Back to Georgia: Reform-Driven Success event page






Transcript by
Federal News Service
Washington, D.C.

ROSS WILSON:  Good afternoon.  My name is Ross Wilson.  I’m the director of the Dinu Patriciu Eurasia Center here at the Atlantic Council.  And on behalf of our chairman, Sen. Chuck Hagel, and our president and chief executive officer, Fred Kempe, delighted to welcome all of you, and especially, the Prime Minister of Georgia, Nika Gilauri, who is here in Washington for talks with the administration on the implementation of the U.S.-Georgia Charter on Strategic Partnership that was concluded in early 2009.

Prime Minister Gilauri is here at the Atlantic Council in the context of the council’s project on Georgia’s Euro-Atlantic integration, which seeks, through public events such as this and in other ways, to promote discussion of Georgia’s future and to support democracy, free markets and civil society in that country.

Georgia, of course, is a very interesting place.  It’s been through a whole lot over the course of the 20 years of its modern independence.  When I came back to Washington in 1997 to a policy position responsible for Georgia and other states of the former Soviet Union, it was a deeply troubled place.  In a region full of, we could say, basket cases, Georgia, in some respects, was a standout.  The country seemed nearly overwhelmed by corruption, by poor administration, by enormous economic problems and unresolved issues with many, maybe most, of its nonethnic Georgian minorities.

Ken Yalowitz, a longtime friend who became ambassador to Georgia in 1998, seemed to me in some respects to be like the little Dutch boy with his holes in the dike, trying – in a leaking dike – trying to help stave off internal and external pressures that threaten to overwhelm Georgia and – (audio break) – there in a strong, secure, prosperous and democratic future for that country and for the Caucasus as a whole.  A poster child of dysfunction at that time was Georgia’s annual winter fuel crisis; frantic appeals for help in procuring fuel to get Georgian citizens through the winter – appeals that those of us in government at that time frantically worked to try to address year after year after year.

Thirteen years later, the picture has changed dramatically.  Georgia still has its share of problems – maybe more than its share, in some respects – but annual fuel crises, economic hopelessness, corrupt and ineffectual governance and even some of its interethnic issues now seem to be things of the past.

The country’s transformation owes to many, many things but one of them is the emergence of smart, well-educated, young, new leaders that imagined a better Georgia, and a push through wide-ranging policy changes to put the country on a profoundly better trajectory.

Today’s guest typifies that generation of Georgia’s leaders.  Nika Gilauri became Georgia’s prime minister in February 2009.  He previously served as minister of energy – I’m sure, dealing with some of those energy issues that I mentioned – minister of finance and first deputy prime minister.  He studied economics and management at Tbilisi State University, at the University of Limerick in Ireland, at our own Temple University in Philadelphia. 

He has private-sector experience in the telecommunications and electricity businesses.  Prime Minister Gilauri is an outstanding leader and problem-solver for his country and he’s a great friend to the United States and of the Atlantic Council. 

He’s agreed to speak with us today and after his formal remarks conclude, to take a few questions.  Please join me in welcoming the prime minister of Georgia, Nika Gilauri.  (Applause.)

PRIME MINISTER NIKA GILAURI:  Thank you very much for these kind words.  Thank you, all of you, for being here and for being interested in Georgia.  Thanks to Atlantic Council for giving me this opportunity to address this honorable venue.

What I’ll try to do, I’ll try to be very brief.  I’ll try to focus on economic issues because I’m sure you will ask questions about political issues yourselves.  And then I’ll open – we’ll open the floor for question-and-answer session.  I’ll be happy to answer any of your questions.

Well, to start with economic issues, I’ll start saying that the year 2009 was quite difficult for Georgia.  Not only for Georgia; it was difficult, I think, for almost whole world.  But this was extremely difficult for Georgia for different reasons.  We had kind of triple whammy:  In 2008, August invasion of Russia; internal political crisis that we had in the beginning of 2009; and of course, worldwide financial crisis that hit the world sometime late 2008.

But despite that, Georgia economy didn’t really go down to ruins.  We had negative growth of 3.9 percent – minus 3.99 percent.  Well, it’s a negative figure but it’s still quite good result having all things in mind.

Last quarter of previous year was already positive.  And actually, we are seeing quite significant recovery in the year 2010.  First six months of 2010, we are having GDP growth of 6.9 percent.  We expect the growth for 2010 to be somewhere between five and 6 percent.  And we expect the growth to continue in the nearest years and, most likely, to go back to eight, 9 percent growth rate between two or three years’ time.

