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ethnic groups 
Georgians 68.8%
Armenians 9% 
Russians 7.4%



Eduard Shevardnadze


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Georgia was absorbed into the Russian Empire in the 19th century. Independent for three years (1918-1921) following the Russian revolution, it was forcibly incorporated into the USSR until the Soviet Union dissolved in 1991. Russian troops remain garrisoned at four military bases and as peacekeepers in the separatist regions of Abkhazia and South Ossetia (but are scheduled to withdraw from two of the bases by July 2001). Despite a badly degraded transportation network - brought on by ethnic conflict, criminal activities, and fuel shortages - the country continues to move toward a market economy and greater integration with Western institutions. 

Update No: 263 - (26/11/02)

On October 22nd the Georgian authorities confirmed what had been suspected for some time. They had seized various Arab al-Qaeda fighters in the Pankisi Gorge, just south of Chechnya and now have handed them over to the US.

Tilt to Washington away from Moscow
The Russian authorities are not best pleased. They have been saying for months that the Pankisi Gorge was home to terrorists from Chechnya, whom they want handed over to them. The intrusion of the US in their former backyard in Central Asia is galling enough. Now Georgia is slipping out of their sights and hence, they fear, the whole Caucasus with which the Russians have long had a love affair, understandably since the Black Sea coast there is the best bit of real estate in the entire FSU.
Moscow still has military bases in Georgia. But it is not being asked for co-operation in the same manner as Washington. The US has sent 200 special advisers, along with 10 helicopters and other military hardware, in a Train and Equip operation to combat the terrorists.
Tbilisi has in act, handed over to Russia a number of Chechen rebel fighters whom they have captured in the last few months, although not all of them. The al-Qaeda captives are being extradited to the US. 
Georgia is now a frontline state in the US's campaign against terrorism, which is a major geopolitical development not only for itself, but for the whole of the region and for Russia. With Georgia also the key transit country for oil and gas from the Caspian Sea its importance in world affairs is decidedly growing.

The al-Qaeda menace
The al-Qaeda fighters apprehended by Georgia include one believed to be a senior operative with previous links to Osama bin Laden himself. They were detained during dawn raids in the past two months inside the Pankisi Gorge. The prisoners are now thought to be in the US military prison at Guantanamo Bay, Cuba.
Two of them are middle-ranking al-Qaeda operatives; but one is Saif al Islam el Masry, a member of al Qaeda's high council, the Shura.
The links between al-Qaeda and the Chechens have been suspected for a long time. The Hamburg connection has led in recent German court cases to revelations that Arab and other sympathisers with al-Qaeda were being trained in bases near Kandahar, close to one of Osama bin Laden's haunts, in 2000 and early 2001 with the intention of their going to help the Chechen cause. Some were redirected in mid-2001 to more pressing anti-US activities, including 9:11.
Naturally the Georgian and US authorities are concerned about their appearance in Pankisi, as indeed are the Russians. The coalescence of Islamicist fighters prepared to use terror to pursue their ends is undoubtedly occurring, even if their goals are widely divergent, hurting the US and its interests in the one case, repelling Russia from Chechnya in the other.
The Georgian authorities alleged recently that Arab detainees in Pankisi had been plotting chemical attacks on Westerners in Central Asia, primarily Americans, and similar acts against them in Russia. Official concern from the US is at fever pitch.
Khakha Imnadze, the spokesman for the Georgian president, Eduard Shevardnadze, was quoted by the Washington Post as confirming that several extraditions had taken place. He also conceded to the UK newspaper, the Guardian, that US and Georgian relations were "good enough that the extraditions could have occurred." If Iraq, Iran and North Korea are partners in 'an axis of evil' Washington and Tbilisi are in their own eyes in "an axis of good."

The fury of Moscow 
The extraditions have exacerbated already fraught relations with Moscow, which has increasingly accused Tbilisi of inaction against "terrorists" who cross from Georgia into Chechnya to carry out raids. The Russians, according to Georgia and the US, have been carrying out air raids of their own in Pankisi, killing a civilian in August, a claim the Kremlin denied. But at the acme of concern over a new UN resolution against Iraq last month, Putin wrote to the UN to state that Russia reserved the right to invade Georgian territory in pursuit of terrorists.
While it is unclear whether the captives extradited to the US have also been sought by Russia, the Georgian decision to give suspects from the unstable region surrounding Chechnya to the US is certain to infuriate the Kremlin.
A senior official of the Russian federal security services, the FSB, said that another member of al-Qaeda's Shura was in Chechnya. He is Abu Omar as-Sayf and represents the organisation al-Haramein, which the US has blacklisted for its links to al-Qaeda. "It is through him that today the financing of the Chechen fighters is exercised," the FSB claimed, adding that as-Sayf works with "Afghan Arabs" linked to al-Qaeda.

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EBRD denies final decision to invest in Caucasus oil pipeline project

The European Bank for Reconstruction and Development (EBRD) has denied Georgia's assertion that it has made its final decision to participate in the funding of the Baku-Tbilisi-Ceyhan oil pipeline project.
The decision on investment in this project has not been made so far, an EBRD spokesman told an ITAR-TASS News Agency correspondent in London. He said that a loan for the oil pipeline project, which is to link Azerbaijan, Georgia and Turkey, was only being "considered."
Georgian President Eduard Shevardnadze spoke of the EBRD's intention to invest in the pipeline as of an accomplished fact in a radio interview on 4th November. He said this "gives a guarantee" of financial reliability of the project.
However, the EBRD spokesman said the financing of the pipeline project has been "considered since last year" and a positive decision was not in sight earlier than at the beginning of 2002.
The EBRD statement appeared amid growing scepticism among the project's participants about its prospects. Russia's LUKoil company, Italy's Agip, American Chevron Texaco corporation and Turkish TPAO are reportedly going to quit the endeavour.

Georgia concerned about Transcaucasian pipeline's impact on ecology

To make the final assessment of the possible impact of the Baku-Tbilisi-Ceyhan oil pipeline on the environment, the Georgian State Ecological Inspection has requested additional information from the Baku-Tbilisi-Ceyhan oil pipeline operating company, British Petroleum, Georgian Radio has reported. 
According to the Georgian minister of environmental protection and natural resources, the ecological examination of the project will continue for another month. Along with Georgian specialists, representatives of the International Development Agency of the United States of America, the World Bank, the European Bank for Reconstruction and Development and the German government, as well as specialists from the Netherlands Ministry of Housing, Spatial Planning and Environment, are taking part in the expert assessment of the project.
French experts on ecology and hydrogeology have already submitted their negative conclusion to the Georgian Ministry of Environmental Protection and Natural Resources. According to their conclusion, the Baku-Tbilisi-Ceyhan oil pipeline will have a negative ecological impact not only on the mineral water resources of the Borjomi Gorge [south-central Georgia] but also the Borjomi-Kharagauli National Park. 
Minister Nino Chkhobadze has said that the Georgian State Ecological Inspection will base its work on the conclusion drawn by the French experts.

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World Bank's SAC-3 US$20m tranche to Tbilisi

Georgia has received a tranche of a structural adjustment credit (SAC-3) from the World Bank totalling US$19.5m, Finance Minister, Mirian Gogiashvili, was quoted as saying by Interfax News Agency.
The funds were received by the Treasury department and will be used to cover the country's budget deficit, which totalled around 83m lari in the first nine months. The money will cover the deficit by almost 50 per cent. The minister hoped the government would be able to find funds to cover the rest of the deficit before the end of the year. The loan is allocated for 35 years with a 10-year grace period at 0.75 per cent annually.

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