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Refugees have begun to resettle in the zone of conflict but still only in small numbers, the major obstacle being the economic situation in the region. Numerous small steps of co-operation between Georgians and Ossetians took place.
The absence of central control over the region, the loose authority of the South Ossetian government, and the region’s contiguity to the Russian Federation, through North Ossetia, have made it a haven for organised criminal activity, specifically smuggling. The Ergneti market on the outskirts of [[Tskhinvali]] was the main economic black hole into which vast amounts of Russian contraband fuel, cigarettes, alcohol and wheat flour were pouring – robbing Georgia of revenues and propping up the breakaway region. Kidnapping, drugs and weapon business and trafficking are also common.{{Fact|date=July 2008}}
=== The 2004 flare-up ===
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