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Books on Georgia
REPUBLICAN REFERENCE
Area (sq.km)
69,700
Population
4,693,892
Principal
ethnic groups
Georgians 68.8%
Armenians 9%
Russians 7.4%
Capital
Tbilisi
Currency
Lari
President
Mikhail Saakashvili
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Update No: 293 - (27/05/05)
No go in Moscow
President Mikhail Saakashvili of Georgia refused to go to Moscow for the 60th
anniversary of the victory over Nazism in 1945 on May 9th, a fact that certainly
ruffled feathers in the Russian capital. In March the Georgian parliament
insisted that the Kremlin should agree to the withdrawal of its two military
bases in Georgia by May 15th. The unstated implication was 'or else.'
The Russians certainly minded that the Georgian leader was not there, especially
as the next port of call for President Bush, after attending the ceremonies in
Moscow, was Tbilisi, the capital of Georgia.
The Local Sovereignty Conflict
Indeed, recent events in the Republic of Georgia have raised tensions between
Russia and the United States. They illustrate the complexity of relations that
great powers encounter when they seek to tip the balance of power in their
favour. The root of the current troubles in Georgia is a local set of conflicts
over sovereignty that resulted from the break-up of the Soviet Union. Soon after
Georgia became a separate state, the regions of South Ossetia in the northern
mountains and Moslem Abkhazia on the southwest coast fought successful wars of
independence against the central government. Although the two mini-states have
not been internationally recognized, they have maintained their autonomy with
Russian protection. The central government, in turn, has sought -- primarily
through diplomacy -- to reintegrate the separatist regions into the Georgian
state.
Up until the present, the situation in Georgia has been deadlocked in a
political and legal limbo, primarily by the presence in the two mini-states of
Russian troops in the guise of "peacekeepers" who have blocked the
possibility of Georgia's central government initiating military action.
Recently, however, Georgia's pro-Western and pro-American president has taken a
more aggressive stance toward the two regions. In early August, he warned that
any unauthorized vessels attempting to dock in Abkhazia would be sunk --
including tourist ships from Russia -- and Georgian gunboats have already fired
on a freighter reportedly registered in Turkey with a Russian crew. At the same
time, in South Ossetia, a visiting Russian parliamentary delegation was fired
upon. The Russian Foreign Ministry blamed Georgian military infiltrators for the
incident and Georgia's Interior Ministry asserted that the attack had been
mounted by South Ossetian militia in order to create a provocation.
Saakashvili has promised that he will integrate Abkhazia and South Ossetia into
Georgia by the end of his presidency. Both the popular reform movement that
ousted the government of Eduard Shevardnadze in early 2004 and vaulted
Saakashvili to power, and Georgian nationalists are pressing him to make good on
his pledge, even to the point, in some cases, of urging him to risk
confrontation with Russia. Meanwhile, Russia shows no signs of acquiescing in
any diminution of its influence. The populations of the mini-states are
pro-Russian and, indeed, would welcome incorporation into Russia. Many
Abkhazians hold Russian passports and Ossetia is split between its southern
portion legally in Georgia and North Ossetia, which is part of Russia.
Saakashvili would find it difficult to abandon irredentist policies, in light of
the popular support for them, and Russia could not easily give up its role as a
protector. Ultra-nationalists in Georgia are willing to contemplate war and
military hardliners in Russia claim that they are ready for it. Yet a tangled
web of interests obstructs the path to a direct military confrontation.
Great Power Strategic Conflict
The most important complicating factor in Georgia's conflict over
sovereignty is that the country is an essential link in the Baku-Ceyhan pipeline
that will carry oil from the Caspian Sea to the West. Control over Caspian Sea
oil is perceived by the Western capitalist powers, led by the United States, to
be a vital strategic interest. Uppermost in Western policy towards the entire
Caucasus region is the goal of sufficient political stability to guarantee that
the oil will flow. A secondary aim is to contain Russia's moves to regain its
influence in the region and break out of what it perceives to be encirclement.
Georgia's strategic importance has resulted in an American military presence in
the country to train its armed forces and assist in operations against Chechen
fighters and Islamic revolutionaries who cross the border from Russia. The
best-case scenario for the United States would be a reintegration of Abkhazia
and South Ossetia into a Georgian state with a pro-Western government.
Saakashvili, who has contributed a small contingent to the American-led
coalition in Iraq and is otherwise firmly committed to the West, including
eventual membership for Georgia in N.A.T.O. and the European Union, would like
to have active American support for reintegration, yet when he paid an
unofficial visit to the United States in early August and met with National
Security Advisor Condoleezza Rice and Secretary of State Colin Powell, he
received only calls for dialogue and negotiation. Given its difficulties in
Iraq, the United States is not ready for a confrontation with Russia and seems
unlikely to back an assertive policy by Georgia's government towards the two
breakaway mini-states. The United States will settle for relative stability that
will protect the pipeline, and will put its more ambitious aims on hold.
Saakashvili's recent move to a more assertive posture might be an attempt to
force the issue with the United States, but it is unlikely to be successful.
Russia's best-case scenario would be the annexation of Abkhazia and South
Ossetia, which would expand its influence over its periphery, but it is blocked
from that path by the conflict in Chechnya, its present military weakness and,
most importantly, by its interest in maintaining -- for economic reasons -- good
relations with the West. Russia does not want to confront the United States
militarily any more than the United States wants to confront Russia. The Putin
administration will be satisfied to maintain the present status of Abkhazia and
South Ossetia indefinitely, preserving its foothold and weakening Saakashvili's
regime by forestalling reintegration. Russia can be expected to continue its
present strategy of dragging out and stalling negotiations, seeking to limit the
presence of O.S.C.E. and U.N. monitors along the borders of the separated
regions, condoning local separatist militia and maintaining its
"peacekeeping" forces.
