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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: 300 - (01/01/06)
Georgian-Russian tensions have reached a climax
There is no doubt that these are tense days in Georgia. The political
aggravation in the country, the confrontation of the opposition and the
government is entering an increasingly dangerous phase.
It had a great revolution in 2004. But revolutions set off their repercussions:
opposition rallies, scuffles in the parliament, pensions issue and the demand to
bring the government to account. A rising People's Front seeking general
elections for mayors and heads of administrations. The opponents of the
government keeping on talking about social crisis, mass media restrictions,
government PR campaigns. On top of this, calls for seceding from the CIS - a
demand that makes the opposition look bigger in the eyes of the people.
The opposition parties are running nose-to-nose in their, sometimes biased,
criticism of the government. But pressuring the government are forces not only
at home but also abroad. The tensions with Russia have reached their climax.
Russia puts up the gas price, stops issuing visas for Georgian citizens; the
Russian foreign minister appears with a note of protest against Georgia's new
national military concept with some Russian politicians urging their authorities
to bombard Tbilisi. Russia's annoyance is quite understandable: for two years
already the country has in vain - and luckily - been trying to inspire a new
conflict in Samachablo. Also clear is the fact that Georgia has not yet escaped
the danger of a new war.
All the above realities are pressing hard on the government, and nobody knows if
it will be able to overcome this pressure, first of all, not to be pressed by
Russia into resuming war in Samachablo. The Russian pressures, the social
hardships, the mistakes and glaringly undemocratic steps of the government are
giving the opposition hope for an early political crisis and government change
in Georgia. That is exactly why the opposition is as active now as ever before.
There is also one factor shaping the present political situation in Georgia -
Salome Zourabichvili and her movement.
Given Georgia's past experience, Zourabichvili does not trust the existing
political spectrum including the opposition and is trying to forge an absolutely
new political force that will gain the people over and will be free from any
political obligations both inside and outside the country. Unlike many other
oppositionists, Zourabichvili does have a chance to do this.
Deputy madhouse
The situation is getting increasingly tense in Georgia with every passing
day: the opposition is threatening street actions, some government officials are
raising fists at their opponents and there are forces foretelling new
revolution, reports Rezonansi on December 5th. Political analyst Ramaz
Sakvarelidze says that the tensions in Georgia are steadily growing with more
and more citizens displeased and more and more rallying in the streets.
But one should not expect a revolution at the moment. There is a feeling in
society and, especially, among the politicians that any new revolution will have
the same scenario and the same result. Especially as a new revolutionary change
of government would be a heavy blow on Georgia's image abroad. Leader of the
Freedom Institute Levan Ramishvili says there will be no revolution. Judging
from the incidents in the parliament, Ramishvili infers that one should take
urgent measures, including legislation or regulations changes, to provide
against any possible recurrences in the future. Be it a mandate service or
something else, but it should have the authority to take adequate measures
against a deputy, official or ordinary citizen violating elementary norms of
demeanour.
That is, it is necessary to create the same legislative terms that are applied
to courts - when fines and administrative arrest are imposed on those showing
disrespect for the court. Head of the Association of Young Lawyers, Anna Dolidze,
says that the recnet incidents have shown that there is evident escalation of
violence in the country. These facts are contrary to the supremacy of law and
the state must not just accept somebody's apologies or resignation. If there is
a pretension that there is a law in the country there should also be knowledge
that there is punishment for any physical insult. When it comes to ordinary
people the police are very effective in investigating their cases, but the
supremacy of law means equality of all before the law, irrespective of their
office, and so whoever offers a physical affront must be made responsible for an
illegal action, says Dolidze.
Abashidze wanted
The Batumi municipal court granted the petition by the prosecutor generals
office of Georgia to announce a hunt for the former leader of Ajaria Aslan
Abashidze, reported Free Georgia on Dec 6th. Abashidze is facing the charges of
abuse of office, misappropriation of 98 million lari and terrorism. Abashidze's
lawyer Shalva Shavgoulidze says that his client has been given guarantees of
immunity by Georgian President, Mikhail Saakashvili, after he was ousted by the
people from the office and Ajaria on May 6, 2004.
There is no proof that Abashidze is hiding or pressuring witnesses, says
Shavgoulidze, while the prosecution says that there are no legal documents on
this, and so Abashidze can be wanted internationally. It took the investigator
as many as 40 minutes to read out all the charges made against Abashidze. The
lawyers are going to dispute the verdict at the Batumi Court of Appeal. In May
2004 Aslan Abashidze was forced to leave Georgia with his family and comrades.
In July, the prosecutor general office of Georgia brought a criminal action
against him. Some sources report Abashidze as owning a controlling interest at
the Russian Krasny Oktyabr confectionery, to live in Moscow and to enjoy the
protection of the local mayor Yuri Luzhkov.
