Tag Archives: Geopolitics

Abkhazia, a new investment land!

By Alessio Zillio, Venetian Diplomatic Consultant for the Republic of Abkhazia. An entrepreneur who is interested in investing abroad will often explore various alternatives before choosing the country where to set up a new business and commit his forces. But nowadays a lot is missed due to misinformation and many important areas with good economic potential are also missed due to ignorance or prejudice. Yet the dream of those who want to start a business abroad remains that of finding a virgin territory, where to be the first to arrive and create something secure out of nothing. The Republic of Abkhazia is one of these unknown destinations, a State that is as internationally strategic for the geo-political status quo of the entire Caucasian area as it is neglected by most people. Including entrepreneurs. Indeed, to date from 1991, this small Transcaucasian country remains oneof the few in the world where foreign investment has been scarce.

1.1.Geopolitical map of the Republic of Abkhazia and neighbouring State

1.1.Geopolitical map of the Republic of Abkhazia and neighbouring State

The reason is simple. Abkhazian Republic is a State with limited international recognition; from 2006 it has been legitimized only by Venezuela, Nicaragua, Tuvalu, Nauru, Vanuatu and Russia, the latter being its only real trading partner.

1.2 The Abkhazian Parliament to Sukhum

1.2 The Abkhazian Parliament to Sukhum

Until 2006, therefore, Abkhazia was a nation forced to self-support, with few foreign commercial partners, such as Turkey, to which to export coal extracted from Tkvarchel Mountains District. Since then, national politics have addressed better protection for the environment, which is in iteself the real treasure of this country, given that tourism, both in summer and winter, is becoming its true vocation. Foreign entrepreneurs able to start a process of genuine national economic reconstruction have been so far almost exclusively Russians, with rare examples from other nationalities. Opportunities of investment are thousands, starting from infrastructures. This Republic fought for independence in early ‘90s and was left with great urban damages, as exemplified in the picture by the ruins of the historic headquarters of the Abkhazian Parliament. This building is located in the heart of the Capital, Sukhum, which in 1992 was the last battlefield in the war of liberation. Today, two-fifths of the city are still composed of tottering palaces and homes, some of them being historic buildings of the Soviet era as the magnificent Hotel Abkhazia. Cultural life in the Capital remains quite vivid. Sukhum is the only Abkhazian University, though also in need of major restoration works and left with a frame that still remembers the war of 1991/92. The Capital’s current state is partly due to the rapid development of the northern part of the country, which is bordering with Russia (City of Sochi is only 4 km from the border). This area has been lucky enough to not be touched by the war, and so it has been able to host, since mutual recognition between the two countries was signed, thousands of Russian tourists. Sukhum’s “recovery” plans should, however, end up with shadowing the importance of Abkhazian northern border towns. Government’s projects indeed indicate as key targets: a) the building of a new airport, few miles from the Capital, precisely in the adjacent province of Gulripsh, b) the restructuring and implementation of the old railway network, which ideally should link Moscow to Armenia crossing the centre of Abkhazia, and finally c) the creation of a trading hub to attract huge volumes of merchandise, like Sochi and Sevastopol are doing already. Russian entrepreneurs have already bid for themselves, but the Abkhazian administration would also welcome Europeans to become effective partners in the reconstruction of their capital. On top of economic infrastructures, are then needed all those initiatives necessary for the proper functioning of a city that, according to the forecast, within ten years will host an annual flow of more than 300.000 visitors. This involves the construction of an efficient network of hospitals, not only locally but also nationwide and at least in the major cape towns (which are nine). This would open a market for pharmaceutical sectors and those who manufacture medical equipment. Reconstruction needs would be the main drive for a series of renovation projects in all areas situated south of the Capital, especially for transports and the development of tourist activities. As for the latter it is important to know that Abkhazia, which overviews the Black Sea, has a very long summer, which runs from late May to early October, with average temperatures of 24 C grades. Only the northern part is enjoying tourism development, with sufficient infrastructures, albeit outdated, not touched by the war. Interior mountains and southern regions have not enjoyed prosperity since the end of Soviet era. For southern provinces investment scenarios are similar to those identified for the Capital and its surroundings, thus great potential but still poorly addressed. These are areas of mainly agricultural, wine-producing and cattle rearing activities, with typically small size Abkhazian bovines, not uncommonly loitering free in the downtowns. Gulripsh and Ochamchira districts enjoyed spa centers in the past, and today these are coming back alongside the restoration of several former Soviet sanatoriums. Business around welfare centres and the spa should however need more investors, focused not only on tourism but also on waters treatment, both for health and drinking usage. Abkhazian territory is widely crossed by thousands of streams that come down from the Caucasus, and that in Soviet times were a major resource for hydroelectric power. With the advent of independence many power stations and generators have been abandoned and would need substantial repair and refurbishing, especially in view of a growing population, both local and touristic, that requires more and more energy. Internal areas of Abkhazia are short of roads suitable to connect the mountain villages with the Black Sea centers; a parallel development of strategic roads would facilitate a steady stream of tourists who love mountain nature both in summer and winter.

1.3 Mountain landscape in Abkhazia

1.3 Mountain landscape in Abkhazia

At the moment tourist facilities are virtually non-existent, the only one worthy of mentioning being located at Lake Ritsa, where summer trekking usually alternates with white winter holidays. In fact Abkhazia could attract far more tourists even in winter months if there were good hotels and update facilities for skiing. In particular some private project proposals have suggested to learn from past cooperation between the autonomous province of Trento and the autonomous Republic of Adyghezia for skiing installations. In conclusion, Abkhazia represents a country full of opportunities and credit for young people and their future. Important co-operations between Italian municipalities and Abkhazians councils could ensure greater mobility for young people. To move forward, the Abkhazian Government is now aiming at building a dense net of schools so to improve education and reintroduce Abkhaz as main official language (today Russian is still the most spoken language). As a consequence there is need for a large information network, computer services, advertising and book printing shops that can employ lots of skilled young people from abroad. Investing in this country is easier than ever for foreign entrepreneurs, and the opportunities are many. Abkhazia has recently signed an agreement that grants important benefits for those who have business companies in Russian territory and wish to transfer them in this country. Customs check-points between the two countries have recently been wiped off, so far allowing for free trade, something unthinkable until just few years ago. Abkhazia is not far and it is a beautiful and in many ways still unspoiled country where creating safe and affordable economic relations is now definitely possible. allessilio-zillio Alessio Zillio, Entrepreneur Venetian Diplomatic Consultant for the Republic of Abkhazia