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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: 321 - (03/10/07)

Turmoil came to Georgia at the end of September. It involved a dismissed and resentful defence minister, an angry mob and a possible closer alignment of the opposition ahead of elections next year.

Saakashvili defends arrest of former ally Georgian President Mikheil Saakashvili on September 29th defended the arrest of a former minister, who had accused him of plotting murder, as opponents vowed to continue protests that have drawn thousands to the streets. In a clear reference to tensions with Moscow, Saakashvili also said that "ill-wishers" were seeking to sow chaos in Georgia. Up to 10,000 people demonstrated in Georgia on September 28th against the arrest of former defence minister, Irakli Okruashvili, who was detained after alleging that Saakashvili had ordered the killing of high-profile figures, including a prominent businessman with links to the opposition. "Okruashvili's allegations are false and he knows it very well," Saakashvili said in televised remarks after interrupting a foreign trip to return to the capital, Tbilisi. "Georgia, unlike many other places, enjoys freedom of the press. Everyone can say whatever they want and as much as they want. But you cannot blackmail people who have a clear conscience," Saakashvili said. The protest outside parliament marked the most serious challenge to Saakashvili's authority since he took office. It was held in the same place where thousands of demonstrators chanted Saakashvili's name during the 2003 "Rose Revolution" that swept him to power. Okruashvili's supporters accused the president of trying to silence a potential rival and said the arrest undermined Saakashvili's credentials as a democratic reformer. Georgia's opposition parties vowed to continue demonstrations calling for the resignation of Saakashvili and his government. They did not specify when the next protest would be held. "The protest movement in Georgia is rapidly gaining force," said Levan Berdzenishvili, a lawmaker from the opposition Republican Party. Long fractured by infighting, most of Georgia's opposition parties agreed at a meeting on September 29th to unite under one banner. "We will use all legal forms of protest. We are preparing for an electoral revolution," Berdzenishvili said. Saakashvili later travelled to a Georgian-controlled area on the border of the breakaway region of Abkhazia, where he hinted that Russia had a hand in the turmoil. "Georgia has ill-wishers who wait for any mistake to devour us," he was quoted as saying by Interfax. "Our ill-wishers know very well that when Georgia is united, it is invincible. But they know there is always a percentage of traitors they can use... to cast Georgia into chaos. "Saakashvili's vows to bring his country into NATO and the European Union have infuriated Moscow, which has cut travel links with Georgia and imposed a ban on key Georgian exports. Saakashvili returned to Georgia on September 29th from New York, where he had been speaking before the UN General Assembly. A Georgian court ruled on September 29th that Okruashvili would spend two months in pre-trial detention during an investigation into charges of corruption, money laundering, abuse of power and negligence. After being fired last year, Okruashvili re-emerged recently with an announcement he was forming an opposition party, the Movement for United Georgia. Though he produced no evidence, he alleged Saakashvili had ordered him to kill prominent public figures while he was a minister. Georgia is to hold presidential and parliamentary elections next year, and analysts said Okruashvili had the credibility and power base to pose a threat to Saakashvili in the polls. Saakashvili has cultivated close ties with Western countries, in particular the United States, which has provided substantial economic and military aid to the small mountainous state on Russia's southern border.

The US and NATO loyalists supreme
It is curious how powerful atavism is in the history of nations and their inter-relations. The Poles distrust the Russians and the Germans, with excellent reasons in both cases. The Georgians dislike and distrust anything coming out of old Muscovy. The Russians can do nothing right in their view.
A Russian plane penetrated their airspace in August and launched a missile, only the latest in a long list of grievances.

As for the US, it can do no wrong. Is there any other country where the main boulevard to the capital's airport would be called President Bush Avenue? 

Actually, there are several - the Kurdish entities in Iraq. The Kurds - and the Marsh Arabs - are the only beneficiaries of the sorry mess in Iraq.

The Georgians find it only too easy to identify Saddam with any Russian leader (he was in fact a great admirer of Stalin). Russia and Saddam's Iraq were bosom friends. That makes both of them bosom enemies of the Georgians.

