Abkhazia: Peacebuilding and Business

IMGXYZ2599IMGZYXAbkhazia has enjoyed a new but uncertain status since the Russian-Georgian war in August 2008. Recognized as an independent state by Russia and three other states, it is still regarded as part of Georgia by most of the international community, including the United States and the European Union. 

In a discussion facilitated by Carnegie’s Thomas de Waal, American University‘s David L. Phillips presented his new report Peacebuilding and Business: Fostering Commercial Contact Between Georgians and Abkhaz, which explores opportunities for mutually beneficial engagement between Georgians and Abkhaz through business connections. 

Relations between Georgia and Abkhazia

Immediately after the war, the government of Georgia adopted a new “Law on Occupied Territories” that sought to deter the international community from recognizing the breakaway territories of Abkhazia and South Ossetia, and to restrict commercial and diplomatic contact with them. In January 2010, however, Georgian authorities announced a new state strategy that rejected violence as a tool for conflict resolution and endorsed engagement, with the eventual goal of improving socio-economic conditions in the two territories and gradually addressing status issues by building confidence on both sides. Currently, the government of Georgia is finalizing an action plan to implement the new strategy.

Building Economic Ties

In his report, Phillips argues that the private sector is well suited to promoting cooperation and interaction even in the most intractable conflicts. Since the private sector is primarily interested in market access and a stable business environment, economic engagement between actors in an area of conflict can help build the trust necessary for political interaction and cooperation. Phillips suggested examples of mutually beneficial economic activities for Georgia and Abkhazia:

• The Enguri Sand and Gravel Export Project is a specific, private sector initiative that could be launched immediately as a win-win for Georgia, Abkhazia, and Russia, Phillips said. Pending negotiations and agreement, the project will produce raw material from the Enguri River, which will be transported to markets across the Black Sea. In particular, sand and gravel are urgently needed by Russia for construction of the facilities for its 2014 Winter Olympic Games in Sochi just north of Abkhazia. Abkhazia would receive royalties in exchange for guaranteeing security and safe passage and Georgia would benefit from new jobs and from the upgrade in infrastructure provided by the developer. 


• A Black Sea Resorts and Family Entertainment Centers enterprise, could play a leading role in expanding hotel capacity in Georgia and marketing tourism packages with stops in Abkhazia and Russia. This has particular appeal ahead of the 2014 Olympics.


• Restored Tea Plantations in Gali would facilitate contact between Georgians and Abkhaz. With bridges and infrastructure already in place, the initiative can be restored with a tea collection and processing center on the east side of the Enguri River.


• Agro-industries (including hazelnuts, tomatoes, citrus, and apple products) could use the same model as the tea plantations project, effectively creating a free trade zone, where commodities, machinery, and equipment could be sold.

Policy Recommendations

• Upgrade the Action Plan: The donor community can assist by establishing an “Action Plan Affinity Group,” which would offer resources to private sector initiatives in the form of project financing, loan guarantees, risk insurance, and grants for worker training.


• Empower the Coordinating Commission: A reliable communications and liaison channel for exchanging information and assisting project development is essential to implementing the Action Plan. The coordinating commission must have the tacit approval of both the Georgian and Abkhaz authorities. To ensure the Commission’s independence, it could be established under UN auspices.


• Enhance freedom of movement: Georgian and Abkhaz authorities could allow mutual recognition of civil documents, such as birth certificates, drivers’ licenses, and professional degrees, to allow freedom of movement and facilitate commercial contact between Abkhaz and Georgians, including those displaced by the conflict.


• Reduce the isolation of Abkhaz: Civil society interaction can identify practical areas for cooperation, thereby building bilateral confidence. Donor funds should be allocated to encourage dialogue between Georgians and Abkhaz.


• Expand Turkey’s role: Improved links between Turks and Abkhaz can stimulate trade and tourism. To that end, Georgia could waive customs requirements for Turkish cargo ships stopping in Abkhaz ports or develop a direct land route from Turkey to the Gali region. 

Obstacles to Engagement

Serious obstacles to engagement remain, Phillips stated. The Georgian government wishes to engage with the Abkhaz, but on its own terms. Meanwhile, the Abkhaz lack incentive to engage, especially since Russia is providing Abkhazia with funds and security.  Yet both Georgia and Abkhazia have an interest in strengthening Abkhazia, in order to reduce the possibility of its absorption by Russia. 

“Though Russia wields a veto over Abkhazia’s affairs, it might be prepared to look the other way if there were savings or money to be made,” Phillips concluded. “The government of Georgia and Abkhaz authorities should take gradual and carefully calibrated steps that are in their own interests, as well as those of Russia.”