South Ossetia was left in ruins after August's five-day war. With Russia’s help, the new republic is being reconstructed. But the global crisis is limiting the amount of international aid flowing to the new country.
Rich in natural recourses and natural beauty, South Ossetia thrived in Soviet times. It supplied mineral waters to every corner of the USSR. Now, just one aging production line works. And because of the trade blockade with Georgia, it only caters for local Ossetian customers.
But South Ossetia holds many untapped water reserves, giving it serious economic potential.
“We have many reserves that we are just not making the most of. Nearby there are 14 more springs that could be used to produce an extra 400 cubic meters of bottled water a day,” Roland Tedeev of Bagiata Mineral Waters says.
The South Osssetian government plans to expand its mineral water output. But to do this, it needs to invest in new machinery. And it doesn’t have the money to do that.
Agriculture has always been the engine of the region’s economy. But 80 per cent of farms now lie in ruins. Tskhinval's Ministry of Economy says agricultural growth is a key aim. But the current budget won't stretch to funding farm reconstruction. So South Ossetia is relying on Russia for investment.
Bullets may have scarred the nation, but along with daily efforts to patch up Tskhinval's buildings, the government seems determined to construct a new and prosperous economy.
And South Ossetians themselves are saying they are using all their power to reinforce their future.
In past years jobs have been scarce. A lack of industry and trade and little need for a profession has meant living standards are low.
But now there is hope – a joint pipeline project between Russia and South Ossetia. It's given more than a thousand locals a job and training in valuable skills. Gas from Russia will mean cheaper rates for customers there, bringing huge potential to transform the economy.
“We hope to have a transit agreement with Russia in the future so that we can sell on the gas to Western Georgia. This will be of great benefit to us and might help forge a better relationship with Georgia,” Gennady Kadjiev says, a representative for the gas pipeline project.
But the main benefit for South Ossetia is that it will no longer rely on Georgia for gas, which will mean greater independence.