But the main question – actually, to give you the idea of what is behind this quick economic growth, I’ll give you some figures.  The drivers are export; export is up by 40 percent.  Driver of the growth is tourism.  Tourism is up by 35 percent.  Driver is financial sector, which is also has record-high loan books and record-high deposits.  So there is quite significant growth – robust growth throughout all the sectors and industries. 

Actually, this was – by the way, I’d omitted MODIS (ph) which actually have a report just recently, just a couple of days ago, and MODIS gave Georgia double B-minus – actually, A/B, A-3, which corresponds to double b-minus, which is one much higher than we had from Standard Imports (ph) and from Fitch (ph), which is actually a good result and we are hoping for an additional increase sometime early next year.

But the question is, how did small economy like Georgia have survived such a difficult period, have showed such a resilience and have got into the growth in such a short period of time?  And the answer to this question has, like, three dimensions and three different pillars and I would like to talk about these three different pillars.

One is definitely IFIs – international financial institutions – which have played, we have to admit, quite significant role.  Second is reforms that have been conducted by Georgia in the past four or five years.  And third is actually diversification.  And when I talk about diversification, I mean diversification of trade, diversification in FDI, diversification in energy – in everything.

So first, let’s concentrate on IFIs.  Yes, international financial institutions have played quite a significant role.  But at the same time, we have managed to channel these funds into correct direction.  What I mean correct direction, I mean infrastructure projects which attract more private investors. 

Just to give you idea – for example, we did financing of KFW, EBRD and EIB.  The project we are financing is high-voltage line connecting Georgia with Turkey.  The moment we announced about this project we had a line of investors in Georgia wanting to build hydro-power plants because we have underutilized hydro resources in Georgia.  For some reason it’s only 18 percent that have been utilized.  And tariffs and demand in Turkey is very high.

The only bottleneck for building new hydro-power plants in Georgia was actually a connection between Georgia and Turkey.  And by announcing it, by concluding this project high-voltage line connection with IFI in France we actually attracted a huge amount of private investors.  Right now there are five new hydro-power plants being built in Georgia. 

And I don’t know of any other country in the region, maybe in the world where five new hydro-power plant construction started in 2009 and 2010 because these were quite difficult years for everybody in the region.  And definitely, foreign influence, which decreased in comparison to 2007 have been substituted by IFIs.  Foreign influence, I mean foreign direct investment definitely had decreased in comparison to 2007.  But these decreases have been substituted by increase in exports, increase in tourism and increase in international financial institutions. 

Right now, we are seeing private investors coming back to Georgia.  Right now we are seeing very significant economy growth and this is driven by private investors from outside of Georgia, which is for – to have this sustainable growth.

The second issue that I would like to focus is reforms.  And I think this could be the most interesting part because these reforms become kind of trademark for Georgia – for our country.  The thing is that many representatives of other countries in the region actually come special to Georgia to copy those reforms and to take those reports back to their countries.

The reforms and based on the reforms – the success story actually gives a question mark to millions of people in that part of the world.  Asking the question that if policeman in Georgia doesn’t accept bribe, if bureaucracy in Georgia is not corrupt how come in other post-Soviet Union countries it’s still the same situation?  How come we cannot change?  And this is a question that is asked by many, many people and by millions of people in post-Soviet area. 

And these reforms have become a trademark.  And these reforms right now are being copied by many countries in the region.  And by that I mean few that I would like to mention.  For example, actually, to explain the philosophy behind these reforms is very simple.  Our major goal is fighting unemployment.  From an economic standpoint the major goal is fighting unemployment. 

Creating one job place in Georgia takes somewhere of an investment of between $25,000 to $50,000 depending on the industry.  Unfortunately Georgia is not wealthy enough, either state or private sector, to have this kind of investment on our own.  So the only way out is to attract foreign investors, for them to make money in Georgia, to make profit in Georgia.  But on the other hand, to create jobs in Georgia – for Georgian population.

We have to find our niche.  Azerbaijan has oil and gas.  And don’t have problems with economic growth.  Turkey in the region is quite large country on its own and large market on its own.  Armenia has quite rich and powerful diaspora – (audio break) – Georgia’s niche. 

And we found the niche very easy and very simple.  Niche is private-sector-driven economy.  Niche is the philosophy behind which there’s a small government and private sector is the one that leads and government is the one that just helps private sector to go ahead. 

And we actually looked in the past five years at every legislation from private sector’s point of view, believe it or not.  And we just asked questions.  Does the law – how does that law affect private sector?  Better or worse?  And we changed many things.  We had 21 different types of taxes.  Right now, we have only six.  All of them are flat and all of them are low.  All of them are very easy to calculate. 

