PARLIAMENT CONFIRMS MINISTERS, ALEKSISHVILI WAITS

UNCLAS SECTION 01 OF 02 TBILISI 002308

SIPDIS

SENSITIVE

SIPDIS

DEPARTMENT FOR EUR/CARC

E.O. 12958: N/A
TAGS: PGOV SENV SOCI GG
SUBJECT: PARLIAMENT CONFIRMS MINISTERS, ALEKSISHVILI WAITS

REF: A) 07 TBILISI 2169, B) 07 TBILISI 2221


1. (U) Summary: On September 7, the Georgian Parliament approved the
new Cabinet of Ministers (ref A) at its first fall session after the
summer holidays. The nomination of the former Minister of Finance,
Aleksi Aleksishvili, to be President of the National Bank of Georgia
was not considered (ref B). Parliament may consider his nomination
around the end of September. The changes to the Cabinet were
announced by Prime Minister Noghaideli on August 29, but as the
changes affected more than one third of the Cabinet, parliamentary
approval was required. The six new ministers are not unknown, as
all have previously held leading positions in the government. End
summary.


2. (U) Davit Tkeshelashvili - confirmed as Minister of Labor, Health
and Social Protection, has held the position of Minister of
Environment since 2006. Tkeshelashvili was a member of Georgia's
parliament since 1995, where he held various positions from Deputy
Leader of the Majority to Head of the Subcommittee on Media
Relations of the Human Rights Committee. A lawyer by background,
Tkeshelashvili completed his master's degree in law at Emory
University on a Muskie fellowship. At one of the committee
hearings, Tkeshelashvili said that while he does not have a medical
background, he is not going to interfere with the professional work
of medical doctors. Even so, the government intends to reform the
entire system.


3. (U) Nika Gilauri - confirmed as Finance Minister, held the
position of Energy Minister since 2004, he served longer as minister
in one position than any other person. Prior to his ministerial
appointment, Gilauri held the position of financial manager at the
Irish Company, ESBI Tbilisi, and financial consultant at Iberdola, a
Spanish Consortium in Tbilisi, Telecom Georgia, and Center for Small
Business Development, Philadelphia. Gilauri holds a master's degree
in International Business Management from the University of
Philadelphia. PM Noghaideli has characterized Gilauri as a
"stubborn," principled person. He is bright, witty and energetic.



4. (U) Gilauri enjoys the confidence of PM Noghaideli and President
Saakashvili, not least because of the remarkable recovery of the
Georgian energy sector under his administration. USAID provided
policy advice under one program and a contractor who managed the
electric utility UEDC under another while he was Minister. In the
last few years, he insisted that renewing the policy advice program
was unnecessary. Although he does not have financial experience,
Noghaideli indicates that he is relying on Gilauri's intelligence
and drive to make him a good Minister of Finance.


5. (U) Davit Chantladze - confirmed as Minister of Environmental
Protection and Natural Resources, has held the position of Deputy
Minister in that Ministry since 2005. Before that, Chantladze held
various positions in private business and worked as a business
specialist at the US Embassy, Tbilisi. Chantladze holds a diploma
from the London School of Economics.


6. (U) Eka Tkeshelashvili - confirmed as Minister of Justice, was
formerly the Chair of the Tbilisi Court of Appeals. Prior to that,
Tkeshelashvili held positions as Deputy Minister of Interior and
Deputy Minister of Justice. Tkeshelashvili has a master's degree
from the University of Notre Dame, Indiana and is a Muskie/FSA
graduate fellowship recipient.


7. (U) Alexander Khetaguri - confirmed as Energy Minister, worked at
the Georgia National Energy Regulation Commission after 1999.
Khetaguri holds a master's degree in Energy Management from Tbilisi
State University, and has a degree in computer science.


8. (U) Khetaguri was Deputy Minister of Energy under Gilauri from
2005 until 2006. He became President of the Georgian Oil and Gas
Corporation after its previous head resigned due to corruption
charges. He led Georgia's negotiation team with the Azeris last
year and secured additional amounts of gas when supplies from the
Shah Deniz line were delayed. Khetaguri has a more serious mien
than Gilauri, but is technically fully as competent, if not more so.
He attended two short training programs on utilities management and
finance in the United States.


9. (U) Aleksi Aleksishvili - nominated for the position of the
president of the National Bank, held the position of the Finance
Minister since June 2005. Prior to that, Aleksishvili was Minister
of Economic Development and Deputy Minister of Finance.
Aleksishvili is another recipient of a Muskie fellowship, and holds
a Master of Arts in Public Policy from Duke University, North
Carolina. During parliamentary debate on his nomination, Speaker
Burjanadze stated she would not support Aleksishvili's candidacy.
She fears that Aleksishvili will not be independent as the head of
the National Bank. He was elected to the National Bank Board on
September 11. Parliament is expected to consider Aleksishvili's

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nomination as bank president by the end of September.


10. (SBU) Aleksishvili was neither a vocal nor controversial member
of the Cabinet as Finance Minister. He was overshadowed by the
Prime Minister, a former finance minister himself with strong
opinions about how the job should be done. During Aleksishvili's
term as Minister, tax and privatization revenues skyrocketed as
better collections and new, lower tax rates reduced the gray economy
from an estimated 70% of production to 20% after the Rose
Revolution. A consolidation of the revenue agencies was undertaken
and the notorious Financial Police somewhat reined in. These
decisions were most likely Noghaideli's. If Aleksishvili is
confirmed as President of the National Bank of Georgia, he will be
far more deferential to Noghaideli than was its former head, Roman
Gotsiridze. The central bank has a leading role to play in the
fight against inflation, which is currently the number one threat to
Georgia's economic stability. Noghaideli once told us that but for
IMF restraints on government spending and the tight money policies
it counseled, growth in 2006 would have been two or three percentage
points higher than the 9.4 percent it was. While he went along with
IMF recommendations Noghaideli has wondered aloud with us on several
occasions whether Georgia should follow the policy prescriptions of
advisors like Andrei Illarionov, who counsel that countries at the
stage of development of Georgia must be ready to tolerate inflation
for the sake of faster growth. It remains to be seen whether the
National Bank under Aleksishvili will be able to jawbone the
government into controlling spending and limit the growth of the
money supply to a rate where inflation remains in control.


11. (U) The shuffle of Ministers is intended to infuse new energy in
the work of the Cabinet. "The goal of the latest cabinet reshuffle
is to achieve even more efficiency," said PM Noghaideli, while
President Saakashvili stressed that despite some changes in the
Cabinet, Georgia has a stable, united team. "This is a stable group
which speaks with one voice and is result-oriented," said
Saakashvili. Opposition is not supporting the changes, claiming
that the reshuffle is only a signal that preparations for next
year's parliamentary and presidential elections have begun. The
reshuffle was also criticized by speaker Burjanadze, who complained
that the government had not consulted with her on the proposed
changes beforehand (ref B).

TEFFT