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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: 296 - (26/08/05)
The Kiev-Tbilisi axis
The Georgians are revelling in their new status as a member of the Free World.
Their president, Mikhail Saakashvili, is a world-renowned figure. It was the
Rose Revolution he led in the autumn of 2003 that set off the even more
momentous revolution in Ukraine last year, which then sparked off the one in
Kyrgyzstan. But the Georgians were the prime movers in this wave of post-Soviet
democratisation.
In mid-August Saakashvli went to Kiev to cement ties with President Viktor
Yushchenko of Ukraine. They devised what the Georgian leader calls 'the Kiev
Club for Democracy.' He says: "The purpose of the initiative is to provide
an open and forward-looking forum for the new democracies of our region to share
our experiences, learn from one another and better coordinate our efforts to
promote democratic reform. We are looking to tie together democracies from the
Baltic, Black Sea and Caucasus Regions."
It is not difficult to imagine how this clarion call is heard in the Kremlin.
Convinced that the West and its NGOs were behind the nefarious events in
Georgia, Ukraine and Kyrgyzstan, it can now see Russia being increasingly
encircled by former Soviet states taking the Western path, an inexorable process
it can do nothing to stem.
Russian bases to depart?
The Kremlin at least seems to be aware that military activities are not the way
to do so. It is in principle agreeing to remove its bases in Georgia some time
soon.
The withdrawal of Russian bases, a longstanding dream for the Georgians, has
great political importance not only for Georgia, but also for Saakashvili and
his party. His lavish pre-election promises, including the quick removal of the
Russian bases, remain unfulfilled. Moscow's delay tactics likely are intended to
hurt Saakashvili politically. Should Saakashvili be successful and have the
bases removed by the end of 2007, it would give him and his party a tremendous
asset going into the 2008 parliamentary and 2009 presidential elections. If they
fail to do so the opposite may be true.
Moscow has basically agreed to their withdrawal, under pressure from Washington
and persuasion by the Europeans. After all is it sensible for the Russians to
contemplate another Caucasus war? They have enough on their plate in Chechnya as
it is.
It appears that Tbilisi's bold attitude to have the Russian bases removed from
Georgia by the end of 2007 is backed by more than Georgia's own resources. If
left to face Russia alone, Tbilisi, given its heavy dependence on Russian
energy-carriers and the great number of Georgian guest workers in Russia, could
hardly afford such a bold stance regarding the military bases. The type of
concessions, if any, that Moscow might make about the terms of the pullout could
indicate how much the Western community has pressured Russia on this issue.
IMF extends 3rd loan tranche to Georgia; negotiation on PRGF programme bears
fruit
Full cooperation with the West on economic issues is also the order of the day.
The International Monetary Fund (IMF) recently extended to Georgia the third
tranche of a loan for 14 million liras, or 20.4 million Euro, under a three-year
Poverty Reduction and Growth Facility (PRGF) programme.
The Georgian national bank received the money on August 5th. The third tranche,
like the previous two, will be used to fulfil the bank's foreign currency
reserves, which, including the tranche, are currently at 444.6 million Euro, the
source added. Georgia is expected to get another PRGF loan by the end of the
year.
The executive board of the IMF in fact recently completed the second review of
Georgia's performance under the three-year programme supported by the PRGF, the
IMF said in a statement.
In completing the review, the board approved the authorities' request for a
waiver for the non-observance of an end-December 2004 structural performance
criterion on amendments to the budget systems law, and the conversion of the
indicative target on reserve money into a performance criterion. The executive
board approved the PRGF arrangement on June 4, 2004 for an amount equivalent to
SDR 98 million (about US$141.6 million). Completion of the second review will
release an SDR 14 million tranche, bringing total disbursements under the
arrangement to SDR 42 million (about US$60.7 million). Kato said the government
has made progress in structural reforms, including in revenue administration,
the promotion of transparency in government operations, and a sweeping
simplification of licences and permits to facilitate private sector activities.
"It is important now to also make progress in areas where measures were
delayed, including parliamentary approval of amendments to the budget systems
law and liberalisation of the trade regime," he said. He noted that the
thrust of the authorities' economic programme for the remainder of 2005 is to
maintain macroeconomic stability and keep inflation at single-digit rates.
"The government will also continue to pursue reforms aimed at enhancing
growth prospects and alleviating poverty, and it plans to institutionalise and
further strengthen its anti-corruption strategy. Public spending priorities for
2005 seek to remove long-standing obstacles to growth, especially in
infrastructure and the energy sector," he said.
"Going forward, higher government spending against the backdrop of sizable
capital inflows will require skilful coordination between the fiscal and
monetary authorities. To ensure low inflation, the government has provided
welcome assurances that discretionary spending will be managed carefully. If
inflationary pressures intensify during the second half of the year, the central
bank should stand ready to tighten the monetary stance beyond the limits
envisaged in the programme," Kato said.