Georgia currently has 2,000 soldiers in Iraq, the largest contingent after the US and the UK. The number was increased from 850 in July after Georgia's parliament approved a proposal by President Mikhail Saakashvili, who is fiercely pro-American. The Georgian president and the ruling party have been working to build closer ties with the United States and other Western nations in a bid to gain NATO membership, the most desired of goals.
Nevertheless, Georgia's defence minister says that his country will reduce its military presence in Iraq to 300 soldiers by next summer. Davit Kezerashvili told reporters on September 14th that the planned cut is part of a previous agreement with the United States. Kezerashvili says no reduction is expected before mid-2008.

Russia out; BP in
The Russians may be boycotting Georgia - and harrassing Western companies, such as BP and Shell, as well under the new Putin Doctrine. This is the successor to the Brezhnev Doctrine - that socialist countries should never be allowed to revert to pre-socialist ways. The Putin Doctrine is that everyone, once Soviet, should be made to revert to the Russian sphere and mores if possible. 
Georgia, for all that it engendered their godfather in Stalin and their supreme executioner in Beria, never will.

BP knows that; and is investing in Georgia, to the tune of £300m in 2006. A similar amount is expected to be registered for 2007, It is hoping to recoup thereby what it is losing in recalcitrant Russia.

It all concerns the Baku-Tbilisi-Ceyhan oil pipeline, which is taking Central Asian energy westwards to Turkey and the Mediterranean, Since June last year when the pipeline was commissioned, it has pumped 130m barrels of oil and 160 tankers have been delivering them from Ceyhan. 
There is something symbolic about this. The East is disgorging its mineral riches to the West. The West is dispensing its lucre and way of life to the East. Georgia is after all now a liberal-democracy in a way that Russia is not.

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Action Plan for the economy and security
Amid a cabinet shake-up, President Saakashvili is initiating an ambitious new "action plan" to stimulate economic growth and promote security.

The plan features a significant boost in military spending, taking this year's defence budget to about $767 million. In addition Saakashvili's new programme pledges to create 100 new agricultural processing companies and 100 new hospitals, to build roads to 200 villages, to increase teacher salaries and introduce "niche" specialty training programs for students. The plan also contains a bold promise to deliver annual growth of up to 15 percent, while helping to attract some $2 billion in foreign investment "to put Georgia on the list of the [World Bank's] top 20 business-friendly countries." (The country ranked 37th last year.) 

To finance the programme, the government has proposed amending the 2007 budget to allow for a 430 million-lari (about $259.6 million) increase in state spending. Most of that hike will go to military spending, which would amount to up to 4.5 percent of the Gross National Product, Prime Minister Zurab Noghaideli stated. 

At a September 8th appearance before the parliament's Defense and Security Committee, Deputy Defense Minister Vera Dzeneladze stated that the additional defence funds will be devoted to the construction of a new military base in the western region of Imereti, as well as for procurement of weapons, equipment and new communication systems, according to local media reports. 

While many pro-government MPs have lauded the government's drive and vision, one legislator has expressed concern that the plan could push inflation to dangerous levels. Parliamentarian Vladimer Papava, a senior fellow at the Georgian Foundation for Strategic and International Studies in Tbilisi, fears that a large inflow of foreign currency into Georgia - from privatization and foreign investment, in particular - could hamper the country's price competitiveness for exports, which are declining, while encouraging an already rampant reliance on imports. The phenomenon, known as Dutch Disease, is usually associated with countries undergoing energy-production booms. 

"We are seriously under the Dutch Disease, and the government is doing nothing about it," Papava asserted. "This is our number one problem." 
Prime Minister Zurab Noghaideli has forecast inflation for 2007 at less than 8 percent, down from an earlier projection of 10 percent.

Both Papava and Niko Orvelashvili, the senior expert at the Georgian Economic Development Institute, however, question the estimate. In July 2006, Georgia's annual rate of inflation was put at 14.5 percent, a figure that sparked strong criticism from the International Monetary Fund.

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