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
Russia–South Ossetia relations formally integrated into the Russian economy by treaty in March 2015. After being instructed by Russian Prime Minister Vladimir Putin, in March 2009, Russia allocated 2.8 billion rubles from the Russian federal budget, as part of agreements between the Russian Ministry of Finance and its South Ossetian counterpart, which were based on the treaty signed in September 2008. Russia also allocated an additional 8.5 billion rubles to South Ossetia in order to assist in rebuilding housing, social amenities and utilities which were destroyed or damaged during the 2008 war. According to Eduard Kokoity, seventy percent of residential housing and eighty