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EU-Led Donors Pledge $4.5 Billion In Aid To Georgia

Georgian infrastructure, like the port in Poti, suffered major damage in the conflict
BRUSSELS -- International donors meeting in Brussels have pledged a total of $4.55 billion to help rebuild Georgia in the wake of its conflict with Russia.

The World Bank and the United Nations earlier proposed a target of $3.25 billion, the amount they estimate Georgia will need over the next three years to offset the damage done by its conflict with Russia in August.

Georgian Prime Minister Lado Gurgenidze said he was "deeply moved and humbled by the demonstration of solidarity and support that we have received." The promised total "far exceeds the expectations that we all had, especially since the onset of the financial crisis or difficulties on the global scale," Gurgenidze said.

In his opening address, President of the European Commission Jose Manuel Barroso said the international community had a "moral imperative" to help Georgia, and that the representatives at the conference want to show their solidarity with the Georgian people.

Just under half of the total, or $2 billion, of the pledged funds will come in the form of grants for Tbilisi; the rest will be low-interest loans.

Washington had the deepest pockets, pledging $1 billion. The European Union's executive arm, the European Commission, promised up to $650 million.

External Relations Commissioner Benita Ferrero-Waldner had earlier urged the EU's 27 member states to match that figure.

While not all individual countries openly said how much they were contributing, Ferrero-Waldner was clearly thrilled at the total figure. "I must tell you that it is much more than we have thought, and therefore I think it's really a day of joy," Ferrero-Waldner said.

The money is to go toward repairing infrastructure damaged mainly in Russian bombing raids. It is also meant to help the tens of thousands of people displaced within Georgia.

The pledges came in higher than expected despite concerns over whether the money will be spent transparently and with full accountability.

Ahead of the meeting, Ferrero-Waldner had said the donor funds would bolster Georgian public finances in three key areas. "First, rebuilding confidence in the Georgian economy; second, boosting investment in critical infrastructure including in energy; and providing food, shelter, and other basic services to thousands of internally displaced" persons, she said.

Fears Of Misuse

Member state governments -- as well as the European Commission itself -- were said to be worried going into the conference that Georgia might lack the institutions to assure foreign donors the money would be spent transparently and with full accountability.

Standing before an audience which included Prime Minister Gurgenidze, Ferrero-Waldner pointedly listed reform of "public finance management" as a key field in which Tbilisi urgently needed to demonstrate further progress.

Officials familiar with EU-Georgian relations said Brussels has been particularly disappointed over Tbilisi's foot-dragging in setting up a court of auditors.

Fears that a sudden massive influx of aid money could fuel corruption in the country were also widespread within the EU.

The European Commission was also worried EU funds could be used by Georgia to buy weapons. This is something the EU is constitutionally prohibited from doing. Brussels's concerns are stoked by the size of Georgia's defense budget, which absorbed 27 percent of the country's public spending in 2008.

Yet the EU is acutely aware of the stake it has in the stability and prosperity of Georgia. Barroso noted that point in his address when he said the Georgian-Russia conflict had implications for European security, in particular in terms of energy provisions.

The Caucasus region is a crucial conduit for oil and gas transit to Europe circumventing Russia. Barroso said that "new pipelines through more politically sensitive areas raise risks that have to be addressed," and that by shoring up Georgia, the EU is also helping itself.

"Giving ourselves the means to help increase economic, political, and infrastructure security in Georgia is not just a way of helping Georgia therefore," Barroso said. "Of course, it is very important in terms of solidarity, but it is also a way of helping ourselves too."

The EU's flagship Nabucco pipeline project, intended to furnish the bloc with direct access to the natural gas reserves in the Caspian region, is in danger of becoming one of the long-term casualties of the Georgian-Russian conflict.

Crisis In Georgia

Crisis In Georgia
For RFE/RL's full coverage of the conflict that began in Georgia's breakway region of South Ossetia, click here.