Books on Georgia
Update No: 285 - (01/10/04)
New foreign military bases ruled out
Georgian President Mikheil Saakashvili said, while speaking at the UN General
Assembly Session on September 21, "Georgia has a very firm position and
will not have any new foreign military bases on its territory."
He added that the Russian military bases on the Georgian soil are "left
over from a period that no longer exists. Left over from a country [Soviet
Union] that does not exist."
Recently the Russian media quoted sources in the Kremlin saying that the issue
of a possible deployment of a military base in Georgia by a country other than
Russia or Georgia, represents a hitch in the signing of a comprehensive
framework agreement between Russia and Georgia.
Russia insists on a provision being included in the agreement which restricts
Georgia from allowing any foreign country to deploy its military bases on the
Georgian soil, while Georgia refuses to accept this provision.
The third country is of course the US, which has already deployed 200 troop
'advisers' in Georgia. They are likely to be still there, an informal military
The new pro-Western slant to Georgia's foreign policy is not in doubt.
Saakashvili has even pledged to send troops to Iraq if requested by Bagdad.
Moscow would not like that. But in the new post-Beslan climate international
co-operation against terrorism is the order of the day.
The Beslan affair happened right on Georgia's very doorstep in North Ossetia.
South Ossetia is a breakaway region of Georgia itself, aided and abetted
previously by the Russians. Indeed 80% or more of the population have dual
nationality, being Russian citizens, eligible for Russian state benefits.
The Russian state is of course a lot richer than the Tbilisi one. The South
Ossetians feel more in common with Russia. Is Moscow going to carry on fishing
in troubled waters there? Time will tell.
It is coming up to nearly a year since the Rose Revolution of October 2003,
which saw off Eduard Shevardnadze from the political scene. How has the country
One has to remember that Georgia was a basket-case when Saakashvili took over
then. At $2,384 its per capita income is the lowest in the whole region. FDI has
been minimal at $251per capita since independence until 2003.
Despite that and the political turmoil of last year, the economy registered a
rise in GDP of 7% in 2003, while it is on track to have a 5% rise this year.
This is a much-desired improvement over the dismal 1990s, when GDP contracted by
one-half or so.
International finance and investment can now be expected to flow in. It is going
to help that Georgia will be the preferred route for Caspian Sea oil to flow
westwards to Turkey and beyond along the Baku-Tbilisi-Ceyhan pipeline, bringing
in hundreds of billions of dollars, over time.
Gazprom shows interest
Another good portent is that the Russian energy giant Gazprom is coming in.
A delegation from Gazprom arrived in Georgia on September 22 for a two-day visit
to discuss investment opportunities with Georgian officials.
Details of the talks with the Georgian Economy Ministry officials are not known
yet. However, according to unofficial reports, Gazprom is interested in
purchasing shares of the state-run Tbilgazi, which is the gas distribution
company in Tbilisi.
Gazprom and the Georgian side signed an agreement in 2003, envisaging a supply
of natural gas to the Georgian customers, rehabilitation of the gas pipelines in
Georgia and the use of the Georgian infrastructure for transit purposes
Georgian Airlines changes its name
Georgian airlines, Airzena, is changing its name to Georgian Airways, because
"the name Airzena has no association with Georgia whatsoever," company
press secretary, Teya Gadabadze, said recently, Interfax News Agency reported.
Georgian Airways makes the company more recognisable in the West, Gadabadze
said. The airlines has also begun changing the livery on its three Boeing
737-500s, two of which it leases from the German company Hapag Loud and one from
the US company CIP. Two other Georgian airlines have also changed their names.
Silk Road Airways became Caucasus Airlines two years ago, and Air BISEC became
Georgian National Airlines not long ago.
Construction of BTC's Georgia section resumes
Construction of the Georgian section of the Baku-Tbilisi-Ceyhan (BTC) oil
pipeline, which was suspended in late July after Georgia demanded extra
environmental security guarantees, resumed on August 6th, Interfax quoted the BP
company's Georgian office as saying.
Georgia's government demanded that BP, the BTC project operator, provide extra
safety guarantees for the 17km section of the BTC that passes through the
Borzhomi Gorge and is considered to pose significant environmental hazards. A BP
spokesman said that the Georgian demand had been satisfied, and that experts
invited by BP were drafting a management plan for the BTC.
