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.

Abkhazia has experienced a modest economic upswing since the 2008 South Ossetia war and Russia's subsequent recognition of Abkhazia's independence. About half of Abkhazia's state budget is financed with aid money from Russia.[1]

Tourism[edit]

Main article: Tourism in Abkhazia

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]

Agriculture[edit]

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 is largely supplied by the Inguri hydroelectric power stationlocated on the Inguri River between Abkhazia and Georgia proper and operated jointly by Abkhaz and Georgians.

Trade[edit]

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.[4]

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%).[5]

Foreign investment[edit]

Many 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, signed an agreement on economic cooperation between Moscow and Abkhazia. Both Abkhazian and Russian officials have announced their intentions to exploit Abkhazia's facilities and resources for the Olympic construction projects in Sochi, as the city will host the 2014 Winter Olympics. The Government of Georgia has warned against such actions, however,[6] and has threatened to ask foreign banks to close accounts of Russian companies and individuals that buy assets in Abkhazia.[7]

The CIS economic sanctions imposed on Abkhazia in 1996 are still formally 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,[8] but met with protests from Tbilisi and lack of support from the other CIS countries.[9]

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 is the repair and reconstruction of the Inguri power station.[10]

In April 2011, the Abkhazian government announced it had reached an agreement with Israeli companies to develop the country's mineral industry sector. Global CST company has promised to provide Abkhazia with non-offensive military technologies, security equipment, and medicine, as well as invest into the agricultural sector, tourism, and mining.[11]

Corruption[edit]

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.[12]

References[edit]

  1. ^ Nikolaus von Twickel (26 Aug 2011). "No Clear Frontrunner as Abkhazia Goes to Poll". The Moscow Times. 
  2. ^ Kommersant-Dengi, Тяжелая экономическая независимость (Hard Economical Independence), 08.09.2008 (Russian)
  3. ^ Ministry of Foreign Affairs of the Republic of Abkhazia :: Consular Service. Mfaabkhazia.org (2011-04-25). Retrieved on 30 May 2011.
  4. ^ 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) (Russian)[dead link]
  5. ^ "Основными торговыми партнерами Абхазии продолжают оставаться Россия и Турция". Apsnypress. 27 July 2012. Retrieved 28 July 2012. 
  6. ^ Statement of the Ministry of Environment Protection and Natural Resources of Georgia. OSCE Economic and Environmental Summit, Prague, May 2008.
  7. ^ Moscow Mayor Pledges More Investment in Abkhazia, Civil Georgia. 9 July 2007.
  8. ^ "Russian Federation Withdraws from Regime of Restrictions Established in 1996 for Abkhazia". Ministry of Foreign Affairs of Russia. 6 March 2008. Retrieved 6 March 2008. 
  9. ^ Russia expands economic ties with Abkhazia, Georgia angry, CIS idle. Itar-Tass, 09.04.2008.[dead link]
  10. ^ The European Commission's Delegation to Georgia, Overview of EC Assistance in Abkhazia & South Ossetia
  11. ^ "Israel gives boost to Abkhazian economy". Nezavisimaya Gazeta. 19 April 2011. 
  12. ^ Country Report 2007: Abkhazia (Georgia). The Freedom House. Retrieved 3 October 2007.