Organized Crime and South Ossetian De Facto Independence

Introduction At 7.32 p.m.

on 26 December 1991, as the sickle and hammer flag before Kremlin went down for the last time, the once-powerful USSR ceased to exist. In its place emerged 15 successor states. Some, like the Baltic states, soon managed to grow a healthy economy almost crime-free. Others, like Ukraine and Georgia, became embroiled in decade-long chaos involving corruption and territorial disputes. With these disputes going on and on, place names like Crimea, Donbas, Luhansk, Abkhazia, and South Ossetia made their way into the headlines of the newspapers.

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Different journalists give out different explanations as for why these regions managed to maintain their independence from the recognized states. Today, according to one journalist, points to the evil power of the bully Russia. The other day, another journalist awes at the magnificent power of national consciousness and self-determination. Of the two, who holds the truth? Or are they both mistaken? In this paper, I will focus on South Ossetia and answer the question what exactly accounted for South Ossetia’s ability to maintain its independence. I will argue that post succession war poverty, which generates organized crime and the need for further isolation from the Georgian government; Russian presence coupled with the humanitarian aids destined for South Ossetia but transported via Georgia, which made such isolation possible; and the separatist state-building project are the answer to this question.

I will first give some background information on South Ossetia, examine the existing literature on this issue and pose my hypothesis, and finally look at the evidence collected from South Ossetia to see whether my hypothesis or something else is the most plausible explanation. Background Located on the Russo-Georgian border, South Ossetia is a quasi-state that emerged after the USSR’s collapse and Georgia’s independence. According to the 2015 census, South Ossetia’s population consists of 48,146 (89.9%) Ossetians, 3,966 (7.4%) Georgians, 610 (1.1%) Russians, and 378 (0.

7%) Armenians (Bespyatov, par. 1), which makes it ethnically distinct from the Republic of Georgia. South Ossetia went through a civil war in the late 1980s and early 1990s that saw itself gained de facto independence. During the three years from 1988 to 1990, Georgian legislature “adopted measure to increase the use of Georgian language,” rejected South Ossetian request to turn their ethnic homeland from an autonomous region to an autonomous republic, revoked South Ossetia’s existing autonomy after the South Ossetians’ self-declared a “South Ossetian republic within the Soviet Union,” and ultimately deployed troops into South Ossetia. The South Ossetians, infuriated by Georgia’s moves, resisted the invading Georgian army ferociously and eventually managed to secure a cease-fire agreement in 1992.

After 1992, South Ossetia enjoyed de facto independence. Theoretical Framework In her essay “Organized Crime and State Failure,” Jessica West established organized crime as a “proximate cause,” as opposed to a symptom, of state failure by examining the current situation of Afghanistan and Tajikistan (1). Profits created by organized crime finance the “non-state” actors to establish an enduring non-state violence that undermines the state’s monopoly of violence — the first step towards state failure (3). The existence of drug trade, in turn, creates a need for protection against the state authority, which in effect means a need to snatch more territories from state control to non-state control. This loss of territory further reinforces the state failure. The instability — the state’s failure to provide security — further shifts the subjects’ loyalty to organized crime.

The shift in loyalty further deprives the state of its revenue and aggravates its inability to provide protection. State officials, often not paid well by the weakening states, resort to corruption and join organized crime. The state’s legitimacy is further destroyed. Tilly further illustrates the process of state making of both state and non-state entities. The elements of state building, as Tilly puts, includes offering protection service, gaining empirical legitimacy, and propaganda (181).

To develop into quasi-states or even proper states, gangsters firstly have to offer better protection services than that of the government’s in a certain area. Then they proceed to gain the support of the people living in the area they control. When the first two steps are completed, they would build propaganda machines to further justify their legitimacy to the populations under their control. In South Ossetia’s case, I expect the explanation to be a hybrid of the two models. South Ossetia’s post-Soviet poverty proliferated organized crime, which in turn demands and ultimately results in further isolation from the Georgian government.

This isolation sucks the tax money that is destined for Georgian government. The loss of revenue further loosened Georgia’s control over South Ossetian territory. As Georgia’s control diminishes,the separatist movement — the organized crime in this context — accomplished their state building project by providing economic incentives that the Georgian government cannot provide, gaining popular support, and eventually building propaganda to further justify the legitimacy. Russian assistance and ethnic consciousness are also essential, but here I expect organized crime to be the most important reason. Poverty Home to a thriving zinc industry in the Soviet era, South Ossetia underwent a significant economic decline once the USSR ceased to exist (King 537). In the Soviet economy, industrial goods produced in South Ossetia were circulated through the state-managed cooperative relations with other enterprises in the USSR.

