Russian Economic Crisis Reflected In Occupied Regions

Russia reduces “financial investment” by 50 percent in occupied South Ossetia. Evidently, Moscow finds itself in a difficult economic situation and the economic crisis might soon touch Georgia’s second occupied region – Abkhazia.


Th past week’s intergovernmental commission of self-declared South Ossetia discussed the main activities of the investment program for the next two years.

“To implement the investment program for the promotion of the social and economic development of South Ossetia in 2018-2019, more than 3 billion ($50 million) Rubles will be allocated from the Russian budget” – the head of de-facto government Eric Pukhaev said.

The Prime Minister noted that the draft investment program includes 16 new and six transitional activities from the program for 2015-2017.

“South Ossetia, together with the Minkavkaz, had to develop a draft investment program for the next two years, with a total funding volume of 3.3 billion Rubles, including 1.5 billion for 2018 and the same number for 2019,” said Pukhaev.

According to Pukhaev, Improvement and construction of roads and streets, housing, engineering networks, social infrastructure facilities in various localities, including sports, educational and medical institutions, will continue in South Ossetia. Also, close attention will be paid to the creation of a favorable investment climate, the development of the real sector of the economy, small and medium-sized businesses, tourism, and energy.

Russia South Ossetia
President Of Self-declared South Ossetia And President Of Russia

Pukhaev also noted that this year the republican agencies submitted proposals worth more than 5 billion Rubles ($84 million), of which the most priority objects were selected in accordance with the limited funding. Eventually, South Ossetia will receive 3 Billion Russian Rubles instead of 5. According to the republican authorities, 9.1 billion Rubles were allocated from the Russian budget for South Ossetia in 2015-2017.


According to Dimitri Sanakoev, head of the South Ossetian administration, the reduction of the amount for Tskhinvali was caused by the economic crisis in Russia, sustained by economic sanctions imposed by the West.

See also: Putin Unmasking His Plans Over South Ossetia

Apparently the Russian Ruble is devalued, which is reflected in South Ossetia. But, despite the crisis, Moscow will not leave South Ossetia without financial aid. The South Ossetian budget is mainly dependent on Russian subsidies. In this case we cannot rule out the possibility that people get dissatisfied with the reduction of the money and start thinking about re-joining Georgia, but Russia has a more devious strategy – it still pays enough so that people are not hungry and the Russian army stays there.


The reduction of Russian investments in South Ossetia is connected to the severe crisis and it will touch Abkhazia as well in the future. Although Abkhazians react angrily to such things, they believe that Russia is obliged to help. This can cause Moscow great trouble. Russia has been trading with the occupied regions the whole time, but in such a severe economic crisis, it gets harder to support such expense.


One thing is crystal clear, Moscow does not have enough resources to sustain many freeloaders, especially when most of the money goes to the pockets of the officials. So, maybe this is the right moment for Georgian officials to intensify the negotiations with the occupied regions?

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