Russia woos Georgian territory with jobs, tourists

At Psou, a town on the border between Russia and Abkhazia, elderly women wheel trolleys of vegetables and household goods from Russia to sell in Abkhazia. A few Russian tourists – incongruous in their bright clothes and bikinis – bob between the shuttle traders, headed for sunny holidays amid the palm trees on Abkhazia's Black Sea coast.

Officials in Sukhumi, the capital of the breakaway Georgian region that has functioned as an independent state since 1993, are expecting an economic boom over the next few years that will reduce the number of those dependent on shuttle trading to make ends meet and boost the number of tourists exponentially.

After Russia officially recognized Abkhazia and South Ossetia as independent states last month, in the wake of the war with Georgia, the signs are that Russian capital will flood Abkhazia, raising living standards in the region and pulling it further away from Georgia's orbit and closer to Russia's.

"We're expecting massive economic development over the next few years thanks to this decision," says the Abkhazian foreign minister, Sergei Shamba. Already most of Abkhazia's trade is with Russia, and many of its citizens have Russian passports.

Russian President Dmitry Medvedev signed a friendship treaty with Abkhazian President Sergei Bagapsh on Sept. 17 that guarantees Russia will militarily defend Abkhazia in the event of an attack from Georgia.

But in addition to security guarantees, the deal also brings economic advantages. The treaty envisages a customs union and privileges for Russian businesses in Abkhazia. A further set of agreements will be drawn up in the coming weeks to finalize the details.

The governors of several Russian regions have journeyed to Abkhazia to talk about investing in the region, and Moscow Mayor Yuri Luzhkov will travel there Tuesday for a victory parade for Russia's war with Georgia in the early-1990s. Russian analysts say that the Kremlin has been signaling that investing in Abkhazia is a "patriotic" thing to do.

In 2014, Russia will host the Winter Olympics in Sochi, just a few miles from the border with Abkhazia. The massive effort required to prepare the city for the Games will be a further factor boosting Abkhazia's economy, with thousands of jobs created just across the border in the construction and service sectors. With the new agreements in place, Abkhazians will have the right to work in Sochi.

Movement in the other direction will also rise. During the Soviet period, hundreds of thousands of tourists relaxed in the sanatoria and hotels of subtropical Abkhazia. Over the past few years, Russian tourists who can't afford trips to Turkey or Egypt – and are willing to sunbathe amid war ruins – have started to return. The hope is that, with regeneration, a higher class of tourist will again be attracted to Abkhazia.

Abkhazian analysts welcomed the possibility of new investment but say that the Abkhazian authorities will have to be wary of ceding too much to Moscow.

"Of course, on the whole it's very positive for us, but we need to negotiate these agreements very carefully to retain as much of our independence as possible," says Irakli Khintba, an independent political analyst in Sukhumi.

Over the spring and summer, Abkhazia looked the most likely place for a spat to escalate into full-blown conflict between Russia and Georgia.

The Russians were accused of moving troops into the region, while the Abkhazians claimed to have shot down several unmanned Georgian spy drones. But when conflict came, it was in South Ossetia, and Abkhazia achieved its decade-old goal of being recognized without being subjected to war.

Russia's decision to recognize these territories surprised many people, including the region's leaders. Georgian officials have said that Russia's actions amount to the annexation of Georgian territory and protest that tens of thousands of Georgian refugees from the region are still unable to return.

But for now, Abkhazia has no interest in joining with Russia to form a single country. "The possibility of a genuine absorption into Russia is not there, in either the short of the medium term," says Mr. Khintba.

"It's not in Russia's interests," he continues. "They'd much rather have a friendly state on their borders than be accused of annexation."

South Ossetian leaders have expressed their desire to link up with their ethnic kin in North Ossetia, across the border in Russia. But the Abkhazians have no such desire, insists Shamba. "There is no pressure at all from Russia for annexation," he says.

Still, he accuses the West of holding a double standard by recognizing Kosovo but not Abkhazia. "The more the West pursues its hypocritical policies, the closer we are pushed towards Russia."