Monthly Archives: November 2006

06TBILISI3069, THE ROSE REVOLUTION: THREE YEARS ON

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Reference ID Created Released Classification Origin
06TBILISI3069 2006-11-22 15:32 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

VZCZCXRO6680
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #3069/01 3261532
ZNY CCCCC ZZH
O 221532Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4698
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 07 TBILISI 003069 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR DAS BRYZA AND EUR/CARC 
 
E.O. 12958: DECL: 11/22/2016 
TAGS: PREL PGOV GG
SUBJECT: THE ROSE REVOLUTION:  THREE YEARS ON 
 
Classified By: AMBASSADOR JOHN F. TEFFT.  REASONS:  1.4 (B) AND (D). 
 
1. (C) Summary:  The Saakashvili administration came to power 
after the 2003 Rose Revolution promising to build 
democracy, increase prosperity, and reincorporate Georgia's 
separatist regions.  Three years after the Rose Revolution, 
the Saakashvili administration has much to be proud of.  In 
place of a nearly-failed state, the GOG has built a 
cohesive nation with maturing democratic institutions, a 
growing and diversifying economy, and a comprehensive 
reform program that has been cited by the World Bank and 
other international organizations for its success in 
fighting corruption and improving the environment for 
investment.  The GOG successfully re-integrated the Adjara 
region in 2004.  Russian bases that have existed in Georgia 
for over 200 years are being withdrawn and NATO, citing 
reform progress has given Georgia Intensified Dialogue (ID), 
bringing the country one step closer to its strategic 
objective of membership in the Alliance.  Serious challenges 
remain including consolidating difficult reforms 
as major economic and political pressure from Russia 
threatens to undermine them.  The pressure comes in the 
form of economic bans on Georgian goods, the complete cutoff 
of all transport and communication links with 
Georgia, support to the separatist regions, and alleged 
covert activities designed to undermine the Saakashvili 
government.  Achieving Georgia's strategic goals and 
fulfilling the promise of the Rose Revolution, will require 
continued political commitment to difficult reforms and 
patience in the face of escalating pressure and 
provocations from Russia.  It will also require continued 
help from the U.S. and Europe to keep the GOG on the right 
path and to act as a check on Russian misbehavior.  End 
Summary. 
 
----------------------- 
LOCAL GOVERNMENT REFORM 
----------------------- 
 
2. (SBU) The decentralization of power from Tbilisi to the 
regions has been a major achievement for the Saakashvili 
government.  With strong USG political and assistance 
support, laws passed in 2005 and 2006 established viable 
and accountable local governments that are elected by and 
directly accountable to their constituents.  In May 2006, 
Parliament passed budget legislation that clearly defines a 
formula by which money is distributed from Tbilisi to local 
authorities.  Power of the purse will strengthen the hand of 
local administrators and give them the ability to better 
address their constituents' concerns.  Although the GOG has 
passed good legislation, implementation will be the true 
test.  Mission will continue to urge central authorities to 
refrain from interfering with nascent local governments and 
USG assistance will help newly-elected local officials to 
develop their technical capacity. 
 
--------------- 
JUDICIAL REFORM 
--------------- 
 
3. (U) One of the most difficult challenges to tackle has 
been dismantling the corrupt Soviet era judiciary.  Since 
the Rose Revolution, the GOG has implemented a number of 
measures to reform the judicial system including 
consolidating a previously sprawling and inefficient court 
system into a straightforward three tier system of trial 
courts, Appeals Courts and Supreme Court.  Corrupt and 
incompetent judges were removed from the bench and replaced 
with appointees drawn from a pool of candidates who had 
passed an objective written examination. Other efforts to 
promote judicial independence including granting contempt 
powers to judges to impose fines or confine anyone who 
disrupts court proceedings and introducing court 
marshals/bailiffs to provide security and maintain order in 
courthouses and during court proceedings. 
 
4. (SBU) During 2006, at our urging, President Saakashvili 
acknowledged the need to hasten judicial reform.  Court 
salaries were increased for the first time since 1998 thus 
reducing the incentive for corruption.  In April, the 
composition of the High Council of Justice (HCOJ), the 
disciplinary body of the court system, was changed to 
remove the Prosecutor General and to increase the number of 
judicial members elected by their peers so as to constitute a 
majority on the HCOJ.  The High School of Justice was also 
established as a judicial training center where 
starting in 2008, all newly appointed judges will undergo 14 
months of training prior to assuming their place on the 
bench.  Pursuant to the constitutional amendments proposed by 
the President in October, the President will no longer 
have the unilateral power to appoint or dismiss judges.  That 
 
TBILISI 00003069  002 OF 007 
 
 
power will rest with the HCOJ whose nominees to the 
bench would be approved by Parliament.  The President, 
however, will remain chair of the HCOJ but a non-voting 
member. 
 
5. (U) Other complementary reforms have been implemented to 
improve the legal profession and the effectiveness of the 
administration of justice.  A program of intense training and 
a new code of conduct have been implemented within the 
Pr
osecutor General's Office.   The Legal Committee in 
Parliament is working on legislation to ban ex parte 
communications, an unfortunate legacy of Soviet-era 
'telephone justice, legal systems.  A newly reconstituted 
bar association has drafted a code of ethics and introduced a 
new disciplinary system.  A new objective bar exam for 
attorneys has replaced its corruption-ridden predecessor. 
Access to affordable legal services, however, continues to 
be a concern.  Most defendants in criminal cases proceed 
without benefit of counsel. 
 
---------------- 
EDUCATION REFORM 
---------------- 
 
6. (U) Education reform has been one of the most successful 
areas of progress made by the GOG.  Two important laws were 
passed in 2005: the Law on General Education and the Law on 
Higher Education.  The Law on General Education reorganized 
the Ministry of Education's standards for teaching, 
curricula, textbooks and testing.  By establishing a new 
system of school governance involving boards of trustees, 
teachers' councils, and parents' consultative bodies, the 
Law has made secondary schools more independent from the 
Ministry of Education and more accountable to local 
families.  The elections of school boards were widely 
attended by the public underlining Georgian support for 
this reform.  The Law on Higher Education created 
accreditation standards for universities to meet: in 2006, 
32 Universities obtained this accreditation.  It also 
provided for uniform entrance exams, making predictable and 
transparent a previously and often corrupt process. 
University reorganization has made many institutes of 
higher education financially independent from the Ministry of 
Education. 
 
