Russia’s intention to directly control financial aid to Tskhinvali without involvement of the breakaway region’s authorities has become a source of disagreement between Moscow and Tskhinvali, the Russian daily, Kommersant, reported on March 3.

Shortly after the August war, Russia’s Prime Minister, Vladimir Putin, ordered to allocate 10 billion rubles (now about USD 275 million) to finance reconstruction works in South Ossetia. As part of this aid 1.8 billion rubles were allocated for immediate needs in late August and the sum was transferred to the treasury of Russia’s North Ossetian Republic.

According to the Russian daily, Moscow is now offering to set up a special federal unit at the Russia’s Ministry for Regional Development, which will monitor and control spending of aid funds for South Ossetia. Russia’s state audit agency has proposed the measures after it studied spending of the initial 1.8 billion aid in November, 2008.

The special federal unit at the Russian ministry, according to the Kommersant, will be composed only by the Russian officials and the authorities of the breakaway region will have no say in it.

Hasan Pliev, the first vice-premier of the breakaway region, told the Kommersant the proposal was not an appropriate way to finance reconstruction needs in the region.

“We should take into account the changed reality. In August South Ossetia was not recognized by Russia as an independent state and for that reason scheme of financing was worked out by Moscow and that was natural,” Pliev was quoted by the Kommersant. “But  now we are recognized. Relations should be built based on the principles of inter-state relationship; financing should now be carried out through our [South Ossetian] Ministry of Finance, instead of the North Ossetia’s treasury.”

According to the Russian daily, disagreement over scheme of financing has delayed allocation of further tranche as part of 10 billion ruble aid. 

“As there is no money, nobody has received salaries in the region since the beginning of this year, even the members of the government. It certainly triggers anxiety,” the breakaway region’s first vice-premier said.