Presidents Meet over Peacekeepers
May 30, 2008
Moscow and Tbilisi have agreed to hold the first bilateral meeting of Presidents Dmitry Medvedev and Mikheil Saakashvili. The talks will take place during the June CIS summit in St. Petersburg and the Georgian side will try to convince the new Russian leader to move away from the political course chosen by his predecessor in regard to unrecognized republics. If that is unsuccessful, a source in the Georgian Foreign Ministry told Kommersant, Georgia will use its last argument and demand the withdrawal of the peacekeepers from Abkhazia.
The Georgian president’s staff confirmed for Kommersant that the last preparations have been made for the meeting between Mikheil Saakashvili and Dmitry Medvedev. “The will meet face to face on June 6 during the CIS summit in St. Petersburg. The main topic of conversation between the two presidents will be the situation in Abkhazia,” a high-placed member of the presidential administration said. He added that deputy secretary of the Security Council of the Russian Federation for CIS conflict zones Yury Zubakov had visited the Georgian capital on a special mission. Zubakov had meetings at the Georgian Foreign Ministry and yesterday met the head of state.
They are saying seriously in Tbilisi that the upcoming meeting of the presidents is almost the last chance to defuse the tension in relations between the two countries. In a recent interview with Kommersant, the Georgian president stated openly that “everything has to begin with a blank slate with Medvedev.” Kommersant sources in the Georgian Foreign Ministry suggest that the talks will be momentous only if Medvedev changes the policy of political, military and economic support for the unrecognized republics on the territory of Georgia set by his predecessor Vladimir Putin in his April instruction. “Any meeting has expectations attached to it, but I don’t think Medvedev is ready to take the decisive step,” commented Konstantin Gabashvili, chairman of the Georgian parliament’s foreign affairs committee. “Putin left him a difficult inheritance in the form of the Abkhazian problem, but it will at least be seen in St. Petersburg whether Medvedev is ready to undertake something.”
OSCE Chair: S.Ossetian Negotiating Format not Conducive to Conflict Resolution
May 30, 2008
The OSCE Chairman-in-Office, Finnish Foreign Minister Alexander Stubb, said on May 30 it was time to look into possibilities for a new negotiating format for resolving the South Ossetian conflict.
“I am concerned that the existing negotiating format in the South Ossetian conflict has not been conducive to the resolution of the conflict. It is time to explore possibilities for a new negotiating format that would be acceptable to the parties to the conflict,” the Finnish Foreign Minister said after meeting with his Georgian counterpart, Eka Tkeshelashvili, in Helsinki.
These remarks by the Finnish Foreign Minister, who holds the rotating chairmanship of the OSCE, are in contrast to his previous statement on the same matter made in April, 2008, when he expressed his support for the existing negotiation mechanisms and “regretted that they have not been fully utilized.” “I encourage the parties to the Georgian-Ossetian conflict to return to the negotiation table in the format agreed by all parties,” he said on April 17.
Tbilisi wants to scrap the current Russian-dominated negotiating mechanism for South Ossetia - the quadripartite Joint Control Commission (JCC) - and replace it with a 2+2+2 formula, which would see Russia’s North Ossetia being replaced by the Tbilisi-backed South Ossetian provisional administration and the inclusion of the OSCE and the EU. The move is opposed by Moscow and Tskhinvali.
www.civil.ge/eng/article.php?id=18435
Source: Civil.Ge; May 2008
No Concrete Proposals from Russia - Georgian Security Chief
May 30, 2008
Aleksandre Lomaia, the secretary of the Georgian National Security Council, said that the Russian side had not put forth any concrete proposal that would help to overcome crisis in the bilateral relations.
President Saakashvili met with deputy secretary of the Russian National Security Council, Yuri Zubakov, in Tbilisi late on May 29.
Lomaia, who was present at the meeting, said later on the same day: “We are disappointed… We were expecting concrete proposals on how to overcome the crisis in our bilateral relations, but unfortunately we have not heard these ideas. This is dangerous in the light of existing crisis in our relations.”