7. (U) In 2006 the Ministry opened 17 Education Resource 
Centers, making the control of local education bodies the 
responsibility of publicly competitive positions.  The 
Ministry of Education's ongoing efforts to extend inclusive 
education and vocational training programs are also a major 
focus for the GOG: 12 rehabilitated and modernized 
technical education centers were opened in 2006.  Further 
steps are required to ease University faculty members into 
a system of openly competitive academic positions, and to 
fully implement the policies outlined in the two major 
Education laws, for example expanding the GOG plans to give 
each school in Georgia a board of education, board of 
trustees, student council, and pedagogical council to empower 
local stakeholders and guarantee qualified and 
consistent education standards. 
 
--------------- 
ANTI-CORRUPTION 
--------------- 
 
8. (U) The fight against corruption has been a major area of 
focus for the Saakashvili government and a major area of 
assistance for USG programs.  GOG initiatives including the 
prosecution of corrupt officials and businessmen including 
those from the ruling party, along with continuing 
deregulation and tax and customs reform supported by USG 
technical assistance and programming have created a more 
transparent business climate with less opportunity for 
corruption in government institutions.  The World Bank hails 
Georgia as the top reformer in its 2006 
Anti-corruption in Transition report, the Millennium 
Challenge Corporation's 2007 indicators shows Georgia 
scores above its peer group on anti-corruption efforts, and 
in an April 2006 International Republican Institute poll, 
96 percent of those surveyed said that they had not had to 
pay a bribe to receive a public service in the last 12 
months.  Georgia has also significantly improved in 
Transparency International Corruption Perception Index, 
moving from 130th place to 99th from 2005 to 2006. 
 
9. (SBU) Similarly, a 2006 World Bank/EBRD survey states that 
the percentage of firms that identified corruption as a 
significant obstacle fell from 60% in 2002 to 39% in 2005 and 
the percentage of firms that paid bribes during the 
same period fell from 44% to 11%.  Increased compliance with 
financial structures, improved implementation, and 
 
TBILISI 00003069  003 OF 007 
 
 
more participation in the formal economy have significantly 
increased public trust in the Government and increased the 
size of the national treasury five-fold.  The USG will 
continue to push the GOG to fulfill the steps outlined in 
its 2006 Anti-Corruption Action Plan in order to consolidate 
gains made in the last three years. 
 
--------------- 
ELECTION REFORM 
--------------- 
 
10. (U) Nation-wide local elections were held on October 5 in 
which ruling party National Movement notched a big 
nationwide victory capturing over 70% of the votes throughout 
Georgia.  The Organization for Security and 
Cooperation in Europe /Office for Democratic Institutions and 
Human Rights (OSCE/ODIHR) concluded that the elections 
were conducted with general respect for fundamental freedoms. 
 In a post-election statement, ODIHR praised the 
Central Election Commission (CEC) for its "commendable 
efforts" to improve the quality of the voters, list and the 
"professional and inclusive manner" in which the election was 
conducted.  In the October 2005 Parliamentary 
by-elections, observers had noted problems with the voters, 
list and had recommended that the CEC to take steps to 
address this concern.  USAID-funded local NGOs International 
Society for Free and Fair Elections (ISFED) 
and new Generation new Initiative (nGnI) concluded that the 
October 5 local elections were fundamentally fair and the 
results represented the will of the electorate.  ODIHR, ISFED 
and nGnI recommended that the CEC continue its 
efforts to improve the voters, list in the run-up to the 
Fall 2008 Parliamentary and Presidential elections.  USAID 
in conjunction with OSCE is funding a civil registry project 
which will computerize all civil records in 
Georgia.  This multi-year project will ultimately fix the 
voters list.  In the meantime, USAID is funding a program 
to help the CEC implement some of the changes recommended by 
ODIHR. 
 
------------- 
PRISON REFORM 
------------- 
 
11. (U) Changes to the Criminal Procedure Code have increased 
the protections provided to the accused.  By 
requiring that a defendant confirm to a judge any statements 
given in pre-trial detention before it can 
be introduced as evidence, the incentive for investigators to 
coerce a confession was reduced.  Bail is now the 
legislatively mandated preferred force of pre-trial restraint 
in instances where the accused does not pose a 
threat.  As a result over 50% of arrestees are currently 
released on bail as opposed to less than 10% in 2005. 
 
12. (U) Despite the increased use of bail and the opening of 
new and remodeled facilities, however, conditions in 
pre-trial detention facilities as well as post-conviction 
prisons generally remained poor.  The International 
Committee of the Red Cross, the OSCE, and many NGOs including 
Human R
ights Watch report inhumane and 
life-threatening conditions compounded by overcrowding and 
inadequate nutrition and health care.  The Ministry of 
Justice, which oversees the penitentiary system, announced 
that as a result of increased budgetary commitment, by 
2008, all inmates in Georgia will be housed in newly 
constructed or completely renovated facilities that meet 
international standards.  At present, approximately 4,000 of 
Georgia's 14,000 inmates are housed in the new 
facilities financed by the European Union.  Expected 
improvements in prison conditions as a result of increased 
budgetary allotments may be unrealistic as a result of the 
increase in prisoners following the GOG's crackdown on 
crime.  While the inmate population has grown 56 percent from 
the end of 2005 to mid-October 2006, the per inmate 
budget allocation has only increased 19 percent in that same 
period. 
 
