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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: 262 - (22/10/02)

The Georgian leadership under President Eduard Shevardnadze is being strongly pressurised by Russia to deal with Chechen rebels or 'terrorists,' as Moscow always terms them, who have taken refuge in the Pansiki Gorge just over the border from Chechnya. 
The belligerent noises emanating from the Kremlin are for domestic consumption first and foremost. The inability of the Russians to win a decisive victory in Chechnya is immensely irksome for the generals, conducting the conflict, and Georgia provides an obvious scapegoat.

Negotiations with the Russians and NATO
Shevardnadze is hoping to defuse tensions with Moscow in the course of talks under the umbrella of the Commonwealth of Independent States being held in October. The Russians might go so far as to make incursions themselves to flush out the Chechen fighters, but would not threaten a general invasion of Gerogia, aware that the Americans would never accept it.
Shevardnadze is inching his country as close to NATO as he can manage. He even entertains the idea that Georgia could join NATO. This would never be likely to be acceptable to Moscow, although it must be said that nearly everyone would have averred that the Baltic states joining NATO would also be unacceptable to Moscow, to which it has now lifted its objections.
Some 200 US troops are already helping the Georgians in a Train and Equip operation, with a view to flushing out 'terrorists,' including possibly some al-Qaeda elements, from the north-eastern border zones with Chechnya. Some Chechens detained at the border in August have been handed over to the Russians, but not all those 16 it apprehended then. Major David Grosso is in charge of the US operation and gets on famously with the Georgian Minister of Defence, David Tebvzadze, who like his colleagues prefers dealing with US military personnel rather than Russian ones, despite the language barrier.
The US is keen to project its might in the Caucasus for more reasons than one. Oil from the Caspian Sea is never far from consideration by Washington here.

Oil pipeline up and running via Georgia
Shevardnadze is placing great hopes on the oil pipeline from Baku transporting oil to Tbilisi and then to Ceyhan on Turkey's Mediterranean coast. He avers that the pipeline could boost GDP by 10% in its first year of operation and bring in US$63m on an annual basis in transit fees.
Collaterally, a gas pipeline is to be built from Baku to Tbilisi and then on to Erzrum in the South Caucasus, "solving Georgia's gas shortages once and for all" Shevardnadze claims. The Azeris, however, are reporting difficulties in developing gas deposits found in huge quantities at the Shah Deniz field in the Caspian Sea.
Georgia has suffered from gas shortages intermittently since independence, causing power black-outs. The inconvenience to the population is one reason for a general dissatisfaction with the way things are going. 
Shevardnadze is still seen as indispensable by most people and certainly gives the country an international profile. But what they want is actual results in the economy, not just a lot of talk about the good times to come.
Tbilisi was a regional centre for the Caucasus before 1914 and could yet become so again. With a market economy being re-created this should, indeed, eventually occur.

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ENERGY

Azeri gas pipeline project important for Georgia

Georgia is very concerned about delays in the implementation of the Sah Daniz project and the construction of the Baku-Tbilisi-Erzerum pipeline, President of the Georgian International Oil Corporation Giorgi Chanturia told journalists, Kavkasia-Press News Agency has reported. "Despite the fact that both projects are important for Georgia, the gas pipeline project is of particular significance," he said.
According to Chanturia, the implementation of the Sah Daniz project will be delayed for no more than six months. "We expect that Azerbaijan will start exporting its gas in 2005," Chanturia said. Georgia is already looking for alternative ways of importing gas and does not wish to be entirely dependent on the Russian route.
There are several options for importing gas, including one via Azerbaijan.

Tripartite oil pipeline boosts Tbilisi GDP

Georgia's gross domestic product (GDP) is expected to increase by almost 10 per cent in the event of the construction of an export oil trunk pipeline to link Baku, Tbilisi and Ceyhan. This estimate was announced by President Eduard Shevardnadze whilst addressing reporters on the republic's national radio.
Shevardnadze said that oil transit alone through this pipeline would bring Georgia US$63m on an annual basis. As reported by Interfax News Agency, he explained that this project would draw enormous investments into the country, create a wider work force and boost the country's infrastructure development. 
The pipeline's security will be guaranteed by a 36-channel satellite system that will be provided by the US-based Northrop Grumman company. Shevardnadze said that the project requires "enormous efforts linked with formidable risks, including a risk to the lives of construction workers." "Nevertheless, Georgia will benefit even more from the construction and operation of the Baku-Tbilisi-Ezrum South Caucasus gas pipeline, which will solve Georgia's problems with gas supplies once and for all," Shevardnadze was quoted as saying by Interfax. Concluding, he noted that "everyone recognises that Georgia is the key element in these projects," and stressed that his country would largely determine the smooth operation of this oil pipeline.

Georgia's gas distribution sector not to be taken over by Russia's energy giant

Russia's energy company, Itera, is not setting foot in the Georgian energy sector. This news was announced on the return of Georgian Minister of Fuel and Energy, Davit Mirtskhulava, and Deputy Minister of State, Giorgi Isakadze, from Moscow, Georgian Radio has reported. No agreement on investments has been reached in formal negotiations with the Itera management, they said.
At the current stage, a Russian-Georgian joint venture will not be established. The Georgian state remains the 100 per cent owner of the gas distribution company Tbilgazi shares.

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ENVIRONMENT

Britain to help build waste processing plant in Georgia

British specialists will deliver equipment and machinery for the waste processing plant in Rustavi, southeast of Tbilisi, in early October, Iprinda News Agency has reported.
The plant will be built under the World Bank programme. The British will also select the location for the plant. Construction and assembly should be finished by the end of this year.

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FOREIGN LOANS & AID

Georgian foreign minister plays down concern over EU aid cut

Georgian Foreign Minister, Irakli Menagharishvili, has described as "baseless" Georgia's concern about the possible discontinuation of EU assistance to Georgia, Kavkasia-Press News Agency has reported. 
Menagharishvili told Kavkasia-Press that, indeed, serious concern had been expressed at a Georgia-European Commission meeting in Brussels in connection with British banker, Peter Shaw's, abduction. However, that was natural, he said. 
"No ultimatum has been issued to us and I would like to say that EU programmes will still continue in Georgia in the future," he said. 
Despite everything, the law-enforcement bodies should spare no efforts to free Peter Shaw, Menagharishvili said. He said that if the situation improved, the EU might even revise the extent of cooperation with Tbilisi. 
"However, no specific decision has yet been made in this connection," he said.

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