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THE CAUCASUS & GLOBALIZATION
Giulia PRELZ OLTRAMONTI
Teaching and Research Assistant, MA in Conflict, Security and Development from King's College, London, Doctoral Program at the Department of Political Science,
Université libre de Bruxelles (Brussels, Belgium).
THE POLITICAL ECONOMY OF
PROTRACTED CONFLICTS: ABKHAZIA, SOUTH OSSETIA, AND VIOLENCE MITIGATION
Abstract
In order to comprehensively elucidate the dynamics of a conflict, we need to look at the causes while taking into account mobilization strategies. The two are closely intertwined, as causal factors lead to, contribute to, and support mobilization strategies, while mobilization and organization allow for motivations to be expressed through collective violence instead of nonviolent engagement. We address the cases of the prolonged conflicts of Abkhazia and South Ossetia in relation to the existing the-
oretical framework of the political economies of war. After an initial review of the literature, stakeholders in the war economies and the processes of boundary activation are identified. We then go on to address the role of these stakeholders as violence entrepreneurs showing that, although the interests embedded in the political economies of the protracted conflicts were geared against resolving the stalemate itself, they were also, for the most part, against the resumption of high-scale violence.
Introduction
When we look at the Abkhazian and South Ossetian conflicts and decide to explore the timeframe between the ceasefire agreements of the early 1990s and the resumption of the full-scale conflict in 2008, we are immediately confronted with a stumbling block. The very definition of these fifteen years is problematic, given the state of relative war and relative peace that characterized it. Indeed, both cases are protracted conflicts that cannot be considered resolved due to the lack of peace agreements, even though there has been little full-fledged confrontation. The question that we ask here—what was the role of the war economies in the protraction of the Abkhazian and South Ossetian conflicts?—touches upon the dynamics that sustained this state of affairs.
The question does not specifically focus on a search for the exclusive causes and origins of war. While the causes and origins have repeatedly been explained by mono-causality, as scholars searched for an all-encompassing explanation, a more multifaceted—and somewhat modest—understanding of war is emerging from the long list of previous failures. According to this approach, which this paper adopts, there is a concomitance of factors causing war and affecting its development, be they
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political, geopolitical, social, economic, cultural, or religious, whereby in each case the balance among them differs. While the goal here is not to prove the primacy of the political economic perspective in explaining every aspect of the ongoing war and its developments, this paper aims to elucidate the impact of the economic factors throughout the various phases of the protracted conflicts. A political economic analysis of war unearths some of the incentives for increasing or decreasing the levels of violence and protracting or ending the conflict. It is also, however, an eye-opener on war economies and the feasibility of conflicts. This paper will therefore touch upon both the "whys" and the "hows" of war and of its development.
The Political Economies of War
In order to comprehensively elucidate the dynamics of a conflict, we need to look at the causes while taking into account mobilization strategies. The two are closely intertwined, as causal factors lead to, contribute to, and support mobilization strategies, while mobilization and organization allow for motivations to be expressed through collective violence instead of nonviolent engagement. Surely this relationship between the two can be exploited by violence entrepreneurs or mitigated by peace entrepreneurs.1 In the first case, we would then be confronted with causal factors that are crafted to support mobilization; in the second case, we would be confronted with one of the cases of conflict that did not happen. But in order to understand the role of violence entrepreneurs, peace entrepreneurs, and all the actors in between, we need to explore our case studies, as it is unlikely that a template of causes and mobilization strategies will fit all past and ongoing wars.
Although the body of literature on the political economies of war is vast, there are astonishingly few definitions of what is meant by the political economy of war. What is more, most of the existing definitions tend to be reductive, focusing on one aspect as the dominant factor.2 I have adopted Wen-nmann's fairly broad definition: "The Political Economies of Conflict is devoted to the study of the relationship between political and economic spheres in affecting the dynamics of armed conflict as well as the relationship between the material environment and motivations in the organization of the use of force."3
The economic factor in war has traditionally been associated with the financing of war, and therefore a specific component of organization and mobilization. The sources of financing conflict are extremely diverse, as well as the way finances are employed and vary according to the actors involved—state or non-state actors, for example, the conflict setting, the presence of external support, resources to exploit, and so on. As of late, however, there has been a conceptual shift in the understanding of the issue, as scholars have investigated economic agendas as a cause or driver of conflict.4
If we are to understand the intricacies of the political economy of a given conflict, we first need to have a sound grasp of the war economy itself, that is, "all economic activity carried out in wartime."5 Let
1 While the phrase "violence entrepreneur" is widely used, I have crafted "peace entrepreneurs" for lack of an appropriate idiomatic expression.
