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georgia

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  GEORGIA

REPUBLICAN REFERENCE

Area (sq.km)
69,700

Population
4,989,285

Principal
ethnic groups

Georgians 68.8%
Armenians 9%
Russians 7.4%

Capital
Tbilisi

Currency
Lari

President
Eduard Shevardnadze

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Background:
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: 256 - (23/04/02)

The Georgian president, Eduard Shevardnadze, is ambitious for his country and makes a point of boxing above its weight for it in foreign affairs.
He dramatically did just that the other day when he agreed to in effect, a military alliance with the US. For reasons of location Georgia is playing a key role in the post-9:11 anti-terror campaign.

New US military alliance.
Indeed some al-Qaeda fighters are thought to have holed up in the Pankisi Gorge in north-eastern Georgia. The US are sending military equipment, 10 helicopters and 2000 special force troops to help flush them out. 
Putin made no protest about this encroachment on its preserve, as the Russian military still see Georgia. Hardliners among them tried to assassinate Shevardandze several years ago. It is now clear why from their point of view.

The EU beckons
Shevardnadze visited Germany and Belgium recently, where he pressed the case for EU entry for Georgia some time soon. This is a rather optimistic idea, not really practicable for years. Indeed, it is as starry-eyed as his notion of NATO membership too.

Succession problems
At 74 he is unlikely to be in power when either happens. The question of succession to him is a live issue.
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 apparently 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 due, 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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AVIATION

Turkmen Su-25 comes for repairs in Tbilisi

Six Su-25 attack jets from Turkmenistan will be shipped to Georgia shortly, New Europe has reported. The Tbilaviamsheni aviation plant plans to finish their repairs by the end of the third quarter.
The shipment will cost US$50,000, chairman of the Supervisory Board, Vazha Tordia, was quoted as saying by Sarke daily. Throughout the year, the plant intends to carry out the work worth US$26m for Turkmenistan.
The sum will repay part of Georgia's debt to Turkmenistan. "In addition," Tordia said, "the plant has concluded deals with two more countries to supply them with goods worth US$50m."
While commenting on a development outlook for Tbilaviamsheni, the head of the plant did not hide his interest in the privatisation of the enterprise, the controlling interest of which belongs to the state.

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ENERGY

Georgian president urges tax breaks for investors in energy sector

At a government meeting on 10th April, Georgian President Eduard Shevardnadze instructed Minister of State, Avtandil Jorbenadze, and heads of appropriate agencies to prepare a draft law within a week that "exempts investors from all taxes" during the construction of energy generation facilities and the first few years of their operation, the Georgian news agency, Prime-News has reported.
The president issued his instruction following a report at the government meeting by State Property Management Minister, Solomon Pavliashvili, who asserted that because of a poor investment environment, foreign companies were reluctant to invest in Georgia and buy state-owned facilities that were up for sale.
Shevardnadze told the meeting that tax breaks should apply particularly to new hydroelectric power stations. This, he believes, would allow the country to become an importer of electricity in a few years' time.

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FINANCIAL NEWS

EBRD strategy to Tbilisi behind closed doors

The Investment Council of Georgia was recently briefed on the European Bank for Development and Reconstruction (EBRD) strategy for the next two years, approved by the Board of Directors on March 26th. As cited by the Sarke daily, the report, containing the assessment of the Georgian economy as well, was made behind closed doors. Reportedly, the EBRD activity much depends on the investment climate in the country. The EBRD intends to focus on such spheres as a private sector, power and energy, transport banking system and communications.
Among already confirmed projects, of which implementation will continue in the next few years, were named the rehabilitation of EnuriHES, modernisation of AES TELASI, rehabilitation of Tbilisi airport, contribution to the development of the South Caucasian railway, credit lines to commercial banks for financing small and medium business and others.

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TRANSPORT

Turkish-Georgian railway project

Georgia's State Minister, Avtandil Jorbenadze and his Turkish counterpart, Mehmet Kecejileri, who was on a recent visit to Tbilisi, had a thorough discussion regarding the construction of a railway that is supposed to link Turkish Kars with Georgian Akhalkalaki, as a component of the Great Silk Road project. The Turkish minister was quoted by the Georgian Prime News Agency, as saying that the construction of the railway will significantly raise the competitiveness of cargo transport not only for the Great Silk Road but also for the wider Eurasian region. Kecejileri disclosed that China had been taking a strong interest in the project.
The Georgian minister confirmed his country's readiness to step up activity in that direction. The plan is, however, perceived by many political analysts in Armenia as the latest attempt to isolate Armenia by bypassing the more direct and commercially cheaper route from the Georgian capital, Tbilisi, to the northern Armenian city of Gyumri and on to Kars.

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