Georgia–Russia relations to urge President Medvedev to recognize Abkhazia and South Ossetia as independent states. On the following day, Medvedev agreed, signing a decree officially recognizing the two entities. Georgia has rejected this move outright as an annexation of its territory; Western nations such as the United States and Germany have also opposed such a decision. In response to Russia's recognition of Abkhazia and South Ossetia, the Georgian government announced that the country cut all diplomatic relations with Russia. Russia had already closed its embassy right after the beginning of the war in South Ossetia in August 2008 before diplomatic relations between
South Ossetia third of its budget by levying customs duties on freight traffic before the war President Eduard Kokoity has admitted that his country is seriously dependent on Russian economic assistance. South Ossetia's poverty threshold stood at 3,062 rubles a month in the fourth quarter of 2007, or 23.5 percent below Russia's average, while South Ossetians have incomparably smaller incomes. Before the 2008 South Ossetia war, South Ossetia's industry consisted of 22 small factories, with a total production of 61.6 million rubles in 2006. In 2007, only 7 factories were functioning. In March, 2009, it was reported that most of the production