SOUTH OSSETIA DONORS STEERING COMMITTEE ADDRESSES

C O N F I D E N T I A L SECTION 01 OF 02 TBILISI 001992

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DEPT FOR EUR DAS BRYZA AND EUR/CARC

E.O. 12958: DECL: 08/06/2017
TAGS: PGOV PREL EAID OSCE GG
SUBJECT: SOUTH OSSETIA DONORS STEERING COMMITTEE ADDRESSES
WATER PROJECTS

REF: TBILISI 1619

Classified By: Charge d'Affaires, a.i., Mark X. Perry for reasons 1.4(b
&d).

Summary
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1. (SBU) In a meeting August 2, the Steering Committee for
the OSCE-led economic rehabilitation projects in South
Ossetia conditionally approved three water-related projects
for contracting, although the Georgian and South Ossetian
sides made final approval contingent on resolving some
remaining technical and legal questions about the projects.
Contracts have not yet been finalized for three school
rehabilitation projects approved in early July (reftel)
because of contractual wrangling with the winning bidders.
International donors stressed the need for urgency in
implementing the projects and for sharing as much information
as possible with the Steering Committee and the sides. End
Summary.

Water, Water Everywhere
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2. (C) Prior to the meeting we had heard several reports,
including from officials at OSCE, that Tskhinvali was once
again without drinking water and that a new round of
water-related reprisals was looming. When we reached
Tskhinvali for the meeting, however, OSCE's Tskhinvali-based

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Project Coordinator Ryan Grist privately assured us that was
not the case. He said that the city had water -- indeed, it
had always had at least some water even at the height of the
crisis earlier in the summer -- and that the dispute seemed
to be on the road to resolution. While this lowering of
tensions may have helped set a positive tone for the Steering
Committee meeting, a separate meeting (immediately before our
meeting) on the older EC-funded South Ossetia program may
have had the opposite effect; several participants arrived
from the first meeting unhappy that EC money for an
electricity project had expired because it was not acted on
in time. Separately, the German DCM told us that he was
concerned that a German specialist, in Georgia to work on
engineering projects as part of the donors' program, had been
waiting for two and a half months for the de facto
authorities to permit her to enter South Ossetia. After
consulting with Grist, the German DCM decided not to raise
the issue -- which apparently originated when the de facto
authorities said the specialist's name had been omitted from
an entry list early in her stay -- in the Steering Committee.


3. (SBU) Once the meeting convened, OSCE reviewed three water
projects, the Avnevi-Nuli-Kimasi water pipelines, the
Tskhinvali reservoir project, and the

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Ksuisi-Gugutiantkari-Divesi pipeline. In each case OSCE had
received a number of bids and made a recommendation for a
contract. While no one voiced objections to the projects or
the recommended firms, each side raised other concerns.
South Ossetian representative Leonid Tibilov sought
assurances that provision of water to the village of High
Avnevi was included in the Avnevi plans. While OSCE
officials said they believed that it was, they promised to
confirm. When a company from Vladikavkaz (North Ossetia, in
Russia) was the recommended winner of the tender for the
Tskhinvali project, Georgian representatives asked whether

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the tender was defined legally as an "international tender,"
something they believed would have required a special process
with the Georgian government. The sides agreed to review
these two questions in coming days with OSCE at the working
level, after which they thought it would be possible to give
the projects final approval. Tibilov requested that the
three projects be approved only as a group.


4. (SBU) OSCE also reviewed the status of a fourth water
project, the construction of a water purification system in
Kekhvi. Grist explained that OSCE had learned about the
availability of other sources of water near Kekhvi, and it
was still reviewing options to see if another approach would
make more sense to address water needs in the area. The
Georgians stressed that they considered the Kekhvi project
one of the top priorities, along with the Tskhinvali
reservoirs and the Edissi-Tskhinvali pipeline, and urged that
work be started as soon as possible. (Note: The Georgians
have privately expressed surprise that OSCE has taken a
slower approach to Kekhvi than to other water projects on the
approved list of projects. It is true that the Kekhvi
project would benefit only Georgian areas, but at the same
time the Tskhinvali reservoir project benefits only
separatist areas. End Note.)

But No School Construction Yet
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TBILISI 00001992 002 OF 002



5. (SBU) Asked by the donors about the three school projects
approved by the Steering Committee July 2, OSCE officials
said the contracts had not yet been signed. They said one of
the winning bidders was asking for a higher price, and the
two others had not yet signed their contracts either. The
OSCE officials said they were trying hard not to agree to a
modified price, because the precedent would likely lead other
companies to request the same. The donors agreed, but
expressed frustration with the continuing delays, especially
with the end of the building season approaching in
mountainous areas.

Comment
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6. (C) Much of this meeting, like previous ones, was devoted
to the sides and the donors asking for more detailed
information about the projects, and OSCE promising to provide
it. Grist expressed hope that communication with the sides
would improve once each side's liaison officers started work
within the OSCE team; he said each side had submitted a name
and these were now going through the OSCE personnel process.
We hope this is the case; better communication would help
reduce delays in project implementation and also permit some
of these technical issues to be resolved before they come
before the Steering Committee. The donors' program as a
whole has moved frustratingly slowly, but we nevertheless
agree with the assessment of Georgian Deputy State Minister
for Conflict Resolution Ruslan Abashidze, who recently
reiterated to us his belief that the South Ossetia donors'
program is the most transparent and constructive of the major
international assistance programs in the separatist regions.

PERRY