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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: 292 - (26/04/05)
A growing geopolitical profile
The Kyrgyz revolution is having repercussions right across the FSU, just as the
Georgian one did and then that in the Ukrainian. These events are logical
consequences of those of 1989-91. All three countries are now on the map in a
way they were not beforehand.
The first in this second wave of revolutions was the Rose Revolution in Georgia
in October 2003; the second was the Orange Revolution in Ukraine; the third was
the Tulip Revolution in Kyrgyzstan. Saakashvili can speak as the senior exponent
of this revolutionary botany.
"We have overcome our enemies in Georgia, Ukraine, and Kyrgyzstan, and have
one more country on our list," President Mikhail Saakashvili said at a
meeting on April 15th with Georgian General Prosecutor's Office workers. He did
not specify the country, suggesting it would become known during the GUUAM (an
organization formed by Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova)
summit, which was to be held in Chisinau on April 22nd. The answer almost
certainly is Belarus.
At the same time the Georgian President named among the first priorities of
Georgia the need to "snatch Abkhazia from the empire's claws." He
again did not specify the empire, but mentioned that that empire "had
nothing else left to do." Again the answer is obvious - Russia.
The opposition politicians state that Saakashvili's announcement was made in
view of the visit of U.S. President George Bush to Georgia, scheduled for May.
Internal affairs
On the same day, April 15th, the media spread the announcement by Chairman of
the Defence and Security Committee Givi Targamadze that Tbilisi allegedly
intended to solve the problems of Abkhazia and South Ossetia by force.
But Targamadze called "wicked calumny" the Russian media's statements
which attributed to him the threat to solve the problems of Abkhazia and South
Ossetia in the nearest future by force. "It's true that we are forming a
modern and powerful army. In order to reach peace, one must have a powerful
army," he emphasized in his interview to Georgian journalists.
"However, Georgia will not be the first one to start any military action in
Abkhazia or in South Ossetia. We are exclusively for peaceful settlement of
these problems." According to Targamadze, his words were taken out of
context, and were intentionally misrepresented for propaganda purposes.
Nevertheless, independent observers cannot guess why such sharp announcements
have been voiced just now. Not so long ago, Saakashvili had been saying time and
again that he had no intention to export the revolution. However, lately, he has
been often saying that Georgia's problems, including the restoration of its
territory, "depended on being freed from Russia and the destruction of
imperial structures on post-Soviet territory."
Some observers supposed that these statements were made with hopes of gaining
the support of other participants of the GUUAM summit, mainly Ukraine, but
hardly Uzbekistan or Azerbaijan. Indeed, GUUAM seems not to be the obvious
vehicle for democratic change with those two countries in membership, but a
Georgia -Ukraine cooperation makes a lot of sense. According to Georgian media
Saakashvili and Viktor Yushchenko have talked on the phone several times.
Besides that, Yushchenko plans to visit Georgia in the nearest future, and in
link with that, the media has been giving special attention to the subject that
one of the main direction of GUUAM activities will be the support of democratic
tendencies on the post-Soviet territory.
Georgia is a friendly country for Russia - says Saakashvili
Nevertheless, Saakashvili does not want to alienate the Russians, key to any
peaceful solutions to Georgia's internal problems. "Russian citizens must
know that Georgia is a friendly country. They will find it hospitable and warm,
not only in the sense of weather, but also in the sense of attitude to
Russians," he said in a recent speech.
"Large Russian banks have started working here, and several Russian
companies are taking part in the privatisation of government-owned facilities in
Georgia. We will welcome the enlargement of Russian business projects in
Georgia," he said.
New post-Zhvania government.
A fortnight after the death of Prime Minister Zurab Zhvania on February 3rd,
Georgia's parliament voted in a new cabinet that pledges to make economic
recovery its top priority. The new prime minister, Zurab Noghaideli, indicated
that the government's immediate challenge would be reducing unemployment.
The huge majority, 175-24, in the vote on February 17th in favour of Noghaideli
came as no surprise. President Saakashvili's ruling National Movement-Democrats
Party dominates the Georgian legislature and the confidence vote had been
largely viewed as a mere formality, following Saakashvili's nomination of a new
cabinet following Prime Minister Zhvania's death.
Saakashvili dominates Georgian politics in a more comprehensive fashion than his
predecessor, Eduard Shevardnadze, who was ousted in the Rose Revolution of
October 2003. He has a mandate for radical change in the impoverished Caucasus
country. He is a highly educated man, who knows five languages, and has a
cosmopolitan outlook. Moreover, he has left Shevardnadze the presidential
palace, while he occupies a modest flat in central Tbilisi. The drive against
corruption and ostentatious consumption is a cornerstone of the new order and
the new president exemplifies it in his own person.
