Russian business setting up camp in Syria through South Ossetia

Companies from South Ossetia have been invited to trade with Syria. Damascus has offered South Ossetia to create a permanent pavilion in the city centre on an area of ​​two hectares and to sell goods there.

“Any company registered in South Ossetia will be able to exhibit its products in this pavilion,” said the vice-president of the Chamber of Commerce of South Ossetia, Vakhtang Dzhigkayev.

“We want to create a single-window system for national and foreign companies wishing to work with Syria.”

However, prospects for South Ossetian companies seem doubtful to many.

• Op-ed: Syria recognises Abkhazia out of gratitude towards Russia. What next?

• How Russia finances war-torn Eastern Ukraine through South Ossetia

• 10 years since the August 2008 War. Where are we now?

Business in South Ossetia is not developed enough to even satisfy local requests, and to work in a country as large as Syria – which has been ravaged uninterrupted by war for several years – requires great experience and large production volumes.

Pundits suggest that the real aim of the project is for Russian companies to be able to work in Syria. The process, however, will be formalised via South Ossetia.

Is trade possible between South Ossetia and Syria?

Theoretically. In May 2018, Damascus recognized the independence of South Ossetia and established diplomatic relations with the entity. A Treaty of Friendship and Cooperation, signed by Presidents Bashar Assad and Anatoly Bibilov, provide for cooperation in the fields of trade and finance.

Who will trade what?

The South Ossetian information agency RES reported that the Modular Technologies of Ossetia company has signed a commercial agreement with the Syrian holding Hamsho International Group.

Vakhtang Dzhigkayev says that prefabricated structures will be supplied from South Ossetia to Syria.

He also mentioned another company concluding a similar deal – Avtomatika Ossetia.

However, both companies are in Moscow and are only registered in South Ossetia.

• The fate of Georgian-Russian transit trade through Abkhazia and South Ossetia

• What’s behind Syria’s decision to recognise the independence of Abkhazia and South Ossetia?

• Parliamentary speaker of S. Ossetia says he worked for KGB and Soros simultaneously

Dzhigkayev explained the situation in the following way:

“In September 2018, a delegation of the Chamber of Commerce of South Ossetia participated in the Damascus International Exhibition, and then an agreement was concluded with a similar structure in Syria.

“The Syrian Minister of Construction told us: ‘We are primarily interested in technologies for the rapid construction of structures.’ Half the country is in terrible ruins. We, accordingly, began to look into the matter, and found that in Russia there is a company that possesses such technology.

“But the condition was that the firm should be South Ossetian. We went to [this company] with the proposal, And they answered: ‘We are ready to start production in South Ossetia so that there are no unnecessary questions,’” said Vakhtang Dzhigkaev.

Dzhigkaev says a plot of land will be allocated in South Ossetia, where the Russian company will build an enterprise called Modular Technologies of Ossetia. Supposedly 140 jobs will be created there. The factory will produce prefabricated schools and kindergartens. From South Ossetia, they will be delivered to the port in the city of Novorossiysk, and from there they will go by ship to Syria.

It is assumed that production will begin either at the end of 2018, or at the beginning of 2019.

The head of the Chamber of Commerce of South Ossetia, Alan Alborov, considers it particularly promising for the republic that Syria has an agreement on duty-free trade with other Arab states, and this zone includes market access to at least 350 million people.

“We traveled around 30-40 per cent of Syria and saw that there was a lot of damage there. The Syrian government has a sound strategy – only its friends will participate in the restoration of Syria: Russia, China, Iran, Abkhazia and South Ossetia. Other countries are not involved in the construction process, so we have a unique opportunity to participate in the restoration of this Middle Eastern country,” said Alborov.

His deputy, Vakhtang Dzhigkayev, said that South Ossetia has also agreed with Syria to supply the latter with wood. A wood processing plant will be built according to European standards in South Ossetia.

“We will cut down beech trees, but we will keep our forests in good condition,” said Dzhigkayev, mentioning that the main supplier of wood to Syria will still be Russia’s Siberia.

Pundits: cautious optimism and irony

Economist Vyacheslav Dzhabiyev notes that the two South Ossetian companies, Modular Technologies of Ossetia and Avtomatika – Ossetia, have only recently appeared in Tskhinval, and that they will work closely with Russia.

However, Dzhabiyev says that South Ossetia’s participation in the restoration of Syria is a serious step in the international positioning of the republic.

The head of the international public movement For United Ossetia, Alikhan Khugaev, held an interview with JAMnews in which he was skeptical about the prospects for economic cooperation between Damascus and Tskhinval.

“The talk [between South Ossetian and Syrian commercial leaders] is ironic. How can South Ossetia help Syria? Syria’s population, its industrial and construction potential is hundreds of times greater than that of South Ossetia. Meanwhile, the restoration of South Ossetia itself lasted a decade and was carried out, again, by construction companies from Russia.

“It also seems to me that no one will allow South Ossetia’s woods to be cut down. The only thing that is in South Ossetia is nature. Most likely, this is wishful thinking on the part of the Chamber of Commerce and businessmen.

“They are actually acting as a sort of screen for Russian companies, cutting down tens of thousands of hectares of woods for construction in the eastern regions of Russia. According to my data, private companies in Russia sell much more wood abroad than the state itself.”