2 See: D. Keen, The Economic Functions of Violence in Civil Wars, Oxford University Press, Oxford, 1998; M.R. Berdal, D.M. Malone, Greed and Grievance: Economic Agendas in Civil Wars, Lynne Rienner, Boulder, 2000; P. Le Billon, The Political Economy of War: What Relief Agencies Need to Know, ODI, London, 2000.
3 A. Wennmann, "What is the Political Economy of Conflict? Delimiting a Debate on Contemporary Armed Conflict," Presented at the World International Studies Conference, Ljubliana, 23-26 July, 2008.
4 M. Berdal, D. Keen, "Violence and Economic Agendas in Civil Wars: Some Policy Implications," MillenniumJournal of International Studies, No. 26 (3), 1997, p. 795; D. Keen, op. cit.; P. Collier, A. Hoeffler, "On Economic Causes of Civil War", Oxford Economic Papers, No. 50 (4), 1998; P. Collier, A. Hoeffler, D. Rohner, "Beyond Greed and Grievance: Feasibility and Civil War", Oxford Economic Papers, No. 61 (1), 2006.
5 M. Pugh, N. Cooper, War Economies in a Regional Context: Challenges of Transformation, Lynne Rienner, Boulder, 2004, p. 8.
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us first point out that the normative concept of war as a negative and irrational state of chaos usually pairs up economic activity during war with the characterization of criminal or illegal. It would be useful however to treat war economies according to the legal vacuum in which they exist, and which is characteristic of war and post-war contexts. Given these legal vacuums, not only is the focus on legality then conceptually misleading, it also undermines a sound analytical approach to the case studies. If we maintain the categorization of legal versus illegal economic activities, we are then led to join under the same umbrella the ministry of defense employee, the person who does not take bribes, and the supplier of arms, food or services to the national army, and pitch them against a group formed by the resident of a borderland area who "smuggles" jeans or tomatoes across the border or ceasefire line to feed his family, businessmen who "smuggle" primary resources or arms to non-state combatants, and non-state combatants themselves. Clearly, the focus on the illegality of economic dynamics and the criminalization of many of these actors does not tell us much about what drives these actors, how and why.
More useful categorizations have been drawn in terms of combat, shadow, and coping economies, leading to a better understanding of the motivations, incentives, and dynamics of different actors.6
■ First, as defined by Pugh and Cooper, "combat economies include both
(1) the capture of control over production and economic resources to sustain conflict and
(2) economic strategies of war aimed at the disempowerment of specific groups."7
The main actors of such groups are combatants, members of military structures, and their political backers, whether state or non-state8; their key activities are varied and span from taxation and external financial support to trade, asset stripping, and looting. What draws them together is the motivation that drives their economic activity, namely funding the war effort or achieving military objectives.
■ Second, the shadow economy includes activities aimed at making a profit on the margin of conflict. These activities rely on the environment created by the war, exploiting, for example, the legal vacuum or the emergence of new borders. The rationale behind all the activities, which are extremely varied, however, is of an economic rather than military nature. Similarly lacking a military rationale are the activities of the coping economy, the goal of which is "to cope and maintain asset bases through low-risk activities, or survive through asset erosion."9
In fact, these two last categories overlap considerably, mirroring the multiplicity of interests of some actors and the inapplicability of clear-cut distinctions among residents, elites, businessmen, the military, and the government. The resident of the borderland area who trades in jeans or tomatoes across profitable ceasefire lines is an actor of the coping economy as long as he feeds his family, whereas he becomes a participant of the shadow economy when he starts trading a few tons of tomatoes, adding to that remunerative gasoline and cigarettes, and accumulating a certain amount of capital out of his trade. But the question of whether there is a need to differentiate between the two is pertinent. And while it is difficult to assert that there is a clear-cut distinction, there is a marked dif-
6 J. Goodhand, "From War Economy to Peace Economy? Reconstruction and State Building in Afghanistan," Journal of International Affairs, No. 58 (1), 2004, pp.155-175; M. Pugh, N. Cooper, op. cit.
