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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: 315 - (29/03/07)

There are grave problems in the Caucasus. It is a cauldron of unholy loves and hatreds, namely in Chechnya and to its south.

The West needs to take advantage of the fact that its central country, Georgia, is now led by an exceptionally intelligent and honest man, Mikhail Saakashvili, who has the makings of a true statesman. While a politician pursues the interests of his clan and so of himself, a statesman advances the cause of a wider entity and of humanity - as De Gaulle did when he gave up Algerie Francaise, saving France from civil war as it so happens, so advancing its interests too. 

Saakashvili is a cosmopolitan in the right sense here, said to be fluent in seven languages, including Dutch, English, French, German, Spanish, and Russian. He also has De Gaulle's advantages of great height and a commanding presence, being unmistakable in a crowd. He is a born leader.

He succeeded, on January 25, 2004, Nino Burjanadze, who acted as a president after President Eduard Shevardnadze stepped down in Georgia's 2003 bloodless Rose Revolution, led by Saakashvili and his major political allies, Burjanadze and Zurab Zhvania.

Some non-Georgian sources spell his name via the Russian as Mikhail. In Georgia, he is commonly known as "Misha," a hypocorism for Mikhail. It is also transliterated Mixeil Saakashvili.

He has the merit of being disliked by the Kremlin, and Putin in particular. Shevardnadze was not exactly a Russian stooge, being a very wily politician, who knew that his interests ultimately lay with Georgia. But he accommodated his policies to those of the Kremlin to a great extent. Saakashvili is far more combative. 

He knows that Georgia has a very special place in the hearts of the Russian elite. It is by far the best place in the Caucasus, indeed in the entire FSU, with a magnificent coastline and countryside, architecture of great antiquity, great wines and brandies and a fine cuisine. Not for nothing is it remembered as the destination of the Argonauts, the land of the Golden Fleece.

Moscow has never forgiven itself for letting this jewel slip out of its grasp. It is using the energy weapon to try and subjugate it again - as it has done with neighbouring Armenia.

Saakashvili blames Moscow for winter power shortages
Saakashvili blamed Moscow for masterminding a "series of sabotage acts" against Georgia after a high-voltage power line and two vital gas pipelines were blown up in Russia's North Caucasus on January 22nd. Saakashvili labelled Russia "an unprincipled blackmailer." 

In a live televised address to the nation, Saakashvili hailed the government's efforts late on January 30th and said that Georgia has successfully passed a test and has overcome the recent energy crisis in the country. He said that the blasts at two gas pipelines in Russia's North Ossetian Republic on January 22nd, which sparked an energy crisis, were "aimed at demoralizing" the Georgian nation. "But we have seen the absolute opposite of this. We have seen how organized and bravely our nation coped with the crisis… We have seen that Georgia has a well-organized, united and well-coordinated governmental team," Saakashvili said. "Our energy technicians have avoided those [problems] which these people [behind the pipeline blasts] aimed at: a total collapse of the [energy] system in the country. We have maintained the vital system," he added. 

He also hailed the activities of the local self-governance bodies and especially stressed measures undertaken by the activists of the ruling National Movement party, who, as Saakashvili put it, "spared no efforts to provide assistance" to socially vulnerable people during the crisis.

"This means that Georgia has an active, effective government, which knows how to deal [with problems]," he stated.

He also said that the way Georgia dealt with this crisis demonstrated how much the country's "positions have strengthened in recent years."

"In the mid-90s there were even worse energy crisis's in Georgia, but this was attracting little international attention. But in recent days, I can say without any exaggeration that Georgia was a major issue discussed around the world. Georgia was top news in the world's media sources. And there were lots of considerations about what a huge threat this [situation involving a energy crisis] poses not only to Georgia, but to Europe as well," Saakashvili said.

"And this is a breakthrough for us. This means that we are a normal country, which has friends," he added.

He said that the Georgian authorities' attempts to find alternative sources of energy supply helped the country overcome the crisis. 

