A Budget Cut in Abkhazia and Russia’s Strategic Problem

By George Friedman

This reality check begins with news from a place many people have never heard of: Abkhazia. Abkhazia used to be a part of the Republic of Georgia, but broke away, as did a region called South Ossetia in the 1990s. Both regions either wanted to stay part of Russia or were manipulated into being part of Russia — the version depends on who you listen to. Abkhazia was never formally annexed by Russia so it is suspended between Russian and Georgia. Internationally it is said to be part of Georgia. Russia treats it as a friendly, autonomous republic, but for all practical purposes, Abkhazia is part of Russia.

Abkhazia is part of the Caucasus and the Caucasus region has historically been important to Russia. Three empires came together in the Caucasus: The Ottomans (now the Turks), the Persians (now Iran) and the Russians (still the Russians). For the Russians, the Caucasus was and remains the buffer between it and the Turks. They divvy into two ranges and the northern one, called the High Caucasus, remains a critical barrier because north of the high Caucasus, Russia turns into a flat bridge between the Black and Caspian Seas, and north of that is the industrial and agricultural heartland of Russia. If it were to lose the Caucasus entirely, this critical region could not be defended.

After 1991, Georgia, Azerbaijan and Armenia became independent and dominated the south Caucasus. The Russians still controlled the northern High Caucasus. That was invaluable but it was also the last line of defense for a tottering Russian Federation. Seeing a threat develop in the southern Caucasus was unacceptable. In 2008, the Russians perceived Georgia as coming under the influence of the United States and also becoming a potential base. Their last line of defense was in danger.

The Russians responded by going to war in Georgia and defeating its army. Strategically this announced Russia’s return as a great power, which is being played out in the Middle East now. Tactically it put the Americans and the Georgians on notice not only of their power but of the limits of their tolerance. Georgia could not become a base for the United States and in particular, Abkhazia could not become part of Georgia. Abkhazia juts out from Georgia along the eastern shore of the Black Sea along the western edge of the Caucasus. It borders on Sochi, where the Olympics were held. If Georgia is a buffer against Turkish and Iranian power, then Abkhazia is a buffer against Georgia. Think of it as a bayonet pointing the way for an army wanting to attack the Russian heartland. And rest assured the Russians think this way.

Abkhazia is therefore strategically very important to Russia and Russia has devoted significant resources to keeping Abkhazia independent of the Georgians and content with the Russians. This makes the Finance Minister of Abkhazia Amra Kvarandzia’s budgetary announcement an important one. He delivered a sober message about reductions from around $134 million to about $74 million.

The reason that was given for this cut was there had been a substantial cut in funding from the Russians. The Russian contribution was cut from $71 million dollars to about $6 million dollars. The finance minister said that an interdepartmental commission was going to Moscow on Dec. 23 to discuss the cut, but given that the cut was already backed into the Abkhazians’ budget a week before the new budget starts, things are not going to change.

Now I have to confess to not really being interested in Abkahzia’s budget problems. But I am very interested in this: Russia is becoming assertive all around its periphery. The Caucasus are strategically essential to the Russians and they fought a war in 2008 to assure their interest there. Abkhazia is, from the Russian point of view, strategically significant. Maintaining stability there has to be one of the Kremlin’s strategic priorities. Yet they have cut what should be an insignificant amount for Russia, and is quite a significant amount for Abkhazia. There is no evidence of tension, of Russia trying to punish Abkhazia, and there is little reason for this.

The one explanation is that the Russians are critically short of cash and simply can’t afford to keep funding all of their obligations and interests, no matter how strategic. The Russians are currently involved in upgrading their military, dealing with Ukraine, dealing with Syria, all in the face of collapsing oil prices that are the critical foundation not only of their national budget but of the Russian economy. There are times when amounts of money that would normally be unnoticed by someone becomes important. And if the Russian plan is to cut support for Abkhazia they have reached that point. There are budget cuts everywhere for Russia, except possibly in defense spending, but this one shouldn’t be cut. And it is.

This gives us a sense of the problem of Russian power. They are able to project force into Syria and count on the American government for political reasons, and the mainstream media out of simply not understanding things, magnify the significance of their involvement. They have sent a relatively small number of aircraft, dwarfed by the American presence, and have achieved the psychological impact they wanted.

The fact is their national strategy is built on a base of sand. They are cutting money needed to stabilize a region they went to war over for good reason, from their point of view. That only makes sense if the Russians are against the wall because of oil prices, and in worse shape perhaps than some might have thought. And that means that American strategy has the upper hand if it wants to exercise its advantage. American pressure on the Russian budget in the 1980s, when the price of oil was also depressed and the Russians had to divert funds to their defense budget, led in part to the Russians decline. Something of the same sort might be repeating itself here.

Sometimes a tiny bit of information on a budget cut in a place like Abkhazia reveals a great deal about the global balance of power. This is one of those cases. It doesn’t change our perception of things. Russia’s economy is against the wall. It simply gives us a sense of how far against the wall they are and also how their strategy is constrained in areas of fundamental interest to them.