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The Daily Vertical: Caymans In The Caucasus (Transcript)

The views expressed in this commentary do not necessarily reflect the views of RFE/RL.

South Ossetia and the Russian-occupied parts of the Donbas have a lot in common.

They're de facto Moscow protectorates pretending to be countries.

They're propped up by the Russian military and by Kremlin subsidies.

And they're key components of Moscow's strategy of destabilizing Georgia and Ukraine.

And now they have one more thing uniting them.

South Ossetia is effectively becoming something of a little Switzerland -- or a little Cayman Islands -- for the self-styled Donetsk and Luhansk "people's republics."

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According to a recent report in Eurasianet, an obscure South Ossetia-based holding company called Vneshtorgservis, now controls the nine largest factories in Donetsk and the three biggest plants in Luhansk.

And, oh by the way, Vneshtorgservis is reportedly run by Vladimir Pashkov, a Russian citizen and the former deputy governor of Irkutsk Oblast.

And there's more:

According to the report, for the past two years the Tskhinvali-based International Clearance Bank has been managing payments between Moscow and the separatist eastern Ukrainian territories.

Now, in a perverse sense, this all makes sense.

South Ossetia, which, of course, is legally part of Georgia, is the only entity in the world that has recognized the independence of the so-called Donetsk and Luhansk people's republics -- which are of course legally part of Ukraine.

So one fake country recognizes two other fake countries.

And then that fake country becomes the main money-laundering hub for the other two fake countries. Got it? Good.

Welcome to the new Russian Empire.

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