Publication: Eurasia Daily Monitor Volume: 4 Issue: 18

On January 18, Russian President Vladimir Putin declared that he would allow the Russian ambassador to return to Georgia, after recalling him last October. At that time relations between Russia and Georgia had seriously deteriorated, and Moscow also imposed economic sanctions and cut all transportation links between the two counties. Belatedly, the Kremlin realized that its overreaction had actually made the Georgian government stronger.

The Russian Security Council held a special meeting on January 13 to discuss the effectiveness of the sanctions against Georgia. Details of the discussion are unknown, but the ultimate outcome was to cancel the sanctions and soften Russia’s policy towards Georgia (Kommersant, January 19).

The Kremlin backed down for several reasons. First, Moscow’s attempt at gas blackmail failed. Georgia simply switched to cheaper natural gas from neighboring Azerbaijan instead of buying high-priced Russian gas from Gazprom.

Second, the Russian sanctions had very little impact on the Georgian economy. Tbilisi instead managed to strengthen its economic and political ties with many other countries, including neighboring Azerbaijan, Turkey, and Iran.

But the issue that finally broke the Kremlin’s sanctions against Georgia was the “tangerine crisis” in Ossetia at the start of the new year.

Over a year ago Russian authorities began imposing a series of economic sanctions on Georgian products. On December 19, 2005, Russia banned imports of all farming produce from Georgia and later banned imports of mineral water and wine. In August 2006, the main frontier post on the Russian-Georgian border, Upper Lars, was closed.

However, the Georgian agricultural industry continued to export fruit to Russia illegally through the uncontrolled territory of South Ossetia. While imposing sanctions on Georgia, the Russian authorities simultaneously lavished benefits on the population of Georgia’s two separatist regions: South Ossetia and Abkhazia. Residents of these regions managed to carry fruit and other produce into Russia through frontier posts that were not Georgian controlled.

The most lucrative business was importing Georgian tangerines, which are very popular in Russia. Tradesmen from South Ossetia, as well as from North Caucasus regions inside Russia like North Ossetia and Kabardino-Balkaria, bought Georgian tangerines at a wholesale market in Vladikavkaz, the capital of North Ossetia. The profits were so high that many businessmen invested all their money in tangerines.

In theory, the Russian authorities only allowed imports of agricultural products grown in South Ossetia, such as apples, but the real money was in selling Georgian tangerines in Russia. Border guards and custom officers in the Nizhny Zaramag frontier post that separates South Ossetia and Russia (North Ossetia) were easily bribed and pretended they saw “Ossetian apples” instead of Georgian tangerines.

According to the Russian TVC channel, it cost 150,000 rubles ($5,600) to bring a small 3-ton truck loaded with tangerines to Russia through Nizhny Zaramag, while a much bigger KAMAZ truck could pass for more than 200,000 rubles ($7500) (TVC, January 9).

In the middle of December the Kremlin realized that the sanctions were having no impact on Georgian agriculture, since the bulk of the country’s tangerines continued to appear on the Russian market. On December 19, Russian border guards at Nizhny Zaramag received a strict order to stop all trucks leaving South Ossetia with tangerines. Tradesmen were astonished when they found that they could not take the tangerines across the border at any price. Enraged traders blocked the South Ossetian highway that leads to Russia with 60 trucks full of tangerines. They demanded that the authorities allow them to carry the tangerines to Russia. Ironically, there were no Georgians among the protestors, only residents of South Ossetia or Russia.

Nevertheless, federal, North Ossetian, and South Ossetian separatist authorities refused to negotiate. On January 6, border guards and North Ossetian police attempted to unblock the road and suppress the demonstration with armored personnel vehicles and special riot units. Instead, the protesters lay under the trucks, and police officers did not dare to drag them away.

The crisis was resolved on January 10 when the pro-Georgian government of South Ossetia, located in the village of Kyrta, declared that it would buy all of the tangerines that belonged to the protesters. Dmitry Sanakoyev, the pro-Georgian leader of South Ossetia, reportedly bought a total of about 400 tons of tangerines (Georgia Online, January 17).

Such steps make the pro-Georgian authorities of South Ossetia very popular among the locals. Supported by at least a part of the South Ossetian population, Sanakoyev claims he should be able to take part in the dialogue among Georgia, Russia, North Ossetia, and the pro-Russian separatist authorities of South Ossetia. His successful resolution of this crisis will strengthen his argument

The tangerine crisis has clearly demonstrated to the Kremlin that economic sanctions against Georgia hit not only Georgians, but also Moscow’s allies in the North Caucasus. Not only did the sanctions seriously damage the economy of South Ossetia, they made the locals turn from the pro-Russian separatists to Georgia and its allies in the region.

Under such circumstances Moscow saw the senselessness of continuing its strict blockade against Georgia. At least some economic sanctions against Georgia may soon be lifted as well.