We had cut down number of licenses by 85 percent.  So there’s no bureaucratic power amongst middle level of government.  I think the biggest fight that we had and biggest victory that we have is fighting corruption, which is I think something that all of us – part of this team are very proud of. 

According to Transparency International, for example, it’s my own words, we are amongst top 10 of least corrupt countries in Europe.   I’m not saying Eastern Europe – I’m saying in Europe.  I think it was European Commission who had some survey asking people one question.  In the past three years, have you paid bribe yourself or have you heard somebody paying bribe.

And this question was asked to people in Eastern Europe, in Caucasus and in Central Asia.  Results are quite unbelievable.  In Central Asia, I think 45 percent said that yes.  In Eastern Europe, it was 23, 21 percent that said yes they have paid bribe or they’ve seen somebody paying bribe in past three years. 

In Georgia, it was 4 percent that have done it in the past three years, which is, I think, quite good result.  Well, it’s not zero yet and we have to go down to zero, but it is quite good result.  And what happened is that despite – and other few reforms that I would like to mention, it’s definitely for you to open business in Georgia, it can be done in one day.

Labor code is something that is quite questionable by many other institutions is – we have one of the most liberal labor code.  And according to easy to do business report which is done by World Bank and it actually measures how easy it is to import, export, pay taxes, corruptions and so on and so on.  According to that report, we were 112 five years ago.  Right now, we are 11th.

And we are the only country that broke into top 20 since this report exist.  There was always the same top 20.  We are hoping to get into top 10 this year.  And this is based on these reforms that we are doing.  And actually, these reforms have had very, very positive results.  There is actually private sector being very active in Georgia and Georgia becoming kind of investment hub in the region.

Right now, many, many investors who are looking at the region, they see Georgia as a possibility to base and from that base to expand in other countries in Caucasus, in Central Asia and neighboring regions.  Also, I have to mention one more aspect of this economic recovery and it’s diversification. 

By diversification, I mean diversification of trade.  Right now – Russia was our biggest trading partner four years ago.  Fifty-five percent of our trade was with Russia.  However, then, there was ban of agriculture products, ban of everything and so on and so forth.  Right, and it was difficult times for Georgian businesses, but they found new ways to diversify their trade and right now, the biggest trading partner is European Union, with 24 percent. 

Next one is Turkey.  Next one, Azerbaijan, Canada and others and others.  Diversification of FDI – (audio break) – good country in terms of attracting foreign direct investment.  United Arab Emirates are one of the top providers of FDI, Ukraine, the Czech Republic third, Turkey fourth and it’s quite diversified providers of foreign direct investment as well.

Energy is also very important issue that I have to mention because four years ago, if you’d go to Georgia in October, you would see – or five years ago, let’s say, you would see blacked out country – you would see blacked out cities.  However, this is not the case anymore.  Right now, we have full diversification of gas supply.  We have three different supplies.

We have full diversification of oil supply.  We have absolute different electricity balance.  Eighty-eight percent is hydro-driven electricity and only 12 percent is thermal power plants.  We are exporters to Russia.  We are, right now, even though Russian is saying they don’t accept any Georgian export, they are accepting, with pleasure, Georgian electricity.

We’re exporters to Azerbaijan, to Turkey, to Armenia, to all neighboring countries, actually.  And it can grow in future.  We can play, also, very interesting role for energy diversification of Europe.  Nabucco is one project but also crossing Black Sea with LNG and taking Azerbaijan gas through Georgia to European markets also can be very, very interesting and profitable project for European Union and can be very profitable for Georgia as well.

So for example, even today, we discussed the new issue with deputy secretary of energy of United States about possible supply of electricity through Turkey to Iraq, which also can be very interesting issue for U.S. as well as Iraq as well as Turkey as well as for Georgia.  So Georgia have become kind of this little – not large – but little hub of energy sector in the region.

This is kind of sort of the main drivers of the economy of Georgia right now.  Diversification, on one hand, reforms that have their own very positive results that attract foreign direct investments that are being copied and trademarked by Georgia right now and international financial institutions which are being kind of already going down and we are seeing private investments coming back to Georgia.

So what we are expecting in the nearest future in terms of economic growth for Georgia, I expect the growth in energy sector, growth in telecommunications, in financial sector, in agriculture and mainly growth in exports. 

And that would, I say, would make Georgia a very, very successful case in terms of economic recovery in very, very short period of time and that’s due to and thanks to those reforms that have been done, due and thanks to those international financial institutions that have supported Georgia throughout this period of time.

