Georgia Update February 23

UNCLAS SECTION 01 OF 02 TBILISI 000384

SIPDIS

SIPDIS

E.O 12958: N/A
TAGS: PREL PGOV GG
SUBJECT: Georgia Update February 23



1. This cable contains current items of political, economic, and
social interest concerning Georgia during the weeks of February
10-23.

The 81 Richest Georgians?
--------------

2. The newspaper Georgian Times stirred up considerable public
interest with its February 15 list of Georgians with estimated
wealth above USD 10 million. The list includes 81 persons living in
or outside Georgia, many of them former or current members of the
government. The biggest news was the appearance of the names of
former Defense Minister Irakli Okruashvili and Prime Minister Zurab
Noghaideli on the list, with USD 250 and USD 75 million dollar
estimated wealth respectively. Several members of the parliament
also were alleged to be millionaires. The newspaper, whose
credibility has often been questioned, did not explain the precise
methodology that was used to compile the list, but said that the
list was based on capital value owned by individuals and on
information provided by independent experts and the individuals
themselves.

Parliament Debates Murder Cases
--------------

3. On February 16, the opposition proposed creation of a special
parliamentary commission to investigate the high-profile murders in
2006 of Sandro Girgvliani and Amiran Robakidze. Opposition MPs and
some human rights activists believe that high-level Interior
Ministry officials were involved in both murders and have yet to be
held responsible. The proposal failed, however, with many ruling
party MPs arguing that such a commission would be a "vote of no
confidence in the Prosecutor's Office and the judiciary." Some
lawmakers from the ruling party, mainly those with close links to
Parliamentary Speaker Nino Burjanadze, voted for the commission.
Burjanadze, who was visiting Canada at the time of the vote, had
said in Parliament February 13 that Georgian courts should shed
light on the Girgvliani murder case "in a way expected by society."


Parliament Focuses on Property Rights
--------------

4. The opposition has called for a property rights protection bill,
keeping the issue front-and-center since the opening of Parliament's
spring session. Opposition factions have prepared a draft law that
would require a court decision for any confiscation of private
property, limit the time frame for challenging entries in the public
register, and require the Prosecutor's Office to investigate every
case of property confiscation. Responding to the opposition's call
for a property rights protection bill, Parliamentary Speaker Nino
Burjanadze suggested lawmakers set up an inter-faction group to look
into reported cases of property rights' abuse by the authorities and
to elaborate a bill to provide additional protection. Opposition
MPs welcomed this initiative.

Raising Business Awareness of Parliamentarians
-------------- -

5. An office of the UK-based International Association of Business
and Parliament (IABP) opened in the Georgian Parliament on February

13. The project, sponsored by EU and other donors, is designed to
support good governance and economic development through building
transparent and non-corrupt relationship between business and
legislators. IABP is expected to facilitate dialogue between
business and Parliamentarians on business-related issues. Speaker
Burjanadze expressed hope that development of the Georgian model for
business and Parliament could be transferred to other emerging
economies.

German FM Visits Tbilisi
--------------

6. German Foreign Minister Frank-Walter Steinmeier visited Tbilisi
on February 19 and met President Saakashvili, Prime Minister
Noghaideli and Foreign Minister Bezhuashvili. Talks focused on the
role of the EU in the resolution of Georgia's separatist conflicts
and Germany's stance on Georgia's accession to NATO, as well as
Georgia's European Neighborhood Policy action plan, Georgian-Russian
relations and issues related to energy security. Steinmeier said
publicly that resolution of the conflicts should not be a
precondition for the country's NATO membership, although he noted
that the linkage between these two factors "is a difficult issue."
Steinmeier said any Kosovo precedent could not be considered
applicable to the conflicts in Georgia, and added that Germany is
ready to push for conflict resolution issues in Georgia as part of a
German-Russia dialogue.

Visits Highlight Investment from Kuwait, UAE
--------------

7. Prime Minister Zurab Noghaideli visited Kuwait on February 17-19,
saying afterward that the "Kuwaiti government will invest in energy
and infrastructure development in Georgia." The Economic
Development Fund of Kuwait, which has provided USD 18 million for
rehabilitation of Tbilisi roads this year, will provide an
additional USD 720 million for construction of the Namaxvanhesi
hydro power plant on the Rioni river in 2009-2014, the construction
of a highway in eastern Georgia scheduled for 2008, and (with

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co-financing from Turkish investors) the refurbishment of Batumi
Airport. During his visit in the United Arab Emirates (UAE) on
February 15-17, President Saakashvili reportedly discussed the UAE's
potential investment of USD 817 million in real estate projects in
Georgia.

Landing Safely in Tbilisi
--------------

8. Reviews of the new terminal of the Tbilisi International Airport,
which opened February 7, have been generally positive but a leaky
roof led to the resignation of the airport's director February 19.
The new terminal, with an annual capacity of 2.5 million passengers
and a total area of 24,000 square meters, was built by a Turkish
consortium over the past year. In his opening speech, President
Saakashvili described the airport as one of the best in Europe.
Nevertheless, a light rain ten days later caused a leakage in the
terminal's glass roof, which was followed quickly by the director's
resignation. The Batumi Airport in western Georgia, being rebuilt
by the same consortium, is scheduled to open in May 2007.

New Georgian-Turkish Airline to be Launched
--------------

9. A new Georgian-Turkish airline is expected to start flights by
the summer of 2007. The Georgian Industrial Group (GIG) and Pegasus
Airlines have signed a memorandum to create a joint venture offering
competitive prices and western-style services. GIG is a large
industrial consortium, which owns cement factories, the Azoti
fertilizer plant, coal mines, and gas infrastructure assets in
Georgia. Pegasus is the oldest private airline in Turkey. It flies
Boeing 737-400's and Boeing 737-800's to more than 70 countries.

Prospects for Domestic Gas Production
--------------

10. In February Canargo Energy Corporation began exploration of
natural gas deposits near Kumisi lake south of Tbilisi. According
to a memorandum of understanding signed by the Ministry of Energy
and Canargo in March 2006, the government will buy the whole amount
of gas discovered in Kumisi. Canargo, an oil and gas exploration
and production company with operations in Georgia and Kazakhstan
expects initial results of the exploration in the summer of 2007.
Presently Georgia is net importer of gas, mainly from Russia.

TEFFT