The PRGF is the IMF's low-cost facility, which carries an annual interest rate
of 0.5 per cent, and is repayable over 10 years with a five and a half year
grace period on principal payments. PRGF-supported programmes are based on
country-owned poverty reduction strategies adopted in a participatory process
involving civil society and development partners, and articulated in a Poverty
Reduction Strategy Paper. This is intended to ensure that each PRGF-supported
programme is consistent with a comprehensive framework for macroeconomic,
structural, and social policies, to foster growth and reduction of poverty.
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ENERGY
Gilauri: Georgia to diversify gas supplies
Georgian Energy Minister, Nika Gilauri, recently announced that Georgia will
soon begin talks with Kazakstan on supplying natural gas. Georgia's energy
ministry has planned to diversify the country's gas supplies, according to
Interfax News Agency.
He said that the Baku-Tbilisi-Erzurum pipeline would also provide another source
of gas and Georgia was already holding talks with the consortium behind the
project to increase the amount of gas it will receive under the existing
contract. Gilauri explained that the demand for gas in Georgia would grow
considerably over the coming years and there would be a need for several
alternative supplies.
Azerbaijan, Georgia ink natural gas deal
Georgian Prime Minister, Zurab Noghaideli, and Azerbaijani President, Ilham
Aliev, signed an agreement in Baku recently according to which Azerbaijan will
send new stocks of natural gas to Georgia, New Europe reported.
The details of the agreement will not be worked out until August at which time
Aliev will announce the amount of Azerbaijani natural gas that Georgia will
receive in the winter.
During the talks, the most important item on the agenda was the search for an
alternative to Russian natural gas and Georgia preferred Azerbaijan as the ideal
partner.
At the same meeting, there was another discussion on whether Georgia will get an
additional two billion cubic metres of natural gas from the Shah Deniz-Erzrumi
natural gas pipeline, according to the reports.
Georgia to transport Iranian gas to Europe
Georgia will facilitate projects proposed by Ukraine and the European Union to
transport Iranian gas to Europe, Georgian Energy Minister, Nika Gilauri, said on
August 8th, Interfax News Agency reported.
Gilauri said the package of proposals that Britain, France and Germany submitted
to Georgia on the EU's behalf on August 5 included the construction of a trunk
pipeline to ship Iranian gas to Europe, provided that Tehran discontinues its
nuclear programmes.
Ukraine submitted two options to Iran for transporting Iranian gas to Europe at
the beginning of July. Ukraine's proposals, like the EU's, involve routing the
gas via Georgia, using either an Iran-Armenia-Georgia-Russia-Ukraine-Europe
pipeline or an Iran-Armenia-Georgia-Black Sea-Ukraine-Europe route. "We'd
welcome any of these projects and do all we can to facilitate them,"
Gilauri said. "This would be an additional source of gas for Georgia and
bolster the country's energy security," he added. Asked whether the United
States might respond negatively to these projects, Gilauri said the US
government had not yet made any comment. "If a question arises, we will
definitely consider it," he said.
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FINANCIAL NEWS
Georgia trade deficit increases 25.6% in H1
Georgia's trade deficit in January-June amounted to 586.2m Euro, up 25.6 per
cent from 466.8m Euro a year earlier, a source in the Georgian statistics
department told Interfax News Agency reported recently.
Georgian trade in the first half reached 1.335bn Euro (up 25.4 per cent).
Exports increased 26.1 per cent to 374.2m Euro, with imports up 25.1 per cent to
960.4m Euro. The CIS accounted for 41.5 per cent of Georgia's trade in the first
half (39.7 per cent in the first half of 2004), or 46.32 per cent of exports
(52.8 per cent) and 39.8 per cent of imports (34.7 per cent). Russia is still
Georgia's main trading partner, accounting for 17 per cent of trade. Georgia's
main export is iron and steel scrap (14 per cent), and its main import is oil
and oil products (12.8 per cent).
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TELECOMMUNICATIONS
New services for Georgian mobile users unveiled
The Georgian telecommunications company Geocell recently announced new services
that were branded as Geo-msxneli, Geo-zumer and Geo-kadr, Interfax News Agency
reported.
These services which were described by company officials as innovative and
affordable, were presented for users as part of a summer promotion, reported
Interfax. During the presentation ceremony, the chairman of the Georgian
national commission on communications, Dimitri Kitoshvili, praised the telecom
industry for introducing new services and technology. Also Magticom introduced a
new service for its customers. "I hope that Geocell and other
communications companies will continue this tendency and present more new
services this summer," Kitoshvili said.
The service Geo-kadr allows customers to send photos taken by their mobiles to
special numbers at Konika offices where they will be automatically printed. The
company stated that the Geo-zumer service is similar to a very popular service
in South-Eastern Asia. According to Geocell, the company is the first to
introduce it to CIS countries. It enables customers to replace the standard
ringing tone by a song or sound, which callers hear when calling the individual.
The cost of one zumer is one lira. The service Geo-Mxsneli was described by the
manager of Geocell's marketing communications department Maka Neidze as a saving
tool for customers with no money on their account.
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