Identifier
Created
Classification
Origin
07TBILISI894
2007-04-20 11:56:00
UNCLASSIFIED
Embassy Tbilisi
Cable title:  

Georgia Bi-Weekly Update April 20

Tags:  PREL PGOV GG 
pdf how-to read a cable
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DE RUEHSI #0894/01 1101156
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R 201156Z APR 07
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 6133
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS SECTION 01 OF 02 TBILISI 000894 

SIPDIS

SIPDIS

E.O 12958: N/A
TAGS: PREL PGOV GG
SUBJECT: Georgia Bi-Weekly Update April 20

REF: 06 TBILISI 3144

UNCLAS SECTION 01 OF 02 TBILISI 000894

SIPDIS

SIPDIS

E.O 12958: N/A
TAGS: PREL PGOV GG
SUBJECT: Georgia Bi-Weekly Update April 20

REF: 06 TBILISI 3144


1. This cable contains current items of political, economic, and
social interest concerning Georgia during the weeks of April 7-20.

Controversy over Border Monastery
--------------

2. A longstanding controversy over the border with Azerbaijan -- and
specifically over the David Gareji cave monastery complex on the
Georgian side -- came to the fore during the past week, following
controversial statements by officials in both countries.
Azerbaijani Deputy Foreign Minister Khalap Khalapov was quoted
referring to David Gareji as an Albanian monastery that "Baku would
not give up." Then Georgian Minister of Culture Goka Gabashvili
proposed establishing a "free tourist zone" on the territory of the
monastery to be shared by both sides. Khalapov's statement produced
an angry response from Georgian Foreign Minister Gela Bezhuashvili,
who said Khalapov should "read up on world history." Gabashvili's
initiative triggered an equally angry reaction from the Georgian
Orthodox Church, and led some opposition figures to accuse the
government of trading a Georgian monument for Azerbaijani gas.

Armenian Language and Election Draw Crowds
--------------

3. Protesters in Akhalkalaki, an area with a large ethnic Armenian
population, called April 14 for the Armenian language to receive the
status of administrative language of the Samtskhe-Javakheti region,
which would permit all official business to be conducted in
Armenian. The protest was reportedly organized by local nationalist
parties Javakhk and Virk. At the same time, several candidates in
May's Armenian parliamentary elections visited Akhalkalaki to
underline their family roots in the area and to promote their
candidacies among locals with relatives in Armenia.

Conservative Party Calls for New National Day
--------------

4. Conservative Party leader Zviad Dzidziguri called for April 9 to
be designated Georgian independence day, replacing the current date
of May 26 -- the day Georgia proclaimed its independence in 1918.
April 9 is the date of Georgia's 1991 independence declaration,
under Zviad Gamsakhurdia, and was also the date of a 1989 massacre
in which Russian troops killed 20 demonstrators in Tbilisi. The
date is associated with Gamsakhurdia in the public mind, and
Dzidziguri, a former Gamsakhurdia ally, may have been appealing to

residual public support for Georgia's first president. In response
to the proposal, Speaker Burjanadze noted that people are accustomed
to celebrating on May 26.

Batumi Booming
--------------

5. Economic development in Batumi continues to boom. During an
April 6-9 visit, Poloff stayed in the comfortable and renovated
Intourist Hotel, noted the opening of many new restaurants and cafes
in the last year, and saw an increased use of the newly refurbished
boardwalk along the coast -- which was peppered with walkers,
joggers, and tourists. The improvement continues with the visible
construction of a line of hotels along the coast as well as freshly
(and colorfully) painted buildings in town. As Poloff heard from a
local artist working on a mural at the hotel, employment remains an
issue, but the signs of improvement and economic growth seem more
visible here than any other part of the country except perhaps
Tbilisi.

Foreign Direct Investment Skyrockets
--------------

6. According to the government's newly released foreign direct
investment (FDI) statistics, Georgia made impressive progress over
the past year. FDI more than doubled in 2006, reaching USD 1.14
billion, up from USD 450 million in 2005. The U.K., the U.S. and
Kazakhstan were the top three investors with USD 182 million, USD
181.9 million and USD 152 million respectively, followed by Turkey,
Norway and Azerbaijan. Russia with USD 27.8 took eleventh place in
the list, much lower than in 2005 (USD 38.7). Prime Minister Zurab
Noghaideli said FDI was expected to reach USD 1.5-1.7 billion in

2007. The new figures raised the eyebrows of many analysts, who
questioned the reliability of the data, especially with regard to
the U.S. and U.K. numbers. In fact, we understand that the U.S.
investment figures were inflated by the USD 130 million stock
offering by the Bank of Georgia on the London Stock Exchange. The
market maker for the stock was a New York bank, hence the investment
was counted in favor of the United States.

Products from the Conflict Zone
--------------

7. On April 17, the Parliamentary Commission on Territorial
Integrity, chaired by MP Shota Malashkhia, gave a presentation on
the current status of a proposal to spur economic develop in the
South Ossetia conflict zone (reftel). The project, called "Product
from the Conflict Zone," envisages support for income-generating
activities in the conflict zone and creation of a special market
both inside and outside the zone for manufactured products. The
overall goal is to promote peaceful resolution of the conflict
through economic cooperation between the Georgian and Ossetian

TBILISI 00000894 002 OF 002


sides. According to Malashkhia, the program would be piloted in the
Georgian-controlled territories, where specially designed small
plants could process raw material -- fruit, timber, mineral water --
into a finished product.

Energy Regulator to be Abolished
--------------

8. Acting on the recommendation of State Minister for Economic
Reforms Kakha Bendukidze, the government has submitted legislation
to Parliament that would transform the independent State Agency for
Regulation of Oil and Gas Resources (SAROGR) into a sub-departmental
body under the Energy Ministry. The Agency was set up in 1999 with
USAID support to administer oil and gas legislation and to exercise
authority in the granting and enforcement of agreements with
investors. Under the draft law, responsibility for agreements would
be assigned to Georgia's Oil and Gas Corporation, and other
functions would be allotted to different governmental structures.

New Head of Georgian National Investment Agency
-------------- --

9. Irakli Beraia, the new head of the Georgian National Investment
Agency (GNIA),told us April 19 that he plans to restructure the
agency to attract foreign investors to local industrial, tourism,
agriculture and forestry sectors. Beraia admitted that, in some
cases, foreign investors face unfair treatment due to the lack of an
independent judiciary. He believes that foreign investors in
Georgia should have stronger guarantees for their rights and should
enjoy equal opportunities during privatization process. Beraia
expressed readiness to support the development and implementation of
the Trade and Investment Framework Agreement (TIFA),and was quite
interested in U.S. programs administered by OPIC, USTDA, and Ex-Im
Bank. Prior to his appointment, Beraia worked as a head of the
Western Georgian Office of the Red Cross and then completed studies
at a diplomatic academy in the U.K.

TEFFT