Actually, I have to underline the U.S. is single largest bilateral donor organization or donor country for Georgia, which I have to thank the United States for that as well.  That’s all that I want to say in my very short brief speech about economy.  I’m sure you’ll have questions about political issues and I’m ready to answer any of your questions.  Thank you very much.  (Applause.)

MR. WILSON:  Well, thank you very much, Mr. Prime Minister, for that very detailed overview of what some of your priorities have been.  One question I’d be interested in, just to take the moderator’s prerogative and ask the first question or two, is to ask you to talk a little bit about Georgia’s regional economic strategy and the attention or the place that you see in Georgia’s strategy for integration and strengthening of economic relations with your neighbors. 

You mentioned a growing trade and investment relationship with Turkey.  There is an important trade relationship with Armenia.  There obviously is one with Azerbaijan, with other Black Sea countries.  How does that particular region fit into your strategies as opposed to the efforts you’re making with the European Union, trade and investment opportunities with the United States or others elsewhere?

PRIME MIN.    GILAURI:  Well, of course, for us, trade with European Union as well as with U.S. is quite important.  On the other hand, we are seeing very concrete projects and very concrete success stories with Azerbaijan, with Armenia, with Turkey.  We have – Turkey’s one – is largest trading partner for us as a country, not counting EU as a whole.  Turkey’s largest trading partner.

With Azerbaijan, we kind of – for them, we are corridor for the hydrocarbons to be exported to rest of the world.  For us, Azerbaijan is one of the main sources of energy, of gas and oil.  For Armenia, we are the only gate for Armenia to get many of the products.  So we, in this kind of very difficult region, we are playing – we want it or not – we are playing role of a gate, role of a hub for countries of Azerbaijan and Armenia.

And we have quite interesting projects to go forward.  For example, this liquefied natural gas project and this project, four president – three president and prime minister of Hungary, I’m talking about president of Azerbaijan, Georgia and Romania and prime minister of Hungary got together in Baku just few weeks ago, signed a new deal about AGRI.

AGRI – Azerbaijan, Georgia, Romania Interconnector and companies already formed and this will change geopolitics of energy of that part of the world.  It means that Azerbaijan gas will go without any Russian control, will go through Georgia, will be liquefied in Georgia and will be taken to Black Sea markets.  I mean by that first, definitely will be Romania. 

It could be Bulgaria and actually, Ukraine is having – could be interested in that as well.  I’m not saying they are not, but could be interested in that as well, which will mean that there will be new route of supplying hydrocarbons from Caspian Sea to Europe.  It will be alternative – it will be additional route for – to Nabucco.  It will be alternative to other sources of supply to Europe.  That’s one. 

Second is oil refinery.  This also project which is – which can be very interesting.  Oil refinery being built on the Black Sea and by that, kind of developing Black Sea oil market.  And this is project which are – which is very interested in U.S. companies, for example.  There are few U.S. companies that are coming to Georgia right now and they want to participate in this project, saying that this could be very interesting and very profitable. 

So in Nabucco, as well, of course, it’s project for both – three countries, Azerbaijan, Georgia and Turkey.  So we have very concrete and very interesting projects that can be developed very fast and that can change geopolitics of Eastern Europe and geopolitics of that part of the world.

MR. WILSON:  All those sound like very positive things, both to connect energy markets and to connect and strengthen markets elsewhere in the region.  Let me ask one other economic question and then I’ll turn it over to the floor. 

One of the things that I believe you and other Georgian economic leaders have talked about is interest in attracting knowledge-based industries as Georgia, like everybody else, seeks to move up the value-added chain in terms of industry and production and so forth.  I know that there’s significant IPR issues in Georgia, some significant issues in particular IPR enforcement.  Can you talk a little bit about Georgia’s strategies in that area and how you see that relating to your overall economic strategies?

PRIME MIN. GILAURI:  Well, this is definitely something that we have shortcoming of.  We are committed to improve this problem.  We have already put together new legislation, I have to say, and there are significant movements already.  We think that by these moves, we’ll solve the problem finally and it can be done in very short period of time.

MR. WILSON:  I hope so.  It’s very difficult work.


MR. WILSON:  Let me turn it over to the floor.  If you would please identify yourself and a mike should come around.  Mike Haltzel in the back.

Q:  Thank you.  I’m Mike Haltzel from Johns Hopkins SAIS and also a member of the Atlantic Council’s new task force on U.S.-Georgia relations.  Mr. Minister, let me ask you a very simple, direct question.  Will Georgia insist on the evacuation of Russian forces from occupied territory as a condition for Georgia’s voting for Russia’s WTO membership?  An easy question.  (Laughter.)

