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: 270 - (26/06/03)
The strongman of Tbilisi
The leader of Georgia, Eduard Shevardnadze, is one of the most intelligent politicians in the world, perhaps the most astute of them all. He foresaw the August 1991 coup in the USSR, resigning as Soviet Foreign Minister in December 1990, with a warning to Gorbachev of what was to come.
He positioned himself well to take over the presidency of Georgia in 1992, a job he had held before Gorbachev in Brezhnev's time, before which he was head of the Georgian KGB. But he realised that the USSR was doomed and that his compatriots wanted nothing so much as complete independence.
From being an accomplice of the KGB, indeed its chief operative in the Caucasus, he has become one of its most inveterate foes, that is the eternal KGB which has survived its official disbandment, and is now split between Russia's Federal Security Service, concerned with domestic matters, and various foreign intelligence agencies. They have several times tried to kill him; but he, like them, still survives.
Shevardnadze understood immediately that 9:11 was the decisive event which could enable him to detach Georgia permanently from Moscow's clutches. Russia had five military bases in Georgia, which are being run down. But the Russians still regard it as their patch, indeed as the best part of the former Soviet sphere, which it is.
Fortunately for Shevardnadze, several al-Qaeda fugitives seemed to have holed up in the Pankisi Gorge in the north east of the country. The US thought so and were called in to combat 'terrorism.' The Americans have 200 Rangers as special advisers. Georgia is now in the American camp and even asking to be admitted to NATO, a long shot.
Georgian airfields are now used to sustain the Western effort in Afghanistan. So even are the railroads. Both are now being used to prosecute the post-war pacification of Iraq.
The Georgian authorities are now confident enough to announce their disbelief in the idea that al-Qaeda types are holed up in the Pankisi Gorge, the reason d'etre of their new line. Georgia knows that it belongs to the West, where perhaps the truth counts.
Georgian president unhappy about ban on foreign airlines
At a government meeting on 11th June, President Eduard Shevardnadze expressed displeasure at the sanctions imposed on the Turkish and British airlines - Turkish Airlines and British [Mediterranean] Airways - by Georgian government agencies, which led to the suspension of operations by these companies in Georgia, Prime-News News Agency has reported.
The aviation department of the Transport and Communications Ministry withdrew the operating licences of these airlines, accusing them of not paying enough taxes and breaking the principle of parity with Georgian airlines in air services.
At the government meeting, Shevardnadze asked the aviation and tax departments as well as Georgian airlines "to look into their positions."
He categorically demanded that it be established why the intergovernmental agreement on air services which was signed with Turkey in 1993 still has not been ratified by parliament. He said that the payment of the tax debts owed by the two companies would "not make Georgia rich." Even British Prime Minister Tony Blair has taken an interest in the problems British Airways has encountered in Georgia, Shevardnadze said.
The tax department wants Turkish Airlines and British Airways to pay 17m lari and 13m lari, respectively, in tax arrears. The financial disputes are currently being examined by the Supreme Court. Meanwhile, the airlines do not acknowledge these claims because, as they explain, the tax breaks were envisaged by bilateral agreements they signed with the Georgian side. The tax department, for its part, does not recognize these tax breaks because, according to the department, they could only come into force after the ratification of the relevant agreements by parliament.
After the government meeting, Transport and Communications Minister, Merab Adeishvili, told journalists that Turkish Airlines had received a document from the Foreign Ministry saying that the relevant agreement would come into force without ratification. The main complaint his ministry has with the Turks is the violation of the parity principle.
Russia's gas giant proposes joint venture to Georgia
Gazprom head, Aleksey Miller, made a one-day visit to Georgia at the end of May. He met the country's president, Eduard Shevardnadze. The main topic of the talks was "strategic cooperation between Russia and Georgia in the energy field." Shevardnadze told journalists that alongside the construction of the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines Georgia is interested in developing the North-South line, 'Kommersant' has reported.
One segment of this line could be the joint Russia-Georgian venture Gruzrosgazprom, whose creation is planned on a parity basis. It is planned to transfer to this enterprise the gas pipelines linking Georgia's cities and regions with the main pipeline. The gas distribution networks of the population centres will remain in the possession of local companies.
Russia is interested in this project primarily to secure the unimpeded delivery of gas to Armenia - Russia's only strategic ally in the Transcaucasian region. The problem is that the Russia-Georgia-Armenia strategic gas pipeline is in a catastrophic state: unless at least US$200m is invested in its restoration, in just two to three years the gas pipeline will be unfit for operation.
Gazprom has long been asking Georgia to resolve this issue. It is prepared to put in 5bn cu. m. of gas a year as its contribution and to channel the sum earned into rehabilitating the gas distribution network. In addition, with the creation of the joint venture Georgia will have the opportunity to buy fuel from Gazprom at a lower price than it is now paying for gas from the Itera company (US$60 for 1,000 cu. m.).
Speaker urges IMF not to stop work in Georgia
Georgian Parliament Speaker, Nino Burjanadze, who made an official visit to the USA, met the management of the International Monetary Fund [IMF]. At the meeting, she expressed the hope that the financial organization would not stop implementing its programmes in Georgia as this would have serious consequences for the country, Prime-News News Agency has reported.
Nino Burjanadze was speaking at a meeting on 10th June with the IMF's managing director, Hurst Kohler, the head of the Fund's [second] European Department, John Odling-Smee, and the head of this organization's mission [to Tbilisi], Paolo Neuhaus.
Hurst Kohler noted at the meeting that the issue would be solved after 24th June after a visit by IMF officials to Tbilisi. He said that Georgia was lagging behind most of the CIS member countries in terms of several economic indicators.
He expressed regret about another sequestration of the 2003 Georgian state budget. He said that this would not have happened if from the very beginning the budget had taken into account the realities.
Kohler expressed the hope that Nino Burjanadze would be able to achieve a consensus between the authorities and the opposition on the issue of the electoral code.
John Odling-Smee expressed regret that the investment climate had worsened in Georgia which would create problems for the country in future.
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