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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: 269 - (29/05/03)

US alliance against terrorism to the fore 
The recent spate of terrorist outrages across the Muslim world from Saudi Arabia to Morocco has given Georgia's alliance with the US new salience. It is not a Muslim country of course unlike Abkhazia. But it is confronting Islamic terrorists all the same. Some 200 US Special Forces are training Georgian troops in anti-terrorism operations, giving them 10 helicopters and other equipment to root out al-Qaeda and other elements lurking in the Pankisi Gorge in north-eastern Georgia just below Chechnya. A Chechen-al Qaeda link up has been established in the gorge, according to US sources.
This is all building up to a bid by Georgia to join NATO, which Secretary-General Lord Robertson, has spoken of favourably.

NATO backs Georgia accession bid
NATO will provide maximum assistance to Georgia in its bid to join the alliance, Robertson said at a recent meeting with Georgian Foreign Minister, Irakly Menagarishvili, in Brussels. Robertson positively assessed the establishment of Georgia's Coordination Council for Integration into the Euro-Atlantic structures headed by Georgian President Eduard Shevardnadze. 
During a recent meeting between Menagarishvili and the Vilnius Ten group (V10) of countries, the V10 members supported Georgia's bid for NATO membership and promised to share their experience in cooperation with the alliance. The countries intend to promote Georgia's interests in Brussels and Euro-Atlantic organisations.

Economy is shaping up
The economic situation has long been dire for many Georgians, especially those who are refugees from the northern province, Abkazia, now effectively independent of Georgia. The government is doing what it can to revive the old market economy of the country, which was spared the worst of Stalinist mismanagement; Stalin was after all himself a Georgian.

IMF mission welcomes 2002 development in Georgia
An IMF mission recently ended its visit to Georgia, during which the country's macroeconomic developments for last year were valued as "broadly encouraging." The IMF report also noted that revenue collection was strong in 2002, although "fiscal pressures persisted due to delays in the transfer of revenue to the central government by the autonomous republic of Adjara". Moreover, "new fiscal pressures have emerged in early 2003, associated primarily with higher spending appropriations, differences in the estimates of privatisation receipts, and weak revenue performance in the first two months of this year", the report further noted. 
The pressures were increased by the recent decision to lower electricity tariffs. The plan to increase minimum wages to USD 53 would likewise "substantially" worsen the situation. However, the mission has proposed a set of corrective actions to safeguard macroeconomic stability and reforms.

Coming self-sufficiency in oil and more Azeri gas
The Georgians may soon be self-sufficient in oil. The US company, Anadarko, has conducted research in the Georgian sector of the Black Sea, with promising results. There have seen several discoveries of oil and gas deposits, with 7 or 8 foreign companies working in Georgia.
The Georgian leader said that the Anadarko representatives "are convinced that there are rich deposits of oil and gas in the Georgian sector of the Black Sea and that with the use of modern technology their extraction is totally possible."
Shevardnadze noted that the southern gas pipeline corridor has entered the practical implementation state and in two to three years Georgia will receive a very serious source of natural gas.
The president noted that according to agreements, Georgia would receive five per cent of the Azeri gas transported through the pipeline to the world market. "This is more than 1.5bn cubic metres of gas per annum," he said, adding that if necessary Georgia would be able to buy extra gas at a reduced price. Georgia produced 73,900 tonnes of oil and 13.4m cubic metres of gas in 2002.