As the Soviet Union dissolved, however, this system collapsed. The epoch of state purchase and subsidy ended once and for all. Successor states either had to find their way into the global market or had to watch their economy languish. Unfortunately, with goods produced in Soviet successor states not able compete with those produced in other parts of the world, the latter situation came true. Therefore in the 1990s, de-industrialization swept former Soviet territory, which, of course, includes South Ossetia.

In Abkhazia and South Ossetia, as economic production diminished in tenfolds, industrial production gave way to subsistence agriculture. Kukhianidze et al. did a great job illustrating South Ossetia’s post succession war poverty: Economic indicators for South Ossetia are on par with those of the world’s poorest countries: GDP is equivalent to $15 million, or $250 per capita. The minimum pension in South Ossetia was 60 Russian rubles ($2) per month, and the average monthly salary was 2000 rubles ($70), whereas the subsistence level was 1100–1200 Russian rubles ($40). The separatist government had a huge internal debt to the population due to non-payment of pensions, salaries and social assistance. High unemployment rates have taken their toll on the youth, who are frequently self-employed or complicit in criminalized businesses.

(Kukhianidze et al. 73) To put all these in a few words, the collapse of Soviet economy that accompanied the collapse of the Soviet Union downgraded South Ossetian economy from an industrialized one to a subsistence agricultural one. From Poverty to Organized Crime When legal economy is devastated to the point where only subsistence agriculture is possible, anyone aspiring for anything more than that has to resort to other approaches to earn a better living. One such approach is organized crime, especially smuggling and drug trafficking. When South Ossetian products enter the smuggling business, their quality may well still be low in quality, but, after evading tariffs, would have an advantage over their legal competitors in regard of price.

Drugs, because of the ban on their production in internationally recognized states, are overpriced and in in huge demand but insufficient supplies. The end users of drug care about whether they can manage to buy drug or not rather than what quality and price are the drugs they buy. So as long as drugs are produced and sold, there are a lot of people who are willing to buy at unbearably high price. Coincidentally, South Ossetia was a perfect location for organized crime. The Georgian government, fearing that this move would be interpreted as recognizing South Ossetia as a separate political entity, did not set checkpoint on the South Ossetian border (Kukhiandze et al.

74). Therefore, goods from South Ossetia could enter Georgia tariff-free. Though the South Ossetian regime has set up a checkpoint on the highway between Tskhinvali, South Ossetia’s capital, and Vladikavkaz, North Ossetia’s capital, the highway police are collaborators with the smugglers rather than tax collectors. Therefore, luxury goods like cigar and alcohol can go from Russia to Georgia without any tariff except the little bit of bribe extracted by South Ossetian highway police. According to King, this smuggling business accounted for the major part of South Ossetian separatist government’s income, which is evident in that while South Ossetia’s official annul budget was only $1 million at the time when the research was published, $60-70 million worth of goods were smuggled via the Tskhinvali-Vladikavkaz highway each year (537). Thus a separatist economy, which both citizens and government apparatus relied on, backed by smuggling was established.

In brief, post-Soviet poverty turned South Ossetians to organized crime, which is further facilitated by South Ossetia’s geopolitical situation. Further Isolation from the Georgian Government In order to keep the lucrative smuggling business going unhindered, the separatist government — the organized criminal group — first and foremost had to ensure that South Ossetia could by no means reunite with Georgia, where smuggling and drug trafficking are illegal. To do so, the separatists had to keep the negotiations going but meanwhile make sure that they never reach an agreement. However, unlike my hypothesis, this objective was achieved with the help of international aids that were supposed to be sent to South Ossetia via Georgia and by Russian presence rather than organized crime draining the Georgian government of revenue. The delivery of humanitarian aids to South Ossetia via Georgia gives the Georgian government economic incentive to keep South Ossetia de facto independent, which is, ironically, exactly what South Ossetia wants. As long as the negotiation drags on, international aids destined for South Ossetia will keep being delivered to Georgia.

The Georgians, also devastated economically, thus could abdicate the aids and sell them on Georgian markets as zero-cost goods. With such a windfall flowing in, the pragmatic Georgian government thus loosened their land-hunger and allowed the negotiation to drag on and the South Ossetians to go on their separate way. Russian presence is another factor that made South Ossetia’s further isolation from Georgia possible. Though Russian officially agreed to withdraw from Georgian territory by 1999, in reality Russian troops can still be found in Abkhazia and South Ossetia to this day (King 540). Russia paid these troops’ salaries in Russian roubles rather than the Georgian currency, which ensures a considerable flow of rouble into South Ossetia.

I can not say whether or not the separatist government has intentionally encouraged the use of roubles to isolate itself from Georgia. However, in effect rouble, instead of the Georgian currency, is the default currency of transaction in South Ossetia. This further cuts South Ossetia’s tie, if there is one, to Georgia economically. To sum up, South Ossetia’s further isolation from Georgia did occur. However, contrary to my hypothesis, the Russian presence and international humanitarian aid — instead of organized crime sucking up revenues — was what made this move possible. Separatist State Building Project Apart from parting ways with Georgia, another project also accounted for South Ossetia’s ability to maintain its independence.