"We have been working for a long time already to secure the energy independence of Georgia. We have spent the last year rehabilitating energy facilities and power lines… In the midst of the crisis we sent our Energy Minister [Nika Gilauri] to neighbouring countries [Azerbaijan and Iran] to negotiate ways out of the crisis. And thanks to all these measures it was possible to avoid a total blackout, because we have started to work in a parallel regime with Turkey, Armenia and Azerbaijan," Saakashvili said. 

"Our brotherly Azerbaijan has restricted itself in its electricity supply and gave electricity and gas to us and I think this was a step which we should highly respect," he stated.

He also said that Georgia is actively working towards significantly reducing Russia's gas share in Georgia's energy supplies by next winter. "When the share of Russian gas decreases, there will be less temptation to manipulate the [gas] prices or to carry out sabotage," Saakashvili said.

He also hailed the launch of an Iranian gas flow to Georgia on January 30, referring to it as "historic."

"Due to the restoration of a gas pipeline [with Azerbaijan] Georgia, for the first time since its independence is not being supplied with Russian gas alone. For the first time we now have an alternative source of gas. And of course we will further intensify work in this direction," Saakashvili said.

"We will also intensify our efforts so that Europe could use our communications for energy resources available in the region," he added.

The Georgian President also said that important energy investment projects are now being prepared by the authorities. "We are now preparing for a large-scale international tender in an attempt to develop our hydro power resources so that in a maximum of three years - in the last year of my first presidential term - Georgia will be able to totally secure its electricity need with its own resources," the Georgian leader stated.

"Georgia has moved from the epoch of destruction into the epoch of reconstruction… There can be only one response to any kind of blackmail, to any kind of sabotage and to any kind of intimidation: we should grow stronger, there is no time to complain - it is time to work and to be well-organized," Saakashvili said.

Putin's reaction
President Putin said on January 31st that the policy exerted by the Georgian leadership towards Russia, especially during the recent energy crisis, hinders improvement of bilateral ties, which "will not improve the living conditions of an ordinary Georgian citizen."

He said that progress in Russo-Georgian relations depends on the "capabilities of separate political figures in Georgia to adequately assess the situation in mutual relations with Russia."

Putin was speaking with about 1,000 reporters from Russia and abroad at a press conference in the Kremlin. "Yes, a misfortune happened and the [gas] supplies were suspended. Our experts were working day and night in the mountains under the condition of -30C temperatures in order to restore gas supplies to Georgia. And what we received in response from the Georgian authorities - only spitting towards us. The citizens of Georgia should know that such a policy regarding Russia will not improve the living conditions of an ordinary Georgian citizen. And the Georgian authorities will bear the responsibility for this. 

"As for our intentions, we think that the Georgian people are more close to us, by their history and culture. How many Georgians lived and still live in Russia? How many citizens of the Russian Federation and former Soviet Union have contributed to the development and strengthening of Russia? We appreciate it greatly and never forget this. We hope that this is a good bridge for strengthening friendly relations in almost all directions. We are ready for it," Putin said. 

The Tbilisi-Vilnius axis
Existing members of both the EU and NATO find it all rather blasé. Indeed, NATO members are in considerable chagrin at the moment, given the parlous goings-on in Iraq and Afghanistan.

Potential adherents to both organizations are another matter. For them the upside of membership is huge - greater distance from Moscow's unwelcome attentions. There is no former Soviet republic of which this is more true than Georgia.

It is forging a new relationship with Lithuania, already a member of both organizations. High-level Georgian-Lithuanian talks on February 2nd in Tbilisi included the issue of deploying a Georgian military unit and civilian specialists to Afghanistan with NATO forces there. Lithuania's Prime Minister Gediminas Kirkilas, Minister of Foreign Affairs Petras Vaitiekunas, Chief of Staff Brig.-General Vitalijus Vaiksnoras, and Defense Ministry Undersecretary Renatas Norkus discussed this issue with their Georgian counterparts during the visit. 

Lithuania operates a Provincial Reconstruction Team (PRT) in Ghor province as part of NATO's International Security Assistance Force (ISAF) in Afghanistan. One option under discussion for the Georgian unit is to join the Lithuanian PRT. Georgian soldiers trained in mountainous terrain in their own country could add value to NATO's multinational contingent in Afghanistan.