------------- 
POLICE REFORM 
------------- 
 
13. (SBU) The Saakashvili administration famously fired 
15,000 police officers in 2004 and with strong USG 
assistance, hired and trained a new force in an effort to 
clean up this corrupt and ineffectual institution.  In an 
April 2006 poll, the police had an over 70 percent approval 
rating according to the International Republican Institute 
-- a figure unheard of in the former Soviet Union.  The 
Ministry of Internal Affairs (MOIA) has done much to 
improve equipment, provide for operating funds, and build or 
 
TBILISI 00003069  004 OF 007 
 
 
upgrade new facilities.  The USG will continue to push 
the GOG to expand on this success by targeting structural 
reform in the MOIA. 
 
----------------- 
RELIGIOUS FREEDOM 
----------------- 
 
14. (U) The status of religious freedom continues to improve 
through increased government responsiveness to the 
needs of minority groups as well as investigation and 
prosecution of harassers of nontraditional faiths. The GOG 
has also implemented a registration process for religious 
groups that grants them legal status, for example, to buy 
or sell property.  Previously, no registration process 
existed yet non-registered groups were subject to fines and 
other administrative penalties. 
 
--- 
TIP 
--- 
 
15. (SBU) The government has taken significant steps to 
combat trafficking in persons (TIP) including the passage 
of a new anti-TIP law that went into effect in July 2006, the 
formation of a permanent inter-agency anti-TIP 
government commission, and the development of a government 
fund that will provide assistance to TIP victims which was 
approved by the inter-agency council in November.  In June, 
the President signed the Law on Elimination of Domestic 
Violence which when implemented in 2007 will allow victims 
for the first to file for immediate protective orders 
against their abusers thus giving them more practical 
recourse than pressing criminal charges.  The GOG has 
committed to taking over the financing and administration of 
a shelter built with USAID assistance in Adjara and has 
acquired another building which it plans to develop as a 
shelter in Tbilisi.  Mission will continue to press the GOG 
to fight for increased prosecutions and tough sentences for 
traffickers that match the heinous nature of their crimes. 
 
------------ 
HUMAN RIGHTS 
------------ 
 
16. (U) Since the Rose Revolution, the Saakashvili government 
has committed itself to observing 
internationally recognized human rights.  Throughout 2005 and 
2006, there were several cases of police officers 
brought to trial, dismissed, or demoted for abuses.  In July 
2006, four Ministry of Internal Affairs officers were 
convicted and sentenced to seven years in the beating death 
of Sandro Girgvliani.  In August, a police officer was 
sentenced to four years in the shooting death of Amiran 
Robakidze.  The level of abuse committed in police stations 
declined sharply after a program of monitoring was introduced 
in 2005.  Despite these positive developments, 
however, NGOs note that close ties between prosecutors and 
police and the lack of professionalism and independence of 
the judiciary hinders systematic investigation, prosecution 
and punishment of abusers, especially outside of Tbilisi. 
Moreover, NGOs note that an aggressive "zero tolerance" for 
crime policy which they claim violates the presumption of 
innocence, resulted in an increase in the number of deaths 
during police operations earlier in 2006, though they 
acknowledge this situation has improved as the year 
progressed. 
 
--------------- 
ECONOMIC REFORM 
--------------- 
 
17. (SBU) With unofficial unemployment at 50%, the 
Saakashvili government has made job creation and improving 
the climate for foreign and domestic investment in Georgia 
top priorities.  The progress made has been recognized by 
the World Bank in its Doing Business 2007 study, which 
compares the ease of opening, conducting and closing a 
business in 175 countries. Georgia vaulted from 112th on the 
World Bank's list to 37, making it the fastest 
reforming economy in the world.  The government has lowered 
taxes, reduced the number of required licenses, 
strengthened and harmonized standards, reduced state 
regulation, cut tariffs, and simplified customs 
procedures.  The government privatized almost nine times the 
value of assets in 2005 as it did in all of 2000-2003. 
The government hopes to attract as much as a billion dollars 
in foreign investment in 2006, even after the 
Baku-Tbilisi-Ceyhan (BTC) oil pipeline construction has been 
completed.  Although stiffer enforcement has increased 
tax revenues since the Revolution, reports of ham-handed 
 
TBILISI 00003069  005 OF 007 
 
 
tactics by the Financial Police remain common, sowing 
uncertainty among businesses.  Mission has proposed 
significant reforms to the GOG that will alleviate problems 
associated with the Financial Police. 
 
18. (SBU) Macroeconomic management has so far been adequate. 
The economy continued to show strong real growth through 
2005, reaching 9.3% year on year in 2005.  The Russian bans 
On Georgian exports, the severing of transport links and 
major increases in energy costs however, may limit growth by 
1-3%, according to the IMF.  The IMF adds that the 
longer the blockade is in place - the worse the damage will 
be.  The economy could still grow as much as 6-7% in 2006. 
Inflation has been relatively moderate for such a 
fast-growing economy, at 8% in 2005, but it is trending up 
as a result of a quickly expanding money supply, higher 
costs, and more vigorous government spending permitted by 
growing tax revenues. 
 
------------- 
ENERGY REFORM 
------------- 
 
19. (SBU) Georgia's energy supply picture is much improved 
since the Rose Revolution. From 1998 to 2004, USAID 
provided $47.3 million in cash subsidies to needy
Georgians 
for energy.   Last winter was the first the time Georgia 
took this burden on itself.  With USG assistance, electricity 
supplies have become more reliable, approaching 
consistent 24-hour-a-day service through improved management, 
systems and anti-corruption efforts. 
Hydropower output has increased almost 27%, and thermal by 
28%, from 2005 to 2006.  Georgia is even beginning to 
export electricity to its neighbors.  Natural gas supplies, 
especially this winter, are more problematic.  Russia 
quadrupled the cost of gas in two years, interfered with 
Georgia's efforts to contract with Azerbaijan for 
alternative supplies, and threatened outright cutoffs to 
Georgia.  Nevertheless, with more gas becoming available to 
Georgia via the Shah Deniz pipeline from Azerbaijan, and 
increased reliance on domestic hydroelectric power, the GOG 
expects that the situation will significantly improve after 
2008.  The GOG has asked for USG support as they work with 
Azerbaijan and Turkey to strengthen their energy situation in 
the short-term. 
 
