Identifier
Created
Classification
Origin
08TBILISI2303
2008-12-09 14:41:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Tbilisi
Cable title:  

GEORGIA: SCENESETTER FOR THE VISIT OF SENATOR JOHN

Tags:  PGOV PREL GG 
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DE RUEHSI #2303/01 3441441
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 0546
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
UNCLAS SECTION 01 OF 04 TBILISI 002303 

SENSITIVE
SIPDIS

H - PLEASE TO PASS TO SENATOR KERRY FROM AMBASSADOR TEFFT

E.O. 12958: N/A
TAGS: PGOV PREL GG
SUBJECT: GEORGIA: SCENESETTER FOR THE VISIT OF SENATOR JOHN
KERRY TO TBILISI

UNCLAS SECTION 01 OF 04 TBILISI 002303

SENSITIVE
SIPDIS

H - PLEASE TO PASS TO SENATOR KERRY FROM AMBASSADOR TEFFT

E.O. 12958: N/A
TAGS: PGOV PREL GG
SUBJECT: GEORGIA: SCENESETTER FOR THE VISIT OF SENATOR JOHN
KERRY TO TBILISI


1. (SBU) Summary: Your visit to Georgia comes in the
aftermath of the August conflict, which resulted in Russia's
occupation of and recognition of the independence of South
Ossetia and Abkhazia. Tension along the de facto boundaries
remains high, and no international monitors have had access
to South Ossetia. Although many of those displaced by the
war have returned to their homes, those displaced from South
Ossetia itself and part of Abkhazia have not been granted
access to return. The war is still the dominant political
issue in Georgia. On November 28, in an unprecedented event,
President Saakashvili voluntarily defended his wartime
decisions in testimony in front of a Parliamentary commission
investigating the war. Saakashvili remains an unrivaled
figure who drives Georgian politics, but his wartime
decisions have drawn significant criticism. Opposition
parties and leaders are largely fractured and have not yet
coalesced into a credible electoral alternative. In October,
Saakashvili named Grigol Mgaloblishvili (former Georgian
Ambassador to Turkey) as Prime Minister, who has been charged
with ensuring that international donors fufill their pledges
of assistance. The move generated little public reaction and
reflects no significant change in overall policy direction.


2. (SBU) Domestically, the government of Georgia is focused
on reconstruction of damaged infrastructure, supporting the
economy, and exploring ways to integrate an estimated 30,000
newly displaced persons into undisputed Georgian territory,
at least temporarily. The global economic downturn, coupled
with the fallout of the August conflict, has slowed a once
vibrant Georgian economy that prior to the war enjoyed
double-digit growth rates and was the 15th best place in the
world to do business. In 2009, the government will be
heavily dependent on foreign aid to achieve many of its
reconstruction goals. The USG has pledged $1 billion in
total support and in November, transferred $250 million of
direct budget support to the Georgian Government. A total of
$4.5 billion of aid was pledged to Georgia at an October
Donors Conference in Brussels, to be distributed over three
years, although to date little - other than US assistance -
has been disbursed. Thus far, the government has weathered

both the military and economic storms remarkably well and
Saakashvili remains popular, but substantial challenges
remain.


3. (SBU) While in Tbilisi you will meet the President for
lunch. You may want to congratulate Saakashvili for his
openness to public inquiry and commitment to a new round of
democratic reforms, to express support for Georgia's
territorial integrity and development and recovery efforts,
and to encourage the president to support an even more
plualistic democratic and system and greater media freedom.
You will also have the opportunity to discuss economic
challenges with the Prime Minister, compare legislative notes
with the Speaker of the Parliament Bakradze and meet with
leading members of the opposition both inside and outside of
Parliament. End Summary.