Summing up Tbilisi's position, State Minister for Euro-Atlantic Integration Giorgi Baramidze expressed readiness to deploy a highly trained military unit to Afghanistan, as soon as the NATO Command determines the size and place of deployment and gives the green light.

Georgia made this offer to the Alliance officially in December 2006, immediately after NATO's summit in Riga, where Secretary-General Jaap de Hoop Scheffer urgently appealed for reinforcements to ISAF, amid incomprehension from many "old" allied countries. Already during the summit, Georgia's delegation, led by Parliament Chairwoman Nino Burjanadze and including the influential parliamentarians Giga Bokeria and Nika Rurua, made clear that Georgia would make its contribution to NATO's operations in Afghanistan.

This possible new deployment, as well as Georgia's ongoing contribution to NATO's Kosovo Force, was discussed at NATO headquarters in Brussels on February 1st as part of the NATO-Georgia's Intensified Dialogue on Membership Issues. Tbilisi also proposes to host an air force exercise in the framework of NATO's Individual Partnership Action Plan at one of Georgia's several upgraded airfields this coming summer.

Georgian troops were deployed to Afghanistan for several months in 2004, when ISAF temporarily increased its troops during the general elections there. A platoon-size Georgian unit from the Sachkere battalion operated with a British battalion in Afghanistan at that time.

Meanwhile, Georgia has been deploying more than 1,000 troops at any given time to Iraq and Kosovo. A group of 60 U.S. trainers from the Joint Multinational Training Command is continuing a training programme for Georgian troops at the Krtsanisi base. At present, Georgia seems to rank third overall -- behind only the United States and Britain -- in terms of its troop contribution to U.S.- and NATO-led operations, (relative to the troop-contributing countries' population). According to Baramidze, any Georgian deployment to Afghanistan would not come at the expense of the Iraq and Kosovo operations.

When the three Baltic states were candidates for NATO membership, they successfully established a record of "behaving as de facto NATO members." The same is currently the case with Georgia. The difference seems to be that certain "old" members de jure tend to contribute less de facto, compared to some new members and certainly to the aspirant country Georgia at the present time.

Georgian President Mikhail Saakashvili and Prime Minister Zurab Nogaideli acknowledged Lithuania's offer at the concluding news conference. 

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AVIATION

SPM to invest in Tbilisi airport cargo terminal

Britain's SPM plans to invest US$35 million in the construction of a new foreign terminal in Tbilisi International Airport, SPM representative in Georgia, Viktor Kervalishvili, said, Interfax News Agency reported on March 15th.
SPM and Tbilisi International Airport signed an agreement on the construction of the terminal on March 15th. According to the document, the cargo terminal will be built at the airport within a year. SPM will own the terminal for 49 years.
Kervalishvili said the new terminal is of strategic significance "it will make it possible to increase cargo turnover at Tbilisi airport several times over." "According to calculations by specialists, cargo transport through Georgia to Europe will be 20%-22% cheaper than freight transportation which is currently carried out through Dubai," he said.
Tbilisi International Airport acting General Director Temur Chkhaidze said that the British company would pay US$100,000 rent for the terminal per year.

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BANKING

VTB Georgia to offer Eurobonds in spring

VTB Georgia, a subsidiary of Russia's VTB (Vneshtorgbank), plans to offer a debut Eurobond issue worth up to US$15 million in the spring, Iraklii Mekvabishvili, the bank's first deputy general director, said, Interfax News Agency reported on February 26th.
Deutsche Bank will arrange the issue. Mekvabishvili said he thought the coupon rate would be up to 10 per cent annually.
"We plan to establish ourselves on the international market with the Eurobond issue and to raise additional financial resources for the bank's further capitalisation," he said.
VTB owns 53 per cent of VTB Georgia, the European Bank for Reconstruction and Development (EBRD) owns another 18.85 per cent and private individuals own the rest of the shares.
VTB Georgia, formerly United Georgian Bank, is one of the top three banks in Georgia by assets, which totalled 470.4 million Lari as of January 1, 2007. Shareholder capital totalled 51.9 million Lari and earnings before tax were 9.3 million Lari.
VTB Georgia was 218th on the Interfax-1000 list of the biggest banks in the Commonwealth of Independent States in terms of assets at the end of 2005.