Earlier, immediately after the meeting, Lomaia, however, said: “The fact in itself that Russia has sent an official envoy to Georgia is positive.”
“The goal of this visit [by the Russian official] was to specify details of the agenda of the meeting between the two presidents. I can tell you that Georgia has conveyed to the Russian representatives those major issues, which led our relations into crisis; that is the April 16 decision, which in fact annulled Georgia’s sovereignty on part of its territory and another one is illegal deployment of [Russia’s additional peacekeeping] troops in Abkhazia. These are those issues, which the Georgian President thinks, should be resolved in order to make it possible to overcome the crisis and move forward towards the normalization of ties. I think that these problems have been understood by our Russian colleague and now we will wait for the meeting between the two presidents.”
www.civil.ge/eng/article.php?id=18430
Source: Civil.Ge; May 2008
Saakashvili Warns Opposition ‘not to Cross Line’
May 30, 2008
President Saakashvili has warned that no one should have any “illusion that one can create problems to the authorities.”
“The authorities are very strong, but we should not cross the line, over which the problems will be created to our country, as a whole,” Saakashvili said at a meeting with newly elected lawmakers from his ruling party on May 30.
Earlier on May 30 the eight-party opposition bloc and the Labor Party reiterated in a joint statement that they would boycott the newly elected parliament and called for a large-scale protest rally on the day when the parliament planned to convene not to let newly election ruling party MPs inside to thwart the session.
Officials from the ruling party have also warned on several occasions already that the authorities would not allow blocking work of administrative structures, including of the new parliament.
“None of us should do something that will undermine the strength of our country, the reputation of our country, the position of our country in such difficult conditions in terms of the foreign policy,” Saakashvili said. “The [Georgian] authorities are already strong as never before. But Georgia should be stronger. Therefore, we offer a hand of cooperation, friendship, mutual dialogue, unification around Georgia to everybody.”
Saakashvili reiterated that he and his ruling party were ready to offer parliamentary positions, including the post of the Vice-Speaker, to opposition lawmakers. He also said that he was ready to offer seats to opposition in the government as well.
Weekly Market Watch Wrap Up
May 28, 2008
Stock and bond markets
Last week the Galt & Taggart Index (GTI) rose by 7.96% to 778.1 in GEL terms on a trading volume of GEL 111,684. Nine different stocks traded on the Georgian Stock Exchange with seven blue chips among them: Bank of Georgia (GEB, Buy, up 8.84%), Galt & Taggart Capital (GTC, Buy, up 3.9%), Teliani Valley (WINE, Hold, unchanged), Caucasus Energy & Infrastructure (NRGY, Buy, unchanged), United Telecom of Georgia (UTC, Hold, unchanged), VTB Bank Georgia (UGB, Hold, unchanged) and People’s Bank of Georgia (AMB, unchanged). Blue chip stocks accounted for 99.53% of the total weekly trading volume.
Last week Bank of Georgia’s global depositary receipts (GDRs) fell by 0.9% on the London Stock Exchange (LSE: BGEO) to US$ 27.26. Total of 427,878 GDRs traded on LSE last week.
Inflation
According to the Department of Statistics of the Ministry of Economic Development of Georgia, the Consumer Price Index (CPI) rose by 0.3% m/m in April 2008, up from a 0.1% m/m increase in March 2008. The 12-month end-of-period CPI as of 30 April 2008 increased 12.2% from 12.3% at the end of the previous month. The annual period-average CPI in April 2008 rose by 9.7% from 9.5% in March 2008.
The end-of-period CPI of 12.2% in Georgia compares favorably to 30.2% in Ukraine, 25.1% in Kyrgyzstan, 19.1% in Kazakhstan, 18.5% in Azerbaijan, 14.2% in Russia and 13.1% in Bulgaria and is broadly in line with Georgia’s other regional peers.
