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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: 310 - (26/10/06)
Nearly three years after the Rose Revolution protests
propelled him to power, the U.S.-educated president of Georgia, Mikhaikl
Saakashvili, has seen his popularity plunge, with Georgians increasingly
disenchanted at the weak economy and widespread poverty.
Government wins local and regional elections
Nevertheless, the populace appears to still just about support his party and the
government at a time of mounting tension with Moscow. His United National
Movement won a majority of the votes in local and regional elections in early
October.
That appears to be the message of the latest elections, if international
monitors are correct. In spite of the crisis, many Georgians could have been
thinking more about bread-and-butter issues when they cast their votes for more
than 1,700 members of municipal and regional councils that will in turn elect
mayors and administration heads. The highest regional posts - envoys - are
appointed by the president.
Opposition leaders alleged on October 6th that the elections were riddled with
fraud, after Saakashvili claimed victory for his party in the continuing vote
count. International observers said, however, that the balloting was conducted
"with general respect for fundamental freedoms."
The vote was seen as an important test of the pro-Western government's
popularity at a time when Georgia faces a worsening confrontation with its
former overlord, Russia. "We got a minimum of 70 percent across
Georgia," Saakashvili told supporters at his party's headquarters on
October 5th. Saakashvili also cited exit polls reported by Georgian television,
which said his United National Movement party was ahead with around 56 percent
of the vote, followed by the joint opposition Republican-Conservative bloc with
8.1 percent. The exit poll methodology could not be verified.
The Central Election Commission said on October 6th that preliminary results
showed the United National Movement won 66.4 per cent of the vote in the
capital, Tbilisi, where about 890,000 of Georgia's 3.2 million registered voters
live.
Labour Party head Shalva Natelashvili, who hoped to unseat Saakashvili ally Gigi
Ugulava from the post of Tbilisi mayor, said that the opposition had been
subjected to tremendous pressure during the campaign before the local elections.
"Those who didn't want to vote for Saakashvili were branded agents of
another state," he said. "These elections failed, by European and
international standards, and we will appeal to international courts to declare
them false and illegitimate," he said.
OSCE endorsement
But the joint mission of the Organization for Security and Cooperation in
Europe (OSCE) and the Council of Europe offered a relatively positive assessment
- though it noted that "the blurred distinction between the authorities and
the governing party reinforced the advantage of the incumbents." Monitors
pointed to "highly visible social aid programmes" used by the ruling
party, which paid out pension bonuses and provided temporary jobs.
Conservative Party leader Koba Davitashvili dispute this and has accused the
government of dragging out the vote count in an effort to fix the results.
"Not even an hour passed after the end of elections that President
Saakashvili said that his party had done better than in the past elections and
got a minimum of 70 percent of the vote and now the electoral commission is
trying to reach that figure," he said.
Saakashvili rejected charges of vote-rigging. "We conducted democratic
elections.... And I want to say that we conducted clean elections despite our
opponents' pouring dirt on us," he said.
Cold War with Russia
Russia's chilly relations with Georgia have worsened steadily since
Saakashvili came to power, vowing to take the country out of Russia's orbit,
rein in breakaway provinces, Abkhazia and South Ossetia, and join NATO. Georgia
accuses Russia of backing the separatists, which Russia denies.
Following Georgia's arrest of four Russian military officers on spying charges
on September 27th, Moscow suspended air, sea, road, rail and postal links with
its southern neighbour, paralyzing trade with economically dependent Georgia.
Moscow has also cracked down on Georgian migrants and businesses in Russia,
threatening to cut off their remittances back home. Up to a million Georgians
live in Russia, according to some estimates, and send home hundreds of millions
of dollars (euros) every year to their families.
The arrest of the four Russians on spying charges was taken as a gross
provocation in Moscow. The Russians have two bases in Georgia, due to be
terminated in 2008. This is now in doubt. It might have been wiser to wait until
their departure then before picking a quarrel with the mighty Russian colossus.
Ivanov plays it all down
Russia's defence minister, Sergei Ivanov, played down Russian measures
against Georgia as "economic pressure," denying allegations Moscow has
imposed a blockade on the impoverished South Caucasus nation. "We are
indeed bringing economic pressure to bear [on Georgia] - I acknowledge as much -
but no sanctions are in place, nor a blockade," Sergei Ivanov said.
