Modernization of Abkhazia’s economy

Abkhazia-Inform – We continue to publish a series of interviews with scientists and public figures about the economic situation in Abkhazia , about external and internal factors influencing its development, about international projects that could be of interest to Abkhazia, as well as how, without yielding to political positions, find ways to unblock Abkhazia for contacts with the outside world.

Alkhas Tkhagushev, head of the public organization “Association” Inva-Assistance “, answers the questions of Manana Gurgulia.

– How freely is Abkhazia developing? Why are the modernization processes in different areas so late?

Alkhas Tkhagushev : Free enough, one might even say that he develops too freely. This is expressed in the spontaneity, chaos of some processes. Basically, we go with the flow, making no effort to resolve any important issues. We put them off until later.

– What factors hinder the development of Abkhazia?

– There is a certain set of external factors, but I think they are not determining, at least for the last two decades. Partial recognition of Abkhazia, the associated restrictions on the ability to establish relations with the outside world, the aggressive and unconstructive policies of our opponents, complex relations between Russia and Georgia, even more complicated relations between Russia and the West, of course, affect the state of affairs in Abkhazia, its economy and the social sphere, on the technological support of various spheres of the country’s life and much more.

But this is not the main thing. The main burden of problems is associated with our internal irresponsibility, with the fact that we are not going where we should go. It seems to me that we have a cumbersome state apparatus, ineffective and highly corrupt. It is completely incomprehensible why our small country needs so many state officials whom we have been supporting for a long time not at our expense, but at the expense of financial assistance provided to us by our strategic partner – Russia. Our authorities demonstrate a lack of political will to solve this problem.

Again, it is a question of the quality of the political elite, which we ourselves choose not for its professional qualities, but for family, family and friendship ties.

First of all, the modernization process is late because there is no clear understanding of why and how to implement it. People living in Abkhazia do not have a massive demand for the modernization of various spheres of life. But when there is no such request from below, it must come from the elite, it must promote something new. But our elite is also happy with everything. Tranches are coming in, money is being scrolled, there is access to the main resources of the country. Today, some have access to basic goods, tomorrow – others, and the economy has been in a state of stagnation for many years. We are given some figures, indicators, but business activity is not visible. Have we moved so much forward since 2008, when Russia recognized the independence and state sovereignty of Abkhazia?

– Speaking about the negative impact of the unresolved Georgian-Abkhaz conflict, I would highlight the internal factor, or rather & nbsp; b endless speculations on this topic.

The authorities change, one president replaces another, the opposition comes to power, the previous government goes into opposition, while accusations against the current authorities are almost always heard. Various kinds of speculation on the topic of Georgian-Abkhaz relations and the unsettled conflict is the most hackneyed and at the same time “winning” topic. Instead of a constructive dialogue between the authorities and the opposition and the solution of accumulated internal problems, from year to year the same accusations are heard of the possibility of betraying national interests, making some concessions to Georgia, illegally issuing Abkhaz passports to citizens of a hostile state, allowing goods to move from Georgia to Abkhazia. and so on.

Every time these speculations lead us away from solving real problems, we are constantly changing the agenda in the country. Instead of discussing, for example, how we can get out of the energy crisis, create conditions for a stable supply of electricity to the population, we are looking for a “Georgian footprint”.

There is a lot of speculation around border trade. It is necessary to create a barrier to smuggling, it is necessary for our customs on the Georgian-Abkhaz border to work in normal mode, to collect a duty for goods imported into Abkhazia, and so on. Those who, after the change of power, ended up in opposition, offer to close the border with a lock, to prohibit any movement of goods across the border.

For me, all this is the most vivid illustration of the madness happening in our country.

As for external circumstances, they are also important, but not so much, in the sense that much does not depend on us. Something depends on us, but we understand that there are other players, and we take this alignment for granted.

To minimize costs in the future, new communication formats are needed at different levels. In the current situation, we have very limited opportunities to attract investments and new modern technologies. Many things are subject to sanctions and other restrictions.

