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GEORGIA



 

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Key Economic Data
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 3,937 3,324 3,100 126
         
GNI per capita
 US $ 830 650 590 145
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 313 - (25/01/07)

The Georgians are feeling their way to the modern world. They are not quite sure where they are going; everything is perilous. But they know what they are going from - and wherefore to- the EU.

A new constitution
Georgia's Western-leaning president proposed on January 17th drafting a new constitution that would conform to European democratic standards. "I believe that we, along with the opposition, should consider drafting a new Constitution that would be adjusted to modern European democracy," Mikheil Saakashvili said. "The current Constitution has a lot of drawbacks that need to be removed." 
Signing amendments to the Constitution that allow for simultaneous parliamentary and presidential elections in the South Caucasus state next fall, Saakashvili said that drafting a new Constitution would take several years and require consensus between the authorities and the opposition. 
He said he planned to step up cooperation with the opposition, which voted against the amendments, arguing that Saakashvili's campaign would help the ruling party win a majority in parliament. 
Saakashvili said a new body, an enlarged national security council, would be set up to comprise all lawmakers willing to contribute to the debate on the country's foreign policies.

The gas problem with Russia
A few weeks ago after complex negotiations a new gas price was fixed between Gazprom and Georgia. After failing to find gas in other countries president Saakashvili was forced to agree to pay US$235 for 1,000 cubic meters of gas - the highest price in the territory of CIS. 
Saakashvili declared beforehand that US$235 was not an economic but a political price and that Tbilisi would not pay such a price and was even prepared to refuse to buy the Russian gas. But after it became clear that Georgia could not expect to get gas from the neighbouring countries, Iran, Azerbaijan and Turkey, it was forced to accept the Russian offer. In principle, Georgia could get gas from Iran through the territory of Azerbaijan this winter as it did a year ago, when the pipeline supplying Georgia was damaged in North Caucasus. However, this year the United States made it clear to Saakashvili that it would not tolerate Iran-Georgia cooperation because of the problems the Islamic Republic had with the international community. 
The Georgian president immediately went to Turkey in the hope of getting a portion of the gas to be supplied to Turkey from the Azerbaijani Shah Deniz deposit. Georgian Prime Minister Zurab Noghaideli went to Azerbaijan with the same mission. Though it was difficult, Tbilisi succeeded in reducing its dependence on the Russian energy recourses and this year Georgia will import gas from Azerbaijan (800 million cubic meters) and Russia (1.1 billion cubic meters). Saakashvili described the decision of Azerbaijan to supply Georgia with gas this winter as a "gesture of genuine friendship and brotherhood." During his meeting with the students of the Tbilisi State University Georgian president stated that Azerbaijani president Ilham Aliyev had made a "historic decision" and that "not many leaders would adopt such a decision." Saakashvili also stated that the decision to supply Georgia with gas from the Shah Deniz deposit was "very important for Georgia which has not only been under a trade and transport blockade since 2006 but, in fact, was condemned to energy death by the Russian side." 

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BILATERAL COOPERATION

Estonian cooperation agreement signed with Georgia 


Estonia and Georgia have endorsed their commitment of strengthening bilateral tie through a new agreement. The Ministries of Defence of Estonia and Georgia signed an agreement on bilateral cooperation in 2007 on December 21st, New Europe reported
The Estonian delegation landed in Georgia earlier in the day. The nine-member delegation was led by the Minister of Foreign Affairs of Estonia, Urmas Paet, accompanied by the representative of the Estonian Defence Ministry, Hanes Hanso, and Ambassador of Georgia to Latvia, Lithuania and Estonia, David Aptsiauri. 
David Kezerashvili, the Minister of Defence of Georgia and Levan Nikoleishvili, the First Deputy Defence Minister, received the Estonian delegation. According to an earlier briefing by the Estonian defence ministry, one of the major goals of the visit was sharing of the Estonian NATO integration experience with Georgia. The Estonian side promised to help Georgia in this direction. 
During the meeting, the sides discussed the process of Intensified Dialogue with NATO, Georgian-Russian relations, military cooperation between Estonia and Georgia, ongoing reforms in the Georgian Armed Forces, future perspectives and plans. After the meeting, Defence Ministries of Estonia and Georgia signed the Bilateral Cooperation Plan for 2007. 
Estonia's Minister of Foreign Affairs met with his Georgian counterpart Gela Bezhuashvili and deputy chairperson of the parliament. 
At the press conference held after the meeting, Georgia's First Deputy Defence Minister Levan Nikoleishvili said: "Estonia has a serious experience in cooperation with NATO and the most important of all- their benevolence towards Georgia. They are ready to assist us at any stage from ID including MAP." 
"This is actually every day cooperation between our and The Georgian Ministry of Defence and we share our experience what we got when we were in the process of joining NATO and we are very satisfied with this cooperation," said the Estonian Minister of Foreign Affairs Urmas Paet. "I hope that our experience is useful for building up the Georgian Army and making those needed changes and reforms to be ready for MAP and after that for membership in NATO," he added. 

