Russia pours money into Abkhazia

A billboard shows Russian President Dmitry Medvedev (left) alongside Abkhaz leader Sergei Bagapsh, with the slogan "Peace! Freedom! Independence!"

By Tom Esslemont BBC News, Sukhumi

From the bridge over Abkhazia's second largest river the four bright yellow diggers ploughing through the water may look like nothing unusual.

In fact, they are the biggest indication yet of Russia's long-term plans to invest heavily in Abkhazia.

The gravel they are extracting from the Kodori river bed is destined for the Russian city of Sochi, further north along the Black Sea coast, for use in one of its most important building projects in the next decade, the 2014 Winter Olympics.

Russia backed Abkhazia's declaration of independence in August 2008 and is the territory's most prominent supporter.

The two agreed to co-operate long before Georgia's August war with Russia.

Russian money

Now redevelopment is going ahead on a grand scale, despite Georgia's assertion that Abkhazia is still legally one of its territories.

Thanks to Russia, we can feel safe economically Kristina Ozgan, Abkhazia's finance minister

In the capital, Sukhumi, new restaurants, hotels and entertainment attractions line the Black Sea promenade. Many have been renovated with Russian money.

This new wave of investment marks a welcome change for a tiny seaside territory where war is never far from the memory.

Houses, government buildings and palaces still lie in ruins after the war for independence against Georgia in the early 1990s. A subsequent economic blockade by Georgia froze development plans.

Abkhazia's finance minister, Kristina Ozgan, welcomes the recent change. Anyone, not just Russia, should feel welcome to invest in Abkhazia, she says.

"You have to understand, Abkhazia does not select which business comes here, it invites business. Other countries don't want to work here without guarantees, but Russia does."

She refuses to name a figure, but suggests Russian investment amounts to more than