Georgia has chosen the false path of demonstrating its desire to improve relations with Abkhazia through unilateral steps. I do not understand how it is possible to resolve a conflict, be it domestic, interethnic, interstate, international, through unilateral actions. It seems to me that unilateral actions, if they do not aggravate the situation, will not improve. They do not bring us closer to resolving the conflict, to the moment when we can really say that the conflict is over, the Georgians and Abkhazians have come to a common denominator.

When Georgians announce treatment programs for residents of Abkhazia, I perceive it as a kind of “trap”. It seems to me that they reason something like this: you have nowhere else to go, and you will be forced to accept our proposals. But in reality, this tactic does not work. Some part of our citizens use these programs, and I am not ready to condemn them, since our country cannot provide them with all the necessary medical services. Whether to be treated in Georgia or not is the choice of the citizens themselves, in need of treatment. But again, to what extent do these programs build trust between us and bring us closer to resolving the conflict? It seems to me that the Georgians are deceiving themselves. Although there are practical benefits for them, these initiatives improve Georgia’s image in the West and make it possible to attract additional funds in the form of humanitarian aid and other donor infusions, where there is definitely a fad about helping the residents of Abkhazia.

Someone may think this is unacceptable, but I have always believed and still believe that we should have adopted a law that would allow and encourage our citizens to accept the social benefits that Georgia can provide, on the basis that it has inflicted a colossal damage during the war, as well as taking into account the fact that international assistance rendered to it extends to the inhabitants of Abkhazia.

But that would be a very bold step, which hardly anyone would agree to. This Vladislav Ardzinba could afford to take and go to Tbilisi for the sake of business. Such bold steps require politicians of his size who enjoy the absolute trust of their citizens.

In the current situation, even such a proposal from the authorities as the multi-level Georgian-Abkhaz negotiations caused a wave of indignation in the opposition camp.

I believe that not the unilateral proposals of Georgia, even if very tempting, should be taken into account, but the initiatives that come from both sides. We must not turn any proposals regarding Georgian-Abkhaz relations into an instrument of internal political struggle.

We must unequivocally state to Georgia: we will ignore all your unilateral decisions and actions, and everything that will come from you and me when you negotiate with us, no matter whose initiative it was, when we work it out together and come to the conclusion that it is beneficial to both parties, we will support such actions.

Georgia must make its choice: either – unilateral speculations, or – full-fledged proposals that are supported by both sides in order to build trust, depoliticize specific areas, think over many things.

– We talked about the restrictions that Abkhazia faces, how exactly is this manifested ?

– Restrictions apply to the movement of our citizens around the world. We are limited in the possibilities of obtaining education in the same European universities. There are various educational programs in the world, but our children, with rare exceptions, cannot use them. I do not mean isolated cases of training our students in the programs of the European Union. Abkhazia does not need 5-10 people (5 people will not build a modern developed state), there should be 50, 500, 5000 young highly educated people familiar with innovative technologies, with advanced management experience.

Previously, our non-governmental organizations had some opportunities to organize study & nbsp; visits for young people, the same officials, but now the field of this activity has noticeably narrowed, if not vanished.

Restrictions also affect our economy, business, logistics schemes, etc.

When they say in our country that we cannot allow Georgia to make money on trade and economic relations with us before the recognition of Abkhazia’s independence, this is nonsense. Almost the whole world is open for Georgia, with the exception of some restrictions on the part of Russia. Georgians will earn their conditional dollar, euro or ruble in foreign markets without us. In this they, in principle, have no problem. Georgia does not need Abkhazia as a market for its goods. Our market is too small even for Georgia, the Russian market is important to it.

But in Abkhazia it would be possible to discuss the creation of free economic zones, where the same Abkhazian, Turkish, Russian, Azerbaijani, Armenian, Georgian, European or some other business could carry out joint projects.

When someone cites the example of the joint operation of the Inguri hydroelectric power station, our home-grown patriots say that this is a special, exceptional case. I cannot agree with this. It’s just that when circumstances force you to communicate well with Georgians, discuss various problems.