Nonetheless, there is an opposition all right, as always. Opposition deputies
used the vote on February 17th to criticize the government sharply. The lack of
tax exemptions for small and medium-sized businesses and an unwieldy state
bureaucracy were among the points raised by the Conservative and Republican
Parties, while New Rights-Industrialists leader David Gamkrelidze attacked
Defence Minister Irakli Okruashvili for dismissing the armed forces' entire
general staff on February 15th, a move that has gone largely without official
explanation. All three parties voted against the Noghaideli cabinet.
The new government remains largely unchanged from the last cabinet reshuffle in
December 2004. Valeri Chechelashvili, Georgia's ambassador to Russia, will
replace Noghaideli as finance minister, while former Supreme Court Chairman Kote
Kemularia will head the justice ministry. Former Justice Minister Giorgi
Papuashvili will instead head the Environment Ministry. All other posts will
remain intact.
Economic revival the top priority
Analysts interpreted the 41-year-old former finance minister's appointment
as prime minister a sign of the central role Saakashvili needs economic
revitalization to play for the success of his reforms. On February 15th,
Noghaideli confirmed those forecasts, telling reporters that the government's
"key priority" during the next three months will be cutting
unemployment and developing "entrepreneurship," the Inter-Press news
agency reported. On February 17th, the prime minister went on to list
improvements in Georgia's lacklustre investment environment, revitalization of
agriculture and the country's energy network as well as the completion of
ongoing educational and military reforms as also on the post-Zhvania task list,
the television station Rustavi-2 reported.
Since Zhvania's death, government officials and Noghaideli himself have
emphasized continuity in economic policies, but details on how the government
plans to tackle unemployment remain elusive. The quarterly Georgian Economic
Trends cites national rates for 2004 at between 10.7 and 13.1 per cent,
depending on methodologies. One highly placed government official said that it
is, in fact, not "realistic" to expect Georgia's unemployment rate to
drop significantly in "only one year."
What is known is that the state budget is growing, fuelled in large part by
privatisation. The government has announced that it plans to revise its 2005
budget revenue figures upward by as much as 500m lari or roughly $275m. Right
now, planned expenses currently outstrip revenues by some $200m to stand at
2.2bn lari, or $1.2bn. Budget amendments with revised figures are expected to be
submitted to parliament the week of February 21.
Privatisation the key
Pinpointing the role to be played by Noghaideli in setting the future course
for privatisation, however, has proven difficult to define. Previously, the late
Prime Minister Zhvania appeared played a central role, announcing sales and
pending deals. The prime minister's involvement, though considered unusual by
some analysts, was explained by the economy ministry as critical for the
resolution of "strategic" sales such as that of the Georgian Ocean
Shipping Company, which sold in late January for a record $161m.
Since Zhvania's death, State Minister for Economic Reform Kakha Bendukidze, a
former economy minister, has been the official most frequently seen on
television addressing privatisation questions, even though technically the
portfolio falls to Economy Minister Alexo Alexishvili.
The minister's visibility, however, has prompted some opposition members to
charge that Bendukidze, who earned millions as head of the Russian firm United
Heavy Machineries, sees the sale of state properties as a prime business
opportunity for former Russian business colleagues.
"Mr. Bendukidze has equated the [government's] entire economic policy with
property sales instead of really developing a free market and free
business," charged New Rights Party leader David Gamkrelidze in parliament
on February 10th. "He equated it with transferring this property to his
friends and acquaintances in a hasty, illegal and non-transparent way."
Driving the speculation is the January 19 sale of the Chiatura manganese mining
complex and Vartsikhe hydropower plant to the Russian firm EvrAzHolding and the
Georgian-Austrian concern DMC Ferro for $132m. EvrAz Holding won the bid despite
remarks by Economy Minister Alexishvili that the Ukrainian Interpipe Corp. had
submitted the "better" bid. To explain the decision, officials,
including Bendukidze, charged that Interpipe had allegedly urged the government
to let it also take control of Zestaponi Fero-Alloy Plant, a property owned by
DCM-Ferro. In response to Bendukidze's accusation of "banditry,"
Interpipe has charged that Georgia's privatisation campaign is "a vague
process with no rules."
Controversy has dogged the privatisation process since its kick-off in the
summer of 2004 when then Economy Minister Bendukidze's declaration that the
government would sell everything "but our conscience."
The latest flare-up occurred on January 31st, just days before Zhvania's death,
when the late prime minister announced that he had made a mistake in naming ASP
Shipping Company as the purchaser of the Georgian Ocean Shipping Company.
Instead, the sale went to Armstrong Holdings Corporation, with ASP Shipping
Company, a British-Australian firm, holding responsibility for management of the
company's ships.
For the detail-oriented Zhvania, the slip-up was unusual, but officials have
been quick to stress that this was a minor mistake that does not jeopardize
privatisation's future in any way.