This is distinctly disingenuous. In practice that is exactly what has happened.
He also dismissed reports Russia is contemplating military action against
Georgia. "Military threats are out of the question," he said. "It
takes a madman's imagination to picture Russia going to war with Georgia."
Speaking of Georgia's bid to join NATO - a prospect Russia is obviously not
happy about - Ivanov said: "Georgia is free to make any decisions about
entering any bloc or organization - NATO, the EU, a beer lovers' alliance,
whatever."
Ivanov, fancied as the likeliest successor to Putin in 2008 by the Moscow
cognoscenti, is clearly a colourful character.
******
The following is an interview with a key player in Georgian politics, now
entrusted with a most important set of task:-
Integration Minister Says 'We Try To Be Patient'
Giorgi Baramidze, a former Georgian defence and interior minister, now
serves as the country's state minister on European and Euro-Atlantic
integration. He was in RFE/RL's Prague headquarters and spoke to correspondent
Rob Parsons about Georgia's prospects for further integration with the EU and
NATO. The interview came as NATO foreign ministers gathered in New York prepared
to offer Georgia a step forward in its membership talks.
RFE/RL: NATO is offering Georgia Intensified Dialogue status in its bid to join
the alliance. How important a step is that for Georgia?
Giorgi Baramidze: It's crucially important because it is recognition of
Georgia's reforms, not only in the military sphere but also in the sphere of
strengthening the rule of law and fighting against corruption, strengthening our
democracy and improving the situation in the economy. In parallel, the World
Bank granted Georgia the world's best reformer status. It's a great achievement
for us. And on conflict resolution, every step toward NATO gives us a better
chance to solve those conflicts peacefully.
RFE/RL: But you had hoped for more, hadn't you? Because there had been talk of a
Membership Action Plan of the type granted to Albania and Macedonia and you
didn't get that.
Baramidze: Certainly, we are always ambitious but we try to be patient. And we
know that it is not enough just to do good homework. Twenty-six NATO countries
have to agree with each other and there has to be consensus. So we learn by
moving forward. Certainly we are now anticipating another step, which would be a
Membership Action Plan and anyway we will very soon start to behave as if we
already had a Membership Action Plan.
Worries About Democracy And The Rule Of Law
RFE/RL: If I can interrupt, the view in NATO appears to be that while Georgia is
doing well as far as military progress is concerned, that there are still some
doubts about its progress on the democratic front, particularly judicial reform.
There was the recent report about the state of Georgia's prisons and there are
questions about what direction the media are moving in. Is Georgia ready to
accept these criticisms and do something about them?
Baramidze: We certainly accept these criticisms, because we know the situation
in the penitentiary [system] is quite bad. That's why we put the issue of the
rule of law as a first priority for us in the [EU] New Neighbourhood Policy
action plan and this is one of our major tasks -- to change the judiciary
system, to reform the judiciary system. This is the weakness of our system and
we certainly recognize this. We are doing our best to achieve results, although
it takes time, certainly. We are proud to have a free press. We have certainly a
press which has sympathy toward the government, [but we also have] those who are
criticizing us every day, and on that regard we don't have a problem. But
certainly democracy is something which should always be exercised and fought
for, and we welcome the activities of the European Union to strengthen our civil
society.
Russia And The Frozen Conflicts
RFE/RL: Russia is not going to be happy about you getting Intensified Dialogue
status. Does it make sense, do you think, for Georgia to be constantly poking
Russia in the eye? Isn't it time for Georgian foreign policy to start improving
relations with Russia?
Baramidze: Actually, we are trying to engage Russia positively. Nothing we do
objectively contradicts Russia's security or any other interests. We offer a
win-win solution rather than a zero-sum game. We think that we have lots of
common interests, including Georgia's NATO membership. It's not really, if we
talk sincerely, a threat to Russia, because Russia itself has a strategic
partnership with NATO and after the end of the Cold War has never considered
NATO a threat. So why should Georgia in NATO should be considered by Russia a
threat?
RFE/RL: At the heart of the problem is the issue of the frozen conflicts. Why is
it that Georgia is so opposed to Russian mediation?
