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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: 297 - (29/09/05)
The afterglow of the Rose Revolution
Georgia is receiving a lot of attention after its Rose Revolution. The US is
very keen to promote it to prominence as a new-found democracy. President
Mikhail Saakashvili was made very welcome by Bush in the White House in
September, the very emblem of what his administration's foreign policy claims to
stand for and unalloyed by the unpleasant things going on in Iraq.
If the revolution was bloodless, one must acknowledge that that was partly due
to the way that Eduard Shevardnadze bowed out in time. He knew that the
US-educated young lawyer was the man to succeed him and voted for him in the
re-run of the elections in late 2003. Fluent in five languages and an urbane,
articulate emissary for his country, Saakashvili is becoming a feature of the
international diplomatic circuit.
Millennium Challenge approves aid for Georgia
The US is putting money where its mouth is. While Saakashvili was in Washington,
he signed an epoch-making accord, reminiscent of the Marshall Aid programme for
Europe after the war.
The Millennium Challenge Corporation (MCC), which administered the US assistance
programme Millennium Challenge Account (MCA), has approved a five year US$295.3m
assistance for Georgia. On August 16th, MCC signed the funding agreement with
Tbilisi.
The US Congress must still approve the agreement. But Georgia officials are
confident this will happen shortly, making Georgia the fifth country to receive
funds from the corporation and the recipient of the largest amount of MCC aid to
date.
According to a press release issued by the MCC on August 16th, the assistance
aims to reduce poverty and stimulate economic growth in the country's regions.
The compact will provide financing for several projects in Georgia, including
US$102.2m for the rehabilitation of roads in Samtskhe-Javakheti, US$49.5m for
the rehabilitation of the main gas pipeline and consultation help to Georgian
government, US$60m for the development of regional infrastructure, US$32.5m for
the creation of the Georgian development investment fund, and US$15m for the
development of agricultural business.
Prime minister of Georgia, Zurab Noghaideli, is a key figure to ensure a smooth
implementation of the agreement. Meanwhile, in Washington officials from the MCC
praised Georgia for a "homegrown effort" to apply for the funds; and
in Tbilisi officials praised the programme for its "new approach."
After the approval of the compact, the funds would be transferred to the account
of the Millennium Challenge Georgia Fund, the agency of the Georgian government
that will supervise the implementation of the programme's mentioned four main
priorities.
The CEO of the Millennium Challenge Georgia Fund, Lasha Shanidze, said:-
Messenger "Millennium Challenge is a new philosophy, a new approach."
Shanidze said that his team has "secured as much funds as possible and
would spend the amount to make sure this 300m becomes 300bn in future."
Shanidze said that the US Congress should approve the project within 15 days. A
congressional delegation is expected to visit the Millennium Challenge Georgia
Fund soon to be acquainted with the projects in place.
"Congratulations to the people and government of Georgia for developing an
integrated programme targeted at helping the regional poor," said MCC Vice
President Charles Sethness. He described Georgia's proposal as "a homegrown
effort." He said that the government had a certain vision for reducing
poverty and "submitted a thoughtful, results-oriented programme to execute
that vision."
"By focusing on rehabilitating regional infrastructure and promoting
private sector development, the programme will directly benefit approximately a
half-million Georgians," reads the MCCs press release from Washington.
The Millennium Challenge Georgia Fund has predicted that the bulk of the
currently envisaged projects would be wrapped up earlier than in five years,
because the problems are acute and need urgent measures. "Some of the
projects like the gas pipeline are intended to be implemented within the next
two years, small infrastructure projects and agriculture projects will be also
implemented and we will start doing it probably at the beginning of next
year," Shanidze said, adding that the rehabilitation of roads in
Samtskhe-Javakheti will take some time.
However, he predicts that in two years, Georgia will see real results. "We
are going to see a new workforce in the region, new roads, new bridges and
irrigation systems," Shanidze said. It was recalled that Georgia received a
compact with a budget greater than any of the other four countries under MCC
tutelage.
Georgia sees budget surplus
Its own domestic budget is of prime importance too. It would be unfortunate
for Georgia to be a large beneficiary of foreign funds and yet be unable to keep
its own finances in order. A budget deficit would hamper the image of Georgian
administration and would even call for re-staffing of the current economic team.
Georgian media said that the problems linked to the fulfilment of this year's
budget parameters and the accountability of the government on this issue would
be topics presented at the autumn session of parliament.
However, government representatives stated that there is no threat of any budget
deficit. At a government session on August 25th, Georgian Minister of Finance,
Alexei Alexishvili, announced that the government has a surplus of 26m laris
thanks to higher than anticipated customs revenues. He added that this amount
would refill the government's reserve fund and toward social programmes.
The members of the parliamentary majority agree that the political fate of Prime
Minister, Zurab Noghaideli, is dependent on the fulfilment of the budget. MP
Davit Zurabishvili stated, as quoted by Akhali Taoba, that "today the issue
of dismissing the prime minister is not under consideration. This will be
dependent on the fulfilment of the budget. If the budget is fulfilled
successfully, I don't think this issue will come up."
Meanwhile, the opposition noted that several problems are emerging in the
fulfilment of the budget. Conservative faction member MP Kakha Kukava claimed
that the prime minister is "ripe for being replaced" due to the budget
deficit. Tens of million of laris were paid in advance to cover the deficit.
"I have absolutely infallible data that shows large sums of money have been
paid to the state budget which, if the results are not falsified, is practically
broke. This is sufficient basis for the dismissal of the government and in
particular the prime minister," Kukava was quoted as saying by Akhali Taoba.