---------------- 
NATO INTEGRATION 
---------------- 
 
20. (C) The Saakashvili has identified NATO integration as a 
top national strategic objective.  NATO's decision to 
give Georgia Intensified Dialogue in September was a major 
success for Saakashvili and was a strong acknowledgment 
from the West of GOG progress in political, economic, and 
defense reforms.  The GOG needs to target judicial reform, 
rule of law, and structural reform at the MOD while remaining 
calm in the face of Russian provocations. 
 
-------------- 
DEFENSE REFORM 
-------------- 
 
21. (C) Georgia continues to make progress on defense reform. 
 Significant progress in meeting Individual 
Partnership Action Plan (IPAP) goals was noted during the 
NATO International Staff (IS) assessment last 
spring, but the challenge for the Ministry of Defense now is 
to implement into operational practice many of the plans 
and programs that have been successfully developed thus far. 
A key shortcoming noted during the assessment was in 
the field of Personnel Management, but several initiatives to 
progress in this area were made this fall. 
 
22. (C) The next two key challenges for the Ministry of 
Defense will be to demonstrate continued progress in 
implementing IPAP objectives during the forthcoming Spring 
2007 NATO IS assessment, and in completing and publishing 
the ongoing Strategic Defense Review (SDR) in July 2007, 
Georgia's stated goal.  Deciding on a stable force 
structure that can be properly resourced into the future will 
be key to completing the SDR. 
 
----------------------- 
RUSSIAN BASE WITHDRAWAL 
----------------------- 
 
23. (SBU) On May 30, 2005, the Russian and Georgian Foreign 
Ministers signed a Joint Statement agreeing to a timeline 
for the withdrawal of Russian military forces from its bases 
in Batumi and Akhalkalaki by October 1, 2007.  Russia 
 
TBILISI 00003069  006 OF 007 
 
 
fulfilled the 2005 provision of the Joint Statement calling 
for the removal of 40 armored vehicles, including 20 tanks, 
by the end of October 2005 (slightly behind schedule because 
of weather delays).  Russia fulfilled its 2006 
withdrawal requirements ahead of schedule, removing all 
remaining heavy equipment from Akhalkalaki, as well as 
equipment and ammunition from Batumi, by mid-September 2006. 
 All remaining Russian military forces and equipment 
in Akhalkalaki and Batumi are on schedule to be removed from 
Georgia by October 1, 2007.  The status of the Russian 
base at Gudauta, in Abkhazia, which the Russians agreed to 
close at the 1999 OSCE Istanbul Summit, remains 
unresolved.  The base has not been transferred to Georgia, 
and Russian troops remain at the base as peacekeepers. 
 
-------------------- 
SEPARATIST CONFLICTS 
-------------------- 
 
24. (C) From the beginning of his presidency, Saakashvili has 
made it clear that he wants the reunification of 
Georgia to be part of his historical legacy.  His active 
approach has produced some impressive successes, bringing 
Adjara and the Upper Kodori Gorge back under Georgian 
government control.  But the hardest nuts -- Abkhazia and 
South Ossetia -- remain uncracked.  Over the past year, 
Russian support for the separatist regimes has become, if 
anything, even more unyielding and overt, making it hard to 
predict a breakthrough in the near future.  Even so, the 
Georgian government's approach has over time become steadier 
and smarter, as evidenced by the contrast between 
the government's poorly coordinated behavior during the 
violence in South Ossetia in 2004 and the well-run Kodori 
operation in July 2006. 
 
25. (C) Since Kodori, the government has shown notable signs 
of improved internal coordination and, under the 
influence of Foreign Minister Gela Bezhuashvili, of 
recognizing the importance of getting its side of the story 
out to the international community.  The government wisely 
moved to get behind the donors' economic rehabilitation 
projects in South Ossetia, despite some qualms that these 
could benefit the de facto Kokoity regime.  It has also put 
on hold the idea of unilaterally terminating the mandate of 
Russian-led peacekeepers in both conflicts. 
 
26. At the same time, however, the government has rejected 
suggestions -- such as a statement on non-use of force or 
abandonment of its push to change negotiating and 
peacekeeping formats -- that it believes would signal 
weakness to the separatists and the Russians.  The 
government's position is tough, but not unthinkingly so, 
and this approach appears to have the broad support of the 
Georgian public.  If anything, any potential opposition is 
likely to come from those -- like former Defense Minister 
Okruashvili -- who would push for a harder line. 
Saakashvili has told us that he believes time is on Georgia's 
side in the conflicts:  Georgia's economic 
development will over time draw the separatist regions back 
toward Georgia, and an outbreak of major violence would 
undercut this favorable long-term dynamic. 
 
--------------------- 
RELATIONS WITH RUSSIA 
--------------------- 
 
27. (C) Georgia's reforms have come in the face of an 
increasingly aggressive Russian policy that many Georgians 
believe is designed to thwart the reforms and to produce 
"regime change" in Georgia.  Between December 2005 and May 
2006, Russia imposed bans on imports of Georgian agricultural 
products, wine, cognac, sparkling wines, and 
mineral water, all products for which Russia had previously 
been Georgia's primary market.  Russia has also closed the 
only legal land border between the two countries, and severed 
all air, rail, and sea transportation links. 
 
28. (C) Following the Russia-Georgia spying
 confrontation in 
September-October 2006, Russian officials conducted a 
highly publicized campaign of harassment and deportation of 
Georgian citizens in Russia, many of whom had been sending 
remittances to Georgia for years.  Many Georgians expect 
Russia to disrupt gas supplies this winter, as happened 
last year.  All these steps have hurt the Georgian economy, 
but they do not seem to have undermined support for the 
government; if anything they have done the opposite, as 
evidenced by the National Movement's huge wins in October 
local elections. 
 
