Abkhazia and the twilight of Russian friendship
A brutal energy crisis reminds the self-declared republic, which broke away from Georgia, where power really lies.
By Oleg Boldyrev.
In more than 30 years of self-declared independence, Abkhazia had never seen an energy crunch like the one it faced this month.
Residents of the republic have had plenty of time to accustom themselves to all manner of hardships. Until recently, they could rely on Russia to lend a helping hand: almost half of Abkhazia’s budget is funded by Moscow.
But the rejection in November of an investment agreement, urged on Abkhazia by Moscow, has seriously strained relations. Not only did Russia at first refuse to bail out the territory’s electricity debt, it also imposed restrictions on Abkhazia’s two most vitally important economic sectors - agricultural trade and tourism.
The resumption this week of ‘humanitarian’ electricity supplies was swiftly followed by a blunt demand from the foreign ministry in Moscow for laws to be passed facilitating Russian investment.
The dispute has already cost Abkhaz president Aslan Bzhania his job. Snap elections called for February will mean the winner has to find a new answer to an old question: how to balance utter dependency on Russia with what the Abkhaz people think of as their national heritage.
And while Moscow may face struggles on other foreign fronts, it shows little sign of relaxing its grip on territories it considers Russia’s backyard in the southern Caucasus.
In 1993, just after a civil war that ended with Abkhazia proclaiming its independence from the rest of Georgia, Amra Ladaria (name changed) bought herself a Japanese-made portable kerosene stove. At the time, central heating in the capital, Sukhumi, was virtually non-existent, as Soviet economic collapse was suddenly compounded by the aftermath of battle.
30 years on, now aged 74, Amra is firing up her little stove once again.
"It's warm and cosy in my home. There’s a slight smell of kerosene, but we’ll get used to it," she says.
Amra prefers to be phoned late at night: there is no electricity by day, and probably won’t be a mobile signal, either.
(At her request, we have changed her name: like some others, ‘Amra’ was uncomfortable when speaking of political matters.)
Over the past week, the streets of Sukhumi and other towns in Abkhazia have become a little noisier: residents are starting up petrol-powered generators for electricity. For now, fuel is readily available. But it doesn’t come cheaply.
“Generators have gone up in price 40 or 50%, and not everyone can afford to get one,” says Ivan (name also changed), who lives in the town of Akhali Atoni. “People have bought a stove, or installed a fireplace. I’m keeping warm with a stove. I own a luxury car – and I am ferrying firewood in it now!”
Last week, daily life meant surviving under strict energy-saving measures. Electricity came only during twice during the day in 80-minute periods. At night, from 9 PM to 7 AM, power is supplied by Russia at a discounted rate, since Abkhazia could not afford the daytime tariff.
Schools and kindergartens closed, but hospitals kept going thanks to generators.
The dam at the border
At its simplest, the energy crisis can be explained by record-low levels of water at the Enguri Hydroelectric Power Plant, situated on the de facto border between the breakaway republic and the rest of Georgia. The power plant and its dam are jointly managed, with energy distribution handled by the Georgian government.
The Georgian side gets 60% of the output, and the Abkhaz side 40%, under a long-standing agreement. According to the power plant director, a Georgian, Abkhazia has already used up its annual quota – but has yet to pay for it. So the remaining electricity generated will be sold to cover the debt, he told a recent meeting with colleagues from the Abkhaz side.
An Abkhaz delegate asked ironically if paying the debt would fill up the river. But whatever the case, Abkhazia has no money and the water behind the dam will not be replenished till the snows melt on the mountains in spring.
“I can remember having timetables for power cuts, but this is the first time in my memory that we had a timetable for the supply of power,” says Inal Khashig, who edits the Abkhaz online newspaper, Chegemskaya Pravda.
He lives in a flat, so a petrol generator would do little to help him. To charge his mobile phone, Khashig plugged it into the socket in his car and ran the engine.
“The government has money to pay for electricity at night, but they have to scrape power together bit by bit. For example, Abkhazia’s largest winery got hold of electricity from Russia for a few days by promising to pay a levy on future profits. Next, the authorities will probably find some other big corporation to cover the cost of ‘night time electricity’ for another week.”