Baramidze: Well, unfortunately for us, Russia cannot be already a mediator
because it was clear from the beginning that it was initiated by old Soviet
rulers. After the dissolution of the Soviet Union the conflict was instigated by
the early Russian leaders and now they still have the policy of divide and
conquer. They have granted more than 90 percent of the population in the
conflict areas -- Abkhazia and Tskhinvali region -- Russian citizenship. They
provide all kinds of assistance, including military, economic, financial,
political, and propagandistic, so Russia has there not peacekeeping forces but,
in fact, police forces. So Russia cannot be neutral in this regard. We don't
want to push Russia out of the negotiation process, but we don't want Russia to
dominate this process. We want the European Union, the United States, and
international organizations such as the OSCE and the United Nations to be equal
partners during the negotiation process and the negotiating format with Russia.
And we request the withdrawal of the so-called Russian peacekeepers from the
territory of Georgia.
RFE/RL: You mention those organizations but there is no sign, for instance, that
the EU is ready to take on that role, and while the OSCE might be willing,
Russia is not prepared to let the OSCE take on that role.
Baramidze: We have in fact presented a peace plan on South Ossetia and that was
endorsed by the OSCE, including Russia, including the [Russian] Foreign
Ministry, last year in December in Ljubljana. All we request is to do what we
have endorsed together.
RFE/RL: Why is Georgia's relationship with Russia so complicated? What do you
think lies at the heart of the problem?
Baramidze: It's better to ask President Putin why President Putin and the
Russian leadership doesn't see the benefit to Russia of a stable, united and
democratic neighbor on its southern flank, to use NATO terminology. Why don't
they see the benefit of cooperation to fight against terrorism, to fight against
aggressive separatism together, to fight against drug and weapons proliferation
and organized crime and, on the other hand, to establish better economic
cooperation and the benefits of economic cooperation: cooperation on energy
issues, transportation, culture and so on and so forth. So, as I have said, we
offer a win-win solution rather than a zero-sum game.
The Surge In Georgia's Defense Spending
RFE/RL: The EU's external relations commissioner, Benita Ferrero-Waldner,
complained recently that defence expenditure in the South Caucasus is going
through the roof. Georgia's defence spending, as a proportion of the total
budget, is huge at the moment. How can Georgia justify spending so much on
defence when it has all these other problems?
Baramidze: Very easily. Because I think you know that for decades or more, the
Georgian military was not being paid and it was more of a threat for national
security than a guarantee of security in the nation. Georgia has the smallest
army in the South Caucasus. If you just compare it with Azerbaijan and Armenia,
they have more than 90,000 [troops]. We have reduced our army from 35,000 to
26,000 as a ceiling. De facto we have 21,000. So certainly it's not a threat to
anybody. But we need to have a NATO-capable army. Therefore we need to
immediately repair barracks, improve the conditions for our military -- our
soldiers, officers. It requires, certainly, a lot of money. And it's been more
than a decade since we bought any new military equipment. So we need to re-equip
our army. It's true that it takes resources. But it's important, in parallel, to
look at how much Georgia spends on other issues. For example, we spent this year
eight times more money for education than we did in 2003; five times more money
for health care and social security. Ten times more money on road construction;
and we're going to spend two times more than that in the next year. This is due
to the fact that Georgia has significantly lowered the shadow economy from 80
percent down to 15 percent. By the way, the EBRD declared Georgia the first
among the European transition economies with the lowest levels of corruption. So
that means the money we already have in the budget this year is five times more
than the budget we had three years ago. We have to spend this money properly,
and according to our reform agenda -- the agenda of the IPAP with NATO, the
Individual Partnership Action Plan, and with the European Union New
Neighbourhood policy.
Georgia And Europe
RFE/RL: I just wanted to get onto that. Georgia has negotiated a
Neighbourhood Policy action plan with the EU and frequently proclaims its desire
for integration with Europe. What does this mean in practice? Does Georgia see
itself one day as a member of the European Union, bearing in mind all the
problems of resistance to further expansion within the EU?