Mikhail Saakashvili said that he supports the court verdict to hunt for
Abashidze. "We have not promised anything to anybody." "We
allowed Abashidze to freely leave Ajaria when his life was in serious
danger," Saakashvili said noting that now some details of his activities
have come to the surface, people have blown up on a mine laid when Abashidze was
in office. "No state will forgive such actions to anybody,"
Saakashvili said.
Economy
The prime minister and the government have submitted to the parliament the
draft state budget 2006, reports Akhali Taoba on December 7th. The revenues and
grants therein amount to 2,931,716,000 lari. Prime Minister, Zourab Nogaideli,
briefed on the reforms and allocations in various spheres with the ministers
dwelling on their respective domains. Nogaideli said that the government is
doing its best for the economy and the population to have no problems in the
winter. He confirmed the rise in the gas price but did not specify the amount.
He said that Gazprom's raising the gas price for Georgia is a political step by
Russia.
The head of the motor road department, Roman Dalakishvili, presented the
measures taken so far to restore the roads damaged by natural disaster. Some 12
million will be earmarked to this end. Education Minister, Alexander Lomaya,
spoke about reforms and school computerization. He gave interesting figures - if
earlier there were 200 children per 1 computer, this year the figure is 125/1
and next year will be 65/1. Lomaya believes that in 2007 there will be 20
children per 1 computer.
Energy Minister, Nika Gilaouri, qualified as progress the no cut off situation
this year. He spoke about supplying the population with electricity meters and
noted that defaulters will get no electricity while conscientious payers will
get it round-the-clock. Justice Minister, Kote Kemoulariya, was concerned for
the broken down infrastructure of the penitentiary system, but was glad to
report the opening of a new Euro-standard jail in Kutaisi.
Deputy Defence Minister, Vasil Sikharoulidze, focused on the efficiency and
fighting capacity of the army and spoke about joining NATO. He said that the
budgetary financing will allow his ministry to fully equip and train two
infantry brigades in 2006, which will enhance Georgia's defence capacity and
will be a crucial advance in the country's Euro-Atlantic integration.
IMF comments
The authors of the draft state budget 2006 promise no more than 5% average
inflation rate next year, reports Khvalindeli Dge. Chairman of the parliamentary
financial-budgetary committee, Irakly Kovzanadze, says that the national
currency will get stronger. Meanwhile, people have long been complaining of
inflation. This concern was recorded by IMF experts a few months ago. Is there a
threat of commodity and service prices inflating to an alarming point? IMF
Resident Representative in Georgia, Robert Christiansen, says that the 12-month
inflation had grown to 7.9% by late Nov 2005 with the advisable rate being less
than 6%. Despite being relatively high the rate is not alarming, says
Christiansen. The Georgian government is reported to be looking forward to
getting serious financial inflows from abroad in 2006. Will this influence the
inflation? Christiansen says that Georgia is expecting big revenues:
privatisation, Millennium Challenge program and private transfers will attract
foreign currency into the country. This will impact both the currency market and
the inflation rate. The government will face the need of inflation balancing.
Christiansen says that the situation will be under control and the National Bank
will carry out a rational monetary policy to curb inflation. Is MP Gigi Bokeriya
right when saying that growing pensions will lead to the issue of additional
lari and consequent inflation? Christiansen says that if the fiscal and
financial policies are well coordinated the budgetary spending 2006 will not
lead to lari devaluation.
Corruption overview
The Transparency International - Georgia NGO has surveyed into what system
is the most corrupt in the country, reports Free Georgia Dec 10th. The survey
says that most corrupt is the judiciary - (51% of those questioned,) the customs
office - 14%, political parties, taxation bodies, health care sector, parliament
and licensing service. The public attitude to the police has considerably
improved since the last year - down from the 1st to 9th rank on the list. Last
year the NGO polled people as to their optimism and found out that Georgia was
one of the most optimistic nations in the world. This year the optimism chart
has dropped to 22%, with experts explaining that the past two years have marked
the end of the revolutionary euphoria period.
Summit highlights investment climate
A two-day business and investment summit was organised in Georgia by the
Brussels-based European Finance Convention foundation in partnership with local
business organisations, Federation of Georgian Businessmen and the American
Chamber of Commerce, The Messenger reported.
