|Russia's Investments in Abkhazia|
|May 08, 2012|
By Elena Ulansky*
A special representative of the president of the Russian Federation, Alexander Tkachev, paid his first official visit to Abkhazia. During his meeting with the president of Abkhazia, Alexander Ankvab, he stated that Russia isallocating an amount of 11 billion rubles towards the economic growth of the country. "Russia is determined to continue support in development of the republic," stated Tkachev.
Abkhazia has always been known and valued for the combination of its location and climate, making it one of most beautiful places on the planet. This comparatively hidden treasure now has the potential to become one of the most popular destinations in Eastern Europe.
Because of Abkhazia's proximity to the Black Sea and the shield of the Caucasus Mountains, the region's climate is very mild. The coastal areas of the republic have a subtropical climate and a breathtaking view of mountains with snow on them year round making it is one of very unique places that have the appeal to beach-goers as well as skiers.
It is said that Abkhazia is located in the exact geographical spot where Adam and Eve lived. However the legend says that the people who live in this paradise are always fighting for the right to stay there. And looking at Abkhazia's endless history of wars and occupations that idea looks valid. Putting it into perspective: Between the 9th and 6th centuries BC, the territory of modern Abkhazia was part of the ancient Georgian kingdom of Colchis, which was conquered by Greeks in 550 BC, and then by the Roman Empire in the 1st century AD, following which it regained a measure of independence, but remained within the Byzantine Empire's sphere of influence. Afterwards in the 1570s, Abkhazia came under the influence of the Ottoman Empire, and then Russian rule, but it was eventually absorbed into the Russian Empire in 1864.
Historically, Greeks, Romans, Turks, then Russians, always warred and everybody wanted to conquer this small piece of land that promised so much value to the beholder. Historically Soviet Union General Secretaries, such as Stalin, preferred their summer residences near Sukhumi -- the capital of the country to other resorts. Nowadays, Putin seems to pay close attention to the development of the republic, as Abkhazia becomes crucial with the Olympics to be held in the joining area of Sochi in 2014-2018.
A sign of Putin's interest in Abkhazia is demonstrated by the fact Russia has invested 11 billion rubles into region.
In May 2011, Putin came to the funeral of the president of the country. Who would have thought that he would come to honor the leader of this tiny piece of land that covers the area of 3,320 sq. miles and has apopulation of about 240,000 people? There are several reasons why it is strategically important for Russia to make economic investments in Abkhazia.
With Abkhazia growth (reportedly the economy nearly doubled in 2009), there is a huge need and opportunity for investors across industries. Russia intends to invest in multiple Russian-Abkhazian joint ventures including in a variety of sectors including tourism, transportation, culture, science and education.
There is no question that Russia and Russian investors recognize what is obvious to me: Abkhazia is ripe for development. Abkhazia is conveniently located on border with the site of the 2014 Winter Olympics in Sochi, Russia. Moreover, Sochi is a host to Formula 1 Racing starting in 2014. The 2018 World Cup played in 18 cities across Russia and multiple matches will be played in Sochi and Krasnodar. At this point Sochi International airport has a capacity of about 1 million passengers a year, which is enough for the Olympic Games and Formula 1, but not for the World Cup in 2018. That is why Sukhumi airport -- that is 1.5 hours from Sochi -- is the logical decision and an amazing investment opportunity now. Sochi without a doubt is to become an international destination for the next decade if only from these existing events. In the border zone of Abkhazia there are great locations available to build hotels. Russia is planning to rebuild the border crossing to accommodate more cross border traffic and trade. This will make these locations especially attractive because they are only a few kilometers for the Olympic Village and the Formula 1.
Combining the remarkable geographical beauty with the short distance from the major world events of the Olympics it makes sense for Abkhazia to become a new resort and show case of the modern Russia for Putin. Look for this area to draw the interest of adventurous investors seeking to piggy back on the Russian investment.
* Elena Ulansky grew up in Moscow. She started her career in Moscow as a sales manager for the major financial services company, MB. Elena is a graduate of the prestigious Moscow State University with a master’s degree in business management. She has worked in investor relations and corporate finance helping small capitalized American Companies. With one eye on the Russia and the other on the United States she brings a unique perspective to contemporary news analysis.