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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. In 2011, about half of Abkhazia's state budget was financed with aid money from Russia.[1] In 2021 43.6% of Abkhazia's state budget was financed by aid money from Russia, while 56.4% of the budget came from local income.

Tourism

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]

Transport

See also: Abkhazian railway and List of airports in Abkhazia

Abkhazian railway is a rail operator in Abkhazia. Under a monopoly agreement, it is fully managed and partially owned by Russian Railways for a ten year contract from 2009-2019. In 2016, 307,748 people traveled between Abkhazia and Russia by rail.[4] There is also the New Athos Cave Railway, an underground electric railroad serving the New Athos Cave in the town of New Athos.

Sukhumi Babushara Airport is the main airport of Abkhazia, located some 20 kilometres (12 mi) from Sukhumi.

Agriculture

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 generation

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

Trade

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.[5]

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%).[6]

Foreign investment

Many[quantify] 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 (in office 1992–2010), signed an agreement on economic cooperation between Moscow and Abkhazia.[7] Both Abkhazian and Russian officials announced intentions to exploit Abkhazia's facilities and resources for the Olympic construction projects in Sochi in the run-up to that city hosting the 2014 Winter Olympics. The government of Georgia warned against such actions, however,[8] and threatened to ask foreign banks to close the accounts of Russian companies and of individuals buying assets in Abkhazia.[9]

The CIS economic sanctions imposed on Abkhazia in 1996 formally remain 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,[10] but met with protests from Tbilisi and with lack of support from the other CIS countries.[11]

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 involves the repair and reconstruction of the Inguri power station.[12]

In April 2011, the government of Georgia summoned the Israeli ambassador for clarifications over an Israeli visit to Abkhazia and AP reported that the Israeli ambassador officially denied that Israel would provide arms to Abkhazia.[13]

Corruption

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.[14]

References

  1. ^ Nikolaus von Twickel (26 August 2011). "No Clear Frontrunner as Abkhazia Goes to Poll". The Moscow Times.
  2. ^ Kommersant-Dengi, Тяжелая экономическая независимость Archived 13 September 2008 at the Wayback Machine (Hard Economical Independence), 08.09.2008 (in Russian)
  3. ^ Ministry of Foreign Affairs of the Republic of Abkhazia :: Consular Service Archived 15 June 2008 at the Wayback Machine. Mfaabkhazia.org (2011-04-25). Retrieved on 30 May 2011.
  4. ^ "Long-haul transportation infrastructure". 2016 Annual Report. Russian Railways. Retrieved 6 October 2018.
  5. ^ 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) (in Russian)[dead link]
  6. ^ "Основными торговыми партнерами Абхазии продолжают оставаться Россия и Турция". Apsnypress. 27 July 2012. Archived from the original on 2 February 2014. Retrieved 28 July 2012.
  7. ^ Compare: "Moscow Mayor Yuri Luzhkov will visit Abkhazia". News.az. Ria Novosti. 13 November 2009. Archived from the original on 9 June 2015. Retrieved 8 June 2015. Moscow Mayor Yuri Luzhkov will visit Abkhazia on Friday in order to hand over humanitarian aid and sign an agreement on food supplies to the former Georgian republic, an Abkhaz presidential spokesman said.
  8. ^ Statement of the Ministry of Environment Protection and Natural Resources of Georgia Archived 21 January 2016 at the Wayback Machine. OSCE Economic and Environmental Summit, Prague, May 2008.
  9. ^ Moscow Mayor Pledges More Investment in Abkhazia, Civil Georgia. 9 July 2007.
  10. ^ "Russian Federation Withdraws from Regime of Restrictions Established in 1996 for Abkhazia". Ministry of Foreign Affairs of Russia. 6 March 2008. Archived from the original on 1 September 2008. Retrieved 6 March 2008.
  11. ^ Russia expands economic ties with Abkhazia, Georgia angry, CIS idle. Itar-Tass, 09.04.2008. Archived 29 July 2009 at the Wayback Machine
  12. ^ The European Commission's Delegation to Georgia, Overview of EC Assistance in Abkhazia & South Ossetia Archived 2 January 2009 at the Wayback Machine
  13. ^ News, Taiwan (16 April 2011). "Israeli ambassador: no arms sales to Abkhazia". AP. Retrieved 30 December 2020 – via Taiwan News. Israel's ambassador to Georgia says his country has no intention to supply weapons to Georgia's separatist province of Abkhazia. Ambassador Yitzhak Gerberg made a statement Friday following a visit to Abkhazia earlier this week by representatives of an Israeli security firm. ((cite web)): |last1= has generic name (help)
  14. ^ Country Report 2007: Abkhazia (Georgia). The Freedom House. Retrieved 3 October 2007.
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