Baramidze: First of all, I have to tell you that at this stage we are not even
talking about membership, because we are realistic. We know that we are not
ready, Europe is not ready. We don't want to be anybody's headache. We want to
be good neighbours and good partners of Europe. Therefore, we are happy about
the new [European] Neighbourhood Policy. Moreover, Germany is planning to
strengthen the new ENP, have it as a kind of "ENP-Plus," or enhance
the ENP. So we will be concentrated on the ENP, and building our relationship
with the European Union based on ENP and then on the new structural document
that will define our relationship. So we're taking our time, particularly
because we know that we need to keep our economy as liberal as possible, without
too many regulations that the EU already has. So we need to keep the speed of
our economic growth intact, because last year we had 9.3 per cent real GDP
growth, this year we anticipate at least 11 per cent. So we need to keep going
in that direction and have an open economy as much as possible. And therefore we
think we have to be concentrated on the new Neighbourhood Policy. Now we are
concentrated on trade issues. A free trade agreement is a priority with the
European Union. Before that, we hope that the EU allows Turkey to sign with
Georgia a free trade agreement alongside the one, by the way, with Syria --
Turkey has signed this agreement with Syria, but now we're requesting the same
status, and I hope it won't be a big problem. So we are concentrated on the
economy. And through strengthening our economy we hope we can move forward on
democratic reforms, and it greatly contributes to the peaceful conflict
resolution as well.
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BANKING
Societe generale buying 60% of Republic Bank
One of France's leading banks, Societe Generale, has agreed to buy 60 per cent
of Georgia's Republic Bank, one of the biggest in the country, the bank said
recently, New Europe reported.
The European Bank for Reconstruction and Development (EBRD) is acquiring another
10 per cent of the bank at the same time. The EBRD notes Societe Generale is the
first major western bank to acquire a majority stake in a Georgian bank.
"With its contribution the EBRD will strengthen the bank's capital base,
corporate governance and thus support the bank's further growth, which will
foster competition in the market," EBRD business Group Director for
Financial Institutions, Kurt Geiger, said.
Societe Generale said the transaction goes in line with the development strategy
of its international retail banking business, which the bank says is strongly
implemented in Eastern Europe. The bank also hopes the acquisition will
strengthen its presence in the region. "Societe Generale will bring to Bank
Republic its financial strength, international network, universal banking
expertise and product development know-how among other things," Jean-Louis
Mattei, head of the international retail banking department of Societe Generale
said. He added that with its well-known local brand, strong domestic
distribution channels, local expertise and the high quality of its top
management, Societe Generale would enable the bank to become the leading bank in
Georgia. "In this context and further to the rigorous restructuring
programmes undertaken, the banking sector achieved a very good performance in
2005, notably in the development of loans and customer accounts and enjoys
strong growth prospects," Societe Generale noted. Republic Bank has 21
sales outlets, 474 employees, is actively developing on the retail market and
has 74,000 clients.
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FOREIGN COOPERATION
Kuwait promises intensive cooperation
Kuwait intends to donate US$17.3 million for road reconstruction in Tbilisi
through the Kuwait Foundation for Arab Economic Development, Kuwaiti prime
minister His Highness Sheikh Nasser Al-Mohammad Al-Ahmad Al-Sabah, announced on
September 15th, New Europe reported.
During his visit to Georgia, the Sheikh was accompanied by a delegation of
Kuwaiti businessmen and expressed confidence that Georgia will be an attractive
prospect for Kuwaiti investors, reported The Messenger. Al-Sabah signed an
agreement to allocate US$17.3 million for road construction in Tbilisi through
Kuwait Foundation for Arab Economic Development. After the signing ceremony, Al-Sabah
said Kuwait has donated a large amount for investment in Tbilis's road
rehabilitation programme. He cited this investment as the first step of
cooperation between Georgia and Kuwait and urged for active cooperation with
Georgia. He said, "We will mediate to deepen the relationships between
Georgia and the states of the Persian Gulf." He added that Georgia has
professionals in medicine and technical fields. After completion of the project,
Kuwait will await further suggestions from Georgia. The agreement comprises a
part of the two countries ongoing cooperation project. With the Kuwait
Foundation for Arab Economic Development's money, approximately 25 streets will
be rehabilitated, squares will be laid out and whole districts will be
renovated. The project is scheduled to commence in 2007. On his part, Georgian
Prime Minister Zurab Noghaideli said that Al-Sabah's visit to Georgia is very
important as Georgia also wants to intensify cooperation with Kuwait. On
September 15th, Georgia and Kuwait Foundation for Arab Economic Development
signed a significant agreement.
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