Russian Subsidies to ‘Microstates’ in the Near Abroad Dr

Home , Transnistria

Creating Allies: Russian Subsidies to ‘Microstates’ in the Near Abroad Dr. Randall Newnham, Penn State University [email protected] International Studies Assn. Conference, Las Vegas NV, April 2021

Abstract In recent years Russia has re-emerged as an important international player. Increasingly, Russia strives to dominate the former Soviet space, which it commonly refers to as the ‘near abroad.’ An important tactic in this effort has been the Kremlin’s use of a divide and conquer strategy against its neighbors. If a country defies Moscow, it may find that Russia helps to create a secessionist enclave in that country. This has happened in Moldova (Transnistria), Georgia (Abkhazia and South Ossetia), and most recently in Ukraine (Donetsk and Luhansk ‘People’s Republics’). While Russian military support can play a role in creating these enclaves, how can they be sustained? This paper will focus on the large array of economic subsidies which Russia has used to keep these statelets going, some for over 25 years. In this way the paper will demonstrate the reach of economic power: it can help to literally change the world map, by creating ‘allies’ which a powerful state can use to bolster its role in the world. This shows that, in the right circumstances, the most basic elements of statehood—control over borders and sovereignty—can be affected by economic aid.

Introduction and Theory

In this section of the paper we will briefly introduce the various ‘microstates’ which

Russia has helped to create in the former Soviet space, which Russia often calls the ‘near abroad.’ We will then discuss how this paper will advance research on the role of economic linkage in International Relations, through showing how important various forms of Russian aid have been to the survival of these small states.

Transnistria, the first microstate to be created, provides something of a template for the other four statelets considered here. When Moldova broke away from the disintegrating Soviet

Union in 1991, it was clear that republic would be dominated by the Moldovan ethnic group.

Since Moldovans speak Romanian, some feared they might attempt to reunite the region with that neighboring country. The Moldovan Soviet Socialist Republic consisted of a larger portion on the western bank of the Dniester River, and a smaller portion on the east. The eastern area, while containing some ethnic Moldovans, was dominated by Russians and Ukrainians, who feared becoming a small minority in an independent Moldova. Accordingly, in early 1992 they rebelled, and after a brief war broke away to form what is now officially known as the

Pridnestrovian Moldavian Republic. Russia aided this process by hastily sending a

‘peacekeeping’ force, thus protecting Transnistria from any attempts by Moldova to reincorporate the area.

The two microstates in Georgia, Abkhazia and South Ossetia, originated about the same time and for similar reasons. As Georgia became independent, activists from the Ossetian and

Abkhaz minority groups feared that they would be oppressed by the new government. Both groups had enjoyed special status in the Soviet period, with both having lower-level

“Autonomous Soviet Socialist Republics” (ASSRs) within Georgia. Both feared losing that autonomy, and losing cultural and language rights. Accordingly, both rebelled and set up de facto independent states. Here, though, the conflicts ultimately became interstate wars, in 2008, when Georgia fought Russia for control of South Ossetia. At that point both microstates were able to expand their territories, expelling any remaining Georgians. And Russia then recognized these states diplomatically, a step it had never taken for Transnistria.

Finally, the two statelets in Ukraine, the Luhansk and Donetsk ‘People’s Republics,’ were more clearly engineered by Moscow from their beginnings in spring 2014. There were already important political divisions between the Donbass region and the rest of Ukraine. Before

2014 that region strongly supported the party of the pro-Russian Ukrainian leader, Viktor

Yanukovych.* Also, the region contained many more Russian language speakers than central and western Ukraine.* Yet until 2014 support for secession was vanishingly small in the

Donbass.* Then Yanukovych was overthrown, and suddenly demonstrations erupted in the region, often seemingly steered by Russian agents, and sporting suspiciously well-printed flags for the new ‘People’s Republics.’ Here too, as in Transnistria and the Georgian microstates,

Russian military aid was instrumental in the initial creation of the states. In the summer of 2014

Ukraine came close to reconquering both regions, until in August the Russian military intervened, preserving and extending the borders of Donetsk and Luhansk.

