GEORGIA BI-WEEKLY UPDATE SEPTEMBER 28

UNCLAS TBILISI 002439

SIPDIS

SIPDIS

E.O 12958: N/A
TAGS: PREL PGOV PHUM ECON GG
SUBJECT: GEORGIA BI-WEEKLY UPDATE SEPTEMBER 28



1. This cable contains current items of political,
economic, and social interest concerning Georgia during the
weeks of September 8-28.

New CEC Chair to be Chosen Soon
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2. On September 23, a special Selection Commission under the
President's administration completed acceptance of applications for the
position of the Central Election Commission (CEC) chairman, vacant
since previous Chairman Guram Chalagashvili was appointed head of the
National Energy Regulatory Commission in August. By all accounts the
leading candidate is Levan Tarkhnishvili, chairman of the Supervisory
Board of the Public Broadcasting Service (PBS),who is said to be
associated with influential ruling party MP Giga Bokeria. The other
two candidates are obscure and listed as "temporarily unemployed" in
their application materials. The Selection Commission will recommend
two candidates to the president by September 29, who in turn will
choose one for the Parliament's approval within 7 days.

Russian Ambassador Predicts Extinction of Georgian Nation
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3. On September 21, at a meeting of the Georgia-Russia Friendship Fund,
Russian Ambassador to Georgia Vyacheslav Kovalenko said Georgia was a
"relict" nation "on the brink of extinction" in terms of demographics.
The statement touched off a firestorm of criticism from Georgian
officials and commentators. Parliamentary Speaker Nino Burjanadze said
"I would advise Kovalenko to worry about Russia and its demographic
problems, and we will take care of Georgian problems ourselves." The
Ministry of Foreign Affairs summoned Kovalenko for explanation, and
Georgian students staged a rally outside Russian Embassy demanding
Ambassador?s apology. The comments even drew criticism from opposition
figures who have themselves expressed concern in the past about
demographic trends in Georgia. Kovalenko refused to apologize, saying
he was referring to the findings of a Georgian research institute and
was truly concerned about Georgia's huge demographic problem, "which
needs to be urgently addressed."

Georgian Armed Forces to be Increased
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4. On September 12, President Saakashvili began the process to increase
the size of Georgia's armed forces, submitting to Parliament a bill to
increase personnel from 28,000 to 32,000. Members of the ruling party
justified the decision as necessary given Georgia's participation in
international peacekeeping missions, as well as to increase defensive
capacities within Georgia. Opposition spokesmen disagreed, arguing
that current Georgian armed forces are fully capable to face present
challenges. They also argued that it would be more expedient to
enhance the professionalism of the Georgian army instead of boosting
its size. On September 17, despite the critisism from the opposition
parties, the Parliament approved the President's initiative.

Improving Relations with Belarus?
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5. Georgia's Interior Minister Vano Merabishvli paid an official visit
to Belarus on September 17, meeting with President Alexander
Lukashenko, who expressed hopes for restoring the positive relations
Georgia and Belarus enjoyed in the Soviet era. Lukashenko said
previous confrontations between the two countries should be
disregarded. Georgia and Belarus agreed on opening diplomatic missions
in each other's countries and on security cooperation, but put higher
emphasis on boosting economic ties. Lukashenko stressed that the level
of trade did not correspond with the potential of the two countries and
set a target of increasing the current USD 25 million trade turnover up
to USD 100 million in the near future. Lukashenko dismissed the
ensuing speculation of some journalists that the visit was aimed at
building an anti-Russian coalition, saying that "only people with a
morbid imagination could conclude that Minsk and Tbilisi are getting
together against Russia."

Higher Price for Azerbaijani Gas
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6. Sources in both countries have confirmed the intention of Azerbaijan
to increase gas prices for Georgia. Georgia's Energy Minister
Alexander Khetaguri reported that talks on the issue have already begun
and will be completed in a near future. His Azerbaijani counterpart
confirmed this shortly afterward. Currently, Georgia pays USD 110 per
1,000 cubic meters of Azerbaijani gas compared to USD 235 for Russian
gas. According to Georgian media, Azerbaijan's gas price could grow by
up to USD 60, which would entail an inevitable increase in gas tariff,
already increased significantly for two consecutive years. Currently
Azerbaijan is Georgia?s sole supplier, as deliveries from Russia were
suspended in late spring due to low consumption level. However, with
Georgia's increased demand in late fall and winter and Azerbaijan's
inability to fully meet the demand, Georgia will have to resume import
from Russia. Unofficial press reports claim Russia is planning to
demand a higher price as well.

TEFFT