As a region, the Northern Caucasus suffers from a double image problem: most people would fail to locate it on a map; and most of those that can would heed their government’s travel advisories and stay well clear. For those who are not aware, the Northern Caucasus is the region of Russia that sits in the narrow corridor of land that separates the Black and the Caspian Seas. It is as ethnically and culturally diverse for its size as almost anywhere in the world.

It is comprised of the republics of Adygea, Chechnya, Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkess and North Ossetia-Alania, and between them its inhabitants speak a bewildering array of languages and dialects. Dagestan alone, a republic the size of Scotland, is home to 35 separate languages belonging to an astonishing 12 language families.

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Geographically, the area is similarly awe-inspiring, comprising mountain ranges, forests, ancient villages and an exotic Caspian coastline. But there is no getting away from the fact that this is Russia’s troubled south, and has been since long before the Revolution.

Some observers of the Northern Caucasus would submit that little has really changed since Leo Tolstoy wrote his novel Hadji Murat in the late 1800s, about a proud Chechen chieftain who is forced into alliance with the Russian Army, determined to stamp out the separatist movement led by the mystic warrior Shamil.

Certainly, in the post-Soviet decades the same antagonisms of Islam versus secularism and separatism versus the Russian state have viciously reasserted themselves. In terms of human cost, the most tragic manifestations have, of course, been the Chechen wars of the 1990s. But even more recent history has also been punctuated by ugly reminders, including the Beslan massacre and the spread of disturbance into Ingushetia, that the region remains unsettled. Close proximity to Georgia exacerbates the volatility that is already intrinsic to the region. And after the brutality of the conflict between separatists and the Russian army -- marked by what many feel is heavy-handedness on the part of the latter -- to say that Russia faces an uphill battle in rebuilding trust in the Northern Caucasus would be an understatement. Rebuilding the economy, and the local buildings themselves, may have to come first.

Getting a facelift

There have been some micro-level efforts what can be termed 'economic counter-terrorism' on the part of Russia to try to tame its wilder fringes. Chechnya, still not a recommended destination for even the most intrepid traveller, has, by all reports, undergone a cosmetic facelift – at least in Grozny. Firmly under the grip of Putin-appointee Ramzan Kadyrov, once war-torn buildings have been made-over, with the help of Moscow money. Authorities announced at the St Petersburg economic forum in July that the city would receive an investment from the Russian state bank Vnesheconombank to upgrade the city’s infrastructure.

The Northern Caucasus tourism development plan currently being backed by the Russian government goes much further and wider – although, it must be said, its initial project site does not include the troublesome duo of Chechnya or Ingushetia. The five ski resorts under development will be in Adygea, Dagestan, Kabardino-Balkar, Karachay-Cherkess and North Ossetia-Alania.

Investment pledges

To its credit, the Russian government does appear committed to using economic development as the key instrument by which it can bring the Northern Caucasus into the fold of Mother Russia’s apron – and to bring an end to the insurgency that has continued long after the ‘end’ of the Second Chechen War.

The Sochi Winter Olympics in 2014 can be seen as part of that effort. Sochi, however, is some considerable distance from the Northern Caucasus’s 'hot spots', being very much closer to Abkhazia, the breakaway Georgian region, which is now in effect a Russian protectorate. The Olympics will certainly reinforce perceptions of Russia’s presence there.

Nonetheless, Russia has repeatedly pledged to invest billions in recreation and infrastructure projects in the Northern Caucasus in the short and medium term. Facilities are to include an investment protection fund to insure potential investors against up to 70% of their losses.

Tourism projects, such as those planned by the Russian Northern Caucasus Resorts Company, are likely to soak up most of this money. Others are mooted also, including a chemical plant in the Stavropol region and a copper and zinc project in south Dagestan (although the latter appears to have stalled, at least according to one commentator, on the back of environmental fears and the opposition of the local Lezgin population – one of the largest ethnic groups in Dagestan).

Security fears

But while the ambitious pump-priming plans are intended to improve the security situation, it does not get around the fact that the security situation could impede their chance of ever coming to fruition.

Alex Jackson, analyst of Caspian and Caucasus affairs, points out: “Each republic is dysfunctional in its own way. Chechnya suffers from Ramzan Kadyrov’s authoritarian personality cult and his focus on an ‘indigenous’ brand of Islam. Dagestan is wracked by internecine political competition (sometimes, but not always on ethnic lines); and in Ingushetia, President Yunus-Bek Yevkurov – generally considered to be an honest pragmatist – struggles against Russia’s highest official unemployment rate (57%) and a barely functioning civil and judicial service.”

As if to further underscore the point, in February this year, three Muscovite tourists were shot and killed near the ski slopes of Mount Elbrus in Kabardino-Balkaria, while attackers blew up a cable-car support pole in the same area, bringing down dozens of cabins but fortunately injuring no one. The incidences prompted the government to close off the area and beef up its security operations. Recent mass protests in Kabardino-Balkaria against Moscow’s muscular counter-terrorist operations suggest that there are few reasons for short-term optimism about the Northern Caucasus.

There is also resentment in European Russia against the Northern Caucasus provinces, which are heavily subsidised by Moscow to the tune of between 60% and 80% of their revenue. The Jamestown Foundation, a US think tank that monitors the region closely, reported that a rally held in the Russian capital, where the slogan was “Stop feeding the Caucasus”, enjoyed a surprisingly high turn out.

Grounds for optimism

And yet, of course, there is always hope. Massive investment into what is in effect a post-conflict region is no guarantee of a successful outcome, but it is arguably a prerequisite condition if such an outcome is going to be achieved. Lack of jobs and other economic opportunties breeds discontent and acts as a recruiting sergeant for terrorist and militia organisations.

The applied science of economically developing regions that are either recovering from conflict, or in which conflict remains ongoing, has yet to be finessed. But it has been extensively ‘field-tested’ in Iraq, Afghanistan and elsewhere, and valuable lessons have begun to emerge.

Research undertaken for the World Bank argues that private-sector investment can play valuable roles in, for example, employing ex-combatants, and therefore providing alternative livelihoods to those that might otherwise be provided by criminal or militia organisations: this has proved to be the case in Sierra Leone and elsewhere. And the sector can also fill any gap in the delivery of essential services that may have been created.

The World Bank suggests a thriving private sector can help rebuild public trust and 'social capital', and create networks that extend across cultural and geographical barriers. Markets, as trading hubs, are a valuable example of the ways in which appetite for economic activity can transcend conflicts. A notable example of this being the Sadakhlo market in Georgia, where even during the war between Azerbaijan and Armenia, up to 5000 Azeiris and Armenians (and Georgians) would trade with each other every day of the week.

There are, of course, dangers. In the absence of an enforced and generally respected rule of law, it is all too easy for investment to be channelled into the hands of clans, well-placed officials and others, fuelling cronyism and corruption. This can limit the benefits to the population at large, as has happened in Nigeria’s oil-rich delta region. This means that if large sums of money are invested without appropriate checks and balances in place, there is every possibility that it will exacerbate the very antagonisms that it is intended to reduce.

Will winter sports tip the balance in favour of peace? At first glance it seems an improbable solution to a highly complex and deep-rooted regional conundrum. But any serious attempt by Moscow to create a lasting solution to the issues of the Northern Caucasus is to be welcomed for as long as the guns stay silent.