7 M. Pugh, N. Cooper, op. cit., pp. 7-8.
8 The need to move beyond a rebel-centric approach has become increasingly apparent, including a shift toward consistent analyses of the role of governments and third parties, their combatants, and their military structures (see: K. Ballen-tine, H. Nitzschke, The Political Economy of Civil War and Conflict Transformation, Berlin, 2005, p. 4).
9 J. Goodhand, "From War Economy to Peace Economy?" in: State Reconstruction and International Engagement in Afghanistan, Joint CSP/ZEF (Bonn) Symposium, 30 May-1 June, 2003, p. 4.
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ference between the exploitation of a conflict environment and the ensuing legal vacuum, as well as survival through adaptation to that very same environment.
It is also difficult to draw lines among purely combat, shadow, and coping economic activities. Trade is a good case in point: trade of licit or illicit resources (gems, drugs, but also gasoline and cigarettes) may fund the war-waging effort; trade in all sorts of commodities and consumer goods is the backbone of most shadow economies; and petty trade largely supports the communities of conflict-affected areas. Similarly, asset stripping is a component of all war economies, but clearly with different aims and at different levels.
All this shows that case study analyses are needed in order to understand the "who" (the actors), the "why" (the motivations and incentives), and the "how" (the key activities) of all three sectors of the war economy, or, more specifically, the stakeholders.10 This, in turn, supports the inquiry into the effects and impacts on the conflict itself of the various strands of the war economy, their actors, their activities, and the relationships that they form.
While the study of political economies of war has initially centered on Sub-African cases, it subsequently expanded its field of inquiry to numerous non-African regional conflict complexes. The conflicts of the Caucasus, however, remained largely unexplored from this perspective. While some international organizations have carried out a few studies on the war economies of some of the protracted conflicts, mostly aimed at delivering development aid and carrying out confidence-building programs, the academic research community has steered clear of such issues. As mentioned above, this paper does not aim to prove the primacy of the political economic perspective in explaining every aspect of the protracted conflicts of Abkhazia and South Ossetia, as well as their developments. However, a political economic analysis of war elucidates some of the incentives in increasing or decreasing levels of violence and protracting or ending conflict. It is also an eye-opener on war economies and the feasibility of conflicts.
A few considerations shall be examined in order to address the cases of Abkhazia and South Ossetia in light of the theoretical framework spelled out above. When looking at wars, scholars and practitioners have mostly focused on the timeframe that covers wars until a ceasefire agreement is signed and high-intensity violence ends. More recently, attention has also been devoted to the topic of peace-building. Peace-building, however, customarily implies that a peace agreement is in sight, or has already been signed, which in turn indicates that some sort of a formal agreement has been found on a range of issues, and not only in terms of a halt to the fighting. A peace agreement implies solidified channels of communication between the parties and allows for external actors to intervene in a defined legal framework.
In many cases, however, this is not how events unfold. The parties may agree on the cessation of high-intensity hostilities for a number of reasons, which might include mediation, exhaustion, or strategic calculations, but fail to, or purposefully refuse to, agree on anything else. We hence have a case where a ceasefire agreement is signed, but no peace agreement is in sight or even sought after. Tension remains high—to varying degrees—but a high-intensity war does not necessarily resume.
This is indeed what happened in the cases of Abkhazia and South Ossetia. While the appellation that was given to the state of affairs, namely "frozen conflicts," is misguided, as both conflicts continued to evolve throughout the years, it remains relevant to look at them in their post-ceasefire agreement continuity. While hostilities and armed confrontation between Georgia, on the one side, and South Ossetia and Abkhazia, on the other side, broke out in 1991 and 1992, respectively, long-lasting ceasefire agreements were reached in 1992 and 1994, respectively. These dates, however, do not tell the whole story, as tension was present, although it varied in intensity, throughout the 1990s and 2000s. The conflicts of Abkhazia and South Ossetia in fact became protracted conflicts to be tackled within the spectrum of a war-peace continuum. The question that arises—namely who were the stake-
1 See: K. Ballentine, H. Nitzschke, op. cit.
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holders in the Abkhazian and South Ossetian (protracted) conflicts—carries a double implication. On the one hand, we can identify the violence entrepreneurs who profited from the failure to reach a peace agreement, and how they influenced or contributed to that failure. On the other hand, we shall seek out the peace entrepreneurs (or violence mitigators) who influenced, contributed to, and gained from the lack of resumption in high-intensity fighting.