PRIME MIN. GILAURI:  An easy question.  Next.  (Laughter.)  Okay, to answer that question, we will – and actually, it was very well-said by Secretary Clinton yesterday, that U.S. is demanding for occupying forces of Russia to leave Georgian territory and this is absolutely separate issue and we will press that internationally in every type of diplomatic way, politically, every day and every minute because this is a single most important issue from political point of view.

WTO has nothing to do with it, actually.  This is our top priority and this is something that we have very good support from United States, from European Union, from everyone, actually, to force Russian occupying forces to leave the country.  About WTO, all we are asking for is for this concrete situation, WTO rules should be followed.

We like WTO organization.  Do you know why we like it?  We like it because it has rules that are followed.  And actually, it helps to trade amongst the countries and we don’t want to have any kind of – any kind of situation where these rules are not followed.  And part of the WTO rules says very clearly that borders and customs checkpoints between countries must be transparent.

Unfortunately, at this stage, there are two customs checkpoints between Georgia and Russia, between South Ossetia and North Ossetia near Abkhazia which are not transparent.  And all we are demanding – we want Russia to become member of WTO.  Any organization that will make Russia more civilized, we’ll be glad to help. 

This is our objective; this is our goal, to make Russia more civilized.  WTO is civilized organization.  It will make Russia more civilized.  We want that, but we want it to be done by following rules of WTO.

MR. WILSON:  Yes, sir.

Q:  Roger Kirk at the Atlantic Council.  I was wondering how you assess the possibility of serious enough trouble with Russia to handicap what you’re trying to do in the economic and other fields.  How do you assess the threat, if you want it to call it that there?

PRIME MIN. GILAURI:  From the – like from economic point of view?

Q:  Economic, but – and political as well.

PRIME MIN. GILAURI:  Okay.  Let’s be honest, yes, there was significant effect of invasion of August of 2008 on Russian – on Georgian economic situation.  And security issue was playing the role in economic problems that Georgia was facing but solved in very short period of time.

But actually, the good way to answer that question is to give you figures of visitors between 2009 and 2010 because this actually shows you the confidence in security by people outside of Georgia.  So if you are a tourist and you have 10 days to rest, you will not go to country where you see that – think that security problem is an issue.

So number of tourists has gone up to 2 million – will go up to 2 million this year.  It’s higher by 33, 34 percent – actually 35 already – percent – in comparison to last year.  So this just shows – and the geography’s much wider.  If in last year and before that, it was only Armenians and Azeris drinking together in Georgia – (laughter) – which is quite strange, but it’s happening, right now, the geography’s much wider. 

And tourists are coming from Poland, from Russia, from Belarus, from Ukraine, from east part of Turkey, from Central Asia.  And this actually shows you confidence in security situation in Georgia right now.

MR. WILSON:  Okay.

Q:  Excuse me, I have follow-on question to the answer you just gave.

MR. WILSON:  Please.

Q:  Are you counting the tourists – Wynne Packard (ph) with the Helsinki Commission – are you counting tourists and the number of tourists that –

PRIME MIN. GILAURI:  No, no, it’s number of visitors.  It’s different.

Q:  Visitors, okay.  When you speak about tourism increasing, are you counting the visitors to Abkhazia?

PRIME MIN. GILAURI:  No, no.  Actually, if we count, it could be more.  (Laughter.)  For statistical reasons, but –

MR. WILSON:  Question in the back.

Q:  Yeah, hello, it’s Heather Maher with Radio Free Europe’s Georgian Service.  My question is about the proposed amendments to the constitution that President Saakashvili’s pushing through parliament.

PRIME MIN. GILAURI:  Why I was sure this question would come up?  (Laughter.)

Q:  In particular, the ones that would add more power to the office of the prime minister in the area of foreign and domestic policy.  Why does President Saakashvili feel that consolidation of power in the prime minister’s office is necessary and is he thinking of trying to become prime minister himself?

PRIME MIN. GILAURI:  Actually, it’s not President Saakashvili only that thinks that way.  It’s whole team that have decided that these changes – not team – society, actually, it was demand from opposition – I have to underline by the way – it was demand from opposition, parliamentarian opposition to make constitutional changes.

There was lots of thought given to this issue by government, by president, by society.  There was lots of debates about that.  And the society’s demand was that okay, in the beginning, we needed very concentrated power in one position, in president’s position and this was in order to solve, actually, mainly corruption issues, honestly.  Let’s be honest.