The summit focused on investment and trade opportunities in Georgia and on the
financial services sectors. "We plan a complete privatisation of the energy
sector. Electrokavshiri will also be privatised in the beginning of next
year," Prime Minister, Zurab Noghaideli, said in his keynote opening
speech. Electrokavshiri is the state-owned telephone operator. High ranking
government officials at the summit announced that the Georgian government is
expecting avenues for investment to open in 2006 as it intends to privatise
state-owned telecom and energy facilities. Minister of economic development,
Irakli Chogovadze, and Minister of Finance, Aleksi Aleksishvili, also addressed
the gathering of over 250 representatives from the business and international
community. Business representatives attended the summit from more than 15
countries. The investment forum had panel discussions on trade, export, regional
and EU-cooperation, SMEs, financial service development; and privatisation and
foreign investment.
Saakashvili to improve business climate
Recently Georgian president, Mikhail Saakashvili, met with representatives
of the business community. During the meeting, Saakashvili undertook to improve
the business environment in Georgia through adoption of a new legislative
initiative which he intends to submit to the Parliament for consideration in one
months time.
Saakashvili said that these new initiatives aim at "lessening interference
and regulation by the state." He said, "Our long-term interest is to
create conditions for the development of your business. This will in itself
settle the problem of unemployment. The first proposal involves further
simplification of the Tax Code of Georgia; the second one concerns
simplification of export-import procedures - since these procedures are very
complicated today; we also plan to liberalise and simplify the Labour
Code." He added that another proposal concerns judiciary reform, envisaging
simplification of judicial procedures on the one hand and simplification of the
language of law on the other in order to avoid double interpretations.
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ECONOMIC NEWS
Polish banker eyes economic reforms in Georgia
During his recent visit to Georgia, the head of the Polish National Bank, Leslek
Balcerowicz, met with the government's economic team to inform them of Georgia's
economic direction, New Europe reported.
He suggested that Georgia's tax burden should reduce as it is currently too high
at 20 per cent maximum. In addition, Balcerowicz called for a decrease in
taxation on the ground that tax revenues should not amount to more than 20 per
cent of the entire gross domestic product.
"In Georgia fiscal reforms must still be approved. People should have more
money in their pockets and they should pay fewer taxes," Balcerowicz was
quoted as saying. It was recalled that Balcerowicz served as economic advisor to
the Georgian government. According to Balcerowicz, the two main problems that
Georgia is currently facing are smuggling and the bad quality of fiscal policy.
He said that these problems were largely ignored; otherwise Georgia would have
been a more stable country on an economic basis. Balcerowicz said he appreciated
Georgia's reforms passed by the new government but added that some things are
still left for Georgia to do in order to access European Union membership, and
that the economic development must be taken into consideration. Commenting on
the privatisation procedure, he said that it should be transparent and secondly
should be carried under the supervision of private individuals instead of
political parties, 24-Saati reported. An honest and effective court system and a
transparent judiciary are necessary for Georgia, he said. According to
Balcerowicz, Georgia is moving slower than the post-communist countries that are
able to pass market reforms and achieve economic results.
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PRIVATISATION
Big privatisations to begin next year in Georgia
The government wants to elevate the position of Georgia as a trade centre in the
Black and Caspian Sea regions by implementing changes in customs procedures and
tariffs which are expected to start at the beginning of January, The Messenger
recently reported.
In the initial stage, the customs tax rates will decrease, as it is currently
higher than 30 per cent. This is the source of corruption, Minister of Finance,
Irakli Chogovadze, recently announced at a government session. He explained that
lower rates would attract potential investors especially from the import-export
business.
Next year the government has also planned to privatise Elektrokavshiri landline
telecommunications network and the UDC power company. Before these assets are
put on sale, a special adviser for financial and judicial issues will be
appointed to prepare the privatisation process. This move will attract some
powerful investors.
A new, 300-ton, Ukrainian transformer is to be installed at the Enguri
Hydroelectric station by the end of January 2006. The transformer is
manufactured and will soon be transported to the Enguri complex. This project
was developed with the financial assistance of the European Bank for
Reconstruction and Development (EBRD).
Energy Minister, Nika Gilauri, suggested that the transformer could be shifted
by sea via the port at Ochamchire.
The government also discussed the privatisation of the Batumi Circus and the
adjacent territory belonging to the Circus. State Minister for the Coordination
of Reforms Kakha Bendukidze said that the privatisation of these assets was
already announced but had been delayed.
According to Bendukidze, the terms of the privatisation were not pleasing as
they specified that the controlling organisation had to be registered in Batumi
in order to carry out reconstruction work on Batumi Circus territory. He
considered such a condition to be discriminatory against companies that are not
based in Batumi and pointed out this issue to the Adjaran ministry of economy.
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