"For years, we got our electricity from Russia. It had to be paid for, but no one bothered to,” Ivan says bitterly. “Still, Russia kept subsidising us. Now they’re apparently not so keen on dishing out subsidies.”
Electricity, tourists, and mandarin oranges
It is widely thought in Abkhazia that a solution to the energy problem would have been found more quickly if Russia weren’t so angered by the lack of progress on an investment agreement it has been pushing for several years.
But allowing big Russian business free rein to develop property on Abkhazia’s sub-tropical Black Sea coastline is a deal-breaker for the local population. On the day the agreement was due to be debated in parliament, a crowd stormed the presidential administration building. Several days later, President Aslan Bzhania was compelled to step down, and on December 3rd, the Abkhaz parliament voted against the investment agreement.
The response from Moscow did not take long. As has become the way in dealings with Abkhazia and other former Soviet territories, the first target was food imports –pests were suddenly discovered in mandarin oranges exported by Abkhaz farmers to Russia.
Then in short order, Russia’s tourism industry association stated it had been instructed by the government to suspend the sale of package tours to Abkhazia. The words chosen by the body’s vice-president made it clear the measure was intended to be punitive: it was a ‘disciplinary’ response to Abkhaz ‘resistance’ to the investment agreement, he said.
The association later rowed back on the statement, but the fact remains that mass tourism has been suspended, while independent travellers may well not warm to the idea of winter evenings by candlelight.
The new enemy of the people: crypto miners
Abkhazia’s energy crisis has turned up the heat on a cottage industry that has hitherto benefitted from cheap subsidised electricity: mining for crypto currency. The largely unregulated endeavour is now competing with homes, schools and hospitals for power that is in very short supply.
Last week, cryptocurrency mining equipment uncovered by activists was burned in public, revealing to those beyond the tiny republic’s borders that mining is far more energy-intensive than the income sources for which it is better known: mountains, mandarins or beach holidays.
“How many people live in Abkhazia?” asked the director of the Enguri hydroelectric power plant at his meeting with the Abkhaz delegation. “244,000,” was the reply.
“Tbilisi has 1.5 million,” he continued, “but electricity consumption there is the same. I heard that when you turn off the internet at night, consumption immediately drops by 50 megawatts.”
“By 45 megawatts,” corrected the Abkhazians.
Locals are well aware of the crypto farms in their midst. Abkhazia legalised mining in 2020 – power consumption has since gone up by more than a third, experts say, to three billion kilowatt hours annually. Restrictions on crypto mining were imposed, but by then significant quantities of equipment had been imported, and the restrictions were only sporadically enforced.
On top of that, many of the larger farms, often deploying hundreds of devices, tapped electricity from the grid at the same time as bypassing meters – in other words, free of charge. The government imported new meters from Russia, hoping to boost payments, but to little avail.
Abkhazia’s acting leadership has promised a crackdown, but for many the damage has been done. And ordinary people sitting in darkness have little sympathy for the crypto farms devouring what little power remains.
What concerns them more is why after three decades of self-declared independence, Abkhazia has neither mustered the funds nor political will to modernise the Enguri power plant, along with a number of smaller hydroelectric stations that have fallen into disrepair and which no longer function.
“Starting with the first president to the current one, they’ve all talked about fixing the Enguri power plant,” marvels Amra Ladaria in Sukhumi. “They talk about the leaks in the dam and the water which is lost. But in 32 years, they haven’t invested a single ruble. It was built in the 1970s! How can you go so many years without doing anything?”
“Massive investments would be needed to renovate the local power system,” says Olesya Vartanyan, a researcher on security issues in the Caucasus.
“And the question would still remain: who would own it? Because nobody will supply the huge funds required – money to replace the wiring, install new meters, or overhaul the distribution grid – without expecting something in return.”
Currently, cryptocurrency miners are plainly seen as enemies, though local people are sceptical about the dramatic rhetoric of recent official statements.
“This isn’t about ordinary people. The main problem are the vast mining farms owned by government officials and wealthy individuals,” says Akhra (name changed), who lives in Sukhumi.
