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GEORGIA

NEWS REPORT

 

In-depth Business Intelligence

Key Economic Data
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 3,324 3,100 3,000 124
         
GNI per capita
 US $ 650 590 590 151
Ranking is given out of 208 nations - (data from the World Bank)

Books on Georgia

REPUBLICAN REFERENCE

Area (sq.km)
69,700 

Population 
4,934,413 

Principal 
ethnic groups 
Georgians 68.8%
Armenians 9% 
Russians 7.4%

Capital 
Tbilisi 

Currency 
Lari

President 
Mikhail Saakashvili

  

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 Georgian economy. 
"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 buildings.
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 shaft.
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.

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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, Nauryz Aidarov.
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.

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FOREIGN RELATIONS

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 Imedi reported.
Prime Minister, Zurab Zhvania, and EBRD President, Jean Lemierre, opened the conference. Zhvania was accompanied by the finance, economic development and interior ministers.
Among the participants were businessmen from the UK, USA, Austria and other countries.
The Georgian prime minister made a detailed presentation at the forum, reflecting the economic reforms and anti-corruption measures being implemented in Georgia.
Similar investment conferences are planned in New York and Berlin within the next few months.

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INDUSTRY

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 Agency reported.
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 metal ores.

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