Kommersant, Russia
Sept 12 2008

Georgia Rejects Goods of Russia in Favor of Ukrainian Product

In the wake of the military clashes with Russia, Georgia intends to
halt import of Russia’s consumer goods, shifting to the product of
Ukrainian make, GUAM General Secretary Valery Chechelashvili announced
in Kiev. GUAM is a regional organization comprising four ex-Soviet
states – Georgia, Ukraine, Azerbaijan and Moldova.

Ukraine will be the leading trading partner of Georgia. It ranks the
third or the fourth now, after Turkey and Azerbaijan. But the role of
Ukraine will be growing; it will completely substitute for the
economic relations that Georgia had with Russia, Newsru.com reported
with reference to Chechelashvili.

Through the help of the United States, the EU and Ukraine, Tbilisi
will re-establish economy as soon as possible. The worth of
Ukrainian-Georgian economic relation will soon reach $1 billion,
Chechelashvili was sure.

For Georgia, economic aftereffects of the war are grave. The Economy
Ministry has downgraded the outlook for the GDP growth from 12 percent
to between 5 percent and 6 percent. But the size of the humanitarian
aid is impressive. Chechelashvili said Washington appropriated $1
billion, the EU gave ?¬130 million and Ukraine provided 100
million hryvnias.

Given this statement of Chechelashvili, the destiny of Russia’s assets
in Georgia provokes speculations. Russia’s business owns quite a
number of assets there, LUKOIL-Georgia, for instance, covers up to 25
percent of diesel fuel and petrol retail and Bank VTB (Georgia) is one
of the leaders of Georgian banking sector with its 14 branches and 13
service offices in all regions of the country. Itera-Georgia supplies
gas to 103 enterprises in Georgia, including 38 regional gas
distribution companies, in nine of which it owns majority
stakes. What’s more, Russia hasn’t halted gas supplies to Georgia and
the fuel transit to Armenia via Georgia.

Russia had been the fifth biggest trading partner of Georgia before
the South Ossetian war. It had followed Turkey, Azerbaijan, Ukraine
and Germany in terms of the trading turnover.