29. (C) With few exceptions, the opposition has supported the 
government's handling of relations with Russia and its 
 
TBILISI 00003069  007 OF 007 
 
 
NATO aspirations.  This level of support appears to give the 
government the time it needs to see Georgia through to 
a more diversified economy in which Russia holds much less 
economic leverage.  As Georgia becomes more closely and 
irreversibly integrated with NATO, we may eventually see a 
lessening of Russian military and political pressure, but 
in the interim as Georgia moves from Intensified Dialogue to 
a possible Membership Action Plan (MAP) this pressure 
seems likely to become even more intense. 
 
---------------------------------------- 
COMMENT: A REVOLUTION IN NEED OF SUPPORT 
---------------------------------------- 
 
30. (C) Comment: The GOG has made tremendous progress but it 
faces a hard road ahead.  Following an overwhelming 
victory in the October local elections the Saakashvili has 
targeted 2007 as a year for continuing its difficult reform 
program in order to consolidate gains ahead of the 2008 
Parliamentary and Presidential elections.  Escalating 
Russian pressure however, is designed to derail the GOG's 
reform program and efforts to integrate with NATO, and 
Saakashvili is counting on U.S. and European support as a 
counterweight to its great northern neighbor.  The U.S. and 
Europe need to speak with one voice on the need for Russia to 
cease its economic blockade and continued obstruction to 
the peaceful resolution of the separatist conflicts.  The 
dreams of the Rose Revolution, inspired by western ideals and 
values, remain very much alive.  Continued success will 
require Georgian steadfastness as well as continued western 
support if the goal of rebuilding Georgia into a democratic, 
prosperous and unified country is to be achieved.  End 
Comment. 
TEFFT

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06TBILISI3061, MFA RELEASES FOREIGN POLICY STRATEGY

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If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06TBILISI3061.
Reference ID Created Released Classification Origin
06TBILISI3061 2006-11-22 06:00 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

VZCZCXRO5933
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #3061 3260600
ZNY CCCCC ZZH
P 220600Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC PRIORITY 4694
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L TBILISI 003061 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 11/22/2016 
TAGS: PREL PGOV GG
SUBJECT: MFA RELEASES FOREIGN POLICY STRATEGY 
 
Classified By: Ambassador John F. Tefft for reasons 1.4 (b) and (d). 
 
1. (U) The MFA recently released its 2006-2009 Foreign Policy 
Strategy document.  The Strategy focuses on the goals of 
territorial integrity, Euro-Atlantic integration, economic 
growth, and the protection of Georgians abroad, and helps to 
fulfill a requirement in Georgia's NATO Individual 
Partnership Action Plan (IPAP). 
 
2. (U) The Strategy lists specific actions to achieve broad 
goals.  For example, under the goal of territorial integrity 
it lists developing and implementing peace plans for South 
Ossetia and Abkhazia, internationalizing the peacekeeping 
forces in the territories, and creating a joint UN/OSCE human 
rights office to facilitate the return of Internally 
Displaced Persons (IDPs) to the conflict regions.  Under 
Euro-Atlantic integration, it lists continuing the membership 
dialogue with NATO, pursuing closer relations with the EU, 
and adopting the European Neighborhood Action Plan (ENP). 
Under economic growth, it lists the promotion of foreign 
direct investment, exploiting the potential of Georgia as a 
corridor for energy transportation, and stimulating tourism. 
Under the support of Georgian citizens abroad, it lists 
combating human trafficking, developing a network of consular 
missions, and promoting Georgian labor migration. 
 
3. (C) The Strategy is the first document of its kind issued 
by the MFA.  Helen Khoshtaria of the GOG Ministry for EU and 
NATO integration told us that the document is designed to 
meet objective 1.1.2 of Georgia's IPAP, which calls on the 
GOG to "Provide more detailed, measurable and time-related 
Foreign and Security Policy objectives to serve as a basis 
for future evaluation." 
 
4. (U) Comment: The publication of this clear and 
comprehensive Strategy document shows that NATO's 
recommendations are being internalized into GOG policy and 
that the GOG is taking concrete steps to make its foreign 
policy goals transparent and measurable.  End Comment. 
TEFFT

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06TBILISI3046, GOG NEEDS STRATEGY FOR THE DEVELOPMENT AND

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Reference ID Created Released Classification Origin
06TBILISI3046 2006-11-20 13:08 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

VZCZCXRO3819
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #3046/01 3241308
ZNY CCCCC ZZH
P 201308Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC PRIORITY 4685
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 003046 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR DAS BRYZA AND EUR/CARC 
 
E.O. 12958: DECL: 11/19/2016 
TAGS: PREL PGOV GG RU
SUBJECT: GOG NEEDS STRATEGY FOR THE DEVELOPMENT AND 
INTEGRATION OF AKHALKALAKI 
 
 
Classified By: Ambassador John F. Tefft for reasons 1.4 (b) and (d). 
 
 1. (C) Summary: On November 7-8, PolEcon Chief and Poloff 
traveled to the multi-ethnic region of Samstkhe-Javakheti to 
meet with newly-elected local officials, NGO leaders, media 
representatives, and university students.  The purpose of the 
visit was to reinforce the USG's commitment to increased 
integration of ethnic minorities in Georgia's political and 
economic development and to urge the newly-elected officials 
to use their increased powers to address the needs of their 
constituents.  The key obstacle to the development of 
Akhalkalaki, the region's most volatile city and home to a 
Russian army base which is set to be withdrawn by 2007, is 
geographic isolation and pervasive poverty.  Despite 
promising ideas from newly-elected officials, local 
authorities need to do more to coordinate a regional economic 
and political development strategy in order to reduce ethnic 
tensions in the region, increase investment, and create jobs. 
 Local authorities also need to identify economic 
opportunities that will grow out of the Millennium Challenge 
Compact's $100 million road-building project linking the 
region with Tbilisi and Armenia and other USG assistance 
activities.  GOG officials need to spend more time in the 
region and appoint a new Presidential Representative for 
Civil Integration who can focus government efforts to 
incorporate the region's ethnic minorities.  The Embassy team 
passed the first  two messages to the local authorities, 
NGOs, and the public, while Ambassador passed the last to 
Presidential Chief of Staff Giorgi Arveladze.   End Summary. 
 
