Accessibility links

Breaking News

Donors Discuss Reconstruction Aid For Georgia

Georgian infrastructure, such as the port facilities in Gori, was damaged in the conflict
BRUSSELS (Reuters) - International donors are meeting in Brussels to pledge funds to help Georgia recover after its August conflict with Russia, which experts say will require $3.25 billion over the next three years.

"This is most important, not only because we want to support physically and directly the Georgians, but also because it is a political symbol of solidarity with the Georgian people," EU External Relations Commissioner Benita Ferrero-Waldner said.

Russia sent in troops after Georgia tried to retake a breakaway pro-Russian region. Moscow has since withdrawn soldiers from Georgia proper, but the West accused Moscow of a disproportionate use of force.

The United States has offered at least $1 billion to help Georgia rebuild after Russian troops and tanks crushed the country's armed forces and damaged infrastructure.

The European Commission, the European Union's executive, has promised up to 500 million euros ($660 million) to 2010, and Ferrero-Waldner wants the EU's 27 states to match that figure.

The October 22 ministerial-level meeting is co-chaired by the European Commission and the World Bank. More than 70 countries were invited as well as international financial institutions.

"We currently have seen pledges or indications of about $1.8 billion," Georgian Prime Minister Lado Gurgenidze said in an interview with "IMF Survey," an internal International Monetary Fund publication, ahead of the meeting.

"We clearly have issues related to the recovery of the direct civilian damage," Gurgenidze said of the tens of thousands displaced by the conflict. "We need to resettle them, give them livelihoods, rehabilitate the damaged areas -- this costs a lot of money, the kind of money we, on our own, cannot afford."

Resource-rich Georgia, a key energy transit route, depends on foreign capital for growth and has enjoyed an investment boom since President Mikheil Saakashvili's 2003 election.

Russian bombing raids in August hit mainly military targets, but Tbilisi also reported damage to civilian infrastructure and risks to its economic growth and investment.

A UN and World Bank-coordinated assessment has estimated Georgia needs $3.25 billion over three years to cover budget support, social sector support, and infrastructure development.

The central bank in Tbilisi said last month international institutions had pledged a loan package of about $1 billion to help soften the impact of the conflict on the banking sector, which has had to scale down expectations of foreign investment.

It said institutions ready to help included the European Bank for Reconstruction and Development, the World Bank's International Financial Corp, Germany's KfW and the Asian Development Bank.

Last month the IMF approved a $750 million loan program aimed at rebuilding Georgia's currency reserves and restoring investor confidence.