Mining for Gold
A breakaway region is already reaping the benefits of the Sochi Olympics. From EurasiaNet. by Elizabeth Owen 31 July 2008
GAGRA, Abkhazia | The XXII Olympic Winter Games may be six years away, but at vendors’ stalls in the northern Abkhaz resort town of Gagra, the Sochi 2014 paraphernalia is already blowing in the breeze. Its presence is no accident.
For the self-declared Republic of Abkhazia, the games offer a chance to show the world that Abkhazia exists and that it can stand on its own feet. The question is whether its economy can be ready in time.
At first glance, the odds seem long. Natural beauty may abound in this breakaway Black Sea territory, but the sights come with no commercial airport, no credit card services or bank machines, and, after a 13-year economic blockade, limited consumer retail options. Officials say Abkhazia has three years to make the necessary infrastructure repairs, reopen its main airport, and upgrade hotels and financial services.
“This is a very, very big challenge for Abkhazia,” de facto Abkhaz Deputy Foreign Minister Maxim Gunjia said in a recent interview. “[W]e will have a huge international project next to our borders and we’ll have to correspond to [international] standards. … If we want to benefit from the winter Olympics, we have to start working right now.”
That work – in various forms and with sizable Russian assistance – has already begun.
In downtown Sukhumi, the Abkhaz capital, a small, gleaming white train station is taking shape next to the town’s sprawling Stalin-era original, a reminder of the region’s past identity as a Soviet-era vacation destination. Its waiting room hung with watercolors of Abkhazia, the station is the work of the Sochi Transportation Co., a private firm that will reportedly run trains daily from Ochamchira in southern Abkhazia to Sochi. Trains between Sukhumi and Sochi could run four to five times per day, according to one estimate.
And with trains come planes. The new Sukhumi station also features a window for flight tickets to Sochi, but, as yet, outside skeptics see that as wishful thinking.
Set at the end of a rambling road lush with subtropical greenery, Sukhumi’s Babushera Airport, closed since the end of the 1992-1993 war with Georgia, looks in no shape to receive regular air passengers. The International Civil Aviation Organization, a UN agency, has stated that reopening the airport could result in sanctions against participating airlines. Tbilisi has echoed the threat.
But that does not mean that the plans do not exist. Located about 25 minutes outside of the city center, the airport, with its dual runway, could easily make up for any potential overflow of air traffic experienced by Sochi, local observers believe.
“If it’s needed for the games, it will open,” predicted economist Beslan Baratelia, deputy head of the Party of Economic Development of Abkhazia. “The Russian government may organize some company” to run limited flights, he added.
The office of de facto Abkhaz President Sergei Bagapsh puts the price tag for the project at $30 million.
De facto Economy Minister Kristina Ozgan projects that the airport could become a “humanitarian” project similar to the repair work done by Russian engineers on the railway between Ochamchira and Sukhumi. “I consider that that question will be resolved the same way as with the railroad,” Ozgan said. Russian officials could not be reached for comment.
NO MEDALS FROM GEORGIA
In Tbilisi, Georgian analysts and officials scoff that any drive to make Abkhazia Olympics-ready comes courtesy of the Russian budget or investors – additional proof, they contend, that Russia is striving to annex the territory.
But Ozgan and other Abkhaz leaders dispute this notion. Russian financial assistance does not mean that the Sochi Olympics will make or break Abkhazia’s economy or impinge on its self-declared independence, she contended.
“I would not say that all our economy is being built on the fact that we should receive a certain role at Sochi,” Ozgan said. “No, it’s one of the possible options for taking revenue into the republic’s budget. But that doesn’t mean that it’s one of the most important or one of the most fundamental [options].”
It would seem that Abkhazia is being used as a supply center for the Sochi games. The region’s top priorities are supplying construction materials to Sochi – rock and cement, in particular – and developing facilities for shipping finished cargo to the site of the Olympic Games, Ozgan said. Encouraging “a considerable number of people to [visit] our cultural sites” ranks third, she added.
Abkhaz officials believe that a series of bomb explosions earlier this summer were staged as a reminder to investors and tourists that the Sochi Olympics will take place 22 kilometers north of a disputed territory. Georgian officials have denied involvement in the blasts.
Beach workers and hoteliers concede that the numbers are down this year, but no official estimate exists as to how much. In 2007, Abkhazia says that it brought in a record 2 million tourists.
Rising tension with Georgia may have turned some Russian sun seekers away, but in Gagra, a mecca for Abkhazia’s summer tourist trade, several hundred tourists still dotted the beaches. “It’s going to take more than an explosion to keep us away,” commented Volodya, a middle-aged mechanic in a sea captain’s hat who was watching friends ride an inflatable banana boat. “We’re Russian. We’re used to uncertainty.”
A Russian construction company’s renovation of Gagra’s high-rise Abkhazia Hotel suggests that others share that reasoning. While a boom similar to the building frenzy gripping Tbilisi or Batumi has not yet taken hold, economist Baratelia says that Abkhazia’s real estate market is already beginning to percolate for the Olympics. “The situation in Abkhazia has changed since the Sochi announcement,” he said.
As sellers take their property off the market in expectation of potentially higher prices closer to 2014, house prices have doubled, he estimated. Russian companies, meanwhile, are buying land for development not only in Gagra, but also in the nearby seaside resort town of Pitsunda. Temporary villages for some 20,000 Sochi Olympics workers are also on the drawing board for outside Gagra, Baratelia added.
The potential to build on that trend – however short-lived – can only please Sukhumi, much as it may anger Tbilisi. Said Deputy Foreign Minister Gunjia: “Tourism is better than oil, and we are very lucky.”