1991–1992 South Ossetia War place around the city in the nearby villages and along the road to North Ossetia. In spring 1992 the fighting escalated again, with sporadic Russian involvement. However, in March 1992, Gamsakhurdia was ousted and replaced by Eduard Shevardnadze. Soon after, Gamsakhurdia loyalists staged an armed rebellion. Furthermore, the conflict with Georgia's other, bigger, separatist region Abkhazia, escalated into a war in 1992. As a result, Shevardnadze had an interest in ending the conflict in South Ossetia and signed the Russian-brokered Sochi agreement. The ceasefire agreement left South Ossetia divided into areas controlled by Georgia and areas controlled by the unrecognised
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