Yet how can these microstates continue to exist, in the case of Transnistria for over 25 years? Why have they not gone the way of Biafra or the Confederate States of America, secessionist enclaves which were soon defeated and absorbed back into their home countries?

As we shall see, in addition to direct or indirect military support from Russia, a wide variety of economic instruments has been vital in protecting these states. Russia has given huge sums of outright monetary aid to the microstates. It has opened its market to their products. It has subsidized the statelets’ energy supplies. It has treated their citizens as Russian subjects, giving them the right to work in Russia and to receive Russian social benefits and pensions. All of this aid has been vital to win over the populations of these states, keeping them friendly to Moscow.

It has also enabled the microstates’ leaders to continue to defy attempts by Georgia, Moldova, and Ukraine to reincorporate the regions, making that alternative look unattractive by

comparison. As we shall see, this successful effort has been important in the Kremlin’s eyes, helping to solidify Russia’s role as a Great Power on the world stage.

None of the microstates discussed in this paper has any ability to survive on its own economically. Transnistria, for example, with 469,000 citizens,* makes little sense geographically—it is a thin strip of land, wedged between Moldova and Ukraine, far from its sponsoring country, Russia. It is poor, lacking in natural resources, and has only several large, very outdated Soviet-era factories to sustain it. The other four microstates at least border on

Russia, making trade and travel somewhat easier. Yet still none of them are economically viable. Perhaps the most extreme case if that of South Ossetia, which has barely 50,000 inhabitants. Lacking resources, a manufacturing base, and tourist potential, it is hard to see how this tiny enclave could function without large amounts of aid. Abkhazia is somewhat larger

(240,000 inhabitants) and has historically been a vacation destination for Russians due to its location on the Georgian coast. This also gives it shipping ports. Donetsk and Luhansk have the largest population of any of the microstates (about 2.3 and 1.4 million, respectively) and have resources of coal and heavy manufacturing facilities. Yet they too would quickly fail without significant outside aid.

For all the diversity in these states’ economic positions, all are clearly reliant on outside help, especially since they all have similar problems as unrecognized microstates. How can they hope to raise any funds from the outside world, which does not recognize their existence?

Which currency should they use? How can they buy and sell their products, when they are not considered legitimate trading partners by most states? How can they fund the expense of perpetually guarding their insecure borders? After all, each faces a hostile ‘mother country’

(Moldova, Georgia, Ukraine) which would like to reclaim them. And each of those countries

does enjoy international recognition. Thus they can legitimately buy weapons, take out loans, and buy and sell products abroad—advantages which make it difficult for the microstates to compete.

Why is this paper important to International Relations theory? There has long been a lively debate over the effectiveness of economic aid and economic sanctions in foreign policy.

Critics contend that these instruments are rarely effective. If they do sometimes work, it is argued, then mainly in disputes over secondary issues, not those of great importance in world affairs. In their study, often held up as the most comprehensive in the field, Hufbauer et al

(2007) estimate that economic leverage works in at most one-third of their cases. Many other studies have focused on specific cases in which economic means seem to have failed, including

Western sanctions against Iraq before 2003, Cuba, North Korea, Iran, Libya, and the former

Yugoslavia (cites*). Just as sanctions are often criticized as ineffective, so too is economic aid.

Is it not possible, critics wonder, for states to simply pocket aid and then do what they please, defying the state providing the funding? Or for states to play the field, taking aid from several states? For example Egypt, from the 1950s to 70s, seemed to be able to manipulate both the US and USSR, taking aid from the two blocs while remaining politically independent from them.*

This paper will attempt to add to the literature on economic sanctions and incentives by employing a ‘least likely case study’ approach, as outlined in George (2005). What are the most basic and important aspects of International Relations? If it can be shown that economic aid or sanctions—not only military force--can impact such important areas, that would help to establish that economic ‘weapons’ are, indeed, important instruments of international power. In past works I have attempted to make that case in several different ways. For example, I have looked at cases in which states seem to be willing to bargain away their programs to create Weapons of

Mass Destruction (WMDs) in return for economic benefits. Libya gave up its programs during the Qaddafi period (Newnham, 2009). Similarly, Iran agreed to strict limits on its nuclear program in talks carried out under President Obama, in return for the lifting of economic sanctions. Countries will also ‘sell’ diplomatic recognition in return for economic incentives.