Power black-out in Baku
Any coming self-sufficiency in oil and more Azeri gas would be most welcome. On March 30th the capital city suffered a complete black-out of electricity. Shevardnadze blamed the event on sabotage. He may be right. An explosion occurred on the Kavkasioni, transmission line, on which the city's energy needs mainly depend. 
At independence twelve years ago a plan to build a hydroelectric power station was shelved. That was in the days of Zoiad Gamsakhurdia, who was ousted in 1992, his successor being Shevardnadze. His followers, Zviadists, as they are called have never reconciled themselves to Shevardnadze's presidency. It is possible that some of them, nine years after Gamsakhurdia's death, are still active in pockets of Georgia.
Alternatively, rogue elements in the Russian security forces have long gunned literally for the removal of Shevardnadze, including two spectacular assassination attempts. His latest moves towards NATO are black treason to such forces in an ex-politburo member. If Georgia does join NATO, it is not going to be just another member, but a potentially explosive one, moreover right next to Chechnya. Brussels NATO planners may become prone to second thoughts on this matter. But Shevardnadze cannot hold power indefinitely. Apart from his age, the people generally are heartily sick of him, his international reputation notwithstanding. After so many years of waiting to see some benefit from a market economy there is hunger for change at the top. 

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ENERGY

Georgia may be self sufficient in oil soon


It is expected that in a few years Georgia might be able to meet its own oil requirements, local radio quoted the Georgian President Eduard Shevardnadze as saying recently. He said that management from US company, Anadarko, had informed him of the result of research in the Georgian sector of the Black Sea, which confirms the possibility of oil and gas fields.
The president noted that at the moment there are seven or eight foreign oil companies working in Georgia, including US company Frontera and Canada's Canargo, which are not only involved in exploration, but in production also. He noted in particular that Canargo recently used directional drilling to restore an old well at the Ninotsminda field and is currently producing 170 tonnes of oil per day there.
Shevardnadze expressed certainty that positive results would be received in the near future at the Dedoplistskaro, Taribana. "Today almost nobody doubts that Georgia has quite large oil and gas resources," he said.

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FINANCIAL NEWS

Georgia on track for economic recovery, but progress slow 

World Bank Vice President [for Europe and Central Asia] Johannes Linn, has blamed Georgia's inter-party disputes and lack of coordination between ministries for the country's slow economic progress, Interfax News Agency has reported.
Wrapping up his two-day visit to Tbilisi, Linn noted that the Georgian government and parliament will have a long way to go to take full advantage of the country's potential.
During his trip, Linn familiarized himself with implementation of a number of World Bank projects, and held meetings with President Eduard Shevardnadze, Minister of State, Avtandil Jorbenadze and parliamentary speaker, Nino Burjanadze.
Linn said that despite all of its woes, the Georgian economy is firmly on track to recovery.
He noted that his meetings with the country's high-ranking officials were dominated by discussions of a new World Bank strategy to provide Georgia with financial assistance. Linn said that another US$200m can be added to the planned US$700m in long-term credits and investments that are expected to arrive in Georgia over the next three years. Linn also attached great importance to Georgia's national poverty reduction and growth facility programme, which will be submitted to the boards of directors of the World Bank and the International Monetary Fund by September.

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FOREIGN INVESTMENT

Foreign investors express interest in Georgian company

Eight foreign companies have expressed an interest in participating in the bidding process for the right to manage United Energy Distribution of Georgia, according to Interfax News Agency. This will be based on the regional grid companies in the republic, New Europe has reported quoting Deputy State Property Minister Geno Malazonia.
The ministry announced the initial range of candidates earlier this year. The World Bank received information on all eight companies and will plan the bidding. The World Bank will help to select the companies, specifically focussing on who would be the strongest and most appropriate among them. Georgia has appealed to the International Development Association, the German bank Kfw and the World Bank with a request for help to re-establish the country's power grid. The total planned amount of credit from the international organisations will be about US$60m; the winner of the bid should use this amount over a five-year period to manage the company.
In that time frame, it will have to become more effective by improving the calculation of the amount of electricity supplied to consumer and increasing the level of payments.
Eight regional grid companies: Imerti, Guria, Ssmegrel-Semo Svanti, Racha-Lechkhumi, Shida Kartli, Kvemo Kartli, Mtskheta-Mtianeti and Samtskhe-Dzhavakheti were the basis for the founding of the United Energy Distribution Company, carried out in March 2002. 

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