All forms of capital represent assets of various kinds yielding streams of benefit." (Uphoff, 2000)"Social capital is recognized as 'glue' that holds communities together."

The conflict, which took place between the Ossetian and Ingush ethnic groups, had severe political consequences. The process of reconciliation has been ongoing for over two decades, but the results are still questionable. The Russian federation played a decisive role in the processes. The authorities of the Russian Federation mistreated the Ingush and supported the Ossetians; this condition encouraged the conflict and served as an obstacle in mediating the dialogue. The article examines the scale and effectiveness of intergovernmental agreements by analyzing the relations between the Ossetian, Ingushetian and Russian authorities. The research proposes a general set of political factors that have been shaping the societal attitudes of the conflicting parties. The work attempted to some key reasons which determined the Kremlin’s position(s) in the conflict and reconciliation.

Russia has always been active militarily; however, the current regime attempts to combine hard power with soft power tools. Russian-Georgian relations are wrought with tensions and clashes. The Western-oriented foreign policy of the latter causes worries in the Kremlin. Although the Russian federation has a strong standing in the Caucasus region, prominently due to its military presence there, the smart power policy is enacted to gain long lasting legitimacy. The mediums, such as pro-Russian non-governmental organizations, cultural intelligentsia and the Church clergy, promote the notion of a common culture and shared values. This promotion is usually accompanied by negative narratives directed towards the liberal West.

The European context of cooperation across borders demonstrates how it engages all stakeholders from a variety of territorial levels in an intensive, collaborative dialog. This approach makes bordering regions more resilient to current and predictable threats, and is largely focused on the practical problem-solving of local needs. Regardless of the (non)material benefits the European cross-border perspective provides, the situation remains very different in the Azerbaijan-Georgia cross-border reality, where the traditional understanding of borders continues to prevail. A field inquiry has shown that territorial local communities have not had a homogenous attitude towards the borderline and their neighbors, and that local municipalities lack the power and credibility to deal with local challenges autonomously. Unlike the European CBC, this cross-border context does not include the elements of bottom-up cross-border planning and locally institutionalized forms of collaboration.