Monthly Review - Friday, February 5, 2016 17:01 - 0 Comments

Abkhazia – January 2016


The year in Abkhazia kicked off with extreme phenomena of meteorological and political character. On the night of January 1, a week-long snow storm hit Abkhazia creating serious communication problems. The weather experts compared the abnormally low temperatures to similar events of 100 years ago that are known as the “big snow”.

However, the meteorological “surprise” was not the only one. The new year’s first legal regulation was the prime minister’s order announcing that Abkhazia joins Russia in sanctions against Turkey – a decision explicitly disadvantaging Abkhazia economically. It went altogether unnoticed in Turkey who has not recognized Abkhazia, and only informal economic ties have existed between the two republics. Experts say the economic turnover between Abkhazia and Turkey in 2015 was around 2 million rubles. Adherence to Russian sanctions against Turkey implies not only economic losses for Abkhazia; it also levels relations with the large Abkhaz diaspora living in Turkey.

Most probably the introduction of the import VAT, a law adopted by the parliament at the very end of 2015, was the government’s attempt to minimize the economic losses consequential of the decision on sanctions and to create conditions protecting the local business people. But the introduction of the VAT resulted in an outrage of some business circles, that in the two decades after the war had gotten used to running businesses beyond of the government’s control. Small rallies in front of the parliament and then in front of the president’s administration by mainly small commercial traders forced the authorities to soften their decision, and the burden of the import VAT will fall only on tobacco products, alcoholic beverages, and water.

Goods imported by “Rosneft”, that generate super-profits for the company, were classified eligible for preferential taxation. Petroleum products imported by this company are exempt not only from the import VAT but also from customs duty in Abkhazia and export duty in Russia. This makes sales of petroleum products in Abkhazia more profitable for “Rosneft” than in Russia or in any other country. According to official data, the Abkhaz government’s such compulsory-voluntary decision costs the Abkhaz budget about half a billion rubles.

Another law adopted by the parliament in January 2016 was on healthcare. One of the amendments to the law, passed through a significant pressure from the Orthodox church, completely bans abortions. In this case, both the parliament and the president turned a deaf ear to the objections of the secular section of the society – doctors and the general public who expressed their disapproval of the ban. The law does not provide mechanisms for incentives encouraging large families; there are no special care orphanages for abandoned newborn babies, and corruption at the official level in hospitals is widely spoken about.

In the last week of January, the political party “United Abkhazia” held its congress in the capital of Abkhazia. Member of the parliament Sergey Shamba was elected as Chairman of the party. He was the author of the law allowing the sale of real estate to foreigners (which in today’s Abkhazia should be read as to Russian citizens). After joining the sanctions against Turkey, the only way to the outside world for Abkhazia remains through Russia.

The views expressed in the Review may be different from the views of the editors of the Caucasus Edition.

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