“Some people have one, two, or three mining rigs at home – and these don’t consume that much. In theory, a household in Abkhazia is allocated 13 kilowatts per year. If you set up two or three rigs, it doesn’t exceed that limit,” she says. “Blaming farmers, the middle class, or regular people makes no sense. The real problem lies with the massive mining farms that have thousands of rigs. These miners are feeding our government, and especially those people whom we elected in the past to be our presidents.”
Inal Khashig, the newspaper editor, agrees: “People here firmly believe that behind every large crypto farm stands a high-ranking official. They protect the operation. No real effort is made to do anything about a well-known problem. There has been a government task force on mining since 2020, but efforts to sort out the problem have been lily-livered at best.”
Social media sites in Abkhazia are full of videos of crypto farms being brought to light and the equipment destroyed, when not voluntarily surrendered. Matters took a lethal turn on December 19th when two deputies flared up at each other in a debate on cryptocurrency mining in parliament. A third, Vakhtang Golandzia, tried to intervene, and was shot dead by the pistol of one of the men, Adgur Kharazia (who managed to flee).
What can be changed - so that nothing changes?
After the forced resignation of the president, and having said a firm ‘nyet’ to the Russian investment agreement, Abkhazia has a month and a half to wait before the early elections.
Candidates will try to convince cold and angry voters that they have a credible plan to get the power back on and entice rich Russians back to the coastal resorts. Meanwhile, they will have to navigate the extremely sensitive issue of who will be allowed to develop prime real estate - and on what terms.
Any proposals and their proponents will be have to acknowledge that there is no alternative to the unbalanced alliance between the self-identifying independent state and its big neighbour, Russia. No faction supports sundering these ties – while détente with Tbilisi is off the table entirely.
Amra, the pensioner who just fired up her stove again in Sukhumi, is hoping for a compromise: “We need someone who can negotiate with Russia and find an option that will suit both sides.”
But it’s not clear why Moscow, which has spent years pressurising Abkhazia into accepting as inevitable the entry of fat players into the real estate market – with deals worth more than two billion rubles – would be interested in any option that the one the parliament rejected.
The old approach from Abkhazia’s leaders – a concession here, a promise there – is no longer viable, says Olesya Vartanyan, the analyst. “It seems tension with Moscow has hit a peak: the Russians need to see concrete action. Hence the problems with electricity, mandarin exports and tourism.
“These are clear decisions that give a clear signal to the ruling elite: not only will there be no further talks, but even the things you now take for granted may be lost.”
Despite its overweening dependence on Russia, there have been times when Abkhazia reached out to foreign suppliers, Vartanyan notes, loosening Moscow’s grip over the territory. For example, when appeals were made for medical supplies during the COVID pandemic.
“However, I see zero evidence that anyone in Sukhumi is considering this kind of approach now,” she says. “Plus, I am afraid the world currently has far too many other pressing concerns to consider now.”
Ultimately, having let an urgent request from the government go unheard for a meaningful period of time, Russia began what it termed ‘humanitarian supplies’ of electricity оn Monday. Power cuts are now shorter – but they still last for at least four hours each day.
Maria Zakharova, Russia’s foreign ministry spokesperson, wasted no time in spelling out what Moscow’s wants to see. Speaking after the resumption of power supplies, she said obligations between the allies call for balance: “Our assumption is that Sukhumi will travel its part of the road in accordance with bilateral documents on harmonising legislation and creating the essential conditions for Russian investment.”
When we spoke to Inal Khashig, the newspaper editor, he thought careful negotiation could find a way through the real estate question without need for legislation.
But he warned that the fact Moscow let Abkhazia suffer the full effect of a mid-winter energy crisis, and was in no hurry to respond to the leadership’s desperate plea for help, demonstrates the Kremlin’s patience has been exhausted.
Although power was switched back on at the last moment, it “should not lead our government back into its habitual state of complacency,” Khashig wrote on his Telegram channel this week. “Reforms are more urgent than ever.”
Read the Russian version of this story here.
English version edited by Chris Booth.