Our whole country prayed that the IngurHES would be launched early after repairs in the diversion tunnel. So I want to ask them: if we are so proud and independent, why have we not invented other schemes for supplying the country with electricity in 30 years so as not to communicate with Georgians?

– What international projects or opportunities that are interesting for Abkhazia from a development point of view are not available due to the restrictions associated with the unresolved conflict?

– It is difficult for me to judge all possible areas, but access to modern technologies, the opportunity to acquire skills in order to use these technologies, to do something in any area, whatever you take, which is important for Abkhazia, it would be if not a breakthrough, but a very strong stimulating factor for economic, social, cultural, political growth.

– What do you mean specifically when you talk about access or lack of access to new technologies?

– Often there are difficulties with the acquisition of one or another modern commercial equipment or software. For example, we are engaged in mapping. For this there is a special software for data processing, it is very expensive. It seemed to us that the main obstacle to acquiring it would be money, but since it is an American product, it was not sold to us, citing the sanctions.

For example, our organization periodically encounters difficulties with the purchase of medical and rehabilitation equipment. It would seem that it can be less politicized than a wheelchair, but here, too, problems can arise. After all, we cannot buy through representative offices in Georgia. Of course, we find a way out, the world is big, sometimes you have to buy not the best technological solutions.

A recent example of the acquisition of products from & nbsp; Microsoft. There is such an initiative – & nbsp; Technical & nbsp; support, it assumes that some of the world’s software companies give & nbsp; significant & nbsp; discounts & nbsp; non-profit charitable organizations. When we contacted them, they said that you, as an NGO, are given more than 50% discounts. We were then asked to provide information that we have charity status. We sent all the necessary information, including UNDP projects and others. In the end, they sent us a letter stating that we fit all the criteria, but because of the unrecognized status of Abkhazia, they cannot support us.

We have colossal logistics costs in business. As you know, the shortest route is usually the cheapest. We do not use optimal routes, and this hits the end consumer. We pay the costs of the whole society for any product, equipment, for everything that is brought here. There would be a different logistic scheme, there would be less costs.

It would be possible to create a free economic zone with logistics warehouses somewhere in the border area, so that businessmen from Turkey could freely come there, from anywhere. Business there should be carried out according to the rules that are introduced in this particular FEZ in order to protect projects from contradictions in status, Georgian or Abkhaz legislation and help people to cooperate. It seems to me that the implementation of the idea of ​​free economic zones can defuse the situation, show both Georgians and Abkhazians, and everyone else that, in principle, you can not fight, but cooperate and develop.

– How can you assess the loss of Abkhazia due to the restrictions associated with the conflict?

– They are colossal, and are further aggravated by the fact that the economy is deprived of the opportunity to receive sufficient investment. After the war, the figure was announced at $ 11.3 billion. And then there is such a thing as missed or unrealized opportunities.

Why, for example, is the mountain resort cluster not fully developing in our country? This is an expensive and high-tech project. The leading countries in this area, which built the same Olympic Sochi and Krasnaya Polyana (let’s put aside our internal problems, corruption and assume that everything is fine with us) are unlikely to want to invest here because of the status of Abkhazia.

The Abkhazian tourist cluster will be inaccessible to anyone other than Russians for a long time to come.

– How significant are the losses for the South Caucasus countries from blocked communications between Abkhazia and Georgia?

– Everybody suffers tangible losses.

Recently, the Parliament adopted an appeal concerning the through railway traffic through Abkhazia. I believe that this was done in a very timely manner. You need to work ahead of the curve, offer some important ideas. If we do not offer anything, everyone around us will develop, receive income, and we will sit still, and this is, to say the least, shortsighted.

It should be said that we are open to the world, but there are things that we want to pay attention to. We must not allow the Georgians to come to an agreement with the Russians behind our backs, and they put us before a fact.

