Ekho Kavkaza | In the upcoming session of the Parliament of Abkhazia, amendments to the law on investment activity will be considered. Also in line are two other controversial laws – on the mutual recognition of judicial decisions and on the legalisation of apartments. Abkhazian economist Akhra Aristava warns of the negative consequences of these three laws for individual citizens and the republic as a whole.
– Akhra, a parliamentary session is scheduled for Wednesday to consider the draft law on amending the law on investment activity. How would you describe the essence of the proposed amendments?
– The amendments to the law on investment activity that are currently proposed, I would characterise negatively. This is not the first attempt. We remember that initially, the president's administration tried to provide 25-year benefits to investors in strategic sectors of the economy. The deputies did not support this idea. Last year, the same was proposed by the Ministry of Economy, but the deputies rejected it. And now, this is already the third attempt to provide incredible, unjustified benefits for 25 years on a number of taxes specifically for economic activities in the strategic sectors of the Republic of Abkhazia. In my understanding, in the absence of reforms, foreign investors are offered to exploit Abkhazia without any participation of the republic's citizens, meaning our people are offered to be not owners, but cheap labour. And all the profitable economic sectors are to be handed over to large foreign capital. This is an attempt to implement the same policy that was carried out by [Anatoly] Chubais during Yeltsin's time, when the economy falls into the hands of a small group of people with incredible benefits, while the people are left without profit from these economic sectors. Then we will find ourselves in a situation where we have no money for supporting peasants, education, healthcare, defence, or anything. This is a very dangerous path and, of course, it cannot be allowed.
– In the Parliament's upcoming plans, as we hear, there is the adoption of two more controversial laws that are causing negative reactions in society – on the mutual recognition of judicial decisions within the framework of harmonising legislation between Russia and Abkhazia, and on the legalisation of apartments. In your opinion, what will be the consequences of adopting these laws for the citizens of Abkhazia? What is their purpose?
– Honestly, I have not seen the parliamentary agenda for the upcoming session, but certainly, issues such as the adoption of a law or agreement on the mutual recognition of judicial decisions and the law on apartments are aimed at attracting foreign capital and protecting these investments through the courts. However, we do not see any tools – there are no long-term loans, subsidies, tenders, or competitions through which the citizens of Abkhazia could participate in these economic projects. This is the path to creating, with the help of power, an oligarchic regime in the economy and in politics. Why this is being done is unclear to me, as entire economic sectors will fall into the hands of a narrow group of people without the citizens of Abkhazia, who have no financial means to participate in this.
– Akhra, could you please specify how these two laws will affect the citizens of Abkhazia and the economy of the republic?
– The law on the mutual recognition of judicial decisions will allow Russian banks to file lawsuits in Russia, unlike the current situation. There have already been attempts to sue borrowers, citizens of the republic, in the Arbitration Court of Abkhazia. But they want to simplify this situation. It will act as a banking guarantee for the loans that will be issued for investment in the economy of the Republic of Abkhazia. For the Abkhaz side, there is no need for this, as the majority of the citizens of Abkhazia are poor people; they do not particularly invest money in the Russian Federation, and there are no special disputes either. In the current situation, this certainly does not serve the interests of the citizens of Abkhazia. Therefore, I have said before and I say again, without creating equal conditions for economic activity, adopting this agreement is premature. We already see the first example, where the trade in oil products is essentially monopolized and given to the company "Rosneft." Naturally, almost all the profit from the sale of gasoline, diesel fuel, and other oil products will leave Abkhazia. The same will happen if all these laws are adopted, in the tourism sector, as the apartments will also hit the small and medium-sized business in the tourism industry, affecting the interests of the citizens of Abkhazia, who have built a significant number of mini-hotels and medium-sized hotels. The energy sector will also come out from under the control of our state and people, and naturally, there will be no possibility to regulate the impact on the economy or social issues. We may also face the loss of such an industry as trade. If large foreign capital enters here, our small or medium-sized shops will be in a very vulnerable position. Therefore, it is not possible to say that this is beneficial for the people of Abkhazia, the Republic of Abkhazia.
– Akhra, meanwhile, the president keeps convincing the society that Abkhazia has no funds for anything: neither for energy, nor for supporting business, nor for agriculture, etc., hence the republic has no other choice but to invite foreign oligarchs to do everything. What can you say against this?
– The authorities' argument that we have no money does not withstand any scrutiny. While the latest data on the money turnover in the country from the National Bank is not available, I assume, considering the turnover growth announced mid-year at 15%, that the money turnover in the country will likely reach 150 billion rubles (1.65 billion US dollars). And we also have a shadow money turnover, as stated by employees of the Center for Strategic Studies (CSS). There are calculations by the candidate of economic sciences Khutuna Shatipa, who estimated it at more than 65 percent. That is, we can talk not about 150 billion rubles but about a much larger sum. This means that there is money in the country; what is needed are reforms that would allow bringing a significant part of the turnover out of the shadows, thereby providing protection to the honest business and increasing the state budget's revenues by up to 5-6 billion rubles (55-66 million US dollars). Then the state will have opportunities for the modernization of energy, financing of small and medium-sized businesses, support for peasants, and agriculture.
We have the initial resources to start reforms in the economy. First and foremost, the authorities must ensure the national and legal interests of the citizens of the Republic of Abkhazia. I am not in favour of closing off the economy. Our economy is open, and foreign companies are present in various sectors. I advocate that, alongside foreign citizens, our citizens should have economic tools to participate in the economic process. Just as foreign companies have the opportunity to take loans from foreign banks, we need to create opportunities for our citizens to take loans from our banks and be able to take loans for 5 years, for 10 years, have access to leasing operations, to insurance operations. None of these tools are available today; they need to be introduced, the economy needs to be reformed. And all these reforms should be carried out on equal terms, under conditions of fair competition.
This interview was published by Ekho Kavkaza and is translated from Russian.