BACKGROUND: On April 2, South Ossetia’s President, Leonid Tibilov, appointed Domenti Kulumbegov as head of the republic’s government. Kulumbegov’s status had remained ambiguous after he was appointed the acting head of government in January 2014. Throughout 2013, news of simmering bureaucratic battles between Moscow and Tskhinvali emerged regularly. The Russian government attempted to establish greater control over South Ossetia’s finances, which Moscow is largely providing, through appointing its own head of government and some other officials. For most of 2013, Russia reduced its funding of the republic to routine maintenance, such as government salaries, halting all infrastructural projects in this impoverished territory. However, South Ossetia’s president, with the backing of his entourage, appeared to be surprisingly intractable. This phenomenon is known as the principal-agent problem and reflects the unanticipated ability of the agent to act in his own best interests, instead of those of his principal.

Eventually, the republic’s previous Prime Minister, Rostik Khugaev, was ousted on January 20, 2014. However, instead of replacing him with a Moscow protégé from Russia, another South Ossetian politician – Kulumbegov – was appointed to the post. Even though Kulumbegov was in the 1990s and part of the 2000s employed by the government migration services of North Ossetia, which is part of the Russian Federation, he comes from the Gori region of Georgia and served as South Ossetia’s deputy Prime Minister in 2009-2012. Moreover, on April 8, Tibilov reappointed most of the previous members of government that he had criticized for multiple failures when he dismissed them in January. According to Murat Gukemukhov, a reporter of Ekho Kavkaza, “the impression is that Moscow suddenly withdrew all the demands of the Russian supervisors of the republic about the region’s government staffing, as if there had been no lengthy and strenuous consultations on the matter.”

Few believe that Moscow allowed the South Ossetians to have their way out of good will. Rather, Russian experts point out that facing a serious foreign policy crisis over Ukraine, Russia is unwilling to jeopardize its relations with its satellite states, such as South Ossetia. Paradoxically, the conflict over the future of Ukraine provided a window of opportunity for the South Ossetian government and improved its bargaining position vis-à-vis Moscow. South Ossetia unexpectedly benefited from the foreign policy troubles of its Russian patrons. For the time being, Moscow is mired in the Ukrainian crisis and is unlikely to engage in any moves that would provoke another conflict in its neighborhood.

Russia’s heavy-weight supervisor of South Ossetia, Vladimir Putin’s aide Vladislav Surkov, has reportedly withdrawn from the realm of South Ossetian politics, focusing instead on CIS diplomacy. In late 2013, Surkov moved to crack down decisively on South Ossetia’s aspirations for greater political leeway. In the end of March, Tibilov and his entourage met Russia’s deputy Prime Minister Sergei Ivanov in Moscow. Surkov was quite tellingly absent from the meeting. Against the backdrop of events in Ukraine, Moscow replaced its initial intention to punish the South Ossetian government for its excessive demands with a less ambitious aim. Moscow now expects the South Ossetian government to hold parliamentary elections in June and provide some semblance of legitimacy and stability as the local population grows increasingly wary of the failing reconstruction efforts and endemic poverty.

IMPLICATIONS: 15 parties are competing for seats in the republic’s parliament. The South Ossetian government adopted a tough residential qualification, demanding that candidates to the parliament should have lived in the republic for the past 10 years. The rule is designed to keep out potential opponents to the current authorities, as many influential South Ossetians reside in Russia or Georgia.

Observers note that five parties are the frontrunners, including United Ossetia, headed by emergency minister Anatoly Bibilov. As implied by its name, the party’s main goal is to seek South Ossetia’s accession to the Russian Federation and to join North Ossetia, which is situated on the northern slopes of the Caucasus Mountains. Bibilov’s party has over 2,000 members, which is a staggeringly large number for South Ossetia whose total population comprises no more than 70,000 according to the most optimistic estimates. It is highly unlikely that Bibilov’s party could have garnered such support without Moscow’s assistance. Tibilov has repeatedly tried to undermine Bibilov, apparently regarding him as a potential contender for the position of president. South Ossetian authorities ruled out the possibility of holding a referendum on joining the Russian Federation and dismissed some people in the government that were loyal to Bibilov.

Soon after the dubious referendum in Crimea on March 16, the well-known Russian analyst and Caucasus expert Yana Amelina proposed that South Ossetia should also be annexed to the Russian Federation to unite with North Ossetia. Amelina called the case of Crimea a “precedent” for other territories that Russia wants to get hold of. However, the majority of Russian experts cautioned against such hasty moves. Following the acute crisis in Ukrainian-Russian and Russian-Western relations, the talks about Georgia’s possible membership in NATO have intensified. Even if Georgia’s NATO prospects will not materialize soon, the country is gearing up to sign an Association Agreement with the EU in the fall 2014. Moscow is therefore likely to postpone wielding the threat of annexing South Ossetia to Russia until then.

Despite South Ossetia’s complete dependence on Russia for security and finance, the South Ossetian government still managed to acquire a space for political maneuver. Even the fact that the republic’s current leader is a former officer of the Soviet KGB did not help Moscow much in establishing tighter control over this small territory. This does not mean that South Ossetia is in any way opposed to Russia, but Moscow’s official recognition of the republic as an independent state and the attention paid by the international community to Russia’s current foreign policy moves constrain the methods Moscow can use to rein in this territory. Given the attention that South Ossetia’s parliamentary elections have received from Moscow and the growth of particular South Ossetian parties, the Russian government has seemingly decided to change the situation in the republic “democratically,” through promoting a Kremlin-friendly party in the parliament and then passing the necessary laws to establish a fuller control of the region’s government. 

CONCLUSIONS: Moscow’s protégés in South Ossetia have capitalized on Russia’s preoccupation with Ukraine. The region’s government thwarted Moscow’s efforts to replace key local politicians with new Russian appointees. The principal-agent problem in South Ossetia has manifested itself in Moscow’s difficulties to appoint the “right” people to important government positions in the republic. Moscow’s annexation of South Ossetia has been postponed for now, but it is likely to reemerge later this year as Georgia’s signature of an Association Agreement with the EU draws closer. It is also plausible that if the tensions over Ukraine do not dissipate and Moscow faces increased opposition from the West, it may choose not to use South Ossetia’s annexation as a bargaining chip in negotiations over Georgia’s accession to European institutions.

AUTHOR'S BIO: Valeriy Dzutsev is a Senior Non-Resident Fellow at Jamestown Foundation and Doctoral Student in Political Science at Arizona State University.

(Image Attribution: kremlin.ru)