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GEORGIA



 

In-depth Business Intelligence

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)

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



Update No: 311 - (29/11/06)

President Mikhail Saakashvili was swept to power in the 2003 Rose Revolution, amid a series of street protests against alleged vote rigging and fraud in parliamentary elections. Since that time, he has pushed Georgia toward closer ties with the West, entering in October a so-called intense dialogue on NATO accession. 
But this pro-Western course has had its repercussions.

Falling out with the Kremlin 
Russian-Georgian relations have worsened since Georgia's pro-Western Rose Revolution in 2004 and reached a new low after Georgian authorities arrested four Russian officers on espionage charges in September, whereupon the Kremlin imposed an embargo on Georgian goods, widening an already existing ban on Georgian wines. Moscow had slapped boycotts, ostensibly for quality reasons, but widely seen as politically-motivated, on Georgian wine and mineral water.
Despite the officers' subsequent release, Russian authorities have arrested and deported many ethnic Georgians and clamped down on Georgian-owned businesses. Moscow began to expel Georgians living in Russia and to curb their remittances home. There are almost one million Georgians living in Russia, who remit home US$2.4m annually, a lifeline for many Georgian households. Relations could scarcely be worse between Georgia and Russia right now, short of outright war
The Russians are petulant at their loss of sovereignty in the Caucasus. They especially regret the loss of Georgia, a great place with fabulous mountain scenery and a splendid coastline on the Black Sea. Dachas in Georgia were the favourite holiday retreats of the old Soviet elite.
Russia still has two military bases in Georgia, which it was due to vacate by 2008. But that is now all in question.
It might have been wiser for the Georgians to have turned a blind eye to the Russian espionage activities until then. After all there is little that the Russians can really do by them to harm Georgia, whereas there is a lot of damage that they can do by other means.

Georgia reels from the pressure
Russian state gas monopoly Gazprom said on November 2nd that it plans to charge Tbilisi US$230 per 1,000 cubic meters of gas, compared with the US$110 that it pays now, increasing economic pressure against Moscow's small southern neighbour. Georgia said on November 3rd it was trying to persuade Gazprom to reconsider its decision to more than double the price for gas supplies, but would also seek to diversify its energy imports. 
Georgian Prime Minister Zurab Nogaideli told a Cabinet meeting that the price hike was obviously political because other former Soviet nations were paying far less. Georgia's foreign minister said the new rate was "the price we pay for our choice" of a pro-Western path. 
Nogaideli pointed out that Ukraine got a price of US$130 for next year and Armenia US$110, and some European Union nations paid less than US$230, an apparent reference to the three Baltic states. He said that Georgian officials were talking to Gazprom hoping to reduce the price it requested. 
Georgian President Mikhail Saakashvili criticized the planned increase but played down its potential effects. "I don't expect any catastrophe, but certainly it's a bad precedent for everybody. Energy cannot and should not become a political tool," he said during a terrorism conference in Monaco. 
Energy Minister Nika Gilauri said that talks were taking place with Azerbaijan, Iran and Turkey to secure alternative supplies of gas. Analysts in Georgia warned of a repeat of the gas war between Russia and Ukraine at the start of this year when Gazprom cut off supplies. 
That stoppage, amid fierce negotiations over a higher price demanded by Gazprom, was seen as punishment for Ukraine's pro-Western policies. It also briefly interrupted deliveries to Europe, sending lasting shock waves through the European Union nations already wary of over dependence on Russian energy supplies. 
Ukraine, which finally agreed to pay almost double at US$95 per 1,000 cubic meters, has since managed to limit the increase for 2007 to US$130 after Russian-leaning Prime Minister Viktor Yanukovych took over as head of government in the wake of his party's success in March polls. 
Neighbouring Belarus faces a fourfold rise in gas prices, although Gazprom is believed to be willing to compromise if the country hands over 50 percent of the state pipeline through which Russian gas transits to western Europe. 
"Russia is increasingly using the energy weapon for political reasons," said Georgian political analyst Ramaz Sakvarelidze. "There is only one aim, to punish Georgia for its policy of integration with NATO and European structures." 

Russia hopes to complete WTO talks with Moldova, Georgia soon
Partial relief is coming from Russia's desire to be acceptable on the international stage. 
Russia hopes to complete talks on its accession to the World Trade Organization (WTO) with Georgia and Moldova in the near future, Andrei Kondakov, director of the economic cooperation department of Russia's Foreign Ministry, said, ITAR-TASS reported. "We hope that (Georgia and Moldova) will be constructive and we'll be able to complete negotiations with them in the near future," he said.
Georgia, which approved Russia's accession to the WTO in 2004, withdrew the approval in July 2006 and said it would renegotiate the issue.

