Dream of statehood still distant for Georgia rebels

MOSCOW (Reuters) - The dream of Georgia's separatist Abkhazia and South Ossetia regions for fully-fledged statehood is still out of reach, even after their ally Russia, defying the West, recognised them as independent states.

Thousands of people in Abkhazia and South Ossetia poured on to the streets to drink wine and fire guns into the air when Russian President Dmitry Medvedev recognised their independence. But when the hangovers wear off, the cold reality will remain.

The two tiny regions are recognised by no other state or international organisation, their economies are crippled by a Georgian economic blockade and Kremlin leaders -- not the separatists -- call most of the shots.

"It doesn't really change anything in terms of who will be controlling these areas because Russia already was," said Svante Cornell, an expert on Georgia at the Institute for Security and Development Policy, a Stockholm-based think tank.

Sergei Shamba, Abkhazia's separatist foreign minister, acknowledged his region still had a long way to go.

Even Russia's closest allies have failed to join the Kremlin in recognising Abkhazia and South Ossetia, though ex-Soviet Belarus came close by saying it understood Russia's decision.

"For small Abkhazia, the recognition by Russia opens up many possibilities," Shamba told Reuters. "But we do not want the process of recognition to stop at that ... We will of course search for allies and friends."

VIABLE STATES?

Both regions already have many of the trappings of statehood, with their own parliaments, flags and national anthems. But there is a question mark over whether they are viable as independent states.

Abkhazia, on the Black Sea, has an area about half the size of Wales and a population the separatists put at 340,000. Its economy was wrecked by a 1990s separatist war and a Georgian blockade. It now depends on Russian investors and tourists.

South Ossetia, with a population of only around 70,000, used to earn revenue from a huge market selling black market goods imported from Russia. That market is now closed after Georgia cracked down on contraband.

RUSSIA TO THE RESCUE

Abkhazia and South Ossetia see Russia as the solution.

More than 80 percent of residents in both regions already hold Russian passports, Russian is the most widely-spoken language and transactions are in Russian roubles.

In Abkhazia, the Russian government pays all pensions via a bank transfer to the separatists' national bank. One of the biggest inward investment projects is a business centre in the capital, Sukhumi, being financed by the mayor of Moscow.

A government official in South Ossetia told Reuters last year the region received at least 60 percent of its budget revenue from the Russian state, and Russia's state-owned Gazprom has built a new gas pipeline there.

TIGHT EMBRACE

If anything does change after recognition, say analysts, it is that Russia will further tighten its embrace of the two Georgian regions.

Abkhazia says it is likely to offer the Russian military use of a permanent base on its soil, a step that would essentially re-brand the Russian troops who have already been there for years wearing blue peacekeepers' helmets.

In South Ossetia, separatist leader Eduard Kokoity said he would invite specialists from Russia to join the region's government. "There is nothing criminal in that. We are all citizens of the Russian Federation," he told a news conference.

South Ossetia, which has close ethnic ties to the neighbouring Russian region of North Ossetia, says it sees its long-term future as a part of Russia. Its leaders said though this week they would wait before taking that step.

Russian officials say they view South Ossetia and Abkhazia as fully-fledged independent states, but they acknowledge they will need a helping hand from Moscow.

"I have no doubt that my country will extend cooperation and friendship in order to ease the transition period," Dmitry Peskov, spokesman for Russian Prime Minister Vladimir Putin, told reporters.