Georgian prime minister Zurab Nogaideli has told Emerging Markets that the authorities in Tbilisi are willing to accommodate the wishes of the populations in the country’s breakaway territories of Abkhazia and South Ossetia, where separatist leaders have won support for independence from the nationalist lobby in Moscow.
“We are fully committed to the peaceful settlement of conflicts and will continue to act with restraint to avoid provocations in the conflict areas,” says Nogaideli, adding that the Georgian government is prepared to offer direct talks with the Abkhaz and Ossetian separatists in an attempt to hammer out a peaceful settlement and preserve the country’s territorial integrity. “We are ready to grant to these regions the highest degree of autonomy where the legitimate interest of the Abkhazs and Ossetians would be safeguarded along with those of the Georgians.”
Despite aggressive rhetoric from far-right politicians in Moscow, Nogaideli believes that Russia is a key actor in the solution of the political drama that has wracked the country since the Rose Revolution in 2004 which brought to power an assertively pro-Western government. “Russia certainly can play a constructive role and now is just the right time to do so,” he told Emerging Markets.
At the same time, he expressed support for the Estonian government, which has faced the full wrath of the Russian authorities as a result of its controversial decision to move a memorial to Soviet war dead in Tallinn. “We have been concerned by the developments in and around Estonia, with which we have close and friendly ties.”
Georgia knows all too well about the dangers of upsetting the Kremlin. In October 2006, Moscow cut postal, rail, and air links with Georgia, stopped issuing visas to Georgians, and began deporting illegal Georgian immigrants, after Tbilisi briefly arrested Russian army officers and accused them of spying. Nogaideli concedes that the blockade had an immediate short term effect on Georgia, but says that the country has made great strides forward economically.
“Obviously, at the beginning the sanctions had a negative impact. We lost about 18% of our export market, which would be significant for any kind of economy. Nowadays, though, the impact is fully compensated.”
Georgia’s GDP grew an estimated 9.4% in 2006, and Nogaideli said he expected growth to reach double-digits in 2007. He also highlighted the positive trends in foreign direct investment.
“Georgia has had an unprecedented inflow of FDI. In 2006, FDI grew by 155% in comparison to 2005, and tripled in comparison to 2003, reaching 15% of GDP.” Nogaideli added that in 2007, Georgia expects to attract an additional $2 billion of FDI inflows, equivalent to 20% of GDP.
However, he acknowledged that the threat of reform fatigue among the electorate makes further reforms more politically challenging.
“Georgia won’t be so successful in reforms and the economy won’t grow as fast without strong support from civil society. Reforms may often be intensely unpopular with a minority, who may be more active politically than the majority who can expect to benefit from them.”