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GEORGIA



 
Key Economic Data
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 3,324 3,100 3,000 124
         
GNI per capita
 US $ 650 590 590 151
Ranking is given out of 208 nations - (data from the World Bank)

Books on Georgia

REPUBLICAN REFERENCE

Area (sq.km)
69,700 

Population 
4,934,413 

Principal 
ethnic groups 
Georgians 68.8%
Armenians 9% 
Russians 7.4%

Capital 
Tbilisi 

Currency 
Lari

President (acting)
Nino Burdzhanadze

  

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 three military bases and as "peacekeepers" in the separatist regions of Abkhazia and South Ossetia.  They also have a base in Batumi in Adjania, the latest defector from Tbilisi's control. 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. But Russia has skilfully manipulated the situation so that it could, if it chose to do so, rapidly make Georgia totally ungovernable.  In effect therefore, Russia now has ultimate sanction over Kazak and Caspian oil flowing through to western markets by pipeline and by Black Sea tankers.

Update No: 279 - (23/03/04)

The Georgians are an ancient people, long settled in the Caucasus. Indeed, their country was once Colchis, the fabled land of the Golden Fleece, discovered by Jason and his Greek mariners on their argonauts.
They have a new Jason from the West in Mikhail Saakashvili, the leader of the Rose Revolution in November and now president after a resounding over-90% landslide victory in January. He was educated in Ivy League universities in the US and has a highly pro-Western approach, as do his followers. The metaphorical Golden Fleece today is to make over Georgia as a Western country, a daunting task.

The name of the Rose
The great thing about the Rose Revolution is that so far it has been peaceful. Nobody has yet been killed. Tbilisi has been burnt down forty times in its history. When Zviad Gamsakhurdia, the president at independence, was ousted in 1992 there was multiple civil war raging in the country. Eduard Shevardnadze survived two attempts to assassinate him, one very narrowly.
When Saakashvili and his followers burst into parliament in November, he was wearing a flak jacket under his coat, but it was a red rose, not an AK-47 that he brandished in front of him. Hence the name of the revolution. Shevardnadze could have used gunmen to stop him, but chose not to. Georgia is growing up.
But the dangers from the other enemies of the revolution are far from over. The great thieves, who have rifled state revenues for years, many of them with armed gangs to call upon, still abound. 

Problems aplenty
The truth is that Georgia is a failed state, of which there are several in the former communist world. The state has no territorial integrity, three provinces being in effect independent, or at the least clients of Moscow with Russia able to call the shots, quite literally in all three. The first, Abkhazia, is in effect totally independent under Moscow's protection, having broken away in the 1989-93 civil war. The South Ossetians are in like case. The third, Adjaria, has a Russian military base in its capital, Batumi. Its dictatorial President Abashkidze was in Moscow recently to obtain the Kremlin's guarantee of a large measure of autonomy, in return for which he will do Moscow's bidding. The rose revolution will not be sustained unless there is an economic recovery and that can only come if Georgia is able to open trade links through the secessionist provinces of Abkhazia and Adjaria, that control the main trade routes into Russia and Turkey. Russia is here the key and can be expected to demand a measure of realty in return. 
This stranglehold is complemented by Russia's dominance over Georgia's energy supplies, Russia can turn the lights off - and the heating - any time it wants. Saakashvili wisely made his first port of call abroad Moscow. Says Saakashvili: "Without finding common language with Russia, it's not possible for Georgia to develop." He will have to tread a very narrow path between Russia and the West.

The fight against crime and corruption in earnest
Georgia has its own oligarchs like Russia. Nearly all acquired their money in highly dubious ways. They congregate in such places as Bakuriani, the ski resort, and had the temerity and, indeed, foolhardiness to be doing so in the Christmas and New Year period on the eve of the presidential election on January 4th. The conspicuous consumption of the super-rich may now boomerang upon them. For they are engaging in it in a republic that is now a democracy where 54% of the 4.5 million population live below the poverty line and where the elderly receive pensions of $6 per month. Professors earn $15 per month. Georgia is a desperately poor country, even if GDP did surge 8.6% in 2003.
Well aware that revulsion against the vast disparities of wealth has fuelled discontent, the interim government before January 4th had already set to work to root out the most flagrant examples of ill-gotten gains. Saakashvili had announced his immediate objectives: "We must arrest the people who created this system. There are maybe ten or twelve people or families who are very corrupted and who have appropriated millions of euros and they are the ones we must neutralize."
The new public prosecutor, the 30-year old Irakli Okruashvili, is here a key figure for whom all right-thinking Georgians will be praying. Like Saakashvili he is taking his life into his hands. A 'Financial Police' is to be set up to combat economic crimes.
December saw the arrest of the former Energy Minister and of the football federation president, who is accused of misappropriating up to $340,000. He was caught at the airport and must face questions about footballers' transfer fees and foreign bank accounts. Arrest warrants were issued for the former railways chief and a former regional governor allegedly involved in the theft of 27kg of gold. The head of the railways was snatched as he tried to take refuge by helicopter in Adjaria, reputedly with $6m on him. At least these rogues were caught fleeing, which indicates that they realize their number was up.
A Post Office director was arrested for embezzlement of $250,000 from funds meant for refugees from Abkhazia and another $600,000 was intercepted before he could pay it into his account. A former energy minister had a mild heart attack when he was charged with pocketing $6m on its way to pay for electricity imports.
But this is just the tip of an iceberg. Further arrests can be expected as the new government gets into its stride. It is anxious to keep events under its control and is discouraging local initiatives that could degenerate into mob violence and revenge killings. For it is well aware it is riding a whirlwind, as is the case in revolutions. Heads will continue to roll
It is planning to ease taxes on small farmers and businesses, while raising them on luxuries, such as expensive cars and villas.
Saakashvili is launching an austerity drive, depriving ministers of their country dachas, while foregoing the luxuries of office himself. He will not inhabit the elaborate Krisanisi presidential palace, perched above the capital, Tbilisi, which Shevardnadze loved too well. Instead he will live in a two-room flat in the centre of town. The ministers' elegant country homes will be sold to raise money for the state. Saakashvili is Mr Incorruptible and his ministers will have to be likewise. 

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FOREIGN LOANS

EBRD to grant US$100m for major Georgian projects


The European Bank for Reconstruction and Development (EBRD) intends to invest more than US$100m in Georgia this year, mostly for oil and gas pipeline projects, EBRD Director for South East Europe and the Caucasus, Olivier Descamps, Interfax News Agency reported recently. 
Descamps said the EBRD would pump US$70m into the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project and US$20m into the Baku-Tbilisi-Erzurum gas pipeline project. He said the rest of the money would be spent on the private sector. Descamps said the EBRD would be targeting specific projects because it works not so much with the government as with private companies. However, the EBRD is prepared to draft a new two-year aid strategy for Georgia which the bank's directors may sit down and discuss in June. The EBRD has allocated a total of US$180m for 28 projects in Georgia in the last eight years.

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