----------- 
USG Message 
----------- 
 
2. (C)  On November 7-8, PolEcon Chief and Poloff traveled to 
the multi-ethnic region of Samstkhe-Javakheti to meet with 
newly-elected local officials, NGO leaders, media 
representatives, and university students.  PolEcon Chief 
underlined the USG's commitment to increased integration of 
ethnic minorities in the nation's political and economic 
development.  PolEcon Chief cited the Millennium Challenge 
Compact (MCC) road-building project which will link 
Akhalkalaki with Tbilisi and Armenia and USAID projects 
supporting newly-elected local officials as evidence of the 
USG's commitment to the region. 
 
3. (C) PolEcon Chief also urged local government officials to 
use their new budgetary and political authority, enacted as 
part of this year's local government reforms, to address the 
concerns of their constituents.  PolEcon Chief advised them 
to look at the MCC road project as a catalyst to attract 
investment so that once the project is complete investors and 
infrastructure would be ready to take advantage of it.  In 
meetings with NGO leaders, media outlets, and university 
students, PolEcon Chief encouraged people to consider how to 
make profitable businesses out of the highly prized goods of 
Akhalkalaki: cheese, trout, and milk.  She urged the 
community to work with newly-elected local governments to 
develop a strategy for economic growth with a focus on 
getting Akhalkalaki's produce to market in Tbilisi, Armenia, 
and beyond. 
 
--------------------------------------------- ---------- 
Meeting with The President's Rep for Samstkhe-Javakheti 
--------------------------------------------- ---------- 
 
4. (C) In a meeting with PolEcon Chief and Poloff, Giorgi 
Khachidze described his role as the President's 
Representative to Samstkhe-Javakheti as that of a 
"supervisor" over local government activities in the region. 
He said he has the right to suspend any Sakrebulo (municipal 
council) decision but acknowledged that the Sakrebulo could 
challenge his suspension in the courts.  Khachidze sees his 
role as a "motivator" for local governments.  He described a 
program he proposed to Parliament to increase local 
government activity in his region by measuring Sakrebulos 
against each other on their success in meeting budgetary 
targets and fighting corruption. 
 
5. (C) On minority issues, Khachidze said that elements in 
the ethnic-Armenian city of Akhalkalaki play the ethnicity 
card to foment tensions and operate outside Government 
controls.  He said that his Government has had to scale back 
tax inspections and unpopular business registration drives in 
order to avoid claims that the GOG is "suppressing 
minorities."  He believes that the "rule of law" will be 
easier to establish once the Russian military base in the 
city is withdrawn at the end of 2007, but acknowledged that 
the withdrawal would also have a negative effect on the local 
economy. 
 
TBILISI 00003046  002 OF 003 
 
 
 
------------------------------------------ 
Meetings with Akhalkalaki's New Government 
------------------------------------------ 
 
6. (C) The team met with the newly-elected Chairman of the 
Akhalkalaki Sakrebulo, Khachatur Aivazian, in his unheated 
and sparsely furnished office.  Aivazian,
an Armenian, 
offered a rose-hued assessment of the situation in 
Akhalkalaki and lavished praise on the Saakashvili 
administration for bringing "democracy to Georgia."  Aivazian 
described Akhalkalaki's problems as "economic" rather than 
"ethnic" identifying agricultural development and 
reconstruction of the city's sanitation system as critical 
tasks for the Government.  He added that his budget was "too 
small" and hoped that the central government would contribute 
more than the planned 50 percent.  PolEcon Chief encouraged 
Aivazian to also consider ways that he could increase the tax 
base by improving the economy rather than relying only on 
subsidies from Tbilisi. 
 
7. (C) Sakrebulo member Artur Yeremian said that the MCC road 
would help attract investment in Akhalkalaki as it would link 
the region with Tbilisi and Armenia.  He said the local 
government needs to focus on energy issues in order to 
consolidate and capitalize on any investment that develops 
out of the MCC project.  He said the Government needs to 
target the region's potential for hydro-electric power 
generation and develop the infrastructure necessary for 
gasification.  He said the region has historically relied on 
agriculture as the dominant feature of the economy.  He 
believes the Government needs to develop agricultural 
technology in the region in order to increase yields and 
guarantee the consistency in the region's produce. 
 
8. (C) Opposition Sakrebulo member and former-Mayor of 
Akhalkalaki Nair Iritsian known for his inflammatory 
rhetoric, told PolEcon Chief that the October 5 local 
elections had been "rigged" by the government.  He claimed 
that his independent group of candidates -- who are linked to 
Armenian nationalist groups -- won 70% of the vote while the 
National Movement picked up only 30% - the opposite of the 
official election results.  (Note: We doubt this claim as 
Iritsian was unable to provide any clear evidence to support 
his assertion and USG and NGO election observer teams in 
Akhalkalaki reported no irregularities which would have 
completely reversed the results of the election.  End Note.) 
 
----------------- 
The NGO Community 
----------------- 
 
9. (C) During a meeting with a large group of NGOs in 
Akhalkalaki, community leaders expressed the need for 
economic development and job growth in the region.  The 
leaders voiced concerns over recent cuts in public sector 
jobs as the numerous local governments consolidated into 
regional structures as part of recent local government 
reforms.  PolEcon Chief delivered the unpopular message that 
the Government could no longer build a factory to employ 
citizens, as in Soviet times.  Rather, the local government, 
in concert with civil society groups, need to take steps to 
make the region more attractive to investors by re-building 
the infrastructure in order to increase investment in the 
region.  PolEcon Chief described USG assistance projects 
which are providing technical assistance to local 
governments, civil society, and small businesses to help them 
do this.  The NGO leaders said that more funds needed to be 
allocated to civil society groups from the local budget and 
from assistance organizations in order to develop the 
capacity of local NGOs to serve as watchdogs on local 
government activities. 
 