Elections to be brought forward
President Saakashvili proposed changing his young country's constitution to hold presidential elections a year early. Under the proposal, presidential elections would be held in 2008, rather than 2009, to coincide with parliamentary elections. 'There is no need to waste so much time and energy on elections' on separate occasions, he said. 
But with four-year parliamentary terms and a five-year presidential commitment, the following set of elections would again be held in separate years. 
Members of the country's opposition said the move was intended to boost the chances of Saakashvili's National Movement party in the parliamentary elections. 'Saakashvili is not very confident of victory in the 2008 parliamentary elections' and hopes his popularity will benefit members of his party, opposition politician David Zurabishvili told the Russian news agency Interfax. 
Saakashvili, who once enjoyed popularity ratings of up to 70 per cent by some estimates, has seen his popularity fall as the country's economy falters. Regional government elections in early October drew a mere 40 per cent of voters, with Saakashvili's National Movement receiving approximately 60 per cent. 
Zurabishvili, the opposition member, told Interfax Saakashvili's proposal came as a result of the low turnout. 'That's a very alarming signal for the government,' he said. 

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AGRICULTURE

Alternative sources of wheat imports 

Georgia plans to import wheat from Kazakstan, Azerbaijan and a number of other countries as an alternative to wheat imports from Russia, Georgian Agriculture Minister, Mikhail Svimonishvili, said, Interfax News Agency reported.
"Georgia is not facing a shortage of bread. Our companies have quickly adapted and found alternative sources of wheat imports," Svimonishvili said. In particular, Georgia will soon receive 12,000 tonnes of wheat from Kazakstan, 6,500 tonnes from Azerbaijan, and 3,000 tonnes from Romania. "A large humanitarian shipment of wheat from the US is also expected," he said. Georgia consumes annually about 800,000 tonnes of wheat, but it produces only 20-22 per cent of the amount. This year, wheat harvest in Georgia was 160,000 tonnes, which is 30,000 tonnes less than the 2005 harvest.

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ENERGY

Electricity from Iran under barter deal 

Georgia is to begin importing electricity from Iran via Armenian territory in late November, a spokesman for the Georgian Energy Ministry said, Interfax News Agency reported.
During his visit to Tehran, Georgian Energy Minister, Nika Gilauri, signed a barter contract on the delivery of a total of 50 Megawatts of electricity via the Alaverdi power line. Georgia will receive electricity from Iran all through the next winter and will return the same amount of electricity in summer 2007. The volume of electricity deliveries will be increased after the Razdan-Gardabani 330-kilovolt power line linking Armenia and Georgia starts to operate, the spokesman said.

Gazprom to more than double gas price for Georgia 

Russian gas company, Gazprom, plans to raise the price of gas for Georgia to US$230 per 1,000 cubic metres in 2007, from US$110 per 1,000 cubic metres this year.
A source in the company said that these figures are contained in proposals from the Russian company, sent to the Georgian side. Gazprom also notes that contracts have not yet been signed with Georgian consumers, Interfax News Agency reported.
Georgian Foreign Minister, Gela Bezhuashvili, said that Gazprom's plans to increase the price are more politically than economically motivated.
"The Russian side should show us the formula according to which they arrived at this price. We should know where this price comes from and why it is the same as for countries in Eastern Europe," Bezhuashvili, who was in Moscow for a meeting of foreign ministers from the Black Sea Cooperation Organization.
"This is a topic for technical negotiations. I think there is more politics than economics in this price," he said.
Speaking about a possible meeting between the Russian and Georgian presidents at a CIS summit in Minsk, Bezhuashvili said: "Now it is necessary to prepare well for this meeting, to make it as productive and positive as possible." Gazprom is expected to supply Georgia with two billion cubic metres of gas in 2006.

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FOREIGN TRADE DEFICIT

Foreign trade deficit in Georgia soars 74.5% in 9 months 

Georgia's foreign trade turnover grew 46.1 per cent year-on-year to US$3.313 billion in January-September 2006, a source at the country's Statistics Department said, Interfax News Agency reported.
Exports grew 20.6 per cent to US$721.9 million and imports rose 55.2 per cent to US$2.591 billion. The foreign trade deficit increased 74.5 per cent year-on-year to US$1.869 billion in the first nine months of 2006.
Georgia's main trading partner was Russia over the period. Foreign trade with Russia stood at US$466.6 million, or 14.1 per cent of all Georgian trade.
Georgia's other main trading partners were Turkey, which accounted for 12.8 per cent of total foreign trade; Azerbaijan (8.3 per cent); Germany (8.2 per cent); Ukraine (7.9 per cent); Turkmenistan (5.3 per cent); Bulgaria (4.3 per cent) and the United States (4.2 per cent).
Ferrous-based alloys accounted for 9.7 per cent of total exports in the nine months. The share of natural grape wine plummeted to 4.6 per cent of total exports from 9.2 per cent in the same period of 2005. Oil and petroleum products accounted for 13.3 per cent of total imports and cars for eight per cent.

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