Once the picture of the war economies in the two cases has been established, a stakeholder analysis can be carried out, expanding our understanding of the political economies of these two protracted conflicts, that is, the underlying relationship between the how (feasibility) and the why (motive).
Stakeholders of War Economies and Boundary Activation
We will take a look at the stakeholders of combat, shadow, and coping economies in the two cases. It is worth noting that it will be necessary to widen our understanding of combat economies to adapt it to the specificity of a protracted conflict. In fact, in addition to sustaining military capability and preventing the encroachment of Tbilisi's influence and control, the strategy of the de facto states for gaining the upper hand in the conflict was to proceed along the path of state-building and independence from Georgia. In a larger sense, then, combat economies aim to develop some sort of economic viability for the de facto states.
A significant share of the war economies in both cases was generated by border and boundary activation.11 Some of the most powerful stakeholders had interests in cross-border trade, which contributes to a profitable shadow economy. Business groups divided Abkhazian territory into zones of influence and became involved in moving specific commodities across the Psou River, the Gali region, and the ceasefire line (CFL).12 By 1995, two Georgian paramilitary groups, the Forest Brothers and the White Legion, mostly abandoned their counter-insurgency operations in favor of commercial activities.13 Along the Inguri River, the stakeholders in widespread smuggling networks included security services (Russian, Abkhazian, and Georgian), militias (Abkhazian and Georgian), officials (Abkhazian and Georgian), peacekeeping forces, and suppliers and distributors of various nationalities. In addition, residents of the adjacent areas, often repatriates to the Gali region or IDPs from the Gali region living in Samegrelo, carried out small-scale smuggling. It allowed them to make a living, given the economic state of despair of the Gali region and the serious problem with landmines in fields previously used for agriculture.14 As an indirect effect, this petty trade allowed the residents of Abkhazia to have some access to consumer goods in spite of the embargo.
Along the CFL, the involvement of Georgian security forces and bureaucracy was crucial to the smuggling networks until 2004. Low-salaried Georgian officials, earning as little as $7 a month, demanded bribes to supplement their income. Local departments of the law-enforcement agencies and influential actors in Samegrelo controlled large-scale smuggling, in particular of petroleum
11 Boundaries are the dividing lines at which something changes that separate areas of certain rules of behavior. In cases of conflict, in fact, boundaries can be hardened or softened to suit various interests, a process defined as "boundary activation" (C. Tilly, The Politics of Collective Violence, Cambridge University Press, Cambridge, 2003).
12 See: S.R. Closson, State Weakness in Perspective: Trans-territorial Energy Networks in Georgia, 1993-2003, Unpublished Thesis Submitted for Doctoral Degree in International Relations, London School of Economics, 2007, pp. 166-167.
13 See: D. Billingsley, "Security Deteriorates along the Abkhazia-Georgia Ceasefire Line", Janes Intelligence Review, No. 13 (9), 2001, pp. 18-20.
14 See: A. Kukhianidze, "Smuggling in Abkhazia and the Tskhinvali Region in 2003-2004," in: Organised Crime and Corruption in Georgia, ed. by L. Shelley, E.R. Scott, A. Latta, Routledge, London, 2007, p. 84.
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products. The Abkhazian Government in Exile, the Georgian Tax Department, and MPs from Samegrelo owning gasoline stations were singled out as providing support to groups involved in smuggling.15 Officials within the Ministry of Internal Affairs had stakes in drug and weapons smuggling, as well as kidnapping and extortion16; senior officers of anti-drug departments were involved in drug trade.17
Aside from trade, additional profits could be made by further exploiting the business environment created by the protracted conflict, the trade restrictions in effect, and the peculiar and loose legal environment in Abkhazia. The family of Vladislav Ardzinba, de facto president of Abkhazia from 1994 to 2005, was at the center of the shadow economy, with interests spanning from tourism to the mobile phone sector, gasoline smuggling, and timber production and export.18 After 1999, Moscow supported Russian investments in tourism, and hypothesized intervention to protect them when Georgia threatened the use of force to impose sanctions and applied economic pressure to consolidate its influence on the region.