According to Tilly, the state building project, which turns criminal bands into parallel governments, follows three steps: providing protection, gaining popular support, and building propaganda. Protection. In the Tillyian model, the first step of (quasi-)state building is providing the protection from violence that the proper state cannot provide. The protection the South Ossetian government provides, however, is the protection against international trade law rather than the protection against violence. Also, this protection is made possible by South Ossetia’s fortunate geopolitical situation rather than monopoly of means of violence.

The most important thing, at least at this moment, for South Ossetians is the continuation of the illicit trade, which they owe their comfortable livelihood to and which the separatist government grants them but the Georgian government and Russian federation can not. Georgia, as an internationally recognized state, has to follow the rule of law, which requires them to tax tariffs and tackle drug trade. The Russian federation, as a recognized state, also face this issue. This means if South Ossetia becomes part of either Georgia or Russia, the South Ossetians’ smuggling business and drug trade would have to stop or at least be restricted. The separatist government, however, as an unrecognized entity, does not have to follow the rule of law. They can tolerate and even facilitate smuggling and drug trade.

Therefore, South Ossetians, wanting to keep making their illicit profits, favor the separatist government over Georgia or Russia. The separatist government gained their first share of legitimacy. Popular support. Because of the economic incentives they provide, the separatists soon gained popular support, which is, to put in pedantic terms, empirical legitimacy. Results from the 2006 South Ossetian election shows that, at least at that time, 90% of South Ossetians voted for independence (RFE Georgian Service, par.

1). The overwhelming number readily proves the separatist movement’s empirical legitimacy. Propaganda. The last step in state building, which take place after providing protection — or economic benefits in this context — and winning empirical legitimacy, is building the propaganda machine to further justify the state’s existence and rule. In South Ossetia, this move is completed by Soviet-era scholars. In the late 1980s and early 1990s, as Georgians were nationalized, South Ossetian academicians felt more and more ostracized in Georgian institutions.

Many other academicians found themselves unemployed as the Soviet system vanished. South Ossetian separatist government thus provided a perfect chance for these disgruntled scholars, who found work in the newly “Ossetianized” institutions as historians to collect historical “evidences” that justify South Ossetia’s statehood. This move helped the separatist movement not only by building propaganda, but also by providing jobs for unemployed population. At this point the separatist group looked more like a proper state government than a bunch of criminal bands. They provide their citizens with protection against law and the recognized states that aimed to incorporate them, have empirical legitimacy over their lands, and finally possess their own propaganda machine. Thus all conditions are in favor of South Ossetian de facto independence.

The separatists have popular support from the local population and a safe distance from the proper governments so that they can continue their lucrative smuggling business and drug trade. Georgia gets to appropriate international humanitarian aid to boost their devastated economy. Conclusion Unlike what I hypothesized after examining existing literatures, South Ossetia’s maintenance of independence is made possible by poverty, organized crime incurred by poverty, Russian presence and international humanitarian aid, and, ultimately, the separatists’ state building project. The devastation of economy after the USSR’s demise and the 1992 war gave rise to organized crime — or, smuggling and drug trade in this context. Smuggling and drug trade in turn requires further isolation from Georgian government, which is made possible by Russian presence and humanitarian aid rather than the revenue-sucking mechanism I hypothesized in my theoretical framework. Finally, the separatists’ state-building project, which proceeded synchronically with the said few moves, accounted for the transformation of the movement from the fightings of some random criminal bands to the independence movement of an almost full-fledged state.

Thus the only difference between South Ossetia and a recognized state is the membership in the United Nations. The return to Georgia or the incorporation into Russia is all but impossible. Works Cited Bespyatov, Tim. “South Ossetia – Ethnic Composition: 2015 Census.” Retrieved August 10, 2018. King, Charles.

King, Charles. “The Benefits of Ethnic War: Understanding Eurasia’s Unrecognized States.” World Politics, vol. 53, no. 4, 2001, pp. 524–552.

JSTOR, JSTOR. Kukhianidze et al. “Smuggling in Abkhazia and the Tskhinvali Region in 2003-2004.” Organized Crime and Corruption in Georgia, edited by Loise Shelly et al. RFE Georgian Service. “Overwhelming Support for South Ossetia Independence.

” RadioLiberty, November 13, 2006. Tilly, Charles. “War Making and State Making as Organized Crimes.” Bringing the State Back in, 1999, pp.169-186 West, Jessica. “Organized Crime and State Failure.

” Innovations: A Journal of Politics, Volume 6, 2006, pp.1-17.