This was the main goal for that.  But this problem is done.  This main illness, sickness of society’s gone more or less.  It’s still there, but more or less, it’s gone.  The victory is there.  So for next development of Georgian society and economy, definitely more checks and balances are needed. 

And what is this constitutional change is proposing is actually more checks and balances, not more power in prime minister himself.  Actually, it gives more power to parliament and less – leaves less power to president.  It still leaves quite significant amount of power within president.  And this is something, by the way, this is one of the points which is matter of debate between us and Venice Commission – committee.

So it’s not, as president himself said, these are not the changes that are suited especially for one person.  These are changes that are needed for the country to develop farther, to have more proper checks and balances, to give parliament more power.  So these are the changes that right now are being debated in parliament, hope that it will be approved by parliament next week.

MR. WILSON:  Next week already.

PRIME MIN. GILAURI:  I think so – I hope so.

MR. WILSON:  Okay.  Yes, sir.

Q:  Yeah, my name’s George Milliken (ph).  I am from CSIS New European Democracies Program.  My question is two simple – is the NATO accession of Georgia still on the agenda?  And my second question is about the Armenia and Turkey rapprochement, if it is still – to what extent this rapprochement can have an effect on the Georgia’s role as economic gate as you mentioned in your speech?  Thank you.

PRIME MIN. GILAURI:  Good questions.  Yes, of course, NATO’s accession – Georgia’s accession to NATO is still on table.  I think Georgia is a country with highest approval of country being accepted to NATO, still, up to now.  Secretary Rasmussen was just few days ago visiting Georgia.

I don’t think he would be doing that if Georgia’s accession to NATO was not on table.  And let’s face it.  We are participating and contributing to security in the region.  We have our forces fighting shoulder to shoulder with U.S. forces and with French forces in Afghanistan.  We are doing reforms which are dictated by NATO, which are, actually, led by NATO.

So yes, it’s on table.  Yes, we’re hoping for faster progress.  We’ll see how that will go.  It’s not decision of one single country.  It’s not decision of one single person.  It’s decision of whole society for many countries and we’ll see how that will go.

About Turkey-Armenian border.  Actually, we are glad if any conflict will be solved peacefully and civilized in our part of the world.  And if Turkey-Armenia border will somehow give more stimulus to this Nagorno-Karabakh problem solved, we’ll be only happy and glad to see that happen.  So we’ll see how that will go as well.

MR. WILSON:  Okay.  Further questions?  Yes, sir.

Q:  Stan Slaw (ph), VA Enterprises (ph).  What is the current extent of Russian investment in Georgia and where do you see, if at all, areas of increased investment with Russia?

PRIME MIN. GILAURI:  Good question and actually, there’s interesting statistics about it.  I remember a few months ago, there was actually a U.S. journalist flying to Georgia to have interviews about how bad the economic relations between Georgia and Russia are.  And when he came into my room, he said that he was very, very surprised. 

Asked why, he said the moment he got out of airport, he saw the billboards of RAO UES, of Beeline and of VTB Bank and he couldn’t understand.  He was coming to Georgia. He expected no Russian business to being in Georgia.  But he couldn’t understand it.  But this is truth.  Third largest petrol operator is Lucile.  In Georgia, third largest mobile operator is Beeline.  Fifth largest bank is VTB. 

And RAO UES owns electricity network of Tbilisi, capital city, owns two hydropower plants and one thermal power plant.  Also, all of these companies – by the way – for example, RAO UES, Tbilisi branch, is the most profitable branch of RAO UES, which is very interesting.  And as far as I know, I don’t want to go into details, some of them could be commercial secrets.  Some of them are thinking about expanding their investments in Georgia. 

And they’re quite happy about it.  And they’re quite – they’re doing very, very well.  And as I told you, for example, Gazprom, we buy zero gas from Gazprom by the way.  But we allow Gazprom to take gas through Georgia to Armenia.  We are exporting electricity to Russia still up to now. 

And by the way, we were exporting electricity to Russia during the Russian invasion in August of 2008, which is I would like to underline because one of the reasons of Russian invasion – I believe that maybe because I was four years ministry of energy – but one of the reasons of Russian invasion of 2008 was, actually, telling to the world that this corridor is not safe.  This energy corridor is not safe. 

That’s why to prove the opposite we – for all this period, we never had one-minute stoppage of flow of any gas from Azerbaijan to Turkey.  Any oil from Azerbaijan to Black Sea or Azerbaijan to Turkey or any gas flowing from Russia to Armenia or even any electricity flowing from Georgia to Russia because we wanted to show to the world that if we signed a contract we’re going to stick to it.  And during Russian invasion they were bombing Georgian hydro-power plants.  We were exporting electricity to Russia. 

