Books on Georgia
Update No: 305 - (30/05/06)
The Kremlin gets tough with Georgia
Relations between Moscow and Tbilisi have soured badly this year. In a series of
clashes between the two post-Soviet states, Russia imposed a ban on Georgian
wines and spirits after bitter rows earlier in the year when pipeline explosions
cut Russian gas supplies to Georgia in the middle of winter.
The situation is getting worse, not better. There is a strong suspicion in
Georgia that it is being punished by the Kremlin for having had the temerity to
have launched the Rose Revolution two years ago.
The Russians are certainly meddling in Georgian affairs in a most abrasive
fashion, backing two secessionist provinces and hurting the economy.
Russia bans Georgian mineral water Borjomi
In yet another bout of temper, Russia is banning imports of the Georgian mineral
water, Borjomi, citing health and safety reasons, its consumer rights watchdog
said on May 6th.
"Analyses have shown that 56 inspected shipments of Borjomi mineral water
... do not correspond to safety requirements," said a letter by the head of
the watchdog, Rospotrebnadzor, Gennady Onishchenko. "I therefore revoke
from May 7 ... Borjomi mineral water safety certificates until the reasons and
conditions, which have caused the above mentioned irregularities, are
Onishchenko also asked customs officials to block imports of the mineral water
and regional Rospotrebnadzor offices to take measures aimed at preventing sales
of Borjomi to customers.
Georgia to quit the CIS?
President Mikhail Saakashvili said his government would look into quitting
the Russian-led Commonwealth of Independent States (CIS), which groups 12
ex-Soviet states, following the wine ban.
On May 5th, Georgian Prime Minister Zurab Nogaideli told Reuters that with the
wine spat, gas disruption and Russian involvement in Georgia's separatist
regions of Abkhazia and South Ossetia, Moscow was punishing Georgia for looking
Wine industry looks westwards
Russia says the wine ban is for health reasons, but analysts say it is to
punish Georgia for trying to use World Trade Organisation talks to force Russia
to stop its financial support for the two rebel regions that remain outside
Georgia is hunting for new markets for its wine, which brought in US$90 million
to its struggling economy last year, 70 per cent of it from Russia. Saakashvili
has tasked a minister with publicising wine in the West.
Russia also suspended imports of wine from Moldova in March, saying it contained
dangerous pesticides. Analysts saw the move was also designed to punish the
ex-Soviet state for its own WTO-linked demands and insistence that the illegal
Transnistrian breakaway client of Russia, accept reasonable terms for rejoining
the nation. It is in other words, a crude powerplay by Russia towards its former
colonies of Georgia and Moldova, which incidentally is quite likely to signal
the breakup of the Moscow backed CIS.
The following is an article from Moscow News, quoting the president's view of
the gravity of the crisis:-
Russia Threatening Democracy in Georgia, Ukraine - Saakashvili
Democracy in Georgia and Ukraine is under threat because Russia is creating
obstacles to democratic processes in the two countries, the Georgian president
said on May 5th at an international conference in Vilnius, Lithuania, called
"Common Visions for a Common Neighbourhood" attended by heads of
states from the Baltic and Black Sea regions and NATO and EU representatives,
RIA Novosti reports.
During the last few months relations between Russia and the two countries have
worsened. At the beginning of this year a gas conflict broke out between Russia
"If Moscow creates obstacles to our democratic values it means only
escalating danger," Saakashvili said.
He added that Russian actions represent a challenge for Europe as well, as a
threat to democracies in Georgia and Ukraine will also undermine European
This was not the first criticism of Russia at the conference. Earlier the same
day, US Vice President Dick Cheney rebuked Russia for rolling back the
democratic "gains of the past decade'' and called on the country's
state-controlled energy companies to stop intimidating nations in the region
that need oil and natural gas to allow their economies to grow.
Fitch rates Bank of Georgia at B-, stable outlook
Fitch Ratings has assigned Georgia-based Bank of Georgia (BOG) ratings of
Foreign and Local Currency Issuer Default B- (B minus), Short-term Foreign
Currency and Local Currency B, Individual D and Support 5, Interfax News Agency
The outlooks on both Issuer Default Ratings (IDRs) are stable. The rating agency
said in a statement that BOGs ratings reflect the high credit risks resulting
from rapid lending growth in the relatively high-risk Georgian economy. They
also reflect its potentially vulnerable liquidity due to a predominance, to date
of primarily short-term customer funding. However, the bank has a strong
domestic franchise, sound core profitability and adequate capitalisation as well
as a well-defined, albeit aggressive, strategy, which was adopted in 2004 and is
being executed by new management with international experience. BOG is the
second largest bank in Georgia by assets (end of first quarter 2006 unaudited:
606.3 million lari), serving both corporate and retail sectors.
Georgia establishes oil, gas corporation
Georgian Gas and Oil Corporation has been established, Georgia's Economic
Development Ministry reported. The company was founded by Georgian International
Oil Corporation, Georgian International Gas Corporation and Gruzneft, which are
wholly state-owned. The new company's board is headed by Prime Minister Zurab
Nogaideli, New Europe reported.
The board also includes the energy and economic development ministers and chiefs
from Georgian International Oil Corp and Gruzneft. Georgian International Gas
Corporation President, David Ingorokva, has been appointed the new company's
general director. Georgian Gas and Oil Corporation has charter capital of 101.12
million lari. The Georgian International Oil Corporation, Georgian International
Gas Corporation and Gruzneft will hold a shareholders meeting on April 20th, the
economy ministry said. They will discuss their reorganisation and the transfer
of functions to the new company. This process is expected to end in the first
half of May.
"As a result a full-fledged holding company will be formed that will work
with one management team and carry out unified oil and gas strategy based on
government interests," a ministry official said.
China to grant 2.5m Euro to build juice factory
China has announced that it will grant 2.5 million Euro to Georgia to finance
the construction of a juice factory, Interfax News Agency reported.
Chinese president, Hu Jintao, and Georgian President, Mikhail Saakashvili, who
was on a visit to China, held a meeting on April 11th and signed a joint
declaration, which reaffirms the two countries' preparedness for developing
relations in various fields. Saakashvili, who arrived in Beijing, spent the
first part visiting the Great Wall of China and the Emperor's Winter Palace.
During his five-day visit to China, the Georgian leader also planned to visit
Georgia receives 4th tranche of IMF loan
The National Bank of Georgia has received 14 million laris in the latest tranche
of a loan from the International Monetary Fund as part of a three-year Poverty
Reduction and Growth Facility (PRGF) programme, the bank said, Interfax News
This is the fourth tranche of the PRGF loan, which the IMF executive council
decided to allocate at a meeting on March 31, 2006. Georgia received the first
three tranches in June-December 2004 and in August 2005 in equal shares of 14
million laris. The total size of the loan is 98 million laris. Taking into
account the latest tranche, Georgia has received 56 million laris (80.9 million
Euro), the bank representative said. All the funds are put in the National
Bank's international currency reserve.