8 ODI Policy brief Donetsk and Luhansk People’s Republics in Ukraine, pensioners were forced to regularly cross the Line of Contact to collect their pensions after the Ukrainian government stopped making social security payments in the occupied territories (Marandici and Lesanu, 2021). In Abkhazia, ethnically Georgian returnees navigate uncertain ‘riskscapes’ in order to cross between Abkhazia and Georgia proper (Lundgren, 2018). Economic High insurance costs, weak integration into global financial systems and risks stemming from political and legal uncertainties all ensure that foreign investment in de facto states is generally limited. As a result, de facto states are economically reliant on a small pool of interested external actors, namely donors, patron states and diaspora communities. For de facto states strongly reliant on a single patron – such as Transnistria or Abkhazia (around 95% of whose trade is with Russia (de Waal, 2018)) – this leads to clear patron-state dominance of national economies (and significant – if not total – influence over their politics). Likewise, South Ossetia is a sparsely populated and economically unviable statelet politically, militarily and economically maintained by Russian interests (de Waal, 2018). At the other extreme, Taiwan’s integral position in the semiconductor industry has given it a crucial role in the global political economy (Miller, 2022). Just as non-recognition does not completely prevent international development assistance, so too does it not totally cut off private financial flows. The four former Soviet de facto states have received significant remittance payments from diaspora communities (Fischer, 2016), while the Somaliland diaspora has provided over $700 million in remittances annually, compared to a 2018 annual government budget of $382 million (Kilcullen, 2019). Large-scale investment, however, remains the exception rather than the rule. One notable case of private investment is the $442 million contract signed by Dubai-based company DP World to develop Berbera port in Somaliland, alongside a $250 million deal to build a highway connecting Berbera with Ethiopia (Philips, 2020). This large international investment can be explained by Somaliland’s geopolitical importance to Ethiopia, which lacks access to the sea, and to the UAE, which is increasingly politically active in both the Horn of Africa and Yemen (ICG, 2018). Given their extremely limited prospects for ‘legitimate’ development, de facto states in many cases become hubs for illicit or illegal trade. In the so-called Donetsk and Luhansk People’s Republics, a complex criminal economy based around the smuggling of licit and illicit goods flourished between 2014 and 2022 (Galeotti and Arutunyan, 2022). Northern Cyprus has become a hub for human trafficking and the sex industry. In Transnistria, a trade in smuggling counterfeit and contraband goods has developed (with the collusion of figures in Moldova and Ukraine). One theory suggests that an agreement signed in 2012 between Tiraspol and Chisinau allowing freight traffic to pass through Transnistria was intended to facilitate the trafficking of contraband cigarettes (de Waal, 2018).