– There is a fairly widespread opinion that it is inadmissible to conduct any negotiations with official Tbilisi before the signing of an agreement on the non-use of force or even before Georgia recognizes the independence of Abkhazia.

– I don’t see anything rational in this approach. How can you reach an agreement if you do not conduct any negotiations?

– Can such a position bring the recognition of Abkhazia closer?

– Of course not. It can only harm our desire to be recognized.

– How can you unblock opportunities for economic development and modernization of Abkhazia?

– I think that it is quite possible to depoliticize many spheres, primarily the economic one. That would be very effective.

– How to ?

– One of the possible options may be the creation of certain formats such as free economic zones, when we take economic activity away from possible negativity, obstacles that may be in national legislation. We agree that this is a kind of supranational level, when we, realizing that the conflict has not yet been resolved politically, nevertheless make a choice in favor of peaceful initiatives and give people the green light to engage in trade, cultural exchange, and something else. Moreover, all this should be transparent.

I think that not only in Abkhazia there are opponents of such initiatives. I believe that there are many people in Georgia who believe that this should not be done. But I am sure that such formats need to be created and protected in such a way that the people who will be involved in this process do not have the feeling that this is some kind of short-term one-time action.

The implementation of a serious business project and attraction of investments presupposes the presence, if not of a long-term, then necessarily a medium-term perspective. Nobody will invest a lot of money in the hope of “recouping” them in six months. Business is associated with risk, but with all possible risks, guarantees are also needed.

Most of all, people can be united by a normal entrepreneurial spirit, business, when people can develop economically. It seems to me that this is a very sensible idea, extremely understandable. The cultural or social spheres are no less important, but it is more difficult to calculate the pros and the result is less obvious, more subjective.

I think that joint economic projects have a perspective. The same Ingur hydroelectric power station, I do not see that someone was ready to refuse it. For a long time, Georgia has not had the same interest in this generation as it was immediately after the war, but in Abkhazia over the years, as we can see, it has not weakened, but, on the contrary, has increased.

– What project could be a breakthrough for Abkhazia if the restrictions are lifted?

– If the restrictions are lifted, the railway can probably be a very successful project. In addition to the transportation of goods, which will provide additional revenues to the budget of the republic, we will receive a modern railway. We will get one more transport highway for the country.

What will be the multiplier effect? The republican highway is overloaded. Its bandwidth is not that great. This problem has existed since Soviet times. Abkhazia today does not have transit traffic, and if we suddenly add at least some part of the pre-war transit traffic, then we will certainly face a transport collapse. And when a country, and even a tourist one, is in a traffic jam, it’s a disaster.

But we have a railway, stations and infrastructure that are not in demand now. It is one thing that transit cargo will go, and another thing is that it will be possible to start up modern, comfortable electric trains so that tourists can move freely within the country. The motorway will be unloaded, the number of accidents will decrease, and gas pollution will decrease. I believe that the railway topic could be one of the breakthrough ones.

The world has gone far ahead, but when we discuss prospects, each time we reason in terms of the 80s – 90s of the last century. Today, rail links require a different level of comfort, a different level of organization. All this requires funds and investments. It is necessary to move from conversations to a practical plane. Do we have a strategy for the development of transport infrastructure in the country? She’s not there. But it must be developed and adopted without fail, and the railway will in any case be one of the key elements of this strategy.

Do we have enough transport professionals? How to restore our train stations, which were once the decoration of our cities? If there is transit, then in what volumes? All these questions need well-grounded answers. We must not forget about ecology, for example, Sochi is thinking about how to remove the railway infrastructure from the coast to the mountains, and we need to raise this issue in the event of a possible reconstruction.

This can be a long-term project that will tie us to a positive, constructive agenda, not to aggression and negativity, not to militaristic rhetoric, but to creativity. We need to turn things around in such a way that various regional players are interested.

– Under what conditions can this project be implemented?