West Germany and South Korea successfully used economic aid to induce countries to recognize them rather than their rivals East Germany and North Korea (Newnham, 2000). The same process is taking place today, as China uses its wealth to press countries to recognize it diplomatically rather than Taiwan. Recently, for example, Chinese aid persuaded the Solomon

Islands and Vanuatu to switch their allegiance from Taipei to Beijing, the latest in a string of setbacks for Taiwan around the world (Cave, 2019). Finally, in other works I considered an even

‘harder’ test of the power of economic tools in International Relations. Are states sometimes willing to give up some of their sovereign territory in return for economic benefits? As we know from American history, this is certainly true—as shown by America’s purchase of Louisiana from the French and Alaska from the Russian Empire. More recently, Japan has attempted to purchase the Kurile Islands from Russia (Newnham, 2001), and President Trump even broached the possibility of buying Greenland from Denmark (cite*).

In this study we will consider yet another possible demonstration of the reach of economic instruments. It can be used to induce states to give up valuable weapons, to extend diplomatic recognition, even to sell pieces of territory. And, as we can see, it can be used to help create new states. This is, perhaps, the ultimate measure of the strength of a policy instrument in world affairs. While the new ‘microstates’ Russia has helped to create in the near abroad may not be recognized by many countries, they do exist. And by helping to ensure their continued existence, Russian economic aid has, essentially, redrawn the map of the world.

This paper will proceed as follows. First, we will examine the various ways in which

Russia has subsidized its client ‘microstates.’ Next, we will consider the impact of that aid.

How has it helped to both project Russian influence, and at the same time limit the reach of its rivals, such as the United States? Finally, we will conclude by examining the importance of this study for both the theory and practice of International Relations.

Russian Aid to Microstates

In this part of the paper, we will detail some of the wide variety of economic subsidies that Russia has employed to prop up the unrecognized microstates which it helped to create in

Moldova, Georgia and Ukraine. As we shall see, Russia has been very creative in its subsidy policies. It has certainly sent money to these states directly. Yet is has also used a myriad of indirect subsidies. These include opening the Russian market to their exports, often with subsidized pricing; allowing migrants from the microstates to work in Russia; and even including the states in Russian domestic social safety nets, such as retirement programs. To some extent the microstates also support each other economically, with Russia’s blessing; for example, as will be detailed below, South Ossetia has assumed a key role in channeling trade payments from

Russia to Donetsk and Luhansk—a service which has come to play an important role in propping up South Ossetia’s tiny economy.

The exact dimensions of Moscow’s aid to the microstates are difficult to measure. None of these states are at all transparent with regards to Russian subsidies. Such subsidies represent a real dilemma to both Moscow and the microstates themselves. Both sides like to maintain the fiction that the states are independent, surviving on their own. This allows Moscow to pretend

that the conflicts around these countries are not its fault and allows the states’ leaders to seem more important to both the outside world and their own people. Yet at the same time, both sides also want to stress how close Russian ties to the states are, to make sure the local people remain grateful and want to keep their statelets aligned with Moscow. Thus, there are often grand statements about Moscow’s largess—such as the well-publicized truck convoys sent to Donetsk and Luhansk soon after those regions seceded from Ukraine in 2014.* But exact details about such aid are harder to find.