The National Bank of Georgia maintained its key policy rate at 12% at the Monetary Policy Committee meeting held on 14 May 2008.
Economy
Georgia’s trade deficit widened in April as energy costs pushed up the value of imports.
The negative gap increased to US$ 1.5bn from US$ 1.08bn in the same month of last year, the statistics department said on Friday.
The value of all goods traded rose 44% to US$ 2.4bn, with exports led by copper and concentrates increasing 44% to US$ 446.2mn and oil and car-led imports rising 31% to US$ 1.9bn.
Turkey remained the largest trade partner, followed by Azerbaijan and Ukraine . Trade with Azerbaijan rose 78%, compared with the same period of the last year, while trade with Ukraine rose 67%, according to the statistics department.
Trade with the Commonwealth of Independent States countries including Russia has increased by 23% y/y. Russia is no longer the main trade partner of Georgia as it banned imports of all Georgian products and cut all air, road and rail links with Georgia in 2006.
Russia and Georgia resumed direct flights on March 25 2008 but have not started talks on lifting ban on import of some Georgian products such as wines, fruit and mineral waters.
State budget
According to the Georgia’s Ministry of Finance, actual revenues and grants of the consolidated budget of Georgia in January-April 2008 exceeded the government’s forecast by 3.5%. According to the latest data GEL 2.1bn were collected against the expected GEL 2bn.
The tax revenues totalled GEL 1.5bn or 3.2% above the forecasted number, while the non-tax revenues totalled GEL 0.19bn or 9.4% above the forecasted number.
FX Market
Last week GEL/US$ exchange rate rose by 0.07%. The weekly turnover on the Tbilisi Interbank Currency Exchange (TICEX) was US$ 48.1mn or US$ 13.3mn more than in the previous week. The National Bank of Georgia’s (NBG) net sales were US$ 10.5mn.
Source: Galt and Taggart Securities; May 2008
The Bank of Georgia (LSE: BGEO GSE: GEB) Announces 1Q08 Results
May 28, 2008
The Bank of Georgia (LSE: BGEO GSE: GEB), announced its 1Q08 results, which demonstrated solid performance across its key business lines, especially retail. Net income jumped 169% y/y to record US$ 21.6mn, while revenues saw 127% growth y/y reaching US$ 54.9mn. BGEO also reported consolidated Basic EPS of US$0.74, up 101.5% y/y, and 16.0% q/q.
Sound performance. Total assets grew 121.9% y/y in 1Q08 to US$ 2.1bn, while total equity increased 123.2% y/y to US$ 505.9mn. Loans and deposits amounted to US$ 1.2bn (up 157% y/y) and US$ 0.9bn (up 153.6% y/y), respectively. Annualised ROA rose to 4.1% from 3.3% in the same period in 2007, while annualised ROE grew to 17.1% in 1Q08, compared with 14.2% in 1Q07. Net Interest Margin increased to 8.9% in Q108 from 8.1% in Q4 2007 on the back of strong retail loan book growth.
Outperforming Georgian banking sector. According to data released by the National Bank of Georgia , in 1Q08 assets of Georgian commercial banks grew to US$ 5.6bn, up 72.56% y/y. Total shareholder equity rose to US$ 1.2bn, up 82.87% y/y. Total loans increased to US$ 3.5bn, up 67.2% y/y, while total deposits rose 61.4% y/y, to US$ 2.7bn. In 1Q08, Bank of Georgia accounted for 47% of net income in the Georgian banking sector.
G&T verdict: We see these results as especially strong given the global credit crunch that plagued most banks at the beginning of 2008. We expect BoG to continue to deliver and enjoy healthy Net Interest Margin and increased operating efficiency in the coming quarters. We will watch closely performance of Universal Bank For Development and Partnership which BoG acquired in Ukraine last year as well as BoG’s move into the untapped Belarusian market this spring following the acquisition of the Belarusky Narodny Bank there.
