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Journal number 2 ∘ Khatuna Khaduri

DOI:  10.36172/EKONOMISTI.2022.XVIII.02.Khatuna.Khaduri

Expanded Summary

The search for and realization of effective ways to resolve conflicts peacefully and achieve stable bilateral cooperation between countries and within countries remains one of the major challenges facing the modern world. The article focuses on the importance of trade-economic ties and the role of private sector involvement in conflict resolution and socio-economic rehabilitation in post-conflict regions. The article also discusses the results of research on entrepreneurial activities in the villages of Shida Kartli near the administrative line of the occupied Tskhinvali region of Georgia and analyzes the peculiarities of trade relations in the post-conflict period.  

In the modern world, interstate and intra-state territorial and ethnic violent conflicts place a heavy burden on the political and economic security of countries, socio-economic development, welfare of countries and the integration of countries into the international community. In the world today, the use of economic ways of resolving conflicts is of great importance. Establishing trade and economic relations between the opposing parties, encouraging business ties and involving the private sector contribute to peace-building and economic rehabilitation in post-conflict regions.

The current cross-border trade between post-conflict regions is largely informal, although it makes a significant contribution to boosting economic activity in the conflict-affected regions and providing a livelihood for the population. In the post-conflict period, investments by the private sector in various sectors contribute to the creation of new jobs, the development of entrepreneurial activities in the region, the growth of local business potential, the implementation of joint business projects.

As a result of the 2008 Russia-Georgia war, the Russian-occupied territories of Georgia include the regions of Abkhazia and Tskhinvali. Despite the difficulties In the post-conflict period, informal trade took place between the occupied Tskhinvali region, Abkhazia and the territories controlled by the Georgian central government, via the Enguri bridge connecting Abkhazia and Zugdidi, and the Akhalgori crossing point in the direction of Tskhinvali. The population mainly transported agricultural products and traded in local markets. Both local Ossetians and Georgians, as well as residents of nearby regions, engaged in retail and wholesale trade. In 1999-2004, trade flows were intensive, also through the market in the village of Ergneti near Tskhinvali in the direction of Gori. Large quantities of smuggled goods were imported to Georgia from Russia: food products, oil products, cigarettes. Agricultural products flowed from Georgia to Russia. Both local Ossetians and Georgians, as well as residents of nearby regions, engaged in retail and wholesale trade.

The Ergneti market was a "black hole" for the country's economy. A large amount of customs-cleared goods flowed through it to other regions of Georgia, which dealt a heavy blow to the country's budget. Difficulties in controlling smuggled goods, the severe criminal situation in the region, the lack of anti-corruption policies and many other factors led to the closure of the Ergneti market. This circumstance had a negative impact on trade and economic relations between the population, on their incomes.

In resent there is a wide range of political, economic, human rights and social challenges in the post-conflict regions of Georgia; The unstable situation created in the post-conflict regions hinders the creation of an investment environment, the identification and stimulation of business potential, and the development of households; The survey of entrepreneurial activity in the villages of Shida Kartli along the administrative dividing line of the Tskhinvali region is based on both primary and secondary data. A total of 115 randomly selected entrepreneurs participated in the study. The online survey method was selected as the research tool. Relevant conclusions were made based on the analysis of the obtained results: Separate fields of agriculture are more or less developed in the region; Agricultural projects and financial support of state and international donor organizations play an important role in the development of entrepreneurship in the region adjacent to the dividing line; Entrepreneurs' incomes are growing, jobs are being created The main challenges of entrepreneurial activity in the post-conflict region are: lack of opportunities for the realization of agricultural products; Inefficient infrastructure; Limited access to finance, new technologies and agricultural machinery, lack of qualified staff and workforce.

The analysis of trade and economic relations with the occupied territories of Georgia showed that post-conflict informal trade relations in Georgia, on the one hand, played a positive role in restoring public confidence, generating livelihoods, conflict resolution, and on the other hand, the disadvantages of informal trade, such as: Lack of customs clearance procedures, crime and others have dealt a huge blow to the country's economy.

The establishment of trade and economic ties will also make a significant contribution to the socio-economic recovery of the regions adjacent to the administrative dividing lines of the occupied territories of Georgia and the peaceful coexistence of the population on both sides. To achieve this, it is important to develop entrepreneurial activities in the region adjacent to the dividing line; Establish a regulatory framework for trade relations between the parties. It is necessary to analyze the experience of the Ergneti market as an economic space promoting joint entrepreneurial activity and to establish an adequate economic space for the current situation.

Keywords: Trade and Economic Relations, Post-Conflict Regions of Georgia, Private Sector, Economic Rehabilitation