakov, Vacha Agaev, and Ruslan Baysarov -- had heeded his call to the Chechen diaspora to partake actively in the reconstruction of the republic, which witnessed two wars with Russia in the 1990s.

Chechen leader Ramzan Kadyrov (right) and Chechen construction magnate Ruslan Baysarov at the unveiling of the Veduchi ski resort project in February 2013. Baysarov didn't even attend the grand opening of the resort in January.
Chechen leader Ramzan Kadyrov (right) and Chechen construction magnate Ruslan Baysarov at the unveiling of the Veduchi ski resort project in February 2013. Baysarov didn't even attend the grand opening of the resort in January.

Fast forward to 2018 and there are questions about whether the three men are as bullish on Chechnya as they once were.

Baysarov ranks 112 on Forbes magazine's list of Russia's wealthiest, with an estimated worth of $900 million. The Chechen construction magnate has enjoyed good relations with Kadyrov. It was allegedly those close ties that led Baysarov to sink money into a ski resort in his hometown of Veduchi, which opened to much fanfare and pomp recently. However, since the start of 2018, he has not been seen in Chechnya. Baysarov was not even on hand for the grand opening of the ski resort in Veduchi. Commentators say it's too soon to say whether he's been pushed aside, but his absence raises questions.

Agayev, a deputy in the Russian State Duma, funded the construction of a school in Urus Martan, boosting his image as a philanthropist. He also paid out of his own pocket to build an Islamic educational center in the village of Roshni-Chu, where he also splashed out to construct gas lines. Such were their warm ties that Kadyrov himself reportedly organized a birthday bash in the Chechen capital of Grozny in 2013 to fete Agayev when he turned 60:

But lately, Agayev has been a no-show in Chechnya and his investments there are shrouded in uncertainty.

Arsamakov is the chairman of the Moscow Industrial Bank. He became chummy with Kadyrov in 2007 when the Chechen strongman personally intervened to help track down and free two of Arsamakov's brothers who had been kidnapped. In 2010, Arsamakov was given the Order of Kadyrov, Chechnya's highest award. He's one of the few Chechen magnates to invest in Chechnya. The sprawling retail center, Grand Park, was his creation. However, that and other businesses of his have been stripped by Kadyrov's regime.

Such a scenario is sadly familiar in Chechnya, experts say. Once a business starts to turn from red to green, Kadyrov and those in his inner circle swoop in to push aside its owners.

Other Chechen businessmen apparently learned this lesson long ago.

Husein Dzhabrailov, who once served as a Chechen deputy prime minister, once talked about his intention of investing in his homeland. For a while, his deeds matched his words, and Dzhabrailov invested money into the reconstruction of Grozny Airport. But that all changed when he was pushed out of his government post in 2007.

His brother, Umar, was reported in March to be considering investing in a shipyard in Russia-occupied Crimea, but is not known for putting money into Chechnya.

Musa Bazhayev, owner of the holding company Alliance Group, has wealth estimated at some $600 million, according to Forbes. He has steered clear of investing in Chechnya from the start. Kadyrov lambasted Bazhayev for failing to pony up a promised $50 million to finance the construction of a regional hospital and a school in Urus Martan, as well as other public projects.

“People like Bazhayev are only capable of promoting themselves, and, unfortunately, there are many such businessmen,” Kadyrov lamented in 2006.

Bazhayev has proved more than willing to invest in other regions of Russia, but no so in the republic where he was born.

The same goes for Chechen businessman Malik Saidullayev, considered one of the richest Chechens with an estimated worth of $500 million, who has failed to invest in any significant projects in the North Caucasus republic.

The late Salambek Khadzhiyev, a former minister in the Chechen government, also has no significant investments in Chechnya.

Reputable or not, Chechnya's business elites for the most part appear to be staying away. Bakha Agaev is one of the exceptions -- a wealthy Chechen who remains bullish on Chechnya and who has investments in the region.

The reason could be simple. It's no secret that nearly all the decision-making power in Chechnya is largely in the hands of one man: Kadyrov. And just like in other authoritarian regimes, investment is precarious, dangling on the whim of the leader. For Chechnya's wealthy elite, the risk might not be worth taking.

Written by Tony Wesolowsky based on material from RFE/RL's North Caucasus Service

RFE/RL has been declared an "undesirable organization" by the Russian government.

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