Bank of Georgia will hold a conference call for investors and analysts this evening at 1700 UK time and we expect to hear more about BGEO’s performance directly from senior management.
Source: Galt and Taggart Securities; May 2008
Georgia Calls on Russia to Pay for Downed Drone
May 28, 2008
Tbilisi says Moscow should apologise and pay compensation after a UN report concluded that a Russian jet shot down a Georgian drone over the breakaway republic. Georgia also wants Russia to withdraw additional peacekeepers sent to the region.
The UN report contradicts the claim made by Georgia’s breakaway republic of Abkhazia that it shot down the spy plane on April 20.
Tbilisi has released a video claiming to show a Russian plane attacking the drone.
“After the act of aggression committed by Russia was proven, the Georgian side strongly demands official explanations,” said Georgia’s Deputy FM Grigol Vashadze .
Moscow strongly denies any of its planes were in the area, saying the tape was questionable. It wants access to the ‘evidence’ that led the UN observer mission in Georgia to conclude it was a Russian aircraft that shot down a the spy drone.
Abkazian Defence Minister Merab Kyshmaria says its own forces were responsible for the incident and that the report is biased. The breakaway region has threatened to pull out of the UN-brokered peace talks with Georgia.
“Aircraft that fly over Abkhazian territory, especially in security zones, are shot down by us. Our jets might be made by Russia but we own them and we shot down that drone,” Kyshmaria said.
But Tbilisi rejects this. And on Monday the United Nations observer mission to Georgia issued a statement saying it believes Tbilisi’s version of the events.
Mikhail Saakashvili Led Parade away from Opposition
May 28, 2008
Georgian Opposition Dreams of a Revolution of Lilies
Yesterday Georgia marked the 90th anniversary of the restoration of its independence. The government and the opposition celebrated the event in different ways: The former demonstrated the army’s military capacity pledging to restore the country’s territorial integrity, and the latter demanded that new elections be called. Kommersant correspondents Olga Allenova and Georgy Dvali report from Tbilisi.
The beginning of the celebrations of Georgia’s national holiday was pompous and impressive. The President congratulated everyone on the Independence Day, the army replied to him with triple Hooray, Georgia’s anthem was performed, and cannons fired from the Mtatsminda mountain. Red and white balloons flew in the sky, which has actually become part and parcel of any celebrations organized by Mikhail Saakashvili. The spectators, who filled Tbilisi’s central square, applauded. It much resembled the January inauguration of Georgia’s President.
In the Georgian media, there has been much speculation about the difference between such ceremonies in Russia and Georgia. It started on the day when Dmitry Medvedev was sworn in. Experts, who came to the studio, said that the inauguration in the Kremlin resembled a Masonic Lodge gathering and manifested that there is a gap between Russia’s government and people. “This inauguration shows to the Russian people that gods gather in the Kremlin,” the experts stated. “In Georgia the President is sworn in in front of the Parliament premises, and common people take part in it, too. This is where the difference lies – we have a democratic government.”
As the balloons disappeared in the sky and the applause ceased, the President addressed the citizens with a short speech.
“I wish us all that this day would be the symbol of Georgia’s independence and liberty, its Eurointegration, and a better social security for our citizens,” said the President adding that at the international level, the situation is challenging for Georgia, but the whole world has sided with it. In support of his words, Mikhail Saakashvili gave the floor to Poland’s President Lech Kaczynski and even called him “the president of the unique Polish people and the emissary of the European Union.”
In his turn, Mr Kaczynski congratulated everyone on the Day of Independence, which the Georgian people “gained under complex circumstances,” and on carrying out “free elections.”
“There were mistakes, of course,” he said. “But these were free elections. It’s a step forward on the way of Georgia’s democratic development, just like President Saakashvili promised it.”