MR. WILSON:  Maybe just to expand on that could you talk a little bit about Georgia’s, sort of, medium-and longer-term strategy with respect to Russia, obviously, a very important country in the region.  They have a role to play on a wide range of issues throughout the region.  Every country including Georgia needs to have a normal relationship with it.

What do you see as the medium- and long-term strategy for Georgia in accommodating Russia and dealing with Russia in an appropriate way?

PRIME MIN. GILAURI:  We are ready for peaceful negotiations anytime.  Absolutely.  We, for example, even though nobody expected it, we agreed to open the Abkhazia checkpoint on Larsi on north of Georgia with Russia.  We think that step by step it can go – it can become better.  And we are ready for any meaningful, civilized negotiations with Russia. 

MR. WILSON:  Yes.  In the back please. 

Q:  Thank you.  I’m – (inaudible) – from, I’m – (inaudible) – from Voice of America Russian Service, originally from the North Caucasus.  My question is about Sochi Olympic Games.  There has been an opposition in Georgian society and also amongst the politicians against Sochi Olympic Games.  What is the official position?

PRIME MIN. GILAURI:  The position?

MR. WILSON:  Sochi Olympic Games. 

PRIME MIN. GILAURI:  Oh, Sochi Olympic Games. 

Q:  Yes.  Thank you. 

MR. WILSON:  What’s the Georgian position with respect to the Olympics in Sochi?

Q:  Yes.  Thank you. 

PRIME MIN. GILAURI:  Yeah.  Honestly, there are two concerns there.  Olympic Games is about – during the Olympic Games in Greece, in ancient Greece, all wars would stop.  And the Olympic Games were kind of a symbol of peace.  To hold it in a country which occupies 20 percent of territory next to it – just next to Sochi – might be something that goes against the spirit of Olympics in total.  That’s my personal – that’s not an official point of view in Georgia, by the way.  It’s my own personal point of view because I love Olympic Games, actually, myself. 

And second is an environmental issue.  An environmental issue which is right now, it is destroying absolutely a whole environment of that part of Georgia as well as around the Sochi region.  Especially we are concerned about Abkhazia region, which right now because of new constructions there this is destroying absolutely the whole infrastructure, whole environment of that part of the world.  So these are the two concerns. 

Is country which is occupying – and which started the war on the day of start of Olympics in 2008.  And a country which occupies – and everybody agreed on that.  Twenty percent of small, much smaller, little country – is it a symbol of peace?  And does it coincide with the spirit of Olympics?  And second question is about environment that I have personally. 

MR. WILSON:  Yes, sir. 

Q:  My name is Pershivic Ivan (ph) I’m from ITAR-TASS News Agency.  Will Georgia be represented on a Lisbon NATO Summit?  And what are Georgian aspirations for it?

PRIME MIN. GILAURI:  Yes.  Georgia will be presented to Lisbon NATO Summit.  Georgia was official – President Saakashvili actually will be there himself.  He was invited by NATO allies.  He was invited by Secretary Rasmussen.  And our future is still the same.  Our aspirations are still the same.  We want to be become part of NATO. 

MR. WILSON:  Just to go back to the domestic side, Mr. Prime Minister.  One of the hallmarks of Democratic societies, of course, is a free and lively, independent media.  I know some observers of Georgia have commented that the main television networks that most Georgians rely upon for their news either are connected with the government or allegedly seem very connected, perhaps, indirectly with government figures. 

What’s your assessment there?  What would be your comment?  And what do you see the government doing to try to ensure that there’s truly independent media and ensure transparency of media ownership in Georgia?

PRIME MIN. GILAURI:  You know, in Georgia you can switch channels.  And on one channel somebody will say some good things about government.  On another channel the government will be the worst government in the whole world.  They be actually trying to prove it.  I think that’s just normal to every society. 

Maybe there are some sympathies amongst journalists of that way or this way.  Maybe sometimes the objective picture is there.  But it can be interpreted this way or the other way.  But I’ve seen it everywhere, absolutely.  I don’t want to name exactly the TV companies but even in U.S. during elections there was one TV company which was saying completely different reality and another which was saying – which is normal to a democratic society. 

And it’s up to society to which journal and to which TV station they will believe it.  And this trust must be actually deserved by media themselves.  The role of government is to give independents and give freedom to all of them.  And right now, having more influence on society is based on how truthful they will be. 