----------------------------- 
Media and University Outreach 
----------------------------- 
 
10. (C) In interviews with Akhalkalaki TV and the news 
journal Southern Gates, and in a meeting with University 
students in Akhaltsike, PolEcon Chief reinforced the USG's 
commitment to see the region play a more active role in the 
political and economic development of Georgia.  PolEcon Chief 
emphasized that the October 5 elections were a key step in 
the consolidation of democracy in Georgia.  PolEcon Chief 
also expressed the hope that the newly elected 
representatives will use their increased powers, including 
budgetary powers, to address the concerns and needs of their 
citizens.  PolEcon Chief also underscored how U.S. assistance 
is helping toward that end and reiterated the importance of 
using USG assistance to help build the local economy. 
 
TBILISI 00003046  003 OF 003 
 
 
 
------------------------------ 
Comment: The Need for Strategy 
------------------------------ 
 
11. (C)  Comment: Although many promising ideas for economic 
development and civil integration were proposed by the local 
government and NGO leaders, a clear strategy needs to be 
developed in order for residents to make the best use of 
economic assistance from abroad and from Tbilisi to rebuild 
an economy based on their natural assets - highly prized 
produce - rather than an unprofitable factory put their by 
the Government.  It is also clear that the role of the 
appointed Presidential Representative needs to be worked out 
in a way that allows local governments to act independently 
to achieve locally-defined objectives. 
 
12. (C) The pervasive poverty, isolation, and the withdrawal 
of the Russian military base weigh heavily on the minds of 
local residents and make them susceptible to Russian efforts 
to foment instability in the region.  The local government, 
the Presidential Representative, and especially central 
authorities from Tbilisi, can help to neutralize Russian 
efforts by simply meeting with local residents and listening 
to their concerns.  We are encouraging the GOG to take this 
step and also urging them to appoint a new Presidential 
Advisor for Civil Integration - preferably from an ethnic 
minority community.  End Comment. 
TEFFT

Wikileaks

06TBILISI2991, IMERETI REGION: SEEKING A VISION FOR ECONOMIC

WikiLeaks Link

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Reference ID Created Released Classification Origin
06TBILISI2991 2006-11-09 15:01 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

VZCZCXRO4753
RR RUEHLMC
DE RUEHSI #2991/01 3131501
ZNY CCCCC ZZH
R 091501Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 4624
INFO RUEHAK/AMEMBASSY ANKARA 3973
RUEHKB/AMEMBASSY BAKU 1740
RUEHRL/AMEMBASSY BERLIN 0971
RUEHLO/AMEMBASSY LONDON 0689
RUEHMO/AMEMBASSY MOSCOW 7927
RUEHYE/AMEMBASSY YEREVAN 1941
RUEHBS/USEU BRUSSELS
RUEHVEN/USMISSION USOSCE 2097
RUEHNO/USMISSION USNATO 3885
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION

C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 002991 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/CARC AND EB/TPP/ABT:TLERSTEN 
COMMERCE FOR ITA/OTEXA:MDANDREA 
 
E.O. 12958: DECL: 10/31/2016 
TAGS: EIND ETRD GG
SUBJECT: IMERETI REGION: SEEKING A VISION FOR ECONOMIC 
GROWTH 
 
REF: TBILISI 02616 
 
Classified By: Ambassador John F. Tefft, Reason 1.4(b) and (d). 
 
1. (C) Summary. The Georgian city of Kutaisi and its 
surrounding region, Imereti, are struggling to find a clear 
direction for future economic growth.  Regional leaders view 
the city, and the region, as a transit and regional service 
center for medicine, education, and trade, but seem to focus 
more on past failures.  Regional unemployment is about 15 
percent.  Local government leaders fret about the potential 
economic fallout from poor Russia-Georgia relations as 
approximately 20 to 30 percent of the population depends on 
remittances from abroad.  However, regional infrastructure 
expenditures have doubled since the Rose Revolution.  A local 
sewing plant gives a glimpse of how, with good marketing, 
Georgia could attract foreign companies with cheap labor and 
proximity to European markets.  The local hospital has been 
outfitted with new, American-made equipment, but it 
illustrates how good political connections still count in 
Georgia. 
 
2. (C) Economic and business leaders in the Imereti region 
city of Kutaisi still struggle to get past the damage caused 
by the post-Soviet economic collapse. Econoff visited Kutaisi 
from October 12-13 to discuss with economic and business 
leaders the region's economic growth prospects. Unemployment 
is a high 26 percent in Kutaisi, and 15 percent in the 
region, according to unofficial calculations by the Imereti 
Economic Department.  The average wage is only USD 85 per 
month, and the region's population has decreased from 850,000 
in 1998 to 700,000 now.  Infrastructure improvements only 
started after the Rose Revolution, and Econoff noted modest 
upgrades in the roads from a visit one year ago.  Almost 
every meeting centered around Kutaisi's prospects as a 
transit city, but it remains unclear how the city plans to 
capitalize on its location.  Some local leaders see Kutaisi 
as a service center for all of Western Georgia in education, 
hospitality, medicine, and trade.  Two bright spots exist in 
a successful sewing plant and a high-quality regional medical 
center that looks to make money from medical tourism.  The 
medical center also hosts President Saakashvili whenever he 
passes through the region, and is equipped so he can lead 
emergency ministerial meetings.  The center treated injured 
soldiers from the Kodori Gorge operation in August. 
Challenges for the region include a lack of skilled workers, 
poor access to credit (interest rates hover at 22 percent), 
problems attracting investment, obsolete equipment, and low 
demand for existing production.  End Summary. 
 
