Books on Georgia
Update No: 287 - (29/11/04)
The president makes a potent speech
Georgian President Mikheil Saakashvili believes that fundamental changes have
taken in all spheres of life in the country over the past few months.
"Today we are on a different planet compared to what Georgia used to be
merely a year ago," he told a Cabinet meeting on October 8th. He was
referring to the consequences of the Rose Revolution that brought down Eduard
Shevardnadze a year ago.
He said that the approach to recruitment policy and state service has changed.
"We took over a government that had been unable to pay pensions or wages
for months, had failed to control the regions, seaports or customs, a country in
which law was absolutely absent," Saakashvili said. He summed up by saying:
"The situation in Georgia has drastically changed."
The South Ossetia conundrum
There is one problem inherited from earlier times that is not going away - South
Ossetia. The Georgian-Ossetian conflict was triggered in the early 1990s by
Georgia's decision to strip South Ossetia of its autonomy. South Ossetians
proclaimed independence in response, and Georgia retaliated harshly. To end the
conflict, a peacekeeping force was established in the republic in 1992.
The Mixed Peacekeeping Force includes Russian, Georgian, South Ossetian, and
North Ossetian battalions, 500 men each. North Ossetia is a Russian constituent
republic, where most Ossetians live.
Oligarch-turned-economy minister returns to Tbilisi
The economy is the vital issue for most Georgians, more important than Ossetia.
a new hand is on the tiller here, with remarkable results already happening.
Kakha Bendukidze, the new Georgian economy minister, is an unusual man.
Ultraliberal in his economics, Bendukidze, a Georgia native and a
biologist-turned-corporate raider, became a multimillionaire oligarch in Russia,
though he did not take part in the big, controversial auctions there. Instead,
he bought small companies and put them together. In June, Georgia's new populist
president, Mikhail Saakashvili, asked him to leave his company, United Heavy
Machinery, to return to the land he left after college and help to lift the
"The president wanted to find accomplished, successful Georgians, and take
advantage of their experience,'' says Zeyno Baran, a Georgia expert at the Nixon
Centre, a foreign policy institute in Washington. "Bendukidze was one of
the very few people who made money legally in Russia.''
But Bendukidze, a large man with a big agenda, has ruffled many feathers with
his attempts at market reforms in Georgia - largely by inviting private
investors in - efforts through which he, Saakashvili and a circle of reformers
want to jump-start the economy.
Under Shevardnadze, Saakashvili's predecessor, many tiny enterprises were
privatised, but only a few large, important businesses, like the Batumi Oil
Terminal. Bendukidze's list, however, has 1,800 enterprises of all sizes -
including a proctology clinic, vineyards, factories, a hydropower station,
Georgia's aging airport and beach resorts (refugees included). At the dusty
Ministry of Economic Development, off Tbilisi's main street, Bendukidze has set
up a hotline and a Web site (www.privatization.ge) for anyone interested in
buying government-owned assets. Turks, Europeans, Americans and especially
Russians have been showing interest.
In one of the minister's first privatisations in the former Soviet republic, the
330-room Iveria hotel was sold at auction to German investors in September. As
part of the US$2.3 million purchase price, the investors bought out more than
1,000 refugees from a civil war here in the early 1990's who were still living
in the Iveria, in what was supposed to be temporary housing. Each of the 270
families was to receive US$7,000 - market price, but not in downtown Tbilisi -
for a new apartment, reports The Nerw York Times.
Such are the legacies of former President Shevardnadze, who ruled the country
for more than a decade of political stability, but economic stagnation.
The languishing of the hundreds of thousands of displaced people is "a huge
problem," says Bendukidze. "These people were being used as a
political tool, as a sword of Damocles. They need to be integrated in society
and have property rights like everyone else."
They also are occupying some of Georgia's most valuable real estate, the sale of
which Bendukidze is hoping will help undo decades of decay and revitalize a
country where nearly half the population lives below the official poverty line.
With the look of the Northern California wine country, but replete with elegant
buildings that have seen better days, Georgia is still a developing country,
with per capita income of about US$3,000 a year. Even in the capital, the
electricity is spotty and phone lines are ancient.
"We have to grow at 6 percent a year for 50 years to catch up, and that's
with no mistakes," Mr. Bendukidze says. He wants Georgia to grow into the
next New Zealand, a country whose radical finance ministers of the 1980's and
1990's, Sir Roger Douglas and Ruth Richardson, "turned around a backward,
slow economy into a dynamic one."
Among Mr. Saakashvili's young cabinet members, Mr. Bendukidze, 48, says,
"I'm an old elephant."
Mr. Bendukidze rarely minces words, and his temper is well known among foreign
aid organizations. According to a BBC report, he called International Monetary
Fund representatives "fools" on Georgian television when they
cautioned against major tax cuts he had suggested. And a World Bank employee
recalls being cursed out at his office.
BP to provide US$60 million for security of Baku-Tbilisi-Ceyhan pipeline
It is not just the security of its territory, but of the new vital pipeline
crossing it, that counts for Georgia, It is a vulnerable pipeline, which
insurgents could target. British Petroleum will provide US$60 million to Georgia
over the next five years for additional measures aimed at ensuring secure
construction of the Baku-Tbilisi-Ceyhan export pipeline, Prime Minister Zhvania
said on October 10th.