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ENERGY

Kazakstan may build oil refinery in Georgia

Kazakstan is considering building an oil refinery in Georgia, Kazak President, Nursultan Nazarbayev, told a news conference after talks with his Georgian counterpart Mikhail Saakashvili in Astana on March 6th, New Europe reported.
"Our energy and mineral resources ministry is considering the possibility of building an oil refinery in Georgia," he said. Saakashvili told the same news conference that the proposed refinery project may carry a price tag of up to US$ one billion.
"It is a huge project. It will cost up to US$ one billion. But it is increasingly important for the economy of Georgia and the region (the Caucasus) as a whole," the president said. The oil refinery may be built in Batumi using Kazak investment, he added.
Cooperation in the energy sector is a key element of Kazak-Georgian contacts, Nazarbayev said. National oil and gas company KazMunaiGaz is planning to build the oil refinery in the vicinity of the Batumi oil terminal, he said.

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FOREIGN TRADE

Georgia-Armenia trade increases

Armenian Ambassador, Grach Silvanian, recently announced that data from the last three quarters of 2006 revealed that trade turnover between Georgia and Armenia exceeded US$90 million, up from the same period in 2005, The Messenger reported. 
"This data is really impressive, and this is only the beginning of deep cooperation in the future between our two countries," Silvanian said. Georgian imports to Armenia went up by whopping 154.3 per cent, and Armenian imports to Georgia increased by 119.4 per cent, The Messenger reported. 
The two countries also collaborated on the economic front. For instance, both sides are involved in the building of the new 400-kilowatt electricity transmission line. After the constriction works are finished, the Georgian and Armenian electrical systems will be able to work in parallel. Georgia and Armenia have also agreed to closely collaborate in solving the social and economic problems existing in the Armenian populated Javakheti region of southern Georgia. Armenia will help restore and develop social infrastructure in the area. The Industrialist and Entrepreneurs Union of Armenia intend to open wholesale trade centres in Tbilisi and Batumi where Armenian industrial and agricultural products will be sold. The Armenian business sector is especially interested in Adjara. An Armenian Consulate is soon to be opened in Batumi, and this city and Armenia's Vanadzor have recently signed a Friendship Agreement.

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TELECOMMUNICATIONS

VimpelCom launches mobile operations in Georgia 

Russia's second largest mobile operator, VimpelCom, has launched mobile operations in Georgia under the Beeline brand, the company said in a press release. Tbilisi Mayor, Gigi Ugulava, attended the presentation of the new operator's service on March 15th, The Messenger reported.
"This is not only a good example of cooperation but also of the fact that business has no borders regardless of political relations," Gigi Ugulava told The Messenger. 
"Despite certain expectations, the company does not intend a wage price war with other operators. Our major weapon is promotional tariff, which actually does not differ much from the one already existing on the market," the company's top executive, Roman Kalinin, said in an interview with the Rustavi 2 TV business news programme. Currently the two mobile phone operators in Georgia are Geocell with 55 per cent market share and MagtiCom with 45 per cent market share, according to the VimpelCom.
Kalinin said that by the end of 2007 Beeline plans to occupy at least 35 per cent of Georgia's market. At this stage the operator will provide service only to consumers in the capital Tbilisi and its nearby town of Rustavi. Service expansion in Batumi is planned by May and the company expects to cover the entire country by 2008. He also said the company plans to invest "about US$100 per consumer."
VimpelCom launched services under its Beeline brand via its Georgian subsidiary, Mobitel. Mobitel started testing its network in Georgia in December 2006.
VimpelCom paid US$12.6 million in mid-2006 for a 51 per cent stake in Mobitel, which at that time held only a GSM-1800 license for Georgia valid until mid-2013.
"Expanding business throughout CIS (Commonwealth of Independent States) is part of the VimpelCom's strategy which made us buy Mobitel," Kalinin said. VimpelCom includes cellular companies operating in Russia, Kazakstan, Ukraine, Uzbekistan and Tajikistan, and Armenia under the Beeline brand.

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