SAAKASHVILI: STANDING TALL IN THE AFTERMATH OF THE WAR, BUT
FACING CHALLENGES


4. (SBU) In an effort to counter growing Russian PR efforts
to define the conflict, at the end of November, President
Saakashvili voluntarily testified in front of Parliament in
what has been dubbed a first in the post-Soviet space. The
country watched on live TV as the President sat before the
Commission for nearly five hours, first reading a prepared
QCommission for nearly five hours, first reading a prepared
statement and then answering the questions of the
commissioners. Saakashvili admitted readily that he had made
the decision for Georgian ground forces to enter South
Ossetia in order to protect Georgian citizens in the
territory. Saakashvili defended the decision as
"inevitable," because Russian troops were advancing into
South Ossetia and Georgian-controlled villages were being
heavily shelled. Saakashvili claimed repeated attempts to
speak with Russia's leaders and stop hostilities were
rebuffed, and that he and the government were left no choice
but to try and defend Georgia's citizens and sovereignty by
force. Saakashvili argued that any responsible democratic
government in Georgia would have reached the same decision.
He said Georgia was neither a loser nor a winner in the war,
as the struggle continues. However, he said the invasion
demonstrated once and for all that Russia could not be
considered a "peacekeeper" in Georgia.


5. (SBU) Despite the conflict, President Saakashvili
remains broadly popular in the wake of the August conflict.
A September USAID-funded International Republican Institute
(IRI) poll suggests Saakashvili continues to benefit from a
public seeking stability. His party, the United National

TBILISI 00002303 002 OF 004


Movement (UNM),has an overwhelming majority in Parliament in
part because some opposition leaders rejected their seats to
protest what they term as unfair parliamentary elections last
March. One opposition faction, the Christian Democrats,
accepted its mandates in Parliament and has seen its public
standing grow. The remaining opposition appears fractured;
some are calling for new parliamentary and presidential
elections and staging protests, while others are starting to
doubt the utility of constant protests and unpopular
ultimatums urging the President to resign. According to the
IRI poll, the popularity and standing of opposition
politicians have dropped and no figure has emerged to be the
leader of a coherent opposition movement.


6. (SBU) The situation has begun to shift in recent weeks.
On November 23, since the poll was conducted, former
Saakashvili confidant Nino Burjanadze launched her own party,
Democratic Movement-United Georgia, which hopes to present a
credible alternative to President Saakashvili and the UNM.
On December 5, Georgian Ambassador to the UN Irakli Alasania
tendered his resignation. Alasania has long been courted by
both the government and the opposition, and appears to be on
the verge of announcing his future political intentions. In
the wake of Alasania's resignation, Prime Minister
Mgaloblishvili announced two rounds of cabinet changes. On
December 6, Grigol Vashadze, current Minister of Culture and
former Deputy Foreign Minister, was named Foreign Minister.
Nika Gvaramia, a former Justice Minister, was named the
Education Minister. Georgia's Defense Minister during the
conflict, Davit Kezerashvili, was initially replaced by his
deputy Batu Kutelia on December 5, and then Kutelia was
replaced December 9 by Georgia's Ambassador to the United
States, David Sakharulidze. Also on December 9, Lasha
Zhvania, Chairman of the Parliamentary Committee for Foreign
Affairs and former Georgian Ambassador to Israel, replaced
Eka Sharashidze as Minister of Economic Development, and MP
Nika Rurua, Deputy Chairman of the Committee for Defense and
Security since 2004, became Minister of Culture. The new
line-up indicates Saakashvili's interest in bringing more
dependable loyalists into the Cabinet and preempting
recommendations to make changes expected from the special
parliamentary committee investigating the war.