At that moment it got clear why the address of the Georgian President, who usually delivers 40-minute speeches on days like that, was so short. The Polish President was performing his function, and he was to show the Georgian society and especially the opposition that the EU backs Georgia and doesn’t doubt the outcome of the parliamentary elections. Poland’s President conveyed the message his Georgian counterpart tries to inculcate into the Georgian people on such occasions. But uttered by Mr Kaczynski, these words had another shade of meaning.
“Georgia must join NATO, whatever! And you can count on our support in it!” the Polish President said. “Georgia has its historical territories, which no one may take away. You have the will to allow united Georgia to exist, and you should be strong and careful without crossing the boundary. And finally, the third matter we support you in, is Georgia’s Eurointegration.”
No sooner had the Polish President finished than the parade began. Elite units of Georgia’s Defense Ministry marched dressing on the President. They wore their ordinary uniform, not the parade one, which is regarded American tradition by military experts. They also marched in the U.S. style – not measuring out their pace as it’s done in the Russian army, but freely and keeping the rows even at the same time. They clasped M4 rifles to their bosoms. A rifle of that type costs some $1.500, which is three times more than the AK. But Mikhail Saakashvili, emphasizing Georgia’s western orientation, has already equipped all elite units of the Defense Ministry with these rifles.
There was one more thing that American and Georgian soldiers have in common. They were extremely sun-burnt, which meant that they had served in Iraq. Georgia’s contingent in Iraq amounts to 2.000 and yields only to those of the USA and Great Britain in these terms. According to President Saakashvili’s order, every two or three months Georgian sub-units in Iraq rotate – so that as many military as possible could get battle experience. In experts’ estimation, within two years the entire Georgian army will have served in Iraq. Regardless of the fact that within three years 4 Georgian soldiers were killed and 17 were wounded in Iraq, service there is reputed honorable. To join the Iraqi contingent, you must pass several tests, with another 7 people competing with you. When you hear a Georgian speak about their countrymen in Iraq, you’re sure to be told a story of a wounded Georgian soldier visited by the U.S. President – all TV channels broadcast it.
Expensive military Toyotas, instead of UAZes, and American APCs (armored personnel carriers), which followed the military personnel, also showed Georgia’s foreign policy priorities. DANA self-propelled gun howitzer models demonstrated Georgia’s military might as well.
Expressing his gratitude to Poland’s President and Georgia’s Patriarch, Mikhail Saakashvili addressed “the thousands of Georgian soldiers defending Georgia’s future.” “I pledge that despite all the attacks, Georgia will regain all the territories,” he said.
These were the words to be endorsed. The parade, which lasted as little as 30 minutes, finished.
The reason for the ceremony being that short got evident 15 minutes later, after the guests had left the tribune. A crowd appeared in Rustaveli Street bearing posters and flags. The people approached the Parliament. At the beginning of the column, you could see activists of the Republican and Labor parties – they hissed off the few military standing on the sidewalk and cried “Down with Misha!” As they reached the parliament square, you could see several women shout at them, “Instigators! traitors of Georgia!” These women had just watched the parade.
In no time the footsteps at the parliament were occupied by the opposition youth with megaphones. “We do not recognize the outcome of the elections!” they claimed. Then their places were taken by opposition leaders, who stated that they signed a common memorandum about refusing to take MP mandates and revoking their party ballots. The latter was done to prevent the authorities from luring minor members of opposition parties, who wouldn’t get in the parliament, into joining the ruling party. They also said that Saakashvili marked Georgia’s national holiday his own way – with tanks – and the opposition will celebrate it differently at the premises of the Parliament.
“Misha has quickly run away from the venue!” one of the united opposition’s leaders, Zviad Dzidziguri, shouted into his megaphone.
People laughed, and cried something.
“We’ll start a rally without any time limitations and summon the entire Georgia here unless the results of the voting are cancelled today,” another leader, David Gamkrelidze, gave an ultimatum to the government.
