Will Russian Investment Win Georgia’s Heart?
By Irakly Areshidze

Moscow Times, Russia
May 11 2004

Aslan Abashidze’s long reign in the Georgian province of Adzharia was
made possible by the continuous support of Moscow, which skillfully
wielded the dictator to influence the political process in Georgia.
President Vladimir Putin, who declined to back Abashidze against a
rising tide of opposition, was therefore primarily responsible for
bringing 13 years of tyranny in the Black Sea province to a peaceful
end last week. Yet, by convincing Abashidze to resign, Putin has
forfeited one of his most effective levers for altering the course
of Georgia’s domestic affairs.

The United States also helped Georgia to resolve the conflict by
backing President Mikheil Saakashvili’s demand for the restoration
of Georgian sovereignty in Adzharia. By repeatedly calling for a
peaceful solution to the conflict, Washington also helped to prevent
the use of military force. During the actual crisis last week, however,
senior U.S. officials were distracted by the prisoner abuse scandal in
Iraq and paid scant attention to events in Georgia. The U.S. role in
securing Abashidze’s resignation should therefore not be overestimated.

Russia’s leading role in resolving the crisis in Adzharia was similar
to its role during the Rose Revolution last year. The administration of
U.S. President George W. Bush actively promoted democratic elections
in Georgia. This gave Saakashvili a strong impetus to launch popular
demonstrations against fraud committed by the government during
parliamentary elections last November.

When the opposition stormed parliament three weeks later, however, the
situation was managed not by Washington, but by Moscow. Igor Ivanov,
then foreign minister, arrived in Tbilisi to mediate between President
Eduard Shevardnadze and Saakashvili, while the United States remained
on the sidelines. Thus Ivanov served as midwife during the difficult
birth of a new Georgian regime, even though the opposition was widely
seen as pro-American.

Since the collapse of the Soviet Union, Georgia has been a focal
point of the Russian-U.S. rivalry in the Caspian region. Moscow has
consistently worked to weaken the Georgian state by stalling on troop
withdrawal, aiding separatist regimes in Abkhazia and the Tskhinvali
region (so-called Southern Ossetia), fomenting a potential conflict in
Dzhavakheti (a region largely populated by ethnic Armenians), and by
supporting Abashidze. Moscow’s goal has been to make Georgia dependent
on Russia for its survival, as it has done with Belarus and Moldova.

For years the United States countered Russia’s efforts, initially
by pushing for the rapid construction of pipelines through Georgia
to carry Caspian Sea oil and gas. Under George W. Bush, the United
States took a more active role, launching a program to help Georgia
upgrade its armed forces. Following the Prague summit in 2002, when
NATO invited seven new members to join the alliance, Republicans in
Washington began to insist that Georgia — and the Caucasus as a whole
— be considered as a priority for future expansion. Their efforts will
likely begin to bear fruit next month at the NATO summit in Istanbul.

Georgia now stands at a historic crossroads. It has the potential,
along with Turkey and a democratic Iraq, to serve as a conduit for the
advancement of U.S. interests in Central Asia and the Middle East, the
region that will likely dominate U.S. foreign engagement for the first
half of this century. For this to happen, Saakashvili’s government must
pursue real political and economic reforms, the United States must
continue to support Georgia during its period of transition, and the
Bush administration must at least partially implement its vision for
the greater Middle East. Georgia would need to become an economically
strong and politically stable member of NATO, much like the Baltic
states, before it could realize its full potential in this scenario.

Such developments would be incompatible with Moscow’s own policy in
the Caucasus, of course. Analysts in Tbilisi are therefore debating
whether Putin actually acknowledges Russia’s defeat in the battle
for the Caucasus and wants to build a new relationship with Georgia,
or if he has merely changed his tactics in an effort to retain Georgia
within Russia’s sphere of influence.

At first glance, the events of last November and last week suggest that
the United States and Russia have reached a compromise on Georgia,
under which Washington would take the leading role in matters of
strategic importance while Moscow would play a constructive but more
limited role. The agreement on ending the U.S.-Russian rivalry in
the Caucasus, reached by Bush and Putin during the Moscow summit in
May 2002 appears to be working.

This optimistic appraisal may be premature, however. Saakashvili was
hugely indebted to Putin for his rise to power, and Putin’s removal
of Abashidze has doubled that debt. Putin will undoubtedly use this
newly gained influence to pursue Russia’s traditional goals, though
he may be changing his tactics.

A number of recent developments suggest that Moscow is now focused on
keeping Tbilisi under its thumb by means of private sector investment
into key sectors of the Georgian economy. Last year, Unified Energy
Systems took control of electricity distribution in Tbilisi. Gazprom
now seeks a similar monopoly in gas delivery. Neither move is motivated
exclusively by profit. When Saakashvili visited Moscow in February, top
Russian businessmen expressed a strong interest in pursuing ventures
in various sectors of the Georgian economy. Given Putin’s influence on
the oligarchs, the Tbilisi media interpreted this interest as a sign
that the Russian government is encouraging business to get involved
in Georgia.

Investment in Georgia remains a risk, and more so recently as many
foreign businesses have come under pressure from the authorities.
Washington is therefore incapable of matching “private,” politically
driven Russian investment in the country.

In the meantime, Russian businesses could quickly dominate the weak
Georgian economy with a relatively small injection of capital. It
seems logical to assume that by taking control of the Georgian economy,
Moscow hopes to influence the country’s domestic and foreign policy. It
is rumored that Russian money is behind the launch of a new television
station in Tbilisi. If true, this would be the first clear sign of
a Russian business in Georgia designed to serve a political purpose.

It is far from certain that this strategy will enable Moscow to stop
Georgia from pursuing NATO membership and a closer relationship with
the United States. So long as Washington keeps up the pressure on
Moscow to remove its military bases from Georgia in a timely manner,
continues to help strengthen the Georgian army and ensures that
Georgia does not enter into a framework agreement with its northern
neighbor, Russian investment in Georgia could indirectly advance U.S.
interests in the country. Such investment will bolster the Georgian
economy and improve living conditions. And a strong Georgia will be
a more attractive ally for the United States and NATO.

Then again, a strong Georgia would also benefit Russia, plagued as
it is by security concerns on its southern flank.

Irakly Areshidze, a political analyst and elections strategist based in
Washington and Tbilisi, contributed this comment to The Moscow Times.

From: Emil Lazarian | Ararat NewsPress