New report on trans-Ingur/i economic relations

International Alert has published a new economy and conflict study on the Georgian-Abkhaz context. Prospects for the regulation of trans-Ingur/i economic relations: Stakeholder analysis analyses the views among business communities, particularly small- and medium-sized enterprises (SMEs), on the issue of regulating economic relations across the river Ingur/i which largely follows the Georgian-Abkhaz conflict divide. This study assesses the inter-linkages between this regulation, the Georgian-Abkhaz conflict transformation process and the invigoration of the political process.

Since the ceasefire agreement that ended the 1992–1993 war, the two sides have ascribed mutually incompatible political and economic definitions to the conflict divide. In the absence of a political solution to the conflict, the basic approaches to the conflict divide have not changed. For Tbilisi, the conflict divide continues to be nothing more than an internal administrative boundary, while for the Abkhaz side, it is considered to be an international border. At the same time, goods, capital and labour have continued to flow uninterrupted in both directions across the Ingur/i river. With few exceptions, the situation has forced all economic interactions into the sphere of the ”shadow economy”.

The report is a continuation of an Abkhaz-Georgian research process which began in 2009 and evolved more generally from International Alert’s economy and conflict work in the South Caucasus, which seeks to deepen the understanding of the economic dimensions of peacebuilding, as well as to engage economic actors in peacebuilding in the South Caucasus. International Alert first deliberated the issue of regulatory frameworks and their relation to conflict transformation in the Georgian-Abkhaz context in 2004 – a topic which remains equally relevant today. Prospects for the regulation of trans-Ingur/i economic relations: stakeholder analysis follows on from the 2011 study Regulating trans-Ingur/i economic relations: Views from two banks, which analysed the political and economic gains and losses that could be brought about by regulating economic relations.

The research methodology for this paper was jointly developed by Georgian and Abkhaz experts and included field research in over 10 regions across the conflict divide covering five sectors considered most relevant for the context – agriculture, retail, construction, tourism and transport. The report analyses the interplay between economic drivers and political constructs, between individual experiences of the interaction with the ”other side” and collective identity – with regard to the issue of regulating trans-Ingur/i relations. The publication covers the current state of affairs – including looking into the economic significance and public attitudes towards trans-Ingur/i economic relations, the arguments for and against the regulations, and the issue of regulation and conflict transformation.

The author of the report, Dr. Natalia Mirimanova, Senior Advisor for Alert’s Eurasia Programme says, ’While the link between a regulatory framework and a political accord seems elusive, our research suggests that a jointly developed framework would, among other things, benefit human and political rapprochement’. Dr. Mirimanova continues, ’The evidence points that facilitation of economic relations is not a merely technical or even legal issue. Deep collective psychology or the so-called emotional economy, unhealed trauma, human security, as well as political stakes ought to be factored into the cost-benefit calculations as well as any further attempt at devising regulatory frameworks.

This publication calls for a regulatory framework for trans-Ingur/i economic relations to be designed and implemented taking into account the economic, political, security and psychological aspects of the context. The design process and the end product for regulating economic relations between Abkhaz and Georgian private sectors should be owned by Abkhaz and Georgian stakeholders. The report concludes that professional dialogue, development and cross-learning opportunities should be created for Georgian and Abkhaz business communities, along with the private sectors across the South Caucasus. This would help to identify possible areas for cooperation and foster professional solidarity between different sectoral groups. In addition, the Abkhaz private sector should be included and should benefit from the business development programmes implemented by the international community.

International Alert will be engaging key stakeholders in the region in May to discuss the findings of this research and ways to take it forward.