Identifier
Created
Classification
Origin
07TBILISI2267
2007-09-07 12:06:00
UNCLASSIFIED
Embassy Tbilisi
Cable title:  

GEORGIA BI-WEEKLY UPDATE SEPTEMBER 7

Tags:  PREL PGOV PHUM ECON GG 
pdf how-to read a cable
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UNCLAS SECTION 01 OF 02 TBILISI 002267 

SIPDIS

SIPDIS

E.O 12958: N/A
TAGS: PREL PGOV PHUM ECON GG
SUBJECT: GEORGIA BI-WEEKLY UPDATE SEPTEMBER 7

REF: TBILISI 2169

UNCLAS SECTION 01 OF 02 TBILISI 002267

SIPDIS

SIPDIS

E.O 12958: N/A
TAGS: PREL PGOV PHUM ECON GG
SUBJECT: GEORGIA BI-WEEKLY UPDATE SEPTEMBER 7

REF: TBILISI 2169


1. This cable contains current items of political,
economic, and social interest concerning Georgia during the
weeks of August 18-September 7.

Government Adopts New Agenda
--------------

2. Parliament is expected to adopt the government's new plan action,
entitled For a United and Strong Georgia, in its first plenary
meeting of the fall session September 7. The document focuses on
steps to promote more jobs in the private sector, transparent and
efficient government, an effective judiciary and law enforcement,
adequate defense capability, energy security, and other goals. The
opposition has strongly criticized the program as a "wish list" and
a collection of "toasts," rather than a concrete plan. President
Saakashvili rejected the criticism, and in explaining the main
directions of the program at a government meeting September 5, he
pointedly gave concrete tasks to almost every minister, stressing
their collective and individual responsibility for the success of
the program.

Controversy Surrounds Refugees Minister
--------------

3. Following the government reshuffle announced August 29 (reftel),
media speculation has swirled on the possible dismissal of another
minister, Gia Kheviashvili, Minister for Refugees and Accommodation.
According to allegations leaked to the press, Kheviashvili and MP
Beso Jugeli were involved in a corrupt deal with Minister of Health,
Labor and Social Security Lado Chipashvili, in which both
Kheviashvili and Jugeli improperly received government funding for
expensive medical treatment abroad. Chipashvili and Kheviashvili
denied the allegations, although in the Cabinet reshuffle
Chipashvili lost his ministerial position (and was nominated for the
position of Ambassador to the Czech Republic). While Kheviashvili
remains at his post, some publications are now reporting new
allegations that he was involved in illegal transfers of Ministry
funds. According to these reports, Minister of Finance Lexo
Alexishvili personally confronted him about these transactions.

Georgia Upgrading Radar Systems
--------------

4. Tests are underway on a new modern radar system, to be installed
in Poti, that will oversee an area with a radius of 450 kilometers

and also be able to track objects flying over parts of Russia and
Azerbaijan. Several employees of the Georgian Air Traffic Control
authority have undergone special training in Paris to learn how to
operate the French-made radar system. In parallel to that, the
media is reporting that Georgia will join the NATO radar network in
several months. The Georgian radar system will transmit data to a
NATO database in a real-time regime. According to Georgian
officials, the political decision to this effect has been reached
and talks on implementation are currently underway.

Georgia Amends Budget Due to High Revenues
--------------

5. Prime Minister Noghaideli has announced an increase in Georgia's
budget expenditure by GEL 450 million (USD 272 million),crediting
strong economic growth and investments into the country. The
additional expenditures will be made in five areas: defense reform,
financing investment measures, promoting agriculture, and expanding
the budgets of the Interior Ministry and Justice Ministry. The
Defense Ministry will receive the largest share - GEL 320 million -
of the increase, in connection with Georgia's drive to integrate
into NATO. This brings the defense budget up to GEL 1.3 billion,
out of total state budget of GEL 4.7 billion, or 7.8% of country's
GDP. The parliament is expected to adopt the changes in its fall
session.

Local Officials Arrested for Corruption
--------------

6. In the last two weeks there have been new examples of the
government's anti-corruption campaign, which President Saakashvili
has pledged will continue even if the wrongdoers are high officials
well-connected to the ruling party. Law enforcement officials
detained the head of the local government of Telavi, in eastern
Georgia, on a charge of extortion of USD 75,000 from a businessman
to guarantee his success in an auction. If found guilty, the
official could face 15 years in prison. Another high profile
detention was a former mayor of Poti, a port city on the Black Sea
coast, who was arrested on corruption charges, including
embezzlement of money allocated for port reconstruction.

British Investor to Manage Georgian Railway
--------------

7. The Georgian government has announced it will transfer management
rights for Georgian Railways to the British company Parkfield
Investments for an 99-year period. As explained by Minister of
Economic Development Giorgi Arveladze, the railroad will remain
state property, and the British company will invest USD 1 billion
over 10 years, with most of the money being spent in the first 3-4
years. Critics of the deal have stressed the strategic importance
of the railroad and demanded more information on the new owner. The

TBILISI 00002267 002 OF 002


company reportedly does not have railroad management experience, and
intends to delegate management responsibility to a separate company.
Existing passenger and cargo tariffs will be maintained until 2009,
Arveladze said, and for five subsequent years tariffs will be
determined jointly by the state and the company.

TEFFT