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Economy

chechen-oil1The war destroyed or damaged much of the republic’s economic infrastructure in the mid- and late 1990s. Petroleum production had been the mainstay of the Chechen economy. Grozny, which warfare reduced to ruins, was the industrial center of the republic. Oil refining was concentrated in the city and its surrounding area, where abundant oil fields are located. The first oilfields in Chechnya were discovered in 1833. Oil has actually been mined since 1906 and in 1917 it accounted for 17% of Russia’s entire output of natural petroleum. Today’s oil deposits still amount to about 30 million metric tons. In 1999 the refineries and most oil wells were destroyed, and Chechnya’s major pipeline linking Caspian oil fields to the Russian Black Sea port of Novorossiysk was closed due to lack of security in the region. Chechnya’s oil has at most been a secondary factor behind the war. When the pipeline from Baku to Russia could no longer be secured in Chechnya, it was rapidly re-routed. Railroads suffered heavy damage. In addition to oil, Chechnya contains significant deposits of natural gas. Manufactured goods have included petrochemicals, building materials, canned foods, and wood products. Agriculture is concentrated in the river valleys of the republic. In the wake of these two wars all Chechen industry has ceased operation. Agricultural land is riddled with landmines. 80% of the infrastructure, including housing, hospitals, schools, the water supply and sewage system, has been destroyed.

According to different sources the damage caused to Chechnya by Russia is estimated at around 300 billion USD.