Georgian President Mikheil Saakaskvili, at a meeting in Washington held on
August 6th, reaffirmed that the BTC was of strategic significance for Georgia
but also added that the health of the country's population and the conservation
of its natural resources were also vital. He insisted that BP take every
environmental precaution and said some agreements had already been reached with
FOREIGN ECONOMIC COOPERATION
Turkish businessmen mull over Georgian investments
Led by Turkish Prime Minister Recep Tayyip Erdogan, a large delegation of
Turkish businessmen, which arrived in Georgia on August 11th, vowed to pursue
political and economic cooperation with the former Soviet republic, online
magazine Civil Georgia reported on August 13th.
After the talks with Georgian President Mikhail Saakashvili and Prime Minister
Zurab Zhvania on August 11th, Erdogan emphasised the need to establish stability
in the region in order to ensure further attraction of investments. "The
fact that such a large-scale Turkish delegation arrived in Georgia confirms that
Turkey is ready for boosting ties with Georgia," Erdogan said at a joint
news briefing with Saakashvili on August 11th.
During the talks with Zhvania, Erdogan initiated the opening of a third
checkpoint on the Karsi-Kartsakhi section of the Georgian-Turkish border and
even expressed a readiness to fund the project. "This is one more step
towards enhancing the economic cooperation between the two countries. Economic
growth was observed between the two nations in 2003. However, this is not
sufficient. Much is still to be done," the Turkish premier said.
In the wake of the Turkish visit, the Georgian president ordered the easing of
customs procedures at the Georgian-Turkish border and customs checkpoint at
Sarpi, in the autonomous republic of Adjara. Along with the talks of the Turkish
governmental delegation with the Georgian authorities, a Georgian-Turkish
business conference was held at the Courtyard Marriott Hotel in Tbilisi on
August 11th. Over 160 Turkish businessmen showed interest in the fields of
construction, tourism and energy.
Georgian Economy Minister Kakha Bendukidze acquainted the Turkish businessmen
with the list of those state-owned enterprises, which were open for
privatisation. "Turkish businessmen will be able to participate in the
privatisation of any facility, if they pay the relevant funds," Bendukidze
Mehmet Habbab, one of the most influential Turkish businessmen and chairman of
Delta Petroleum, one of the largest oil companies of Turkey, showed interest in
the privatisation of the port of Poti in western Georgia. The company has
already invested US$15m in the Poti port oil terminal. "The company would
be glad to make new major investments within the framework of Georgia's liberal
economic policy and privatisation," Habbab said.
The company holds 75% of the charter capital of Georgian-Turkish Channel Energy,
which was established with the participation of the Poti port.
Turkish businessmen also expressed interest in construction of a 500kw power
transmission line, through which electric power will be transited to Turkey.
According to Energy Minister Nika Gilauri, the Turkish businessmen are also
interested in the purchase of energy facilities.
Turkish businessman Islam Adjari expressed a willingness to purchase the
Krtanisi governmental residence to build the so-called "city of the
rich" there. On August 12th, a 15-member delegation of the Turkish
businessmen along with the Georgian president arrived in the Adjara autonomous
republic and visited those hotels which have been put on the privatisation list.
Georgian Ambassador to Turkey Tariel Lebanidze welcomed the attraction of
Turkish business to Georgia. "However, we should not expect the investments
immediately," the ambassador told Civil Georgia. According to him, the
discussion over particular projects may start in September, when another
delegation of Turkish businessmen arrives in Georgia. The Georgian president
pledged to create a liberal taxation system and attractive investment
environment in the country.
FOREIGN LOANS & AID
Dutch bank opens credit line
Dutch bank, FMO, has extended to the Bank of Georgia a credit line of 5m Euro
for developing a programme for inter-action in international trade, under a deal
signed on August 25th, the bank said, Interfax News Agency reported.
Thus, the volume of funds the Bank of Georgia is getting for this program is
15.5m Euro, as the European Bank for Reconstruction and Development (EBRD),
owner of 18 per cent of the Bank of Georgia stock, had extended it 10.5m Euro
for the programme earlier. The EBRD and German investment company DEG, owner of
12 per cent in the Bank of Georgia, are the bank's two main shareholders.
Georgian legal entities and private investors also own Bank of Georgia stock.
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