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Georgia: Moscow, Tbilisi Open 'Historic' Business Talks

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."