Georgia: Moscow, Tbilisi Open ‘Historic’ Business Talks
By Jean-Christophe Peuch

Radio Free Europe, Czech Republic
May 28 2004

Dozens of businessmen have gathered in Tbilisi to attend the first
Russian-Georgian economic forum. Over the next two days (28-29 May),
Russian private entrepreneurs and government officials will discuss
investment opportunities with their Georgian counterparts. This
unprecedented initiative testifies to the new relationship that has
been growing between Moscow and Tbilisi since the recent change of
leadership in the Georgian capital. The development of Russian-Georgian
economic ties is likely to have important consequences for the entire
South Caucasus region.

Prague, 28 May 2004 (RFE/RL) — Georgia’s Rustavi-2 private television
yesterday said dozens of airliners carrying loads of Russian
businessmen were expected at Tbilisi airport ahead of the conference.

Although the report eventually proved exaggerated, it gives a good
indication of the importance the Georgian side attaches to the event.
Georgian President Mikheil Saakashvili is expected to inaugurate the
two-day forum, which will be attended by Russian Economic Development
and Trade Minister German Gref.

Participants include top managers of Russia’s Unified Energy Systems
(EES) electricity monopoly and Aeroflot national air carrier, as
well as representatives of LUKoil, TransGazOil, Rosnefteeksport and
other energy companies. Prime Minister Zurab Zhvania, Economy Minister
Irakli Rekhviashvili, Finance Minister Zurab Nogaideli, and Interior
Minister Giorgi Baramidze will represent the Georgian government.
Included on the Russian delegation’s agenda is a tour of Kakheti,
Georgia’s most important wine-growing region. The perception of Russia,
which helped secure Shevardnadze’s resignation — and more recently
that of Aslan Abashidze, the unruly leader of the Black Sea autonomous
region of Adjara — has obviously changed in Tbilisi.

Although this is the third time both countries have held business
talks since 1991, never before have talks been conducted on such a
large scale. In comments made to Georgia’s state television upon his
arrival in Tbilisi, Gref said that Russia sees today’s forum as a
“symbol” of its new relations with Georgia.

Vladimir Chkhikvishvili, Russia’s ambassador to Georgia, told reporters
yesterday the upcoming event would mark a milestone in the history
of bilateral ties. “It is both a political and economic event for
our bilateral relations,” he said. “More generally, one could even
say that this is a historical event. As far as I know, it’s been a
long time since such a large and high-level Russian delegation has
come to Georgia.”

A Georgian official statement says neither of the first two bilateral
business conferences has produced any concrete results despite
Tbilisi’s willingness to open its market to Russian capital.

The last Russian-Georgian economic consultations were held in October
2003, just days before street protests spearheaded by Saakashvili and
Zhvania forced then-President Eduard Shevardnadze out of office amid
controversy over disputed parliamentary elections.

Since then, Russian-Georgian relations have significantly improved.
Both Saakashvili and Russian President Vladimir Putin have pledged to
foster political and economic ties between their countries, prompting
positive reactions from the United States, which sees stability in
the Caucasus as key to its foreign-policy agenda.

The perception of Russia, which helped secure Shevardnadze’s
resignation — and more recently that of Aslan Abashidze, the unruly
leader of the Black Sea autonomous region of Adjara — has obviously
changed in Tbilisi.

When they were still in the opposition, Georgia’s current leaders
were among the fiercest critics of Russia’s economic presence in the
country, in particular in the energy field. But now they have adopted
a radically different stance. During a visit to Moscow earlier this
week, Zhvania secured an agreement over the rescheduling of Georgia’s
debt toward Russia, thus paving the way for the resumption of talks
between his government and the International Monetary Fund.

At a meeting with his Russian counterpart Mikhail Fradkov, the Georgian
prime minister welcomed the warming of bilateral ties that followed
Shevardnadze’s departure. “I believe we have now the opportunity to
build a new, closer relationship between Georgia and Russia. To our
great satisfaction, we note that our relations can now develop in a
climate of much greater trust,” Zhvania said.

The two prime ministers agreed to draft a comprehensive economic
treaty that would pave the way for an increased Russian presence in
Georgia’s energy sector.

Addressing reporters at the end of his visit, Zhvania praised
Russia’s EES monopoly for helping his country meet its electricity
needs this past winter. Last December, EES acquired a 75 percent
share in Telasi, the formerly U.S.-owned electricity-distribution
company that services Tbilisi. It also purchased majority stakes in
the Mtkvari power station and other Georgian energy facilities.

EES Chairman Anatolii Chubais has hinted that the company could use
Georgia as a springboard for expanding its presence in Azerbaijan
and beyond. In remarks made during a visit to Baku on 25 May, Chubais
floated the idea of connecting the power grids of Russia, Azerbaijan,
and Iran. He also said his company could help Georgia trade electricity
with neighboring Azerbaijan.

Normalization of Russian-Georgian ties would have another positive
impact on the region’s economy. Having secured its authority over
Adjara, Georgia counts on Moscow’s help to restore control over the
northwestern region of Abkhazia, which formally seceded in 1993 to
develop close political and economic ties with Moscow.

Zhvania this week hinted that in return for Russia’s assistance
in solving the decade-old Abkhaz conflict, Georgia could lift its
objections to the reopening of railroad connections between Russia and
landlocked Armenia through Abkhazia. “We will see how things develop
[with regard to Russian-Georgian ties] and, naturally, any significant
progress in that direction will allow us to consider the opening of
[this] railway line,” he said. “This would be an extremely important
development for our entire region. This is a very important question,
not only for Georgia and Russian-Georgian ties, but also for the
entire South Caucasus region.”

Rail communications between Russia and Armenia were disrupted during
the Abkhaz conflict and, despite an agreement reached at a 1994 CIS
summit, were never restored.

Rail traffic between the Abkhaz capital Sukhum and the Russian Black
Sea port of Sochi resumed early last year amid protests from Tbilisi.
Georgia links the reopening of the Sochi-Sukhum-Tbilisi-Yerevan
transport route — one of Putin’s pet economic projects — to the
repatriation of internally displaced ethnic Georgians to Abkhazia’s
southern Gali district.

Ethnic Georgians made up the bulk of the Gali population before
the war and, although most internally displaced people now have
the opportunity to return to the area, Tbilisi is seeking security
guarantees for them. Fradkov this week said Moscow and Tbilisi had
agreed to seek a solution to the Gali issue that would meet the
interests of all sides involved.

In another good sign, while insisting that the Gali and railroad
problems should be solved at the same time, Georgian parliamentary
speaker Nino Burdjanadze said yesterday that Tbilisi was ready to
look at the whole Abkhaz issue “with new eyes.”