Trade As Peaceful Solution
09 May, 2013
Trade As Peaceful Solution
Trade of population in Georgian conflicting region of South Ossetia is expected to be restored in Ergneti for new Georgian authority considers Ergneti market to be an important peace tool.
“We believe a rigid and inflexible approach toward the conflict regulation is not correct, we must be creative,” Ketevan Tsikhelashvili, Deputy State Minister for Re-Integration Issues, said during the Rose Ross 83rd seminar organized by the NATO Parliamentary Assembly in Tbilisi by end-April of 2013. This statement was a response
to Davit Darchiashvili, a minority MP, who questioned how Georgian authority can control borders if Ergneti market is restored. Tsikhelashvili believes the border control is quite possible in case of existence a good will. So does Demur Giorkhelidze, an economic analyst, who upholds the Ergneti restoration idea.
“Relationship between people is based on economic profit and we should restore this relationship with South Osetai again, it is impossible to restore territorial integrity if you block trade with the conflicting regions,” he said. According to him, customs and tax control over Ergneti market can be easily implemented for the anti-contraband system is pretty good after reforms carried out by ex-power. “The goods turnover to and from Ergneti can be fully available at customs check-points located at Georgian controlled territory,” he elaborated.
Ergneti, the Georgian controlled outskirts of Tskhinvali, the de-factor capital of the breakaway region South Osetia, had been a large trade hub between people of Georgia and inhabitants of the conflicting region where the two politically conflicting sides used to set up peaceful economic ties. Ordinary Georgian population-farmers and petty traders used to take agriculture product to Ergneti and sell or exchange them on Russian product provided by the other side. Traders enjoyed tax-free profit in fact for Official Tbilisi had a loose customs and taxation control over Ergneti marketplace over decade. Consequently, Ergneti was a smuggling marketplace not for tax-free Russian import of food and fuel but to drug-and-arm-trafficking too. This trade was believed to be supporting the breakaway regime in fact. After Rose Revolution official Tbilisi shut down Ergneti market in 2005 and established a strong customs/taxation control thus clogging the contraband channel. As a result revenues in Georgian state budget increased however it alienated the conflicting sides again, Georgian economic and political analysts say. Besides, after closing Russian market to Georgian agriculture product in 2006 ordinary farmers and peasants mainly exporting product to Russia were completely deprived of a chance to sell their product and faced huge losses.
Bidzina Ivanishvili, Prime Minister of Georgia, who even as a leader of political opposition stressed that closure of Ergenti market was a mistake, addressed to restoration Ergneti market as soon as he took his office term in October of 2012. Leonid Tibilov, de-facto Presdient of South Osetia, in one of his first interviews also accentuated that restoration of Ergenti market should be the first step in restoration Georgian-Osteian relationships. The ex-power stresses the idea counters to Georgian interests as Ergneti market brought neither economic nor political results and will only boost illegal trade again. Ditrikh Mulelr, a co-founder of Georgian Investments Group, thinks Georgian state budget may really lose some revenues if Ergneti market is restored but on the other hand, Ergneti can become a sort of free economic or a duty-free zone that can bring economic benefits and offset the budgetary losses. “Especially if Russian market opens up again this is the shortest and cheapest way to petty farmers and simply households dependent on agriculture to sell their product,” Muller elaborated.
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