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. Last Updated: 07/27/2016

UN, EU Aim to Revive Caucasus Economy

Starting next year, international aid to the North Caucasus will be targeted much more toward sustainable economic and social development in an effort to try to end the volatile and depressed area's dependence on humanitarian aid.

Under programs run by the United Nations and the European Union, a total of $67 million will be spent in 2006 on job creation, health, education and other development and recovery projects in Chechnya and neighboring republics -- a shift from previous years, when the lion's share of aid went to emergency humanitarian assistance, including food and shelter.

The switch in focus, particularly from those Western countries that have been the harshest critics of the Kremlin's policy in the area, is being seen as a response to elections and a partial stabilization in Chechnya and to worries that the security situation in the rest of the North Caucasus is deteriorating.

Earlier this month, the UN unveiled an aid package for the North Caucasus of $88 million in 2006. Of that, $44 million, will go toward development and recovery projects in Chechnya, Ingushetia, Dagestan, North Ossetia and Kabardino-Balkaria.

The UN aid followed an announcement at the EU-Russia summit in London in October that the EU -- a consistently harsh critic of federal forces' conduct in Chechnya -- would fund $24 million in development programs for the area next year.

Aid organizations point to the urgent need to rebuild the area's economy, which still has the country's worst unemployment rate and lowest per capita income.

Numbers of people displaced by the conflict returning to Chechnya also slowed to a trickle this year, the UN Office for the Coordination of Humanitarian Affairs said in its 2006 aid plan for the North Caucasus. About 200,000 people are estimated to remain displaced following the closure last year of refugee camps in neighboring Ingushetia.

Kazbek Kulayev, coordinator of the United Nations Development Program's North Caucasus program, said the focus of foreign aid was changing in response to events.

"What we have to deal with now are changes in the economic and political situation in the North Caucasus. The slow pace of economic development and the high unemployment rate are problems that cannot be solved by humanitarian levers, " Kulayev said.

"Besides, humanitarian assistance cannot be provided forever."

Last year, the UN allocated $45 million for predominantly humanitarian programs, including the provision of food, medicines and basic relief to those in need in conflict areas or displaced peoples.

The EU, another major donor to the North Caucasus, has given more than 170 million euros ($200 million) in relief assistance since 1999.

Officials in the Chechen government said that measures to kick-start job creation and economic recovery, particularly in agriculture, would help the republic far more than food deliveries.

"The republic was flooded with sugar and groceries four times already, but these products usually turn up at markets in other republics," Magomed Vakhayev, Chechnya's labor and social development minister, said by telephone from Grozny.

Of Chechnya's population of 800,000, 80 percent are unemployed, Vakhayev said, adding that most people tried to get by though subsistence farming or under-the-table payments for regular or occasional employment.

Loans from state-owned banks, such as Sberbank or Agroprombank, to start up a business or a farm remain out of reach for most people in Chechnya, Vakhayev said.

Kulayev said that starting next year, the UNDP in the North Caucasus would provide business education for those wanting to set up businesses and would set up credit organizations that would offer micro loans and lease out agricultural equipment to farmers.

The EU's health, education and job creation programs will be run through UNICEF, the European Bank of Reconstruction and Development, and the World Health Organization.

Sean Carroll, a spokesman for the European Commission's delegation to Russia, said that the EU's recovery and development program was first suggested during the EU-Russia summit in The Hague last year and agreed on with the Russian government.

"Our mission went down to the area to evaluate the situation in April, and following this trip three projects were rolled out," Carroll said.

Up to 80 percent of the EU's North Caucasus aid will go to Chechnya, Carroll said.

Part of the budget allocated for health development will go toward establishing a forensic laboratory in Grozny, he said.

The EU will also continue sending humanitarian aid to Chechnya as long as it is needed, Carroll said. On Dec. 13, the European Commission said it would allocate 6 million euros ($7.2 million) next year for humanitarian aid for victims of conflict in Chechnya.

The UN will also continue its humanitarian programs next year as it expects easier access for humanitarian agencies within Chechnya, said Gregory Ferguson-Cradler, associate humanitarian affairs officer for OCHA in Russia.

The switch in aid toward development indicates that the EU is moving away from criticizing Russia over its conduct in Chechnya and is now taking a more practical approach to Russia, which is increasingly being seen as a key energy partner, analysts said.

"At a political level, the rhetoric of the West -- and particularly of the EU -- has changed in recent months, as Russia's role as a major partner has increased," said Fyodor Lukyanov, editor of the journal Russia in Global Affairs. "The Kremlin has managed to create the illusion of changes for the better in Chechnya by holding elections and transferring rule of the republic into the hands of the local authorities.

"But at the level of nongovernmental organizations and the media, the criticism of Russia's Chechnya policy remains as fierce as it was before," Lukyanov said.

Vladimir Ryzhkov, an independent State Duma deputy and a member of the Duma's EU-Russia working group, said that while international organizations had switched their focus to development projects in Chechnya, it did not necessarily mean that they would ease up on their criticism of Russia.

"Russia held presidential and parliamentary elections in Chechnya. The political changes in Chechnya are microscopic, but they cannot be ignored and the West is responding," Ryzhkov said.