South Ossetia Becomes Thorn in Russia's Side

South Ossetia has been a de facto Russian protectorate since Moscow's victory in the five-day war in Georgia. But the breakaway republic is becoming an embarrassment for the Kremlin, with a corrupt president, disappearing aid money and brewing social unrest.

Thick clouds hang over the roofs of Tskhinvali, as if fog had enveloped the houses there. But they are clouds of smoke coming from the wood-burning ovens in the homes of the city's 27,000 inhabitants. There is no central gas supply in the South Ossetian capital, where gas pipes are not expected to be installed until next year.

Snow and cold temperatures have descended on this small town in the Caucasus, forcing Valentina Tadtayeva and her family to move once again. "It's already the third time since the war," says Tadtayeva, a thin, gray-haired woman.

In the night before Aug. 8, when Georgian forces launched a surprise attack on South Ossetia, a breakaway province northwest of the capital Tbilisi, three artillery shells tore off the roof and one wall of her house. Valentina, 59, and her husband Pavel, 62, had fled to the basement, together with their two sons Alan, 27, and Oleg, 26, as well as their daughter-in-law Asa, 21. "We feared for our lives," says Valentina.

The war lasted three days for the Tadtayevs. When the Russians liberated Tskhinvali, the family moved to the apartment of the youngest son's mother-in-law, where 14 people lived in two small rooms. Four weeks later, the soldiers set up an army-green tent in the courtyard, and the city administration promised to repair the damaged house within a few weeks. "Nothing has happened yet," Valentina complains. Instead, the family is now forced to move in with relatives once again. "They forgot about us," says Valentina. "Now the peace is becoming a burden."

It has been four months since Russia and Georgia went to war over the tiny state, only slightly larger than Luxembourg and with about 70,000 inhabitants, triggering a geopolitical earthquake. Moscow came to the aid of the South Ossetians. With their concentrated military might, the Russians repelled the Georgian troops from Tskhinvali and made it clear to the world that Georgia is part of their sphere of influence. What had seemed like a struggle between Georgia and Russia had turned into a conflict between Russia and the West.

But what did this victory do for South Ossetia, a mountainous strip of land that declared its independence after the hostilities ended? The state whose fate was allegedly the Kremlin's greatest concern at the time? And for which Moscow continues to collect donations through its embassies abroad -- funds intended for the "victims of the humanitarian disaster in South Ossetia?"

Besides Russia, so far only Nicaragua has recognized the separatist republic. Foreign journalists are only permitted to travel in the tiny country when accompanied by officials from the foreign ministry in Moscow. Even the Organization for Security and Cooperation in Europe (OSCE) and the European Union, which brokered the cease-fire between Russia and Georgia, are being denied entry by the South Ossetians and their protective power, Russia. For this reason, very little reliable information makes it out of the region.

Russian Criticism Mounting

This makes what recently appeared in Russian newspapers all the more surprising: that the republic is on the brink of social unrest, just as winter is beginning, because the government has allegedly embezzled Russian reconstruction aid funds, as the former South Ossetian defense minister and head of the security council, a Russian lieutenant general, explained; or that South Ossetian President Eduard Kokoity fled spinelessly during the war; and that millions of rubles deposited in the safes at the national bank in Tskhinvali had gone missing and that Russian businesspeople are refusing to invest in South Ossetia while its brawny separatist leader remains in power.

Kokoity, a former freestyle wrestler who now sits in the "Office of the President," a six-story concrete building from the Soviet era, calls the criticism in Russian newspapers "arranged." Certain pro-Georgian forces in Russia, he says, are attempting to "discredit South Ossetia and its leadership in the eyes of the Russians." Yes, says Kokoity, it is cold now in Tskhinvali, but "we are occasionally warmed by the joy of victory and independence," he tells his freezing fellow South Ossetians -- while his own office has thermopane windows from Turkey, installed after the war.
In the city, 10 schools, kindergartens and the hospital have been rebuilt. But in many houses there are now plastic tarps and blankets where windows used to be. "We brought enough glass to Tskhinvali to provide it with three times as many windows as it needs," Russian Disaster Protection Minister Sergei Shoigu said angrily.

No one knows exactly what happened to all the glass and other building materials. The same appears to apply to much of the €350 million ($490 million) in Russian reconstruction aid. To be on the safe side, Moscow did send two of its own people to Tskhinvali to serve as prime minister and finance minister. But President Kokoity has declared the budget, filled almost exclusively with Russian funds after the war, a state secret. A former security advisor accuses Kokoity of having surrounded himself with confidants from the Russian regions of Samara and Ulyanovsk and of conducting money-laundering operations with dubious companies.