In South Ossetia, along the TransCam, a trans-territorial network composed of Russians, South Ossetians, and Georgians orchestrated trade; the stakeholders in this network were members of the elite, bureaucracy, business groups, and consumers. Moreover, the involvement of traders and goods from the wider Southern and Northern Caucasus created a large group of regional beneficiaries.
IDPs, refugees, and residents of the conflict areas mainly conducted small-scale trade. Although the control of TransCam smuggling was gradually concentrated in the hands of a few well-connected businessmen and members of the elite, the trade continued to provide a living for the residents of South Ossetia and adjacent areas in Georgia. It allowed for the creation of jobs and contributed to keeping prices of basic goods low, as they were virtually duty-free.19
The Georgian and South Ossetian bureaucracies and elites gradually took control over the bulk of the trade, beginning with the profitable smuggling of petroleum products. Members of the Georgian elite, who had significant interests in trade, included successive Ministers of Interior and a Governor of Shida Kartli.20 Within South Ossetia, trade shifted to the hands of few stakeholders drawn from the South Ossetian elite and bureaucracy. The Ergneti market was partly controlled by Lokha Chibirov, the son of the first de facto president. Access to and from the Ergneti market in itself was highly profitable, as protection was provided at a price. Georgian paramilitary groups extracted tolls under the umbrella of the Georgian State Chancellery21; Russian and Georgian customs officials collected bribes in other sections of the corridor, along the Roki tunnel and in Shida Kartli, respectively.22
While in both cases, the power ministries and military were heavily involved in trade and other forms of economic exploitation, it is worth noting that in most cases the extracted profit was only indirectly linked to military aims. On the contrary, most beneficiaries exploited their position of power—whether official or unofficial—for their own personal gain and profit accumulation. But combat
See: S.R. Closson, op. cit., pp. 168-173.
15 i
16 See: K. Stier, "Behind a Desk, Georgian Official Promises War on Corruption," Eurasianet, 19 December, 2003.
17 See: S.E. Cornell, "A Growing Threat to Transnational Organised Crime," in: The South Caucasus: A Challenge for the EU, ed. by D. Lynch, Chaillot Papers, No. 65, Institute for Security Studies, Paris, 2003, p. 33.
18 See: A. Kukhianidze, op. cit., pp. 85-86.
19 See: Georgia: Avoiding War in South Ossetia, Europe Report, No.159, International Crisis Group, Tbilisi, Brussels, 2004, p. 10.
20 See: M. Areshidze, "Current Economic Causes of Conflicts in Georgia," in: Strategic Conflict Assessment, ed. by T. Vaux, Unpublished Report for UK Department for International Development (DFID), 2002; T. Freese, "A Report from the Field: Georgia's War against Contraband and its Struggle for Territorial Integrity," SAIS Review, Vol. 25, No. 1, 2005, p. 110.
21 See: T. Freese, op. cit.; A. Kukhianidze, A. Kupatadze, R. Gotsiridze, Smuggling through Abkhazia and Tskhin-vali Region of Georgia, Transnational Crime and Corruption Center, Tbilisi, 2004, p. 19.
22 See: V. Dzhikaev, A. Parastaev, "Economy and Conflict in South Ossetia," in: From War Economies to Peace Economies in the South Caucasus, ed. by P. Champain, D. Klein, N. Mirimanova, International Alert, London, 2004, p. 205.
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economies, which we could better qualify as the share of war economies that allowed for, and sustained, protraction of the conflict, and the lack of effort to achieve a peace agreement and a settlement were indeed in place.