Some of them will be saying good things about government.  Some of them will be saying bad things about government.  But how truthful will it be that will determine their influence on society?  And this is competition right now which is going on. 

MR. WILSON:  And how about the issue of transparency and ownership of media organizations?  Is that something that’s important?  And what are the government’s thoughts there?

PRIME MIN. GILAURI:  It is very important.  I don’t see – I don’t know of any media on TV right now – and I don’t see of any media that could have this problem. 

MR. WILSON:  More questions.  Please.  All right, around the corner. 

Q:  Hi.  Amanda Lahan, the PBN company.  I’m just wondering about the status of the U.S.-Georgia partnership and its implementation. 


MR. WILSON:  Partnership.  And its implementation. 

PRIME MIN. GILAURI:  Charter, you mean?  Partnership charter?  Well, we held the last meeting just yesterday.  It went very well.  We have discussed many issues.  Amongst them, for example, I just give you one example.  It’s possibility of a new U.S. university being opened in Georgia as an original educational center, which we think is a great idea. 

One of the – imagine one of the top U.S. universities having its branch in Georgia as an regional educational center attracting students from not only from Georgia, from Azerbaijan, from Armenia, from east part of Turkey, Ukraine and Central Asian countries. 

Having that as a scientific center as well because there are some scientists that face it in Georgia that haven’t found – kind of haven’t been – gone forward to have some good knowledge and discourse that have defined themselves that it could be possible to develop this knowledge of the scientist.  So this for example, this is one project that we are talking about.

And there are a few projects that we are talking with United States – let’s face it, is number one bilateral donor for Georgia.  $1 billion is spent by United States in Georgia, which is a great achievement for us.  Its roads, highways, energy-sector pipelines, high-voltage lines that are being built or rehabilitated by U.S. funds right now in Georgia. 

And which are contributed to economic stability and economic growth and job creation for my country.  Which we all think that it’s a very important partnership not only economically but politically, strategically from a defense and security point of view.  And we see the charter commission to be a very good instrument for fulfilling all these goals and objectives. 

MR. WILSON:  I think we have time for one last question.  Yes, sir.  Yes, ma’am. 

Q:  Yes.  Mildred Callear.  We manage the Georgia Regional Development Fund.  And I’d like to hear your comments in terms of how the economic upswing seeming – beginning to occur in Georgia – (audio interference) – that it is benefitting the average – (audio interference) – outside of Tbilisi in the regions.  All the infrastructure takes time.  But what is the general mood outside of the capital in terms of seeing the – (audio interference) – some of this?

PRIME MIN. GILAURI:  Of course, the benefits cannot be seen by population.  But when a person in a village sees it has been there nonrehabilitated for 20 years is rebuilding right now.  They already have some additional stimulus themselves.  For example:  We have just finished right now rehabilitation of one of the roads to the east part of Georgia, Khaheti (ph). 

For that part of the Georgia for them to go to the capital city and come back.  And by the way bring their vegetables or fruits and to sell in Tbilisi it would take them three, three-and-a-half hours.  Now after the road is rehabilitated it takes them 45 to 50 minutes.  It’s a huge difference especially when you are selling fresh fruits and vegetables and grapes.  And this is quite a big problem.

So investing infrastructure is not just something that we are obsessed by or we like it – no.  It will create jobs at that moment of investment.  And at the same time it creates opportunity for the population there.  It’s not only roads.  It’s electricity.  If you don’t have a stable electricity supply and if you want to open a small bar or B&B how can you do that if you’re not guaranteed to guest stable supply or even a cold storage or something else?

So investing in infrastructure is something that has two benefits.  One – (audio interference) – somebody working and doing that infrastructure project.  And second, a benefit of – (inaudible) – to that part of Georgia to have some additional – their own businesses developed.  And this is what’s happening.  And many of them are seeing that, actually, I can tell you right now in public – (audio interference?) – for government is quite high.  And that’s despite the economic problems.  And that’s due to the fact that they’re seeing the opportunity. 

MR. WILSON:  Mr. – (audio interference) – a wide range of issues.  I think for me the take away is to illustrate, yet again, that your government is one that recognizes some various serious and is taking – (audio interference) – to try and deal with them.  I clearly think – (audio interference) – is largely an audience that is – that’s here because they’re interested in Georgia.  Their country will want to do everything that they can and have the United States that it can to help Georgia succeed is a strong, secure, prosperous country.

I’m sure everybody here joins me in wishing you and your colleagues the very best of luck.  Please join me in thanking Prime Minister Gilauri for being with us today.


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