Western Sanctions on Russia to Have Delayed Impact on North Caucasus

Publication: Eurasia Daily Monitor Volume: 12 Issue: 14

(Source: The Telegraph)

President Barack Obama said in his State of the Union message (delivered before Congress on January 20) that US economic sanctions have had a devastating impact on the Russian economy (Tvrain.ru, January 21). In reality, only certain parts of the economy of Russia have been affected. Overall, perhaps it may be too early to talk about the damage inflicted by the sanctions, especially if one examines not the central part of Russia or its oil-rich regions, but the periphery. In fact, the North Caucasus has, so far, experienced only the fall of the ruble against the dollar and the euro, but no other negative effects have been detected so far, including on food prices in the region. The North Caucasus Federal District lives off of financial injections by Moscow. According to data for the first 10 months of 2014, Ingushetia received 83 percent of all its revenues from Moscow, Chechnya received 82 percent, Dagestan—70 percent, Karachaevo-Cherkessia—65 percent, North Ossetia and Kabardino-Balkaria—55 percent each (Kavkazsky Uzel, January 1).

But while the sanctions have not had much of an effect on the North Caucasus region yet, if Moscow decides to cut financial aid to the region, the regional authorities will not be able to provide even for the basic needs of the population there. Still, differences will prevail between the relatively prosperous Stavropol region and the republics of the North Caucasus, which live on federal largesse. Even if the amount of Moscow’s financial allotments remain unchanged, the money’s purchasing power has been slashed by half, and this alone will have inescapable consequences for the region. So, the full force of crisis will likely hit the North Caucasus after a lag of one or two years after it hits the central part of Russia.

Russian officials frequently refer to the rise of domestic tourism in general, but in the North Caucasus the effect has been quite mixed. In fact, most of the plans for the development of tourism in the region have been scrapped by Moscow.

Speaking at the South of Russia 2015 tourism forum, which was just held in the city of Yalta, the head of the Russian government’s tourism agency, Oleg Safonov, said internal tourism in Russia increased by 30–40 percent in 2014 (Newsru.com, January 20). But in the North Caucasus the effect has been mixed, and many of the plans for the development of tourism in the region were scrapped. The Elbrus area, for example, saw a large influx of tourists from all over Russia who were deprived of their Western resorts and had to turn to the Russian resorts in Crimea and the North Caucasus (Stav.kp.ru, January 13). However, there was little excitement over the winter resort in Armkhi, Ingushetia, since there was no snow in the mountains. Having built a ski resort at an altitude of only 1,520 meters above sea level, the management of the hotel is having difficulty attracting skiers, since over the last several years there has been no snow accumulation at the resort even by the end of January. The Dagestani project called Matlas (translated from Avar as “There Is No Snow”) also has been stopped due to the risks of having no snow this winter (Regnum, July 16, 2014). Chechnya’s Veduchi ski resort is being built at a fast pace thanks to the personal involvement of Chechen leader Ramzan Kadyrov (RIA Novosti, November 7, 2014). The construction of the North Ossetian resort of Mamison will also continue (Regnum, December 8, 2014).

All small- and medium-sized businesses will be affected against the backdrop of the overall deterioration of the economic situation in the country. Republican budgets will be hit because they will not receive the corresponding taxes. Large transfers of wealth will occur once again in the region.

The head of the expert analytical network PolitRUS.com, Vitaly Arkov, is habitually looking for attempts by Western countries to destabilize the situation in the North Caucasus. The analyst realizes that the situation is likely to deteriorate soon and is preparing his audience for this eventuality (Newsazerbaijan.ru, January 21). As an example, Arkov cited the situation in Dagestan, which is more explosive than other republics due to its special features. According to the analyst, the republic is being destabilized through the fueling of an uprising among the ethnic Azeris who live there and are allegedly experiencing problems. Russian experts tend to put the blame for the consequences on the faulty policies of the local rulers on the actions of enemies, including those in southern Russia.

The presence of the Islamic State (IS) will be sufficient to damage Russian interests in the region. Some commanders of the militants have taken an oath of allegiance to that group’s leader, Abu Bakr al Baghdadi (see EDM, January 15). As the Russian government’s control over the region falters, the forces demanding separation from Russia will strengthen. Given the emergence of IS in the North Caucasus, the region again will become one of the most explosive ones, and the multiple North Caucasian diasporas across Russia will contribute to the spread of the conflict across the country. The rivalry between the Caucasus Emirate and of the Islamic State will likely result in the spread of violence across the North Caucasus.

Thus, the Western sanctions against Russia could become a catalyst for a new spike of violence in the North Caucasus. The West should bear in mind that the more democratic forces among the armed resistance in the region should be supported; otherwise, the situation could spin out of control and damage the West’s own interests not only in the Caucasus region, but even outside Russia.