One area where Moscow is clearly helping the microstates is with direct cash aid. All of the states rely on money from Russia to simply function, to pay their employees and balance their budgets. The size of this subsidy is often unclear. It is reported, though, that South

Ossetia—the smallest and weakest of the microstates, with a population of barely 50,000— covers over 90% of its budget with aid from Moscow, which provides $110 million of the $120 million spent (Troianovski, 2018). Abkhazia signed a “Treaty of Alliance and Strategic partnership” with Russia in late 2014, which granted the statelet $119 million per year for 2015-

2017 (Fuller, 2015). Berg and Vits (2018:398)) estimate that Russia provides about 60% of

Abkhazia’s budget. Similarly, Transnistia reportedly receives about half of its budget from

Moscow. Without Russian aid, Protnitchi and Lupusor (2013:12), estimate that public sector salaries would fall to 40-60% of their current amounts. And, of course, in the microstates—with their weak private economies--the public sector accounts for a large proportion of all jobs.

In addition to aid which can be freely spent by the microstate governments, Moscow also sometimes covers specific portions of the state budget, concentrating on those which can help to win popular support for the leaders of the statelets, and win support for ties to Moscow. For example, the Kremlin wants to promote Russian-language education in the statelets, to ensure the

next generation remains loyal to Moscow. Thus in Transnistria, for example, Russia reportedly spent 150 million rubles in 2015 (about $3 million) to buy hundreds of thousands of Russian textbooks for the region’s schools (Lungu, 2016). This was just a small part of the $150 million in ‘humanitarian’ aid which Moscow reportedly spends annually in that microstate. As in other areas of state policy (such as spreading propaganda in American elections), wealthy Russians— seeking to curry favor with Putin--have helped to support the Kremlin’s initiatives. An NGO,

“Eurasian Integration,” set up by a pro-Putin member of the Russian Duma, donated funds to build 14 new schools and hospitals in Transnistria (Lungu, 2016).

Russia also supports pension payments in the microstates. This is very important, since all of these states tend to have large numbers of retired persons—the young and capable portion of the population has often moved away, seeking better jobs and better lives elsewhere.1 Thus, for example, even soon after the creation of the Donetsk and Luhansk enclaves, Russia was allegedly supplying $37 million every month to cover pension obligations in the region

(source*). The local authorities were unable to offer full pensions immediately, due to the economic chaos in the region. Many pensioners were still drawing payments from Ukraine, which they had to obtain by crossing regularly (at great risk) into territory controlled by Kiev.

However, they were allowed to ‘double dip,’ taking both Ukrainian and separatist pensions, which left them better off than retirees in the adjacent, government-run regions.2 In Transnistria some pension payments come directly from Moscow—reportedly since 2008 pensioners receive

$15 monthly from Russian ‘humanitarian aid,’ on top of their payments from the local

1 In Transnistria, for example, more than 30% of the population receive pensions (Dembinska and Merand, 2019:22). 2 Reportedly, as of 2018, the average Ukrainian pension was about $110 per month, with the separatist authorities offering a supplement of about $40 per month. These amounts seem very low, but to poor retirees the extra money can be of vital importance (Esch, 2019)

government. Moreover, about half of the cost of these local payments is also subsidized by

Moscow (Dembinska and Merand, 2019:22).

When Moscow provides Russian passports for residents of the microstates, this allows them to qualify directly for regular Russian pensions and other social benefits. Thus, a large portion of residents of South Ossetia, Transnistria, and other enclaves have become even more dependent on the Russian state. For example, as Kochieva notes (2016), although South

Ossetian passports exist, virtually all residents have obtained Russian ones—a process that began soon after Putin took office. As Russia now issues passports to residents in Donetsk and

Luhansk—a policy it announced in April 2019, after the election of the new Zelensky government in Ukraine—more and more poor and elderly residents there will be supported directly from Russian sources…and will thus be unlikely to want their regions to return to

Ukraine. Reportedly, by the end of 2019 196,000 passports were issued (“About 200,000

Donbass Residents,” 2020). The potential economic impact is large; as Baklitskaya (2019) notes, there are about 1.1 million pensioners in the Donetsk and Luhansk People’s Republics.

She estimates that if they all apply for citizenship, and receive 8,000 rubles monthly in Russian pensions, that would cost Moscow roughly $2 billion per year.

Another economic reason to secure a Russian passport has to do with job opportunities.

