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The Messenger, Georgia
March 11 2005
Economic Analysis
Withdrawal of Russian bases carries undeniable economic impact
By M. Alkhazashvili
Parliament on Wednesday and again on Thursday discussed a resolution
declaring Russia's military bases on Georgian soil illegal. The
resolution calls on the government to introduce measures intended to
force Russia to withdraw its bases, should agreement on the terms of
withdrawal not be agreed as a result of bilateral negotiations within
the next two months.
Discussion of the resolution was met with strong criticism from
Moscow, two influential Duma MPs declaring that sanctions should be
imposed on Georgia in response. Possible measures that the Duma
members should be taken in response to Georgia's efforts to speed up
the negotiation process, which has dragged on for almost six years
now without result, include either cutting off the country's
electricity and gas supply or increasing the price of the energy
supplied, deporting Georgians working in Russia, and boycotting
Georgian products on the Russian market.
While the withdrawal of the bases is fundamentally a political issue,
the implication of these threats is that permitting the bases to
remain, or not, is also an economic issue.
Russian threats have led some Georgian analysts to call on the
government to take measures to reduce the country's economic
dependence on its northern neighbor, saying that otherwise business
and the economy may be used to apply political pressure on the
country. This has provided new ammunition for those Georgians opposed
to the government's policy, particularly in the privatization
process, to attract more Russian capital into the country.
"The attitude of the Georgian authorities towards Russia is
absolutely incomprehensible. How can we on the one hand say that
Russia is an aggressor and occupying force and on the other sell it
strategic state assets?" asks an incredulous Giorgi Kobakhidze of the
Forward Georgia opposition party, as quoted by Akhali Taoba.
"In return for withdrawing the military bases, we are giving Russia
crucial economic levers. Putting energy resources into Russian hands
is wholly sufficient to allow them have influence on the state," he
declares.
Besides possible sanctions, social problems that may arise in areas
around the bases also demand consideration. Most of the inhabitants
around the base in Akhalkalaki are ethnic Armenians who are
economically dependent on the base and also view it as protection
from possible ethnic aggression.
Georgian analysts believe Russia will try to use this factor for its
own interests, some even warning that it may attempt to create a new
ethnic conflict. This could destabilize the whole South Caucasus and
cause old conflicts to flare up as well.
Batumi is less reliant thanks to a booming seaport and thru-traffic
from Turkey, but still the bases have preferred hiring locals for
services and trade thus contributing to the area's economy.
It is therefore imperative that economic development options for the
country and especially for residents of Akhalkalaki be developed in
order to diffuse foreseeable negative reactions to the withdrawal of
the Russian base.
March 11 2005
Economic Analysis
Withdrawal of Russian bases carries undeniable economic impact
By M. Alkhazashvili
Parliament on Wednesday and again on Thursday discussed a resolution
declaring Russia's military bases on Georgian soil illegal. The
resolution calls on the government to introduce measures intended to
force Russia to withdraw its bases, should agreement on the terms of
withdrawal not be agreed as a result of bilateral negotiations within
the next two months.
Discussion of the resolution was met with strong criticism from
Moscow, two influential Duma MPs declaring that sanctions should be
imposed on Georgia in response. Possible measures that the Duma
members should be taken in response to Georgia's efforts to speed up
the negotiation process, which has dragged on for almost six years
now without result, include either cutting off the country's
electricity and gas supply or increasing the price of the energy
supplied, deporting Georgians working in Russia, and boycotting
Georgian products on the Russian market.
While the withdrawal of the bases is fundamentally a political issue,
the implication of these threats is that permitting the bases to
remain, or not, is also an economic issue.
Russian threats have led some Georgian analysts to call on the
government to take measures to reduce the country's economic
dependence on its northern neighbor, saying that otherwise business
and the economy may be used to apply political pressure on the
country. This has provided new ammunition for those Georgians opposed
to the government's policy, particularly in the privatization
process, to attract more Russian capital into the country.
"The attitude of the Georgian authorities towards Russia is
absolutely incomprehensible. How can we on the one hand say that
Russia is an aggressor and occupying force and on the other sell it
strategic state assets?" asks an incredulous Giorgi Kobakhidze of the
Forward Georgia opposition party, as quoted by Akhali Taoba.
"In return for withdrawing the military bases, we are giving Russia
crucial economic levers. Putting energy resources into Russian hands
is wholly sufficient to allow them have influence on the state," he
declares.
Besides possible sanctions, social problems that may arise in areas
around the bases also demand consideration. Most of the inhabitants
around the base in Akhalkalaki are ethnic Armenians who are
economically dependent on the base and also view it as protection
from possible ethnic aggression.
Georgian analysts believe Russia will try to use this factor for its
own interests, some even warning that it may attempt to create a new
ethnic conflict. This could destabilize the whole South Caucasus and
cause old conflicts to flare up as well.
Batumi is less reliant thanks to a booming seaport and thru-traffic
from Turkey, but still the bases have preferred hiring locals for
services and trade thus contributing to the area's economy.
It is therefore imperative that economic development options for the
country and especially for residents of Akhalkalaki be developed in
order to diffuse foreseeable negative reactions to the withdrawal of
the Russian base.