Abkhazia: from Georgia's pan into Russia's fire

Although Moscow's military and economic backing is welcomed by the breakaway region, some fear being swallowed by their benefactor.

Russian President Dmitry Medvedev, left, and Abkhazia's separatist President Sergei Bagapsh, 2nd left, speak  during their visit to the Russian military base at the key Black Sea port of Gudauta in the Georgian breakaway region of Abkhazia, Sunday, Aug. 8, 2010. Medvedev pledged Sunday to provide further support to breakaway Georgian regions on the anniversary of the Russian-Georgian war. He arrived in Abkhazia to hold talks with the Kremlin-friendly separatist government. (AP Photo/RIA-Novosti, Dmitry Astakhov, Presidential Press Service)
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SUKHUMI, GEORGIA // Russia's military presence is in plain view here in Abkhazia, a lush coastal territory tucked between the Black Sea and the Caucasus Mountains. Russian navy ships patrol the turquoise waters just a few kilometres off the coast, while Russian army convoys rumble down two-lane highways, weaving deftly between potholes, livestock and oncoming traffic.

The security arrangement suits Abkhazia, whose residents boast of their fierce independent streak and millennia-long struggle to secure this idyllic sliver of real estate. It is Russia's soft power, not military might, that concerns locals. Russia is the sole lifeline for Abkhazia, which seized de facto independence in 1993 after a war with the Republic of Georgia. Moscow pumps hundreds of millions of dollars into the Abkhazian economy. Russian is the local lingua franca. Residents travel on Russian passports; monetary transactions are conducted exclusively in roubles.

Russia recognised Abkhazia's sovereignty two years ago, and last year the two governments signed a deal essentially making Abkhazia a Russian military protectorate. With Russia guarding the borders and erecting military bases here, fear of a Georgian offensive has largely subsided in Abkhazia, which has an official population of just 216,000.  Emerging in its place, however, is a wariness of Russian cultural and economic influence and concern among the Abkhazians that their nascent statelet could be swallowed by its benefactor. While grateful to Moscow for supporting their independence, many Abkhazians say they did not wrest control of the region from Georgia only to become a Russian province.

"Such fears appear in many countries whenever lots of outside investment has flowed into a country, and those fears exist here as well," Abkhazia's prime minister, Sergei Shamba, said. Officials such as Mr Shamba say Abkhazia wants to work with the rest of the world. For now, however, working with its enormous neighbour suffices. "The most important things for us are security and economic development, and our strategic union with Russia takes care of both of these issues," he said.

The Abkhaz government has enacted laws to protect and propagate a national identity, including a statute barring foreigners from purchasing real estate directly. The real-estate question is one of the region's most contentious issues. Like everything in Abkhazia, the region's tantalising real estate hangs in an uneasy limbo. The country was a bustling tourist destination during Soviet times because of its temperate climes, pristine waters and stunning natural beauty.

The war with Georgia, however, left homes and hotels across Abkhazia gutted. International isolation and the threat of renewed hostilities has stymied investment since the 1992-93 war. For Russians, the region's poverty and rustic beauty meant dirt-cheap prices for gorgeous properties. Despite the law against direct foreign purchase of Abkhazian real estate, Russians for years have found ways to buy up beachfront properties cheaply. Their enthusiasm for Abkhazian property has surged since Moscow recognised Abkhazia, said Otar Kakalia, who runs an estate agency and a small hotel in the region's capital, Sukhumi.

Property rights in Abkhazia are shaky for the foreign investor, however. To purchase a property, a foreigner must either obtain Abkhazian citizenship or enter into a joint commercial venture with an Abkhazian citizen. Numerous Russians have complained of being defrauded after investing in Abkhazian real estate. Also, Abkhazia does not exist for most of the world. Aside from Russia, just three other countries have recognised Abkhaz independence: Nicaragua, Venezuela and the tiny Pacific island state of Nauru.

Georgia claims more than 200,000 Georgians were forced from their homes during the war and that much of the real-estate trade involves property seized illegally from these refugees.  The Abkhazian government is weighing the merits of eliminating the ban on direct foreign purchase of real estate, Mr Shamba said. That could lead to a deluge of investment from Russians, thus further entrenching Russia's control of the region.

Abkhazia will have to sacrifice some of its sovereignty in exchange for Russia's recognition and pwrotection, said Arda Inal-Ipa, a prominent Abkhazian civic activist. "Of course we need to think how to do this so that we don't just evaporate, so that we don't lose our language or our potential for economic development." Development, however, remains difficult in a place that is so isolated. The Georgian coastguard has detained or diverted dozens of cargo ships bound for Abkhazia in recent years and pressured western companies contemplating doing business in the country.

The Italian fashion retailer Benetton scrapped plans last year to open a store in Sukhumi after Tbilisi threatened to shutter Benetton outlets in Georgia should the plan go ahead. Abkhazian officials and entrepreneurs say excluding the region from foreign markets only pushes Abkhazia into deeper dependency on Russia. Nonetheless, a palpable optimism about the region's economic prospects emerged here since Russia's recognition.

"We have been isolated for the last 20 years," Mr Shamba said. "Only after recognition by Russia has the possibility for development appeared. We were under heavy blockade and economic and political sanctions, so our efforts were focused primarily on survival. Now we feel like we are on a new track, and we want to use this to the utmost." Abkhazian entrepreneurs are grateful for the Russian market that keeps their businesses alive, but their frustration over a lack of access to other markets is visceral. "We would like the right to choose our business partners, and we have been denied that right," said Beslan Kvarchia, the head of a company that grows hazelnuts for export to Russia. "First of all, it's personally degrading. Secondly, we're placed in second class behind Georgian businessmen doing the exact same business."

For most of the world, Abkhazia is Georgian territory illegally occupied by Russian forces. The United States has consistently backed Georgia in pressuring the international community to uphold an economic blockade against Abkhazia. During a visit to Tbilisi last month, Hillary Clinton, the US secretary of state, irked Russia and officials here by referring to the two regions as "occupied territories".

Preserving Abkhazia's identity while keeping Moscow happy is a delicate balancing act, Ms Inal-Ipa said. "We need to find a very careful, polite tone that won't insult Russia but would allow it to understand our concerns. We didn't fight Georgia just because it's Georgia, but because there was a threat of turning Abkhazia into a part of Georgia. "But if the same threat comes from somewhere else, we will stand our ground against them as well."