None of the separatist enclaves can offer many jobs to their residents. So younger, more capable workers often must go elsewhere for work. With a Russian passport, they can freely enter Russia and work anywhere, without any need for a work visa, which workers from some former Soviet republics now find difficult to obtain. In recent years Russia has begun to use access to its labor market quite consciously as a tool to force former Soviet states to remain loyal to Moscow. For example, in the negotiations with Central Asian states over the creation of the Eurasian

Economic Union—backed by Russia—those states were told that their citizens would be excluded from the Russian job market if they did not join the group. And this has come to pass; for example, Kyrgyzstan, which joined the Union, found that its workers kept their jobs, while those from Uzbekistan often lost theirs (source*). Similarly, citizens of the microstates are rewarded by being able to work in Russia, and the states benefit from large remittances sent by such workers. Dembinska and Merand (2019:21) cite such remittances as a major source of income for Transnistria, bringing in about $200 million in 2014.

Another economic lure used by Moscow has been access to the large Russian market for goods from the microstates. This rationale was frequently voiced by those supporting secession in Donetsk and Luhansk in 2014. Those regions, strong in heavy industry, had long been linked to Russia. And they feared that if Ukraine moved to join the EU, their products would be uncompetitive, and the large factories and mines in the Donbass would be shut down (source*).

Over 20 years earlier, the same argument was made in Transnistria. There, there were four huge, inefficient Soviet-era plants which dominated most of the regional economy. Today, those plants are still operating. Until 2006 they focused on the Russian market, but in that year

Ukraine began to cut off the region’s trade links to Russia. Ironically, Russian aid has now enabled them to begin exporting to Western Europe. Since the large, energy-intensive plants in

Transnistria (producing steel and cement, for example) receive free gas from Russia, their products are competitive in the EU (Dembinska and Merand, 2019:22).

Perhaps the most well-known source of Russian aid for compliant states has been

Moscow’s ability to provide heavily subsidized oil and gas to the microstates. This is part of a larger Russian program, where its allies in the former USSR—such as Belarus and Armenia, as well as Ukraine during the Kuchma and Yanukovych periods—receive cheap oil and gas, while

its enemies—like Georgia, and Ukraine during the anti-Russian periods of the Orange

Revolution and since 2014—face massive price increases. (sources*) In the case of the microstates, Russia has adopted a variety of subsidy tactics for oil and gas supplies. First, prices are intentionally kept low. Second, often Russia does not make a strong effort to actually collect payment from the microstates at all, even for the cheaper oil and gas provided. Transnistria, for example, has racked up truly massive gas debts, which it has no intention of paying. Dembinska and Merand (2019:21) note that by July 2015 it owed Gazprom more than $4 billion. It cleverly exploits its status as a state which is unrecognized, even by Russia. Russia considers all gas shipments to any part of Moldova (including Transnistria) to be Moldova’s responsibility. Thus,

Transnistria simply takes the gas it wants and pays nothing for it. Russia, however, expects

Moldova to pay for all of the shipments. Thus Transnistria manages to obtain gas, essentially, for free—while at the same time weakening its rival Moldova, by adding to its ever-growing energy debts to Moscow. South Ossetia, too, essentially lacks any ability to pay for its oil and gas. Yet the products keep flowing. In fact, Russia’s state-controlled gas monopoly, Gazprom, committed to spending some $50 million to further extend gas infrastructure in the tiny republic.

As Kochieva (2016) notes, Gazprom not only built a new pipeline into South Ossetia, it extended service to more than 200 tiny villages, building 800 kilometers of new distribution lines. In this case Gazprom clearly seems to be motivated by political factors, not any sort of rational business model.

Russia also provides electrical power to the microstates, on the same generous terms—at very low cost, or even no cost if the statelet cannot (or will not) pay its bills. For example,

Moscow has covered the electrical needs of the Donetsk and Luhansk ‘Republics’ since April,

2017, when Ukraine finally cut off electricity to the regions (Vasilyeva). The ‘Republics’ had

never paid Ukraine for most of the power they were using, although they happily continued to charge local residents for electricity. The Luhansk Energy Company, based in Ukrainian government-controlled territory, estimated that it was receiving only ten percent of the fees it was owed by the secessionist areas (Milakovsky). The company’s CEO derisively noted that

Ukraine was effectively “paying for Communism in Luhansk” (Milakovsky). Ukraine’s Deputy

Minister for the Occupied Territories, Georgiy Tuka, estimated that the ‘Republics’ had racked up $431 million in unpaid bills over the previous three years (Vasilyeva). Since 2017, at least, the subsidies have come out of Moscow’s pocket.

