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Monday, 24 October 2016


Is Abkhazia ready for Russian money?

2010-12-29 11:43

11891.jpegRussian president Dmitry Medvedev signed the law on ratification of the treaty on stimulation and joint protection of investments with Abkhazia. Abkhaz ambassador to Russia Semen Grigoriev introduced Yuri Aykin taking charge of the Russian trade representation in the republic to the president. All that means that Russian business will be present in Abkhazia on legal terms bringing more security.


Igor Varov, born in the Urals, owns a luxury home overlooking the sea in Gagra and Abkhazia's largest supermarket. However, that does not mean his life is easy and carefree. He is one of the few entrepreneurs who risked investing in local business. He moved to the republic in 2002 and has been working legally ever since. But problems are numerous. Two months ago Varov spent a few days in prison suspected of kidnapping. He, as well as the press and NGOs consider this case a frame-up. Due to the joint effort the entrepreneur was released.  However the conflicts around the land beneath the supermarket are well underway. Varov's story is a convincing demonstration how difficult it is to do business in Abkhazia. The businessman is not going to give up his

business in Gagra, but support of the authorities is essential to him. For people like him the treaty on mutual protection of investments will be highly useful. Now, formally at least, Russian money in Abkhazia obtained protectorship on the part of both - Russian authorities and local government. 

Abkhazia offers wide opportunities for Russian companies that are playing it safe so far. There are several examples of Russian companies' operation in the republic: Rosneft, joint projects with the Russian Railways, VTB is going ahead, and the Abkhaz market expects arrival of the Russian insurance giant - UralSib. That is it, basically. There are much more examples of medium and small businesses from Russia. And they need as much protection as VTB or other big players whose appearance on the Abkhaz market is guaranteed by Russia's top leaders do. Verbally and documentarily Abkhazia is one of the most attractive places for Russian investments. Not only because of the sea and beautiful mountains. Local laws offer a number of privileges to foreign companies. The major one is 3 years' exemption from most taxes. In practice, however, not many are lucky to work well. Officials, particularly low-level ones, as well as tax bodies view investors as cash cows. Problems are not resolved unless a request is passed on to the highest level. There is a queue of visitors in Bagapsh's anteroom trying to solve their business problems.  

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