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ENERGY

Shah Deniz to supply Georgia with gas 

Georgian President, Mikhail Saakashvili, said on December 21st that the Shah Deniz gas field in Azerbaijan will be the main gas supplier of Georgia, but noted that the country should still ensure other sources of supply. "I am optimistic about the results of the talks here, but here are many technical issues. But the most important thing we should understand is that Georgia should never again depend on a single supplier. We should do everything to avoid dependence on a single supplier," the president told journalists on December 21st in Turkey, New Europe reported.
Saakashvili said the Georgian government is working to find the best possible options. "The price on gas on the world market is increasing. Our goal is to make the price increase less painful for our families, because I know very well how much each family in Georgia suffers. The government has been instructed over this issue as well to find the best options in order to make the transition less painful," he said. 
Georgian Foreign Minister Gela Bezhuashvili hailed talks on supplies of Azeri gas with Turkey. "Turkey is ready to take Georgia's interests into consideration and to cooperate with the country in the area," the minister told journalists on December 20th in Ankara.
Azeri state oil company SOCAR launched two weeks ago a new gas pipeline that will bring natural gas from the Shah Deniz gas condensate field to the Azerigaz network, the monopolist on gas transportation in Azerbaijan, SOCAR said.
"We have completed the construction of a 4.5-kilometre pipeline. The pipeline is equipped with an automated system for regulating pressure and distributing gas. Construction has been completed and the pipeline is prepared to transport gas," the statement said. The construction of the pipeline was carried out in full accordance with the standards of BP, the technical operator of the Shah Deniz field, SOCAR said. The management of SOCAR's gas operations ordered the construction of the pipeline and Kaspmorneftegazstroi was the contractor. Gas is to start being extracted from the field in the next few days.
The field's reserves are estimated at 625 billion cubic metres of gas and 101 million tonnes of condensate. Stage-1 development includes the production of 178 billion cubic metres of gas and 34 million tonnes of condensate.
During peak production under Stage-1 the field will produce 8.4 billion cubic metres of gas and two million tonnes of condensate per year. Stage-1 also includes a project to transport gas to Turkey through the South Caucasus Pipeline.
Turkey expected to receive an estimated 2.8 billion cubic metres of Shah Deniz gas in 2007. However, Azerbaijan, Georgia and Turkey later agreed on additional volumes for Georgia from the share assigned to Turkey.
Georgia can hope to get 800 million cubic metres from Turkey's gas quota plus 250 million cubic metres under the earlier signed contract within the framework of the Shah Deniz project. Georgia's demand for gas in 2007 is estimated at 1.7-1.8 billion cubic metres.
Meanwhile, three Georgian companies have sealed contracts for 2007 gas deliveries from Russian gas giant Gazprom, preventing a threatening conflict over gas supplies, a Gazprom official said December 22nd.
The contracts amount to 1.1 billion cubic metres of Russian gas at the asking price of US$235 per 1,000 cubic metres, the head of Gazprom Export, Alexander Medvedev, told reporters in Moscow. 
Georgia has yet to confirm the agreement. Economics Minister Giorgi Arveladse had rejected Gazprom's demands on December 21st in the Georgian capital Tbilisi. 
Russian gas company Itera shut off gas supplies to six Georgian cities and districts on December 21st for not paying their bills. 
Shortly before Medvedev's announcement, a spokesman for Gazprom, Sergei Kupriyanov said on December 22nd in Moscow that as Georgia had not reacted, the country apparently did not want to buy Russian gas in 2007. 

Georgian gas import plan for 2007 emerges, needs to be defined

A tentative breakdown of Georgia's gas import plan for 2007 has emerged, but the average price to be formulated by a combination of expensive Russian gas and relatively cheap gas from Azerbaijan still needs to be defined, New Europe reported.
Georgian Prime Minister, Zurab Nogaideli, said on December 29 that, during the winter period, Georgia will receive most of its gas from Gazprom, while only one-eighth of its gas needs will come from Azerbaijan.
An agreement has been reached with the Azerbaijani side over the delivery of one million cubic metres of gas per day during his visit to Baku on December 25, he said. The price of this gas will be US$120 per 1000 cubic metres.
Georgia has not yet received any gas from the Shah-Deniz field because of technical problems. The date of the launch of Shah-Deniz gas to Turkey via Georgia is expected to be known by mid or late January, the premier said.
He said Georgia will "reduce and eventually stop" importing Russian gas as soon as technical problems are fixed at the drilling wells of the Shah-Deniz field.
But it is unclear how Georgia will stop importing Russian gas when Gazprom has already signed three one-year contracts and one three-month contract with companies in Georgia on the delivery of a total of 1.46 billion cubic metres of gas in 2007 for US$235 per 1000 cubic metres. 
This amount is about 80 per cent of Georgia's projected gas consumption for next year.
The Georgian authorities have also not specified how Russian gas will be replaced, as there is not yet an agreement on the delivery of any additional gas from Shah-Deniz.
Georgia, according to the original agreement signed in October 2003, will receive 250 million cubic metres from Azerbaijan's Shah-Deniz field - 200 million of which is a fee for transit, and 50 million to be bought at the preferential price of US$55 per 1000 cubic metres.
The Russian gas share of 1.46 billion cubic metres, along with the Shah-Deniz gas share of 250 million, plus one million cubic metres from Azerbaijani's other sources per day during the winter period, already adds up to the total amount of gas - more than 1.71 billion cubic metres - needed for Georgia next year. It is not yet clear what the average gas price will be.

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TRANSPORT

Georgia to build Kars-Akhalkalaki railroad 

The Kars-Akhalkalaki railroad will be built despite the position of the US Congress, Georgian Foreign Minister, Gela Bezhuashvili, said. The railroad's planned route would cross Georgia, Turkey and Azerbaijan, New Europe reported.
"All necessary resources to construct the road without US participation exist, and the road will be built as it is important for Georgia, Azerbaijan and Turkey individually, and for the transport corridor linking Europe and China in general," the minister told journalists on January 10th.
The United States refused to finance the construction of the project, because Armenia will not take part in it. It is expected that the length of the Kars-Akhalkalaki railroad will be 98 kilometres. The total value of the project will be approximately US$400 million. Georgia will receive a loan from Azerbaijan and Turkey to construct its part of the railroad.

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