Kukava stated the authorities are using practices employed by the Shevardnadze
administration while fulfilling the budget. He cited the instance where
businessmen were forced to pay taxes for July and August in order to cover the
planned parameters for June. The opposition has called for an open hearing to be
held on budget issues immediately after the opening of the autumn session of
parliament.
There is one thing - there may be problems with capital revenues, as sums were
planned to be collected from the sales of Chiaturmanganumi and Varitsikhe HES.
But "if the government works intensely until the end of the year, this gap
may be filled," said MP Lado Papava, as quoted by Akhali Taoba. He
predicted that the real situation with the budget, and its fulfilment, would be
visible by the end of the year.
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AVIATION
New company invited for Tbilisi airport talks
Tepe Akfen (TAV) delegation, which operates the Istanbul Ataturk airport,
visited Tbilisi at the request of Georgian President, Mikhail Saakashvili, to
negotiate on the construction and operation of the Tbilisi airport, New Europe
reported recently.
Rustavi-2 reported the Georgian government established a September 2nd deadline
for TAV to respond to the project. TAV officials stated that they "had no
demand" regarding the Tbilisi Airport but Celebi officials could not
understand why Georgia had invited TAV. The Georgian government had initially
selected a consortium of the Turkish firm Celebi, Luxembourg-based Gestion en
Technique Speciale (GTS) and the American company A&J Business Development
but at the beginning of July the latter two firms were expelled as they were
unable to provide financial guarantees on time.
Meanwhile, one of the companies removed from the original consortium, GTS, is
claiming the Georgian government violated the tender process and that Celebi
company has no rights to use its architectural plans for the new airport. GTS
has issued letters to the ministry of economic development indicating that the
company had submitted the case to the London court of international arbitration.
It was stated in the letter that the Georgian government was invited to the
London court on September 5. GTS stressed that the case was filed not against
the companies but the Georgian government. According to the management of
Tbilisi International Airport, neither the government nor the airport management
can interfere in the issue on the ground that it is a disagreement between
private companies. "GTS cannot have any claims against us. This is GTS'
personal problem and nobody has the right to interfere in the matter of two
independent firms. As for us, the Georgian side is absolutely clean," said
the Director of Tbilisi airport, Nika Manjgaladze.
TAM produces personal jets
The Tbilisi-based TbilAviaMsheni (TAM) aircraft factory has started production
of Maverick style five-seat personal jets with initial price of US$1.5m, it was
reported recently. The new TAMJet completed its first test flight on August
12th, Interfax News Agency reported.
Vazha Tordia, chairman of the supervisory board of the company, stated that this
kind of modification of aircraft was being produced in Georgia for the first
time. He noted that his company will launch mass production of the new aircraft
in the near future. All necessary spare parts are produced in Georgia, only the
engine was brought from the United States, he added. TAM, which has ISO 9001
Quality Management Certificate, recognising the high quality of its production,
is producing 4 modifications of the Su 25 battle support aircraft. The most
modern modification is Su 25 "Scorpio," designed in cooperation with
Israeli Elbit Systems company.
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FOREIGN RELATIONS
Turkey aims to increase trade volume with Georgia
Turkish State Minister responsible for Foreign Trade, Kursat Tuzmen, accompanied
by a delegation of entrepreneurs, was scheduled to visit Georgia from September
13 to 15. The team will hold bilateral talks with representatives from Georgia's
private sector, The Messenger reported.
Tuzmen was expected to meet with Georgian President, Mikhail Saakashvili, and
Prime Minister, Zurab Noghaideli, as well as Economy Minister, Serhy Teriokhin,
and Finance Minister, Aleksi Aleksishvili. Tuzmen said that a Turkey-Georgia
Joint Economic Commission (KEK) would be held during the visit. The issue of
prevention of double taxation between Turkey and Georgia will be on the agenda.
"We aim at increasing trade volume with Georgia," Tuzmen said in a
separate statement concerning his visit, noting that the trade volume between
Turkey and Georgia for 2004 amounted to 506 million Euro. He stated that Turkey
will remove the barriers which hinder trade volume and establish legal
infrastructure for trade. Turkey and Georgia along with Bulgaria, Russia,
Romania and Ukraine - are partners in the Organisation for Black Sea Economic
Cooperation and the Black Sea Naval Cooperation Task Group (BLACKSEAFOR).
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TRANSPORT
Azerbaijan, Turkey, Georgia to discuss railway project
Azerbaijan, Turkey and Georgia are expected to discuss the Gars-Tbilisi-Baku
regional railway project in Ankara in the near future. The meeting of the three
countries' transport ministers, previously scheduled in Ankara for August 24th,
had been postponed, reported Interfax News Agency.
Deputy Minister for Transport, Musa Panahov, will represent Azerbaijan, as
minister Ziya Mammadov will be on vacation, the State Railway Office (SRO) said.
Prior to the minister's meeting, the joint taskforce will meet to discuss
technical issues of the project, allocation of funds by the project partners,
drawing funds from other interested parties, as well as establishment of a joint
venture on operation and construction of the new railway line in the future. The
work of the taskforce comprising Azeri, Turkish and Georgian experts is
coordinated by the three countries' deputy transport ministers. The documents to
be discussed by the taskforce will be submitted for signing at the ministers'
meeting. Some details relating to the project were agreed upon in the previous
meetings of the taskforce. The parties decided to build a new railway from Gars
to Akhalkalaki in compliance with European standards and reconstruct the railway
from Akhalkalaki to Tbilisi.
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