Finally, as noted earlier, Moscow has also facilitated the statelets in supporting each other, which can amount to yet another hidden subsidy. For example, tiny South Ossetia has emerged as a key hub for financial transactions carried out by the Donetsk and Luhansk

‘Republics.’ Since Moscow is already facing strong Western sanctions for using force to help create the Ukrainian enclaves, it is cautious about allowing Russian companies to directly help the ‘Republics’ to trade internationally. Thus it has created an ‘arms-length’ system. Companies in the Ukrainian regions send funds to South Ossetia, which functions as a financial clearinghouse, passing money on to Russian companies which then ship goods to Donetsk and

Luhansk. Similarly, payments from Russian firms can move through South Ossetia back to the

‘Republics.’ Reportedly over $150 million flowed through this system in 2018 (Troianovsky,

2018). This method allows Russia to cover its tracks internationally, and also to effectively subsidize all three microstates. Donetsk and Luhansk can trade with Russian firms, and South

Ossetia reaps the benefits of becoming a small banking center. Also based in South Ossetia is a mysterious ‘holding company,’ Vneshtorgservis, which controls the 12 largest industrial plants in Donetsk and Luhansk, which were seized by the separatists from their Ukrainian owners in

2017 (von Twickel, 2017). Recent research by Western reporters in South Ossetia showed that

146 trading firms linked to the Ukrainian regions made up a major part of the state’s miniscule tax base, generating about $1.2 million dollars a year in tax income (Troianovsky, 2018). These firms also, of course, create paying jobs in an economy which has very few employment opportunities.

All in all, Moscow has provided a striking range of subsidies to its client microstates in

Moldova, Georgia and Ukraine. The total value of the support is very difficult to measure, since much of it is deliberately concealed by both the Russians and the governments of the unrecognized statelets. However, it is clearly substantial, probably at least matching any revenues generated within the statelets themselves. Given the population of the five statelets studied here, about 4.5 million altogether, the total subsidy figures definitely amount to billions of dollars annually. For example, Calus (2016) estimates that in 2014 the total flowing from

Moscow to Transnistria alone was about $850 million, making up fully 93% of the territory’s

GDP. Kochieva (2016) claims that subsidies that year for South Ossetia were about 6 billion rubles (over $130 million). However, taking a broader measure of aid—economic aid, infrastructure, pensions, and so on—the International Crisis Group claimed in 2010 that Moscow was spending nearly $1 billion a year on the tiny republic (Schreiber, 2014). This amounted to some $28,000 per resident.

Interestingly, many of the subsidies seem to be designed to appeal to the citizens of the microstates by invoking links to the policies of the former Soviet Union. Many of the residents of the statelets are older—particularly since many younger people have left. Thus they well remember (and often miss) the cradle-to-grave welfare systems of the Soviet era. Moscow’s subsidies mean that gas and electricity are again very cheap, that pensions are paid on time, and

that jobs in surviving Soviet-era factories are maintained. This is very politically appealing, and thus helps the microstate governments to stay in power. Milakovsky (2018), for example, notes that “Soviet-style low utility prices have been one of the main propaganda points for the People’s

Republics.” The governments of Moldova, Ukraine and Georgia—unable to afford to offer such low prices—look ineffective in comparison.

Political Results of Russian Aid

Clearly, as the previous section showed, Russia has showered the unrecognized microstates of Abkhazia, South Ossetia, Transnistria, Donetsk and Luhansk with a great variety and quantity of economic aid. In this section of the paper, we will attempt to show how this has paid off for Russia. As we shall see, the aid has played a large role in the continued survival of the microstates. Aid helps to ensure that both the leaders and the populations of those territories support continued ‘independence,’ refusing to return to their previous allegiance to the states of

Georgia, Moldova, and Ukraine.