The de facto states themselves, their institutions, and, mainly, their leaderships relied on tax revenues from trade and semi-legal activities not only for personal profit, but also for some degree of state-building and the establishment of defacto institutions in the territory they controlled militarily. This included providing some degree of services to its citizens and, crucially, funding institutions to consecrate Abkhazian (and to a lesser degree South Ossetian) de facto sovereignty. In addition, Blake et al. recently revealed the strong correlation between economic development and legitimacy (of the state and of the regime to different extents) in Abkhazia, pointing out the stronger relations between the two.23
It is clear from the above that numerous actors had a stake in the border activation and deac-tivation processes. Among its numerous implications, the activation of de facto borders between Georgia and the de facto states curtailed the reach of the Georgian state's institutions and law-enforcement agencies, including customs bodies. While in South Ossetia this allowed for florid commercial exchanges, in Abkhazia assets could be exploited and traded northwards, notwithstanding the CIS-imposed trade restrictions. In fact, economic restrictions were perceived within Abkhazia as economic aggression and, as anticipated in the scholarly literature, the recipients of the sanctions simply adjusted to the hardships, accepting lower living standards and establishing coping strategies.24 What is more, from the late 1990s, Russian institutional and non-institutional investors exploited the fact that few other investors were willing to significantly finance activities in Abkhazia. While activation of the de facto borders undermined Georgian territorial integrity, numerous Georgian officials held personal stakes in activating the de facto borders, profiting directly or indirectly from the commercial networks which straddled the CFLs. Two more groups of actors adapted and benefited from partial activation of the de facto borders (especially in the case of South Ossetia), namely the residents of the borderlands on both sides of the CFL and traders in the wider region who exploited the transit channels through the de facto states to avoid the constraints and the costs linked to official commercial activity.
Violence, Violence Mitigation, or Peace Entrepreneurs?
What remains to be seen is the contribution of the stakeholders described above to the dynamics of the protracted conflicts. The activities of the stakeholders listed above exploited the lack of central governance, laws, and control over the de facto borders and most of the territories of Abkhazia and South Ossetia. However, they were also dependent on the absence of a renewed high-intensity conflict, which would have entailed increased militarization of the region, heightened control of the CFL on both sides, disruption of trade routes, and potentially a strengthened and internationalized peacekeeping mission.
In this context, Wennmann even disputed the customary correlation between organized crime, traditionally counted among the foremost violence entrepreneurs, and renewed armed violence; given that transnational criminal groups profited from established smuggling routes, they
23 See: K.M. Blake, J. O'Loughlin, M. Ward, "The Viability of de facto States: Post-War Developments and Internal Legitimacy in Abkhazia," Paper prepared for the annual meeting of the APSA, Seattle, September 2011.
24 See: J. Galtung, "On the Effects of International Sanctions," in: Dilemmas of Economic Coercion: Sanctions in World Politics, ed. by M. Nincic, P. Wallensteen, Praeger, New York, 1983.
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had vested interests in maintaining a relative stable environment.25 Indeed, the levels of violence in the borderlands (especially in the Gali and Samegrelo regions) were high.26 However, it was paradoxically noted that the same racketeer Abkhazian paramilitary groups that were responsible for heightened insecurity in the Gali district guaranteed a certain level of security in the area along the CFL.27 It appears in fact that, in the Abkhazian case, the main violence entrepreneurs were the actors who took control over the property of IDPs and imposed protection rackets on repatriates and small-scale smugglers.
At the other extreme we can identify those actors who had an interest in the resolution of the conflict. Aside from the crucial issues of territorial integrity, the Georgian state would have politically and economically benefited from a war-to-peace transition, as long as this consisted of restoring its control over its international borders and entire territory. A parallel can be drawn with the reintegration of Adjaria under central control, which led to strengthening of the budget and stabilization of the investment climate.28 It can also be added that resolution of the conflict would have led to normalization of the economic and business environment, allowing Abkhazian small-producers to transparently export their produce, as well as tourism to expand beyond monopolistic schemes, and benefiting the residents of the borderlands. However, this is partially unfounded.
As mentioned above, coping economies were largely dependent on partial activation of the de facto borders, and most economic activities relied on the distortion of competition and property rights. Actors who adapted to the economic conditions created in the aftermath of the ceasefire agreements were unlikely to foresee considerable advantages in a resolution of the conflict. This could have led to a reunification of the de facto states with Georgia, with striking implications in terms of property rights, rule of law, and control of external borders, but could have also created independent states with sealed southern borders.