7. (SBU) On the issue of broader political reform, the
government has released a document laying out a variety of
planned political reforms to improve democracy and pluralism
in Georgia. The document acknowledges the mistakes the
government made in its use of force to quell protests in
November 2007. The document closely follows President
Saakashvili's September "State of the Nation" address to
Parliament and his address to the UN General Assembly, in
which he outlined his vision for a more democratic Georgia.
The proposed (and in some cases completed) reforms include
measures to strengthen Parliament; increase judicial
independence; strengthen and increase the role of the
opposition; and foster a more open media environment.
Opposition members are skeptical of government motivations
and are not satisfied with the breadth and pace of reforms.
Opposition leaders are calling for, among other things, a
freer and more fair media environment; a change to the
electoral code; and more opposition access to
decision-making. In spite of opposition dissatisfaction,
Saakashvili's administration appears committed to making good
QSaakashvili's administration appears committed to making good
on President Saakashvili's reform promises.

THE ECONOMY: RECOVERING, BUT UNDER STRAIN


8. (SBU) On the economic front, the Georgian economy seems
to be recovering albeit slowly, after the shock of the
Russian invasion in August. Preliminary estimates for
negative growth have been revised and the government
privately expects total GDP growth for 2008 to be around 4-5
percent, well below last year's growth of 12 percent. The
GOG is predicting four percent GDP growth for 2009, although
some commentators suggest this figure is too optimistic, and
will likely be closer to two percent. The real test of the
economy will come in the first quarter of 2009 when revenues
traditionally slow. The government has real concerns that
unemployment numbers could skyrocket as businesses
re-evaluate their business in light of the August conflict
and overall global financial crisis. While still weakened,
the banking sector has been resilient and some modest lending
has resumed. A recent devaluation of the Georgian lari
proceeded smoothly, but the public is wary that further
devaluation is likely as the dollar continues to appreciate.
The overall credit crisis still threatens the recovery of the
Georgian economy, which is heavily dependent on foreign
direct investment (FDI) for growth. The conflict has slowed
the FDI stream considerably, and the government seeks to

TBILISI 00002303 003 OF 004


reassure investors about the stability of Georgia's market. A
Deputy Secretary of Commerce-led trade delegation in October
was greatly appreciated by the Government and led to several
new investment deals.


9. (SBU) Georgia does not appear to face immediate- or
medium-term liquidity problems. Tax collection has resumed
to normal levels, although the government fears a difficult
first and second quarter when budget revenues generally slow.
The government worries that a slowing local and global
economy will exacerbate this problem, but hopes to be able to
fill some budgetary holes with foreign aid. In general, the
Georgia is committed to its long-term growth strategy of
lowering taxes and simplifying the tax code; reducing
financial and business regulations to foster an open business
climate; aggressively privatizing government held assets; and
focusing funding on infrastructure projects to provide for
long term economic growth. The conflict has forced the
government to redirect some of its spending to acute social
needs, in particular those of internally displaced persons
(IDPs). However, the long-term economic plan remains intact.
Georgia's economic team has seen success in the past: in
2008, Georgia was named the 15th best country in which to do
business by the Economist. The economy will continue to be a
key domestic issue as the President Saakashvili and the
ruling National Movement have substantially staked their
electoral fortunes on the ability to provide robust economic
growth.

THE CONFLICTS: STILL TENSE, WITH URGENT SECURITY AND HUMAN
RIGHTS CONCERNS


10. (SBU) The situation on the ground along the
administrative boundary lines of Abkhazia and South Ossetia
remains very tense and is unlikely to improve in the short
term. Violent, sometimes fatal incidents are frequent,
primarily caused by Russia, Abkhaz or South Ossetian
soldiers, and carry considerable risk of escalation. Three
international organizations monitor the situation and help
deter the resumption of hostilities: the UN Observer Mission
in Georgia (UNOMIG),which operates inside and outside
Abkhazia; the OSCE Mission to Georgia, which currently
operates outside South Ossetia; and the EU Monitoring Mission
(EUMM),which currently operates outside both regions. Both
the OSCE and EUMM have been effectively blocked from crossing
the boundaries, which limits their effectiveness; no
international organization except for UNHCR has regular
access to South Ossetia, increasing the concern of
humanitarian crisis. Russia has publicly announced it will
maintain 3,800 troops in each of the breakaway regions and is
reportedly building military bases in both. Although the
EUMM has been working with the Georgian government to keep
its military forces away from the boundaries, no
international organization has been able to work on this
issue with the Russians or the de facto governments on the
Abkhazian and South Ossetian sides. The international
community therefore has little means to determine if the
Russian and de facto governments are taking steps to prepare
for renewed hostilities.