Zhvania and British Petroleum Azerbaijan President David Woodworth have recently
visited the Borjomi region, where the pipeline is being built. "The
Georgian government is happy that British Petroleum has fulfilled all its
demands regarding the security of the pipeline," Zhvania said.
Zhvania also said British Petroleum will provide another US$10 million for
social and educational programmes in Georgia.
Georgia warns Moscow to stay away from Abkhazia conflict
Georgia has warned Russia not to interfere in a continuing political
stalemate in the breakaway republic of Abkhazia.
The warning came after Georgia's foreign ministry summoned Russia's ambassador
to protest at the movement of a small group of Russian military forces towards
the Abkhaz capital Sukhumi on November 13th.
The troop movement came after supporters of Sergey Bagapsh - the opposition
leader who won a disputed presidential election on October 3rd - took control of
the parliament and presidential administration buildings in Sukhumi.
The occupation, which began on November 12th, is in protest at the government's
decision to order a re-run of the October 3rd ballot.
Georgia urged Russia not to intervene in the Abkhaz power struggle after
Russia's foreign ministry issued a statement saying Moscow would "take the
necessary measures to defend its interests" if Mr Bagapsh's supporters
"illegally" seized power - a reference to seizure of the public
One of the leaders of Mr Bagapsh's movement, Leonid Lakarbaia, also strongly
criticised the Russian statement, calling it "ridiculous" and
"one-sided". However, Mr Lakarbaia said he accepted Russian assurances
that the vehicles moving towards Sukhumi were intended to secure the defences of
a small Russian military headquarters.
Russian troops have guarded Abkhazia's border with the rest of Georgia since a
1992-1993 war between Georgia and the republic in which Russia sided with
Abkhazia. Mr Bagapsh has said he wants Russia to continue in that role but he
has promised to crack down on alleged corrupt ties between Russian business
groups and the Russian-backed Abkhaz regime.
Mr Lakarbaia said Mr Bagapsh's talks with the Russian-backed presidential
candidate, the former prime minister Raul Khajimba, had made no progress but
would be resumed. Mr Bagapsh insists that his election victory should be
recognised and would reject any suggestion of a re-run of the ballot -a demand
of Mr Khajimba.
The seizure of government buildings in Sukhumi has come at a sensitive time for
Moscow, which is struggling to cope with a wave of rebellions and terrorism in
its own Caucasian provinces.
Recently, protesters stormed the office of the president of
Karachayevo-Cherkessia, a Russian republic bordering Georgia, and held it for
two days. The protesters accused the local president's son-in-law of murdering
seven political and business leaders whose bodies were found last week in a mine
Russia is also facing a challenge to its influence in Ukraine from the
presidential campaign of the pro-western opposition leader Viktor Yushchenko.
Russia's President Vladimir Putin was in Crimea at the weekend to support the
campaign of Viktor Yanukovich, Ukraine's pro-Russian prime minister, who faces
Mr Yushchenko in a run-off election.
FOREIGN ECONOMIC COOPERATION
Astana and Tbilisi to expand bilateral trade cooperation
Kazakstan and Georgian interagency work groups for the study of potential
bilateral trade and economic cooperation were scheduled to meet in Tbilisi
recently, New Europe reported.
The delegations were to consist of representatives from ministries and
departments of both countries, said charge d'affairs of Kazakstan in Georgia,
Kazakstan and Georgia have already signed over 60 agreements and contracts. It
is an impressive figure, which stipulated close cooperation in many spheres like
political, trade-economic, cultural-humanitarian, scientific and sport. In 2002
goods turnover between the two countries reached US$8m, in 2003 soared by 12.5m
Euro. The last index showed, according to the results of the past nine months,
that growth is evident. Development and strengthening of long-term and stable
links of good neighbourhood, friendship and cooperation between Kazakstan and
Georgia correspond to fundamental interests of the two nations and lead to
preservation and consolidation of peace on a huge scale - from the Black Sea to
the Tan-Shan Mountains.
Georgian prime minister in London for investment conference
An international conference organized by the European Bank for Reconstruction
and Development and the Georgian Economic Development Ministry took place
recenlty in London. The Georgia Investment Conference was the first major event
designed to provide the international business community with first-hand
political, economic and financial information on Georgia and familiarize them
with the business environment. It is hoped that the conference will create trust
between Georgian and foreign businessmen and establish useful contacts, Radio
Prime Minister, Zurab Zhvania, and EBRD President, Jean Lemierre, opened the
conference. Zhvania was accompanied by the finance, economic development and
Among the participants were businessmen from the UK, USA, Austria and other
The Georgian prime minister made a detailed presentation at the forum,
reflecting the economic reforms and anti-corruption measures being implemented
Similar investment conferences are planned in New York and Berlin within the
next few months.
Georgia industrial output grows 10.6% in Q1-Q3
Industrial output expanded 10.6% year-on-year in Georgia to 1.218bn laris in
current prices, the country's state statistics department said, Interfax News
Georgia's processing industry saw 16.7% growth during this period, output in the
production and distribution of electricity increased 4.3%, as did services for
the provision of gas and water. There was an 8.3% drop in mining and extraction
industry output, however, which fell wholly in the field of the extraction of
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