To summon the entire Georgia, the opposition needs TV air. So, they demanded that the Public Channel broadcast live the rally, or they’ll come to the building of the television. Then they appealed to the incumbent Speaker of the Georgian Parliament Nino Burjanadze calling on her “to join the people.” It need be said that the appeal was deliberate. You couldn’t see Ms Burjanadze standing next to the President during the military parade. She was absent at the tribune, which was a sensation: Ms Burjanadze had never missed any occasion of that kind. The opposition must have reckoned that she would side with them, which would have been its significant victory. But their hopes dashed.
Levan Gachicheladze, leader of the united opposition, shouted in his microphone, “I’m glad that the authorities have run away from here and we have taken their place!” And then he turned to the President, “Misha, here we are!” These words were especially endorsed by the public.
Labor party leader Shalva Natelashvili urged that the President “immediately dissolve the illegitimate parliament,” and Republican party leader David Usupashvili asked everyone to be patient and act in the framework of the Constitution. Many of the opposition leaders feared that a provocation might be brought about. “The special forces deployed not far from here consist of our brothers,” Mr Usupashvili said. “They are not responsible for what the government does!”
Georgy Targamadze, leader of the Christian Democratic party, also spoke about the necessity to avert provocations. He received an especially warm welcome. Many people doubted whether Mr Targamadze’s party would join the opposition – unless this had happened, the Georgian Parliament would have been bipartisan. But at that moment it got obvious that only the National movement will be present in there. Opposition activists said that they deprived the Parliament of legitimacy, and that a single-party parliament is characteristic of such states as Turkmenistan.
You could see white lilies in the crowd. Perhaps, some people wished a revolution of lilies would break out in Georgia on that day.
www.kommersant.com/p896402/r_527/Independence_Day_in_Georgia/
Source: Kommersant; May 2008
Georgian Interior Minister: Russia Pushing Abkhazia
May 28, 2008
Georgia demanded an apology from Russia yesterday and compensation for damages from the Georgian unpiloted aircraft shot down over Abkhazia on April 20. Georgian called that an act of aggression. Georgian Interior Minister Vano Merabishvili, who is considered a key figure in the current government, comments in an exclusive interview with Kommersant special correspondent Olga Allenova on the incident with the drone, talks about the future of Georgian-Russian relations, about the conflict between the Georgian government and the opposition and about whether there will be war in Abkhazia.
The Georgian opposition is protesting again. Will the Interior Ministry take measures?
What can it do? The reforms we have carried out have been so painful that people still can’t get over it. We turned everything upside down as we dealt with corruption. When I say that there is not a single kidnapping in Georgia, not a single gangland boss, almost o stolen cars, it means a lot. Since 2003, the federal budget has increased by 14 times. That money had been in someone’s pocket. We got to it and put it in the budget. That means many people lost money. Of course, they will fight the government. That is why society is tense.
But we won in the elections. There were two reasons for that: we campaigned well, and people understood that the opposition isn’t good for anything. What did they offer people? Nothing. The only party that offered anything at all was our party. In five years, we raised pensions four- or fivefold. That’s practical. The opposition had no program and lost so resoundingly that it has become marginal.
Marginal how?
They think that, if we made a revolution, they can too. But they are not the equal of the task. They don’t see that they have no standing. They based everything on their own opinion of themselves.
Russian Peacekeeper Lightly Wounded
May 28, 2008
A Russian peacekeeper was lightly injured after he was stabbed by unknown men in the Abkhaz conflict zone, the Russian news agencies reported citing Russian peacekeepers command.
The incident, which was described by the Russian peacekeeping command, as “an act of hooliganism” took place in the Zugdidi district on the Georgian side of the Abkhaz administrative border.
Earlier on May 28 the Georgian television station, Rustavi 2, reported that one Russian peacekeeper was injured with a gunshot after a dispute between, as the TV station put it, ethnic Russian and ethnic Chechen servicemen of the peacekeeping forces. The Georgian television stations are time after time reporting about cases of alleged confrontation among the Russian peacekeepers in the conflict zone.
www.civil.ge/eng/article.php?id=18418
Source: Civil.Ge; May 2008