11. (SBU) Points 3 and 5 of the August 12 cease-fire
agreement respectively require free access for humanitarian
assistance to the conflict zones and the withdrawal by
Russian forces to their positions held before the war.
Russia and the de facto authorities, in particular the South
Ossetians, have not provided free access to humanitarian
organizations, and Russia has not withdrawn its forces to
Qorganizations, and Russia has not withdrawn its forces to
their pre-war positions. Particularly egregious examples
include the massive increase of Russian military presence in
both regions and the occupation of the Akhalgori Valley in
eastern South Ossetia, which before the war was outside of
the "zone of conflict," was administered by Georgian
authorities and had no Russian presence. The lack of access
by humanitarian organizations, in particular to South
Ossetia, has left the international community unable to
answer serious questions about the human rights situation in
both regions and with no ability to investigate the charge
that the South Ossetians engaged in ethnic cleansing. Over
20,000 displaced persons from South Ossetia cannot return to
their homes, several hundred cannot return to their homes in
Abkhazia, and there is considerable evidence of an
intentional campaign to drive ethnic Georgians from their
homes, then destroy those homes to prevent their return. A
total of about 30,000 new IDPs, combined with hundred of
thousands of IDPs from earlier conflicts, have created
significant humanitarian challenges. The government has
impressively managed to build several thousand new homes for
many of the new IDPs in time for winter, but longer-term
needs remain, such as jobs. However, as increased attention

TBILISI 00002303 004 OF 004


is being paid to the newly displaced, an older generation of
IDPs from the 1993-94 war with Abkhazia, numbering more than
225,000, is beginning to feel resentment for what it
considers years of neglect.


12. (SBU) On the political level, the EU has taken the lead
in starting a process of international discussions in Geneva
(in accordance with Point 6 of the cease-fire). Official
parties to the talks are the EU, OSCE, UN, Georgia, Russia
and the U.S.; there has been considerable controversy over
the informal participation of the de facto authorities, as
well as representatives of Tbilisi-supported Abkhaz and South
Ossetian groups. The second round of talks on November 18-19
went reasonably well, with all participants willing to accept
security/stability and IDP returns as the basic areas for
discussion. The next meeting will be on December 17-18.
Although we hope that this forum can provide a space to
address the more urgent issues, such as security,
consideration of the thornier issues, such as the final
political status of the two regions, will likely be postponed
for some time.

GEORGIA AND NATO


13. (SBU) Georgian government officials hailed the December
NATO Ministerial in Brussels as a victory for Georgia. They
said the decision to intensify cooperation between Tbilisi
and NATO and invigorate the NATO-Georgia Commission (NGC)
would play a central role in moving Georgia toward
membership. Opposition figures, however, have been more
critical, stating that the ministerial's result is not a
victory, but a significant loss. They blame Saakashvili for
ruining Georgia's chances at MAP. Both the government and
opposition are trying to present the Brussels Ministerial to
their advantage. Opposition attacks on the issue are
stronger than in the past, and the fact that MAP appears off
the table provides an opening on a key Saakashvili policy
objective. Russian Prime Minister Putin was also widely
quoted in the Georgian press as hailing the decision in yet
another stab at the Saakashvili government. In spite of the
Government's best efforts, some Georgians see Brussels as a
defeat for the U.S. and for Georgia and are questioning
Georgia's Euro-Atlantic strategic choice. In spite of that,
for now, most Georgians support membership in NATO and still
see it as their strongest, irreversible step into the West.
TEFFT