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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 
Mikhail Saakashvili

  

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 base.
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.

Ossetian developments
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.

Balance-sheet time
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 fared?
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

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AVIATION

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.

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ENERGY

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 the company.

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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 said.
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.

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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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