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Georgia: Shevardnadze Pledges Commitment To Market Economy

Washington, 18 July 1997 (RFE/RL) - Georgian President Eduard Shevardnadze says it is "close to a miracle" the way his country has been recovering from over two years of chaos and bloodshed, becoming politically and economically stable and pushing ahead with reforms.

Small scale privatization is nearing completion, over 70 percent of the nation's economy is in the private sector, inflation is down to around four percent, the economy is growing, and reforms of the structure for business and investment are rapidly being adopted, he says.

"Georgia is committed" to the goal of becoming a fully-functioning market economy, he told a group of leading American business people and investors who gathered at the U.S. Overseas Private Investment Corporation (OPIC) in Washington Thursday. It was Shevardnadze's opening appearance of a hectic two-day visit.

U.S. officials who welcomed the Georgian leader were even more generous in their praise of the country's situation. "Georgia is one of the top investment opportunities in all the nations of the former Soviet Union," said Richard Morningstar, the U.S. President's and State Department's Special advisor on relations with these countries.

Still, the hardest question came from a small American businessman who has been operating a joint venture in Georgia since 1993. "We came to Georgia originally because we believed in you and that under your leadership, the country would succeed and we would be a part of that success," said Chuck Albo.

But, he said, "we stand to lose our investments" in Georgia because the laws keep changing and government officials all have different interpretations of what the new laws and rules mean.

"Can you at least help us during this transition period so our investments are protected until the new laws become clear?" he pleaded of Shevardnadze.

The Georgian President said his government, with the help of western countries and international organizations, had "done the impossible" and created the "basis for a legal infrastructure in a very short period of time." But, he added, Georgia also has "bureaucracy and red tape" and that is why he recently created an investment council in the President's office to handle the complaints of foreign businesses and investors.

"Whatever complaints we receive from our foreign partners, we will discuss, so whoever impaires your activities in Georgia, they'll have to deal with me," said Shevardnadze, adding with a smile: "I'll take care of it."

American officials say privately that despite its progress in passing new laws, Georgia like most of the nations in transition, find it hardest to get government bureaucrats to change their ways.

What's needed is not the intervention of the president in individual cases, say the officials, but general improvements and regular, transparent procedures which assure that any business person, foreign or domestic, knows how to get grievances aired and disputes resolved.

Shevardnadze acknowledged that the second stage of reform the country is about to embark upon will deal with many of these kinds of problems, ranging from a crackdown on corruption to a structural reorganization of communities and measures to enhance the competitive environment for businesses.

He said a cornerstone of the second stage will be a "new wave of privatization which will cover up to 300 medium-and large-scale enterprises to be auctioned at a zero starting price."

Shevardnadze has as one of his goals for this trip increasing American investment in Georgia, and he has been receiving a rich array of new investment and business opportunities.

OPIC, which sells insurance for U.S. investment abroad and provides some financing, announced it will be creating a new $45 million Caucasus Investment Fund to funnel money into Georgia, Armenia and Azerbaijan. The U.S. Agency for International Development (AID) is preparing a $15 million special investment fund for small businesses in Georgia and the U.S. Export Import (Exim) Bank has approved a $14 million guarantee of commercial loans to help Georgia purchase a new air traffic control system from the American aerospace company Northrup-Grumman.

Late today Shevardnadze will visit Exim Bank headquarters to sign a project incentive agreement, the credit pact that allows the agency to proceed with this first involvement in Georgia.