Yuri Morosov, the former prime minister who resigned after the war -- supposedly of his own free will -- voices similar complaints. According to Morosov, 100 million rubles or about €2.7 million ($3.8 million) in salary payments for public servants were embezzled shortly before the conflict. Most of the money was intended for South Ossetia's armed militias.

It's a difficult situation for Russia. While war refugees in the rest of Georgia will receive new houses, thanks to €3.4 billion ($4.8 billion) in aid money, mainly from the EU and the United States, the reconstruction of South Ossetia could prove to be an embarrassment for Moscow. If so, Russia's efforts to present itself as an protective power to the people of the Caucasus and the world will suffer.

Potential Embarrassment for Moscow

There is at least one location in Tskhinvali that looks how Moscow wants it to look. At Stalin Street 27, across from the seat of Kokoity's government, Russian mobile phone provider Yevrozet has opened a shop. Fashionably dressed saleswomen use computers as cash registers -- as long as there is no power outage. It is warm in the shop, where Nokia mobile phones and Canon cameras glitter in glass cases. The shop is an island of modernity in a city in which the scars of the war are in full view on every street corner.

The shop sees about 1,000 visitors a day, which would even be considered a success for a retail business in downtown Moscow. The trouble is, hardly anyone is buying mobile phones and cameras. "People come here because they want to see normal life," says Irma Alborova, a saleswoman.

Normal life? South Ossetia, which the Russians seem so keen on controlling, has had a bad reputation since the early 1990s. Today it is considered a hub of crime and smuggling. It rebelled against the Georgian central government in a bloody war in the early 1990s, and after the war South Ossetia became impoverished and isolated. Many residents earned a living dealing in vodka on the black market.

Kokoity made a name for himself as the region's "trade representative" in Moscow, and then, with Kremlin support, he managed to catapult himself to the presidency of the rebel republic. But now there are growing doubts, even in Moscow, over whether Kokoity is the right man for the job.

Russian Control of Caucasus at Stake

If South Ossetia plunges in chaos, Russia could lose control over the entire unstable and majority Muslim Caucasus region. In the Russian autonomous republics of Dagestan and Inguchetia, government forces wage battles with underground fighters almost daily. Even in Christian North Ossetia, a pillar of Russian imperialism until now, religious warriors are now trying to stir up resistance within the Muslim minority against the "Russian occupiers."

Kokoity governs his territory like a mafia boss. Critics are threatened with deportation by his security staff, while family members are awarded positions in the administration. Kokoity made his brother Robert, a feared gangster in Tskhinvali, ambassador in sunny Abkhazia on the Black Sea.

The Ossetians certainly have Russia to thank for stopping the invasion of Georgian President Mikhail Saakashvili in August, thereby preventing reintegration of the province into Georgia. But they are increasingly skeptical about Kokoity's regime.

The Ossetian leader, who publicly drained a tankard containing three liters of wine to celebrate the Russian victory, now intends to give his regime a civilized makeover and curry favor in Moscow. Stalin Street, the only street with this name in a state capital, is to be renamed Medvedev Street.

But even Russian President Dmitry Medvedev knows that "by far not everything is going well" in South Ossetia, as he admitted in public recently.

But to avoid completely isolating itself internationally, Russia has stopped short of formally annexing the captured mountain province. This has its downsides. For example, the Kremlin cannot simply dismiss Kokoity like any other governor. Instead, it must court him as if he were a foreign head of state -- even though Kokoity's militias were apparently involved in gun battles with Russian troops recently. Many in Moscow are realizing that Russia went to war over a region that is not only insignificant, but also has a leadership every bit as unpredictable as Saakashvili.

In Tskhinvali, Valentina Tadtayeva and her sons packed together their few remaining belongings: blankets, a tea kettle, silverware and family photos. They will also take a basket of apples along to their relatives. The apples are from Kechvi, one of the Georgian villages on South Ossetian soil that were "flattened," as Kokoity says, and burned to the ground in the war. "We picked the apples after the war, otherwise we wouldn't have much," Valentina explains.

She remembers the days when Georgians sold their fruit at the market in Tskhinvali. "Somehow it seems long ago now," she says. "Even the market is now bombed out."