Georgia again might be a precursor of things to come in Ukraine.
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Georgia: Flirting With Tehran to Entice Washington
May 03, 2005 20 32 GMT
Summary
Georgia and Iran have recently announced a series of agreements
designed to improve economic relations. These agreements basically
entail Tehran giving gifts to Tbilisi. Tbilisi's motivations behind the
agreements illustrate that all is not well with Georgia and its
relationship with its close ally the United States.
Analysis
Iran pledged May 2 to spend 20 million euros ($25.7 million) promoting
economic projects in Georgia and announced that it would establish a
permanent trade mission in Tbilisi.
This gesture merely represents the most recent in a series of seemingly
minor economic agreements -- intended to expand bilateral economic ties
-- signed in recent days between the two countries. For example, during
an April 25 visit to Georgia by Iranian Vice President Mohammad Reza
Aref, Iran announced it would reschedule Georgian debt, giving Tbilisi
until 2025 to repay it close to $12 million. Tehran also announced it
would spend $2.5 million to begin refurbishing the Iran-Armenia-Georgia
gas pipeline after Georgian Prime Minister Zurab Nogaideli said Georgia
would be very interested in buying Iranian gas if the price were right.
Moreover, Aref said he would personally see to the matter of setting an
agreeable price. Tbilisi's reaching out to Tehran highlights the
domestic troubles besetting Georgia's leadership, forcing it to
consider pressuring Washington and its interests in the South Caucasus
to elicit greater support.
The Georgian economy is a mess. While Georgia's economy grew by 8.5
percent in 2004, its gross domestic product (GDP) of $5.4 billion
remains well below the levels of the mid-1980s and growth is slowing
rapidly. Much of last year's growth is attributable to a wave of
one-off privatizations, and while this attracted new foreign
investment, the influx of capital has led to rising inflation that is
reducing the living standard of the average Georgian. Roughly 54
percent of the population languishes below the poverty line, and
unemployment stands at 17 percent, according to the International
Monetary Fund; though in actuality, the numbers for both of these are
probably higher.
Poor tax collection rates, though improving, ensure that the Georgian
government stays permanently cash-strapped and the budget remains
constantly in deficit. The country's near-total dependence on imports
for its energy needs is largely responsible for keeping Georgia's trade
balance permanently in the red, with a trade deficit in 2004 of $900
million -- which in essence represents 100 percent of the country's
2004 exports. Corruption and the shadow economy -- estimated to value
close to half of Georgian GDP -- further significantly drain the
country's economy.
While economic reforms are moving forward, it will take years for the
Georgian economy to begin to resemble a freely and normally functioning
economy. In the meantime, Georgians are growing increasingly impatient
with the government's inability to significantly improve their living
standards.
This trend is reflected in Georgian President Mikhail Saakashvili's
popularity ratings, which have fallen dramatically in the last year.
Recent polls show his popularity -- in the 60 percent range for much of
his first year in office -- now in the 30 percent range. A similar
decline has sapped the popularity of Saakashvili's governing coalition.
The popularity of other politicians and parties in the country,
however, remain far lower, with no individual or party registering more
than single-digit approval ratings. While the overwhelming majority of
the Georgian population believes that the government is following the
right course, their faith in their government to pursue that course has
tailed off. This is encouraging opposition parties to grow bolder in
challenging Saakashvili. Gradually, they are attracting more supporters
-- including some from Saakashvili's own party -- and street protests
against the government have begun popping up in Tbilisi.
Internationally, Saakashvili is faring no better. He faces increasing
criticism for the country's human rights and minority rights record,
particularly from the Organization for Security and Cooperation in
Europe (OSCE). Saakashvili's democratic credentials have also suffered
since he took office, as he has gone to great lengths to centralize
power in his own hands since becoming president -- at the cost of the
other two branches of government. Only stern warnings from the OSCE and
European Union have curbed these efforts.
Saakashvili knows he needs the support of the OSCE, the EU and (most
importantly) the United States, in order to achieve his most important
goals for Georgia. As a hardcore nationalist, Saakashvili wants to
limit Russian influence in Georgia as much as possible and bring the
breakaway regions of South Ossetia and Abkhazia back under Tbilisi's
authority. He knows that without the backing of the Western powers --
particularly the United States -- he cannot keep Russia at bay and
offer the appropriate carrots, with the requisite sticks at hand, to
the two separatist regions.
Politically, Saakashvili's struggle to reduce Russian influence in the
country has depended on Western support. The United States has given
Georgia tens of millions of dollars to reform and refit its military,
which remains weak, while U.S. officers have been training Georgian
special forces units. Georgia also received more than $100 million in
foreign aid from the United States in 2004, but Saakashvili feels he
needs even more to deal with the many problems afflicting Georgia.
Washington's support for Saakashvili, however, has cooled somewhat of
late as the United States has come to realize that the confrontational
nationalist tendencies of Saakashvili and his allies could prove
counterproductive. Georgian government sources report that former Prime
Minister Zurab Zhvania visited Washington shortly before his death in
early February to warn the U.S. government that Saakashvili and his
allies' hardcore nationalist agenda could potentially destabilize
Georgia and jeopardize Washington's interests in the region.
Zhvania, who was the country's leading liberal reformer and leader of
the United Democracy party that runs the governing coalition with
Saakashvili's National Movement party, mooted himself as a potential
replacement for Saakashvili who would follow Washington's preferred
course more closely. It appears that Zhvania's warning attracted the
interest of many U.S. officials, and as a result his murder just days
later likely came under the orders of some of Georgia's leading
nationalists.
Saakashvili has no desire to alienate his leading sponsor. But with
Washington's support for him possibly waning, and economic and
political problems building at home, testing the waters with Iran
represents an ideal way to remind Washington that it needs to continue
to pay close attention to Georgia if it wants to promote its larger
agenda in the Caucasus. The United States will have achieved little if
it pushes out Russian influence only to open the door to Iranian
influence, and Saakashvili knows this.
If the United States does not give Saakashvili the economic and
political support he needs, Saakashvili will have to be pragmatic and
consider other options to protect his position. At least economically,
Iran has the potential to offer Georgia concrete benefits that could go
a long way toward addressing some of Saakashvili's needs. Iranian gas
represents a potential alternative to total dependence on Russian gas,
and a pipeline bringing Iranian gas to Europe would bring much-needed
cash in the form of transit fees. The last thing the United States
wants is Iranian gas going through Georgia to European markets and a
geopolitical competition with Tehran in Georgia. Washington, then, will
not ignore the Iranian-Georgian agreements.
On May 10, U.S. President George W. Bush will make a much-anticipated
visit to Tbilisi during which he will no doubt sing the praises of
Saakashvili and his government's role in furthering the cause of
democracy. Washington likely is now considering whether it may need to
bring more than those words to Tbilisi in order to guarantee its
regional interests.
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