SUCCESSFUL LAUNCH OF SOUTH OSSETIA ECONOMIC

C O N F I D E N T I A L SECTION 01 OF 02 TBILISI 002708 SIPDIS SIPDIS DEPT FOR EUR DAS BRYZA AND EUR/CARC E.O. 12958: DECL: 10/10/2016 TAGS: PREL PGOV EAID GG SUBJECT: SUCCESSFUL LAUNCH OF SOUTH OSSETIA ECONOMIC REHABILITATION PROGRAM Classified By: Ambassador John F. Tefft for reasons 1.4(b) & (d). Summary -------------- ¶1. (C) International donors, OSCE, Georgia, and South Ossetia kicked off the new economic rehabilitation initiative for South Ossetia with the first steering committee meeting in Tskhinvali October 6, much of which was open to Georgian and SIPDIS South Ossetian media. DCM signed a memorandum with OSCE to make available USD 2 million of USG funding to support implementation this year. Georgia reiterated its pledge to match the total contribution of all other donors, and suggested joint police patrols as a step to build trust between the sides. The South Ossetians, despite some political comments aimed at the Georgians, expressed strong support for the economic program and a willingness to work with the Georgians and other donors. This event was a positive change in the climate of increasing tensions between the sides, and many of the participants are now aiming to continue the dialogue at the Joint Control Commission (JCC) meeting scheduled for Vladikavkaz October 13-14. End Summary. Helping the People -------------- ¶2. (U) Representatives of a broad range of donors traveled to Tskhinvali for the event, filling the JCC conference room to SIPDIS capacity. OSCE Acting Head of Mission Veselin Nikolaev stressed that donor support was aimed at helping the people in the region; he called for Georgian, South Ossetian, and international experts to work as a team, and stressed the importance of security and freedom of movement. Frank Geerkins of the Belgian MFA stressed the support of the OSCE Chairmanship for the program. Speaking for the USG, DCM said our assistance aims to support just and democratic governance, at national and region levels, to encourage and assist leaders to invest in the needs of the people, and to expand opportunities for economic growth. Following the meeting, DCM and Nikolaev signed a memorandum on the USG contribution of USD 2 million to support an economic development center. DCM stressed that further USG support would depend in large part on the commitment and progress demonstrated by the sides to improve conditions for the region's inhabitants and to further the peace process. Civility Breaks Out Between the Sides -------------- ¶3. (U) Both the Georgian delegation, represented by State Minister of Conflict Resolution Merab Antadze, and the South Ossetians, represented by JCC deputy co-chair Leonid Tibilov, expressed strong support for the program and a willingness to work with each other, as well as with OSCE and other donors. Antadze stressed that next year's Georgian budget will include a sum for the program equal to the amount contributed by all the other donors combined, expected to be USD 10 million. Ruslan Abashidze, Antadze's deputy, called for the revival of an old practice of joint Georgian-South Ossetian police patrols in the region. Tibilov reacted positively to the police idea, and suggested further discussions, including perhaps at the JCC in Vladikavkaz. Tibilov took a generally supportive, cooperative tone during the meeting, although he did veer off onto pointed political comments on occasion, for example blaming Georgia for a deadly September shootout in the conflict zone. The Georgians refused to be drawn in, arguing that the steering committee meeting was not the right format for such exchanges. The Russians, whose Embassy in Tbilisi remains drawn down, were represented at the meeting by Murat Tkhvostov, North Ossetian JCC co-chair, who stressed that economic success will strengthen work in the political sphere. Comment -------------- ¶4. (C) The most significant fact about this meeting was that it took place at all, given the deteriorating relations between the sides, including the reported October 2 statement by South Ossetian "president" Kokoity that he was breaking off talks with Georgia. It now appears that statement was not meant to be taken literally. The Georgians tell us OSCE is working to organize the JCC meeting as scheduled in Vladikavkaz October 13-14, despite the logistical hurdles caused by the Russian flight ban and closure of the Upper Lars-Kazbegi land crossing. The Georgians understand that Russia will likely allow a charter flight from Tbilisi to Vladikavkaz and back. The Georgians and South Ossetians appear to have found avenues to renew the dialogue, but we will need to ensure that the positive remarks in light of a 10 million dollar donation by the international community become real steps forward in the process of finding a political solution, including by using the expanded format to increase the participation of the international community in TBILISI 00002708 002 OF 002 the political dialogue. Both sides have now committed themselves very publicly to the economic rehabilitation program, and we will want to use this success in internationalizing the political process so we can move forward toward a solution. TEFFT