"We have overcome all difficulties," Deputy Economy Minister Natia
Turnava said in a February 17th interview. Amendments to improve the efficiency
of the evaluation and sales process for listed state properties are expected to
go before parliament. Turnava did not provide details on these amendments, but
noted that a law that stipulates a 50 per cent discount in asking prices for
firms not purchased following the announcement of a sale as a major obstacle to
the efficiency of the government's privatisation campaign. Turnava commented
that the law "needs to be more flexible," to allow a greater range of
possible discounts.
Privatisation-related sales are expected to bring in as much as $250-$300m in
2005 to state coffers, according to the most recent official statements. The
amount would total as much as 8 per cent of Georgia's Gross Domestic Product for
the first nine months of 2004.
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BANKING
Bank of Georgia launches Microloan Plus
Bank of Georgia recently announced a new project called Microloan Plus, which
has been designed for the owners of small businesses. This project would enhance
the development of small enterprises in Georgia and would extend to all Georgian
regions, New Europe reported.
Microloan Plus will offer loans and other bank products like debit and credit
cards and insurance. The interest rate of the micro loan starts from 16% and the
maximum size of the loan is US$50,000 while the maximum term for the loan is
five years. The bank administration recently said that on receiving a loan, a
person would also get VISA Electron and Maestro debit cards. They would also get
life and work capacity insurance. Bank of Georgia had also announced the launch
of enhanced current accounts for individuals and corporate clients and adopted a
new nine-digit account numbering system.
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FOREIGN ECONOMIC RELATIONS
Yerevan and Tbilisi target improved trade relations
Georgian Prime Minister, Zurab Noghaideli, met Armenian President, Robert
Kocharian, on a recent visit to Yerevan. During the meeting, both leaders talked
about cooperation in the energy sector and development of trade and economic
relations between the two countries. Kocharian said that the Armenian-Georgian
intergovernmental commission on economic relations would continue its activities
headed by the prime ministers of both countries, The Messenger reported.
Noghaideli also spoke about the completion of the construction of the road
between Sadakhlo on the Georgia-Armenia border and Marneuli. Both sides also
discussed the construction of a new border checkpoint in Sadakhlo. Noghaideli
said, "For the first time we did not discuss past problems but issues of
future cooperation between Georgia and Armenia."
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FOREIGN LOANS
EBRD provides aid for Georgia's wine sector
The European Bank for Reconstruction and Development (EBRD) is lending 7.3m Euro
for seven years to Georgian Wines and Spirits Ltd, a leading wine producer in
Georgia and a subsidiary of Pernod Ricard Europe SA, the world's third largest
producer and distributor of alcoholic beverages, New Europe reported recently.
This is the second transaction with Georgian wines (GWS), following a five
million Euro loan in 1999. This loan will enable GWS to improve its marketing,
packaging and wine quality, as well as to restructure its distribution and
management systems. Hans Christian Jacobsen, director for Agribusiness at the
EBRD, said that this project will help GWS become more competitive and indicated
the Bank's support of the Georgian wine sector with three investments currently
in that industry. The EBRD is the largest investor in the agribusiness sector in
a region that spans 27 countries, with over 220 investments for a total
commitment value of 3.25bn liras. GWS was established in 1993.
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TRANSPORT
Georgia launches new ferry service
The Georgian-Russian ferry line between the ports of Poti and Kavkaz was
inaugurated on March 23rd. This ferry crossing which the Minister of Economic
Development, Alexei Alexeishivli, and the Russian Minister of Transportation,
Igor Levitin, agreed in January is scheduled to operate every three days. The
ferry represents a new wave of cooperation between Georgia and Russia's
transportation systems and is the forth ferry route that is operating out of
Georgia. Meanwhile, railway officials said the line was unable to make up for
the loss of the Abkhaz section of the railway line in terms of shipping goods in
and out of Georgia. Abkhaz de facto President Sergei Baghapsh said that Georgia-Abkhaz
talks should begin with the operation of the railway, the Messenger reported.
An agreement regarding the operation of the railway via Abkhazia was signed
during a Shevardnadze-Putin meeting held in Sochi in 2002. Currently, the
Georgian government has made its stand clear by announcing that the opening of
the railway is related to the secure and protected return of Georgian refugees
to Abkhazia. Tbilisi also called for restoration of jobs for ex-railway workers.
So, agreements have been reached over the restoration of the railway and Russian
officials have also helped to open a line connecting Abkhazia with Russia but
Tbilisi is not pleased in its efforts to return IDPs to the region. Armenia has
also expressed an interest in the reopening of the railway via Abkhazia. The
country believes that this railway would act as an outlet to the Russian and
European economies. Over recent months, Armenia has met Georgian counterparts
and the issue of restoration of the railway was often discussed. Armenia argued
that blockades with Azerbaijan and Turkey have reduced its ability to trade
beyond Georgia and Iran. However, Georgia is pondering whether the restoration
of the railway would settle conflict with Abkhazia.
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