With both of the interested great powers settling for deadlock -- although their
fundamental interests are in conflict -- Georgian hopes for reintegration are
unlikely to be realized. Georgian nationalists who believe that Russia is a
paper tiger and that the United States would have to back Tbilisi in a military
confrontation are unlikely to win a sympathetic ear from Saakashvili. He has
been boxed in and will increasingly find his room to manoeuvre restricted. His
recent attempts to assert Georgian sovereignty seem to be more spasmodic and
symbolic than calculated and strategic, as is evidenced by extensive
qualifications to the gunboat policy issued by the government after its initial
proclamation and by the government's denial of involvement in the attack on the
Russian delegation in South Ossetia.
Georgia can be expected to maintain its support of local irredentist forces and
to use diplomatic pressure whenever possible to increase international backing
for its policies. It will try to internationalise negotiations and border
policing, and Russia will resist such moves. The West will be reluctant to push
back against Russia. Saakashvili is unlikely to be able to engineer a test of
resolve between the United States and Russia for the foreseeable future.
Conclusion
Over the long-term, the deadlock in Georgia's sovereignty struggle works in
favour of Russia and the two breakaway mini-states. Not only does it solidify
and normalize Abkhazia's and South Ossetia's autonomous status, giving them and
their Russian protector more leverage in any final settlement that might be
made, but it weakens the Saakashvili government's support within Georgia,
setting the stage for a conflict between nationalists and accommodationists, and
a resultant weakening of Western influence.
Prospects for overt confrontation would be enhanced if Moscow adopted a more
militaristic policy or if Saakashvili decided that he had to force the issue
decisively, but both of those shifts are unlikely to occur. Russia stands to
gain a small increment of power from the Georgian stalemate and will benefit
even more if Saakashvili's pro-Western regime weakens due to failure to
reintegrate the breakaway regions.
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BANKING
London Intl Bank acquires stake in Georgia's Investbank
Britain's London International Bank acquired a 25% stake in Georgia's Investbank,
increasing its share of charter capital to 31.82%, the banks said recently,
Interfax News Agency has reported.
The News Agency reported that a contract was already signed between London
International Bank and Investbank on acquiring a 25% share package and plans to
further increase its share of Investbank charter capital. London International
Bank plans to help develop the Georgian bank. Investbank was founded in
September 2003 in Tbilisi. The bank's assets were 9.3m laris and obligations
were 3.2m laris in 2004. In addition to London International Bank, Investbank
shareholders are US company Comet Investment, Britain's Seltom Interprays and
Switzerland's Galbon.
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FOREIGN TRADE
Iran to increase trade with Georgia
The Iranian government will allocate 20m Euro in projects aimed at boosting
economic and trade ties with Georgia, Civil Georgia reported recently.
The details of the projects have yet to be revealed but the funds for these
projects will be withdrawn from the Iranian Foreign Exchange Reserve Fund, a
source said. An Iranian official of chamber of commerce, industry and mines of
Gilan province said that Iran plans to open its permanent trade representation
in Georgia. Iranian First Vice President Mohammad Reza Aref, visited Georgia
late in April.
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SHIPPING
Marine Capital acquires Georgian Ocean Shipping Co
The British Marine Capital company, which is a subsidiary company of Aquamarine
Shipping Consultants, paid US$93m into the Georgian budget, Georgian Prime
Minister, Zurab Nogaideli, announced recently, Interfax News Agency reported.
The Georgian government agreed to sell the Shipping Company to Marine Capital
after annulling an earlier privatisation deal with Armstrong Holdings
Corporation in late March. Nogaideli said the income received from this
privatisation would be directed towards the armed forces, energy sector and the
rehabilitation of roads. According to the Georgian Economy Ministry, Marine
Capital will operate the Georgian Ocean Shipping Company through a newly
established company called Georgian Tanker Ltd.
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TRANSPORT
Georgia, Azerbaijan and Turkey to build rail link
Georgian, Azerbaijani and Turkish officials signed a protocol in Baku on April
6th as regards the construction of a railway link between the eastern Turkish
city of Kars and southern Georgian town Akhalkalaki, which will also enable
Azerbaijan to gain access to its strategic partner Turkey via Georgia, Interfax
News Agency reported.
The Georgian Railway Department announced that a joint
Azerbaijani-Georgian-Turkish venture will be set up with headquarters in
Istanbul to implement this project, which according to the preliminary
calculations will cost US$400m.
Tbilisi to consider Abkhaz railway restoration
Georgian parliamentary speaker, Nino Burjanadze, held negotiations with her
Armenian counterpart, Artur Bagdasarian, on April 28th, Civil Georgia reported.
The two officials discussed how Tbilisi has changed its position over
restoration of a railway link via Abkhazia and is ready to discuss this issue if
concrete progress is made in resolving the Abkhaz conflict. Restoration of the
railway via Abkhazia is of vital importance for Armenia, which will gain rail
access to its strategic partner, Russia, if Georgia agrees to rehabilitate this
railway connection Burjanadze added that unlike previous years, Georgia is now
ready to consider restoration of a railway link in parallel with resolving of
problems related to the political issues as well as to return of internally
displaced persons in Abkhazia. This statement of Burjanadze reflects the
softening of stance by Tbilisi over the issue of restoration of a railway
communication between Georgia and Russia via breakaway Abkhazia.
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