FREE ECONOMIC ZONE IN CHECHNYA "NO PANACEA."

The President of Ingushetia, Ruslan Aushev, has told the Monitor in an interview that, despite the creation of a Free Economic Zone (FEZ) in his republic, federal subsidies still constitute about 90 percent of Ingushetia’s budget. The standard of living in Ingushetia is one of the lowest in Russia and unemployment approaches 50 percent. The 1991 separation of Chechnya and Ingushetia left Ingushetia, the more economically backward of the two, in an unenviable position, since almost all the industry and infrastructure were in Chechnya. The situation was further complicated in 1992 when 65,000 Ingush fled to Ingushetia from ethnic conflict in North Ossetia. In 1994 the federal authorities created a FEZ in Ingushetia. According to Mikhail Gutseriev, former head of Ingushetia’s FEZ, about $200 million of federal money have been transferred there — a huge sum for a republic with an estimated population of about a quarter million. (TV-6, November 17)

Chechnya’s situation today resembles that in Ingushetia before the creation of the FEZ, except that it is far worse. The Kremlin plans to restore Chechnya’s economy by creating a Special Economic Zone (SEZ) there. Aushev says Chechnya will not agree to a FEZ defined by Russian law since, according to the Khasavyurt accords, the question of Chechnya’s status is to be postponed for five years. But Chechnya’s SEZ will differ from Ingushetia’s FEZ only in name. Nonetheless, Aushev says Ingushetia’s experience shows that a SEZ will not be a panacea for Chechnya’s ills. According to Aushev, Ingushetia’s FEZ will begin to pay off only in five years, and a turnaround will take even longer for Chechnya. In other words, there is no chance that the economy will revive before the expiry of the five-year period provided for in the Khasavyurt accords.

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