How South Ossetia may weather sanctions on Russia
South Ossetia and Russian sanctions
The South Ossetian authorities believe that extending the Russian investment program is a good thing, but not everyone shares the government’s optimism — if only because this time the amount of investment turned out to be much more modest than before. JAMNews asked experts how South Ossetia will survive sanctions on Russia.
One billion less
Russia and South Ossetia have approved an investment program for 2023-2025 totaling more than 3.5 billion rubles [about $46 million]. This is one billion rubles less than previous investment programs. In the next three years, the authorities of South Ossetia should build housing, social facilities and road infrastructure with this money.
More was expected in South Ossetia. Experts agree that Russia calls on the leadership of South Ossetia to show independence in developing its own economy, and not just rely on Moscow.
But the President of South Ossetia, Alan Gagloev, said that the republic would not be able to achieve the set goals without the support of the Russian Federation and “counts on the constant help of Russian friends”:
“For our part, we have begun and will continue to change the established, but proved to be ineffective approaches to solving various issues of a socio-economic nature. I think that with close cooperation and mutual understanding, we will be able to show results not only on the scale of the republic, but also on the scale of the entire Caucasus region.”
“South Ossetia is a strategic ally of Russia” and “ensuring its security and socio-economic stability meets Russia’s long-term interests, including in the context of new geopolitical realities,” Deputy Prime Minister Alexander Novak confirmed.
Simply put, Russia promises to continue giving money to South Ossetia. Another thing is how much it will succeed.
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“We need to help the farmers”
Former parliamentary speaker Alan Tadtaev:
“South Ossetia is completely dependent on the Russian Federation for supply of essential goods, food and industrial goods. With the strengthening of sanctions, all this has risen in price in the Russian Federation and so in our country too. Some state employees have had their salaries cut.
We need to help farmers who are supplying agricultural products to the market today. Half of the soft loans go to the service and trade sectors. And the amounts allocated to real hard workers are scanty. It would be good to allocate for this the sums they request for the expansion of their production. This would help to somehow protect the republic from a shortage of fruits and vegetables, 80-90 percent of which are now imported from the Russian Federation. We could grow it ourselves.”
Forced development
Former chairman of the committee on foreign policy and inter-parliamentary relations of the parliament, ex-deputy Igor Kochiev:
“Unfortunately, the economy of South Ossetia is so weak that from a purely economic point of view, we will not even feel Western sanctions against Russia. But in connection with the sanctions and the restructuring of the Russian economy for the needs of a special military operation, such unpleasant phenomena are possible for us as a reduction in the investment program or the program of socio-economic development.
We had every opportunity to develop the economy. But for all these years, the leadership has not taken a single real step, obviously failed projects were supported, which cost hundreds of millions of rubles, some incomprehensible schemes were implemented through economic projects, etc. Now more than ever there is a need for at least a minimum food security, in real economic projects. I hope that the current economic situation in Russia will give a boost to our economy.”
Not only economic losses
An employee of one of the ministries, on condition of anonymity, said that he admits the possibility of a decrease in South Ossetia’s revenue, but he is confident that with Russia’s support a crisis will be avoided:
“It will be very difficult for South Ossetia because of sanctions, but there is confidence and guarantees from Russia that it will support us in any case. Yes, funding will most likely be cut every year, there will be staff reductions (optimization) in budgetary areas, but the funding necessary for survival will continue. Yes, we will have to tighten our belts, but life will be secure. In any case, Russia doesn’t want a hungry ally. We’re also small and this means it isn’t much for Russia.”
Political scientist Alan Mamiev says thatSouth Ossetia is suffering not only in economic terms: “The economy has survived and will continue to survive. Funding will be cut. The whole country will bear the cost of the war. Economic and human losses. Many are dying from both South and North Ossetia.”
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