Most actors in fact had an inherent political and economic interest in the absence of conflict settlement—as well as in the resumption of a high-scale conflict. The process of state-building went hand in hand with the process of consolidation of the elites in both de facto states, and members of these elites had both economic and political interests in preserving the status quo. First, they extracted significant profits from most forms of economic activity, taking advantage of their dominant position within the de facto states. This position, in turn, was dependent on the exploitation of clientele networks based on the provision of opportunities for business and trade. Secondly, the processes of de facto state-building similarly relied on tax revenues from trade and led to providing its citizens with at least some services and, importantly, funding power institutions to consecrate the sovereignty of the de facto states. This partly fits in with what we described above as a wider understanding of combat economies for the sake of protracted conflicts, and partly in the broad category of shadow economies. Contrary to logic, even the Abkhazian military apparatus would not have greatly benefited from the resumption of full-scale hostilities. It was a main recipient of the budget because of the prevailing siege mentality, which, in the late 1990s and early 2000s, was fostered by the embargo, aggressive rhetoric on the Georgian side, and domestic propaganda. In addition, as already mentioned above, members of the military profited from their individual involvement in trade networks and economic activities, which the lack of fighting fostered. In all these cases, the actors had a stake in the lack of conflict resolution, as well as in the lack of resumption of violence.
Only when the economic status quo in South Ossetia was upset with the closure of the commercial route along the Transcaucasian highway did the stakeholders lose their interest in prolonging a
25 See: A. Wennmann, "The Political Economy of Transnational Crime and its Implications for Armed Violence in Georgia," in: The Illusions of Transition: Which Perspectives for Central Asia and the Caucasus, Conference Proceedings, Graduate Institute of International Studies, Geneva, 17 March, 2004, p. 105.
26 See: S.R. Closson, op. cit., pp. 175-176.
27 See: D. Billingsley, op. cit., p. 19; A. Kukhianidze et al., op. cit., p. 16.
28 See: N. Khutsidze, "Ajara Boosts Government's Financial Hopes," Civil Ge., 8 May, 2004.
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"no peace/no war" stalemate. As a consequence of the closure of the Ergneti market, South Ossetia became even more dependent on Russia for its budget, economic survival, and state-building. Georgia and Russia both attempted to advance their political and strategic interests through exploitation of the South Ossetian economic distortions by depriving South Ossetia of a lifeline and acquiring preponderant influence, respectively. In fact, Tbilisi mismanaged the use of economic pressure. The civilian population was offered few viable alternatives, while the major stakeholders were simply disregarded. The imposition of economic restrictions was not accompanied by significant political measures, lacking dialog and coordination. South Ossetia therefore perceived the trade restrictions in the republic as a blockade and aggression. Actors who had invested their interests and survival strategies correlated to the dynamics of mitigated violence within the larger conflict setting between 1992 and 2004 lost them quite abruptly. Violence mitigation was no longer profitable and, aside from the resumption of fighting in 2004, hostilities remained strong until the full-intensity confrontation of 2008.
Conclusions and Further Research
While the complexity of the conflicts in the Caucasus is rarely scrutinized from a political economy perspective, this paper shows that this approach unveils a whole new set of actors, motivations, and mobilization processes at work in prolonged conflicts. While it would be difficult to argue that war economies are the driving forces behind the conflicts under scrutiny, it would be equally difficult to discard the incentives and the interests listed above. Indeed, mono-causality has failed to explain the protraction of the conflicts; a more comprehensive approach to the question includes the evaluation of the cases through a variety of perspectives.
We envisage two main directions for further exploring this vector of inquiry.
■ First, we need to assess the impact of the various stakeholders on the unfolding protracted conflicts. Which actors were able to influence the development of the conflicts, the conflict-resolution process, and the levels of violence in the two cases? How? We can look at "mobility policies," including formal and informal policies aimed at allowing or limiting the movement of people and goods across dividing lines as a main factor through which various sets of actors have hardened or softened the de facto borders. Through this prism, we can assess the impact of various actors on the dividing lines, and therefore on the processes of boundary activation.
■ The second path of inquiry addresses the complementarity of a political economy approach and other explanatory approaches. If war economies sustain mobilization strategies or protraction of the conflicts, how do they complement other factors allowing for mobilization— such as political dynamics; social aspects; and ethnic, cultural and religious identities? Clarifying the interaction among the various vectors of inquiry is relevant for understanding both the "whys" and the "hows" of these two cases. This paper has set the ground for such future work to be carried out.