– If we are talking about depoliticization, the first step is to give the opportunity to work for techies, economists, ecologists, and not politicians. Politicians can ditch any idea at any time. It is necessary for the techies to discuss everything, analyze and suggest some reasonable scenarios. The next step is to publicly and transparently present the project with expert justification. Well, then the time will come for politicians to discuss the project.

As soon as the topic of the resumption of railway transit through Abkhazia is raised, questions immediately arise: who is in charge of this project, what should this section of the road be called, is it part of the Georgian railway, as official Tbilisi insists, or is it the Abkhaz railway? We can take the risk and assume that it is possible to depoliticize this issue, as it actually happens with the IngurHES in connection with the current objective circumstances.

You can think over the jurisdiction of the companies that could be involved in the implementation of this project. Both the Abkhazian and Georgian sides can be represented by affiliated companies, you can find the correct legal structure, if you wish.

Suppose that Russian, Turkish, Armenian business, and maybe Iranian, are interested in the project. In principle, there are interested parties, and after discussing this matter, it will be necessary to make sure that no tyrant who came to power in Abkhazia or Georgia would destroy it. This concession must be protected by an umbrella from above. It will not directly represent the parties to the conflict as owners. By depoliticizing the situation, in this way both the Abkhazian and Georgian and other budgets will benefit from this. I am sure that with the will and good will, you can find such a formula that will not offend any of the parties, and at the same time will benefit everyone.

– You have already said that economic and transport projects could be beneficial to various players in the region, including Abkhazians and Georgians. Are there any conditions today for starting a search in this direction? Is the Abkhaz society ready to support such initiatives?

– Obviously, first of all, we need to figure out what we can influence one hundred percent, which does not depend much on external factors. It is necessary to discuss the internal political context. We need to come to a common denominator ourselves. At the same time, we must still rely not on the passions of the rally, but on a substantive dialogue in a calm tone, based on an objective analysis of security issues, technical, economic, and environmental aspects. And when there is no such dialogue, only political speculation remains.

Returning to the same topic of the railway, the loop of the loan received in due time for its restoration also has a very negative effect. Something was done, of course, another thing is exactly how it was done. And this is a negative experience that will certainly be taken into account when discussing new initiatives.

Therefore, the process should be as transparent as possible. There is a very strong polarization in our society, but we do not know for sure how many people are categorically against, how many are “for”, and which part is generally indifferent. I suspect that a significant part may not have a clear position on this issue.

If we develop this topic, then the parties should be able to oppose each other openly, honestly, without any undercover fuss. This is where you start. This should be a topic for public and political debate. I want to convince myself, I want to be convinced of how useful or dangerous all this is.

– Did I understand you correctly? When we talk about the so-called breakthrough projects, be they transport, energy or some other economic projects that can be interesting and useful for both Abkhazia and Georgia, we must make them the subject of broad public discussion, and with all the necessary calculations ?

– I would even say more. After the expert substantiation has been prepared and debates, wide public discussion in both Georgia and Abkhazia have taken place, I would even suggest that these societies hold an absolutely accurate measurement in order to exclude any speculation, hold a referendum where everyone can express their attitude to proposed project. And if 70 percent say no, that’s all. And how will you protect this project? No government will protect him, there are no crazy people.

If the majority votes for the project, then we will receive unequivocal support in two societies, and speculation on the topic will immediately lose relevance. Well, those who will defend the project will argue their position by the fact that this is the will of the people.

– And where to start in case of support from the authorities of the society?

– If there is support, then you need to do and enjoy life. At the local level, this project will be very easy to defend. This will also give confidence to potential investors, everyone who is ready to work for the long term. This project cannot be short or medium term, it is ideally calculated forever.

I’ll make a reservation, this is my personal vision and nothing more. I believe that either we will conduct a dialogue and develop peaceful initiatives, or over time we will face a new war with all the ensuing consequences. Moreover, Georgia is now referring to the events in Karabakh, but I want to remind them that the experience of 2008 should be closer to them. Any war brings destruction and death, and I want to believe that we will be able to offer future generations a peaceful alternative.