Why is the mere continued existence of the microstates so important? The microstates advance Russia’s perceived national interest, in several ways. First, they give Russia the appearance of having a strong group of allies, making it look like the leader of a bloc of states.

This bolsters Russia’s image as a major power. Second, the microstates weaken several states that have been Russia’s strongest critics in the ‘near abroad.’ They also give Russia an excuse for continued involvement in the internal affairs of those states. And third, they also weaken the

European Union and the NATO alliance. Both of those groups have been advancing to the east, taking in states which Russia would prefer to have in its sphere of influence. However, both

groups do not want to take in new members which are enmeshed in unresolved and possibly violent territorial conflicts. Source, quotes* Thus Moldova, Ukraine, and Georgia—all of whom aspire to join the ‘West’—are effectively prevented from doing so. Russia seems to see these political payoffs as ample compensation for its economic (and military) investment in propping up the unrecognized microstates.

The leaders of the microstates studied here have all gone out of their way to support

Russia on a variety of international issues. Admittedly, this support may seem to be of relatively low importance, since none of these states have substantial international recognition. This means, for example, that none are members of the United Nations—and thus they do not, of course, have the ability to vote on UN resolutions. Nonetheless, the microstates have voiced support for Russia on issues such as the civil war in Syria and Western attempts to overthrow the

Maduro government in Venezuela. This can be quite valuable for a pariah regime like Syria’s

Assad government. For example, the Abkhazian President, Raul Khajimba, saw the civil war in

Syria as “Syria’s war against international terrorism” and claimed that “everyone knows that peace prevailed in Syria before the current events, and the situation was calm and normal.” The

Abkhazian government went so far as to stage a “mass festival of solidarity with Syria, where participants raised the Syrian flag and banners in Arabic, Russian, and Abkhazian expressing support for the Syrian people against international terrorism” (“Abkhazia President,” 2016). Not surprisingly, both Syria and Venezuela have joined Moscow in establishing diplomatic relations with Abkhazia and South Ossetia, the only ones of the five states profiled here which the

Russians have recognized. They are practically the only nations to do so.3

3 The only other countries to recognize the two Georgian statelets are Nicaragua (a close Russian ally) and the tiny pacific island nation of Nauru. Nauru’s decision was reportedly also caused by Russian economic linkage. The

Conclusion

Russia has clearly paid dearly to keep the microstates profiled in this article from collapsing. It has spent freely on a vast variety of subsidies for Transnistria, Abkhazia, South

Ossetia, and the Donetsk and Luhansk Republics. As we have seen, these include oil and gas subsidies, trade support, pension payments, direct support for government budgets, and many more. Clearly no government would spend billions of dollars to no purpose; Russia must believe that it receives a substantial return on its investment. And it does, as noted above: a political return. The survival of the microstates harms both the pro-Western states of Moldova, Georgia and Ukraine and the West itself, by preventing the eastward expansion of the EU and NATO.

And the microstates, at the same time, help to bolster Russian policy initiatives (like the seizure of Crimea and the intervention in Syria) and its image as a Great Power. Berg and Vits

(2018:403) also see a more subtle benefit to Russia, in that the microstates’ existence promotes the cultural idea of a Russkii Mir—a ‘Russian World,’ a civilizational space centered on

Moscow.

This conclusion has important implications for the study of International Relations, as noted in the theory section of this paper. Economic aid of various types can potentially be an important instrument in world affairs. It can sometimes motivate countries to change important policies, for example by renouncing nuclear weapons programs. It can induce states to extend diplomatic recognition. And, as this paper shows, it can even help to change de facto international boundaries, by promoting secessionist enclaves which divide unfriendly states. In

Kremlin promised Nauru $50 million in aid, a truly massive sum for a country with only 14,000 inhabitants (Robinson, 2009).

this way, as the title of this paper indicates, Moscow has succeeded in “Creating Allies” where none existed before.

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