The fallout from Abkhazia’s political crisis, which led to the downfall of President Aslan Bzhaniya in late November, has since evolved into one that impacts the economy. 

Over the last week, Abkhazia was hit with twin economic setbacks stemming from Russia, its primary financial benefactor. 

On 6 December, Russia banned the import of mandarins from Abkhazia, one of its top exports. Following this, electricity shortages, exacerbated by the prevalence of illegal crypto mining and the loss of subsidised energy imports from Russia, brought a long-awaited energy shortage to its head. 

Both are widely thought to be forms of retribution from Moscow — or a bid from Bzhaniya to destabilise Abkhazia in order to create a precondition for his return to power. 

Electricity shortages and crypto mining

Electricity shortages are not a new phenomenon in Abkhazia. The Enguri hydroelectric power plant (HPP), located on the River Enguri and jointly administered by Sukumi (Sukhum) and Tbilisi, is the sole domestic power provider for Abkhazia. Abkhazia has also historically received discounted energy from Russia, but that supply has dwindled to a trickle. 

Even before the controversial investments legislation led to Bzhaniya’s ousting, the failure of the parliament to pass other pro-Russian laws resulted in the cutting of Moscow’s financial aid to Abkhazia, as well as end of subsidised energy supplies. 

In September, Abkhazian Foreign Minister Sergei Shamba said Russia would begin charging market rates for the supplemental supply of electricity, which would severely tax the Abkhazian budget. The subsequent crisis with Bzhaniya and the definitive failure of the investments law in parliament resulted in the complete suspension of financial aid from Russia. 

As a result, electricity supply to citizens has been severely curtailed. Acting Education Minister Inal Gabliya said on 9 December that schools would be closed for the next week, but the Cabinet of Ministers clarified the following day that it was only an advisory measure, not an order. 

Acting Prime Minister Valery Bganba also warned last week that water levels at the Enguri HPP were at a critically low level. When coupled with the inability to buy Russian energy at market rates, acting Energy Minister Dzhansukh Nanba said the energy crisis could lead to the rationing of power to only six hours a day. On Wednesday, OC Media learned that the Enguri HPP had been shut off, and that power would only be available from 21:00 to 7:00, as well as intermittent one-hour availability during the day. Energy supplies from Russia have only been paid through Friday, so it remains unclear what the situation will be next week. 

But electricity supply issues in Abkhazia do not solely stem from its currently contentious relations with Russia. Abkhazia is home to widespread illegal crypto mining operations, which as far back as 2021 had become the largest consumer of electricity. 

Lax policing and the ingenuity from crypto miners has reportedly caused the level of mining to remain unchanged. 

‘Despite the power supply regime, we observe that there is no particular decrease in consumption’, Said Blabba, the head of power sales at the state-run Chernomorenergo energy company, told OC Media. ‘This confirms that people who are engaged in cryptocurrency mining continue their activities successfully, and nothing interferes with them'.

Abkhazian authorities have attempted to crack down on crypto mining, which was outlawed in 2020, but efforts have mostly been targeted at larger farms. Moreover, there is a sort of catch-22, as larger operations have developed methods to avoid being detected, while those operating smaller mines are often off of the government’s radar. Authorities took a significant step on 9 December, opting to shut off Abkhazia’s internet connection from 24:00 to 7:00 in hopes that it would at least in part deter illegal crypto mining. 

Nonetheless, the larger operators authorities are ostensibly targeting with the shutoff often access the internet through a satellite connection. The connection, which costs around ₽15,000 ($150) a month, renders the government’s methods largely ineffective. 

Acting Prime Minister Bganba appealed to crypto miners in another way in recent days, calling on them to voluntarily suspend their operations so that Abkhazia is not forced to declare a state of emergency over the electricity shortage. 

The mandarin ban — punishment from Moscow or internal power play?

While electricity issues have plagued Abkhazia for years, Russia’s ban of the export of mandarins is a new measure, and one that strikes deep at Abkhazia’s economy. The move was ostensibly made for health reasons, as Russia claimed there was a harmful pest present in the fruit. 

Opposition leader Adgur Ardzinba refuted the claims, saying that Abkhazia’s mandarins are safe and alleging that the reasoning behind the ban was ‘contrived’. Bganba echoed the sentiment, saying that Abkhazia’s Health Ministry had determined there were no pests present. 

The harvesting and sale of mandarins is a ‘crucial source of income’ for Abkhazians, Ardzinba said.

The timing of the move, coinciding with Abkhazia’s political crisis, also raised suspicions that it was motivated by something beyond sanitary concerns. 

While some have claimed the mandarin ban was a form of punishment from Moscow for Abkhazia refusing to pass pro-Russian laws, Ardzinba alleged that Bzhaniya orchestrated both the ban and electricity crisis in order to ‘destabilise the country and pursue his political agenda’. 

Bzhaniya’s ‘objective is to regain power for himself and his associates at any cost, even if it means creating artificial hardships for the very people he once vowed to protect’, Ardzinba said. 

He further added that Russia had denied there was such a ban, which contradicted the information on the ground. 

Others have argued that the move was a form of ‘economic blackmail’ from Russia in response to political resistance from Abkhazia. 

Although Bzhaniya resigned from his position as president in November, he said he would be running in the next election scheduled for February 2025. 

 For ease of reading, we choose not to use qualifiers such as ‘de facto’, ‘unrecognised’, or ‘partially recognised’ when discussing institutions or political positions within Abkhazia, Nagorno-Karabakh, and South Ossetia. This does not imply a position on their status.