South Ossetia – a gunpowder barrel or a gold mine?

Image removed.Eduard Kokoiti. Photo © "Liberali"

Last Wednesday the President of South Ossetia Eduard Kokoiti criticized the Ministry of Regional Development of Russia and accused it of sabotaging the reconstruction works carried out in South Ossetia. A number of Russian mass media means made hasty assumptions that the president of South Ossetia was not under Russia’s control any more.

South Ossetians believe that the president had to direct the people’s anger against the Russian government department. The public discontent in Tskhinvali is approaching a dangerous level.

Grigori, a Tskhinvali resident, has been living in a military tent together with his wife and two daughters for the second year now. He set up the tent near his vineyard, next to his destroyed house.

After the second winter spent under a tent-cloth, Grigori became an oppositionist. A former plasterer is now a politician. According to local measures, he has a solid voter basis – 400 families who have been left in tents just like his. 

A white building can be seen at the former Tbilisi-Tskhinvali railway station. There are no more rails here. Nobody remembers when was the last rail removed and sold as a scrap metal. The white building is a railway station which has been repaired and refurbished by Russians. But what function will a railway station have without railway links is unclear.

Such stupid projects can be found in South Ossetia at every step. A 3 meter high concrete wall has been built near the Roki Tunnel. It is 50 meters long and less than a meter wide. According to specialists, it has no practical function. It does not protect either from avalanches or from mudslides. The reason behind the construction of this wall becomes clear when you learn how much money was allocated to build it: 50 million Rubles (1.6 million USD) or 11,000 USD for each square meter of the concrete wall. The local opposition says that “such stupid projects are a Klondike of the Kokoiti government.” 

The key principle of “Gold Seekers” is: keep competitors and meddlers away. The construction of large infrastructural projects in South Ossetia is done by two departments – Southern Directorate and Intergovernmental Commission. Both departments are under the Ministry of Regional Development and receive funds directly from the Kremlin.

The budget of the republic is controlled by Prime Minister Vadim Brovtsev who has been appointed by Russia. The construction works are carried out by unitary Russian enterprises created specially for this purpose. Most of their top managers are from the city of Ozersk where Brovtsev himself comes from. They have arrived in Tskhinvali with their engineers, accountants and workers. Local population is not employed in the reconstruction works.

In unitary enterprises the salaries are higher compared to what local residents get. A chief accountant there gets twice the salary of the official salary of President Kokoiti.

The market has immediately reflected the appearance of well-off Russians – the prices have gone up in the republic. The most painful issue for those who have become homeless is the apartment rent. The prices range from 500 to 700 Rubles per month (100 Rubles equals 6 Lari). If we take into account that the local population is poorer today than 2 years ago, this is quite a big sum for them.

“A simple scheme of pocketing the Russian assistance is the following: the volume of works and price of materials is swollen,” says Batraz Takazov, Chair of the Committee for Economic Security and State Control of the Republic of South Ossetia.

Soon after the appointment of Brovtsev, an intermediary firm “Kavkazstroikomplect” was set up in Vladikavkaz. It purchases construction materials in Russia and sells them to South Ossetia for double the price. Inspired by the success of this intermediary, another firm called “Glavstroisnab” was set up to purchase materials from “Kavkazstroikomplect” and to sell them to unitary state enterprises.

The republic where according to local data 35 thousand people live has not felt the effect on one billion USD allocated by Russia at all. The pocketing of this money has resulted in a slow progress of post-war recovery (Due to bad weather the construction of houses was stopped altogether in spring).

South Ossetian MP Amiran Diakonov admits that “the social tensions approach critical levels in the republic”. In order to avoid the “people’s anger” and to establish more control over the Russian resources Kokoiti has launched a campaign against the Ministry of Regional Development and the government.

At first, Kokoiti kept a low profile. It was the parliament who started the conflict. Then the prosecutor’s office intervened. The culmination of the conflict took place on July 10 when meeting Russian senators Kokoiti accused the ministry of sabotaging the reconstruction works.

This statement provoked a great noise. Such accusations from a satellite were not expected in Russia. It is unimaginable from the imperial point of view. In exactly three days, on July 13, the Minister of Regional Development Victor Basargin and his deputy Roman Panov arrived in the republic to find out what was going on.

The visit was brief. The guests visited the construction sites and met with local officials. On Basargin’s request, the talks were held behind closed doors.

Ahead of the visit it was expected that Basargin would put Kokoiti back to its place but as rumors say the president was not very reserved in his remarks. It seems that Basargin and his bosses in the Kremlin still need Kokoiti. The reconstruction of South Ossetia will continue.

The terminology used in the article belongs to the author only and not to “The Liberal”

The article has been prepared with the support of Heinrich Boell Foundation. The views and opinions expressed in the publication do not necessarily reflect those of Heinrich Boell Foundation.