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Update No: 255

Georgia has suddenly sprung to the fore of world politics. The Georgians and the Americans have entered into a military alliance. The US has sent 10 helicopters and other equipment, plus 200 Special Force troops to train and assist the Georgians in anti-terrorist operations. There are thought to be a number of al-Qaeda members who have fled from Afghanistan and sought refuge in the Pankisi Gorge in the north-east of Georgia. The gorge has long been suspected by the Russians of harbouring Chechen fighters. 
The Russians, who have four military bases in Georgia and view it as very much in their 'sphere of influence,' were naturally at first highly distressed. But there is little they can do about it. Putin realised this quicker than his top brass, chastened by his experience in September last when he at first urged the Central Asians not to allow the Americans in, only to find that they fully intended to and there was nothing he could do about it.
The new US move into Georgia needs to be seen in a wider context. It certainly portends a re-alignment of power away from Russia and towards the US within the former's own sphere of influence. It is the decisive moment at which the Central Asian states and now the Caucasus ones are attaining and showing their independence. Rumsfeld visited Armenia in December. The US is diplomatically speaking of all this activity as temporary to help Putin with his hardliners, but in private officials admit it is for the long term. The Caucasus is important of course for its energy and Georgia as a transit route for Caspian Sea oil to world markets independent of Russia.
The president since 1992 has been the wily old fox, Eduard Shevardnadze, Gorbachev's right hand man as foreign minister until he resigned, warning of a coming coup, in December 1990. Everybody in Georgia knows and respects him as a sharp operator, who has the added advantage of an international profile. He is right behind the new teaming up with the US. He puts Georgia on the map
He is keen for Georgia to lessen its dependence on Russian energy. In January he proposed that Georgia become a pivot of a common energy system for south-east Europe. The system "should be formed with the participation of Russia, Ukraine, the Balkan countries, Azerbaijan, Turkey, Armenia, Moldova and other more distant countries," he says. "Georgia will gain a lot if it initiates the common energy system." Georgia's role would be to be the country across which energy pipelines would flow from the Caspian Sea to world markets. This bold conception is already being partly implemented, with an oil pipeline from Baku to Supsa on Georgia's Black Sea coast for the AOIC consortium in the Azeri sector of the Caspian Sea.
But it faces a rival in Russia and its desire to see Caspian Sea energy flow to Russian Black Sea ports or across the expanse of the Russian Federation to Europe. 
Shevardnadze's vision tends to the grandiose, as befits someone who bestrode a great stage at the height of his power when the USSR was still indisputably No 2 to the US. Georgia is small beer by comparison. But at least he is in power. 
However, at just turned 74 he cannot be expected to remain so for very much longer. The succession issue is one that everyone is conscious of in Georgia.
The republic had a crisis in October last year when the government tried to close down an independent TV station. People took to the streets, demanding and obtaining several ministerial resignations.
Shevardnadze reacted with dispatch, removing the offending ministers and creating the office of prime minister. Another major figure, Zurab Zhvania, the parliamentary speaker, resigned in November, but not in disgrace. He has founded with the ex-justice minister, Mikhail Sashashisbi, the National Movement, which could become a political party, Zhvania is a young reformer and clearly a candidate for the presidency sooner or later.
Another big figure is Miko Lekichvili, who left the State Minister's office in 1998. He must be the favourite to succeed, being the leader of the 'red directors' and new businessmen. He is free from the besetting vice of Georgian politicians, the charge of corruption. But he is not averse to those who are so charged, giving him considerable leverage over them. Another big figure is the Ombudsman, Nena Deviarian, a leader of the Socialist Party. Elections for the presidency are not on, however, until 2004.
The Georgian economy is picking up, GDP grew by 10% in 2000 and 4.5% last year, while inflation in 2001 came in at 3.3%, well under a 6% target for the year. But growth is from a very low base, due to the debilitating effects of two ethnic conflicts, one of which is still rumbling in Abkhazia, the north-western province.
A UN initiative, backed by Russia, might break the Abkhaz logjam It declares Abkhazia to be part of Georgia and calls for the return of 150,000 refugees. The support of Russia is the key, now opposed to the independence, which the Abkhaz declared in 1999, in which they were significant players, obviously mindful of the parallel with Chechnya.

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ENERGY

US energy company reviewing its involvement in Georgia

The board of directors of the US company, AES, met on 5th March to decide on the company's future presence in Georgia Prime-News News Agency has reported
The head of the public relations department of AES Telasi [AES-owned electricity distribution company for Tbilisi], Tina Stambolishvili, told Prime-News that the meeting was prompted by the high losses AES has been suffering in Georgia, which last year amounted to US$57m.
AES entered the Georgian market in 1999 when it paid US$25m for 75 per cent of shares in Telasi, the electricity distribution company for Tbilisi. It later acquired 75 per cent of shares in the 9th and 10th units of Tbilsresi power station, each having a capacity of 300 MW. AES paid US$5m in that transaction and undertook to pay off the station's US$85m debt.
In addition, AES acquired management rights for 75 per cent of shares in the Khrami-1 and Khrami-2 hydroelectric power stations.

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FOREIGN ECONOMIC RELATIONS

Belarus, Georgia sign transport agreement

Belarus and Georgia have signed an agreement on international transport communications. According to Belarusian Minister of Transport Mikhail Baravy, Belarus is interested in access to the Black Sea ports. For its part, Georgia is also interested in a transport corridor via Belarus to Europe, Belarusian Television has reported.
Belarusian Minister of Transport and Communications Mikhail Baravy, in Russian Georgia has created a fairly good transport infrastructure. Huge amounts have been invested into the construction of ports, which allows us delivery of goods from Europe to the port of Poti and further to the port of Baku. This opens up opportunities for other states' transport markets, to Afghanistan, Iran, China, Turkey, and so on.
For its part, Belarus also interests Georgian transport companies as a transit country.
Georgian First Deputy Minister of Transport and Communications, Giorgi Nizharadze, said: "We are talking in fact about bringing together all the transport corridors that currently operate independently. For us, it is the Trans-European-Caucasus-Asian transport corridor and the North-South direction where Belarus operates."

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