Prospects for Economic Growth 
----------------------------- 
 
3. (C) Econoff met with various economic and business leaders 
in Imereti, including the region's Acting Governor, Zurab 
Kajaia.  In each meeting, when Econoff asked about prospects 
for economic growth, the responses all centered around 
lengthy historical descriptions of how badly the region has 
fared since the breakup of the Soviet Union.  Imereti was a 
major industrial center until 1991, sending over 80 percent 
of its industrial output to the rest of the Soviet Union. 
When pressed about future economic growth prospects, 
responses centered on Kutaisi's potential as a transit and 
service center.  Economic leaders see potential in food 
processing and packaging, services, and cultural and 
historical tourism.  Local leaders see the need to improve 
the infrastructure -- including establishing a Western 
standard hotel -- in order to improve tourism prospects.  To 
that end, the region's budget for 2007 infrastructure 
projects is $17 million, which is double the 2004-2005 
amounts budgeted. 
 
4. (C) Archil Pruidze of the Kutaisi Economic Department 
presented us with a plan to promote the region's agriculture, 
service, and tourism potential.  It includes a local 
government initiative to support small and medium enterprises 
(SMEs) and to create a marketing bureau.  The local 
government plans to provide loans to local SMEs interest-free 
 
TBILISI 00002991  002 OF 003 
 
 
and will be the guarantor.  However, Pruidze was unable to 
explain what guarantee the local government has for loan 
repayment.  He expressed concern about Russia's threats to 
stop money transfers to Georgia, and said that in the last 
eight months, over USD 22 million was sent from Georgians in 
Russia to banks in Kutaisi.  He estimated that 20 to 30 
percent of people in Kutaisi depend entirely on remittances. 
See reftel. 
 
A Successful Sewing Plant 
------------------------- 
 
5. (C) Econoff visited the successful sewing plant, Imeri, 
which has contracts with various German clothing 
manufacturers and also with the Go
G to produce uniforms.  One 
German company, LEBEK, sells a woman's t-shirt in Germany for 
33 euros, and pays Imeri 0.80 euros for each one. The 
seamstresses make approximately USD 103 per month for a 
five-day, 40-hour workweek.  Working overtime can increase 
the pay to about USD 125.  Of the 380 employees, there are 
only about 15 men, who work mainly in technical repair 
positions.  The company director laughed when Econoff asked 
if any men work sewing products.  He did say, however, that 
about half of the seamstresses' husbands do not work. 
 
Medical Center: High-tech Medical Tourism Prospects.... 
--------------------------------------------- ---------- 
 
6. (C) Kakha Nuralidze, General Director of the West Georgian 
National Center of Interventional Medicine proudly showed 
Econoff around his hospital.  It opened in January, and 
started accepting patients six months ago.  Of the 22,000 
patients served, 700 were from Turkey, including the Turkish 
Deputy Minister of Justice.  The hospital boasts a surgical 
unit for cardio, orthopedic, and neuro surgeries.  The 
hospital also has anesthesiology, intensive care, blood 
transfusion and banking, and emergency units.  According to 
Kuralidze, the hospital is a leader in the former Soviet 
Union and Eastern Europe, and boasted that "even Moscow 
doesn't have equipment as good as ours."  At times, he could 
have been a sales rep for the GE and Johnson & Johnson 
equipment his hospital uses, and made it clear that he 
prefers the American equipment to European.  Kuralidze and 
his top surgeons spent time training in the U.S., France, 
Germany, Moscow, and Austria.  He said BP and the Red Cross 
have started negotiations to use the center's services. 
Total startup costs were USD 20 million.  The GOG contributed 
USD 4.5 million and USD 12.6 million to construction and 
equipment costs, respectively.  Annual operating costs are 
expected to be about USD 4 million, most of which Nuralidze 
said will come from the GOG central budget.  He mentioned 
that although the GoG will pay approximately 75% of the cost 
of a patient's operation, most diagnostic procedures are paid 
100% by the patient, which he says should help with 
operational sustainability.  The hospital boasts a 10-bed 
hotel wing to house patients and their families traveling 
from afar. 
 
...And Emergency GoG Cabinet Operations 
--------------------------------------- 
 
7. (C) The hospital tour took a political turn when Nuralidze 
displayed the VIP wing, which houses a first-rate hotel room, 
complete with a jacuzzi, adjacent to a large office with a 
USD 10,000 crocodile-skin office chair.  Nuralidze said 
President Saakashvili uses the office and the room whenever 
he passes through the region, and the Minister of Health uses 
it almost monthly.  Adjacent to the hotel room is a large, 
fully-equipped conference room ready to be used at a moment's 
notice for Ministerial-level meetings.  Nuralidze expressed 
allegiance to President Saakashvili's National Movement.  He 
boasted that the GOG's recent Kodori operation was managed 
from the hospital's conference room.  He said twelve wounded 
soldiers came to the hospital for treatment after the Kodori 
operation, two with life-threatening wounds.  He then 
presented a lengthy plea for the USG to help Georgia get to 
NATO by 2008, which he believes would guarantee Georgia's 
safety.  He believes that Georgia is the United States' most 
 
TBILISI 00002991  003 OF 003 
 
 
reliable and strategic partner against Iran. 
 
Medical Center's Sustainability is Somewhat Questionable 
--------------------------------------------- ----------- 
 
8. (C) While the hospital in general was clean, it is already 
starting to look older than its six months of use would 
suggest.  Some of the public-use restrooms were missing 
plumbing, were dirty, and generally unkempt.  The private 
patient bathrooms were not much better.  Even though the 
hospital prides itself on its highly trained medical staff, 
basic cleanliness issues could prove to be an obstacle to 
maintaining its high standards. 
 
COMMENT 
------- 
 
9. (C) Comment:  In Kutaisi, local government and business 
leaders still seem to be more focused on past difficulties 
resulting from the breakup of the Soviet Union than they are 
on establishing a clear direction for the economy of their 
region.  The sewing plant we visited demonstrates that there 
is an opportunity for very profitable operations in Georgia, 
based on the low cost of labor, augmented by Georgia's 
proximity to Europe and recent pro-business reforms. 
However, Georgia is only just beginning to market its 
advantages to potential foreign investors and needs to do a 
better job getting the message out.  Our visit to Nuralidze's 
new hospital demonstrates that political connections still 
play a significant role in Georgian business.  The hospital 
has had a successful beginning, but it will require skillful 
and dedicated management and marketing if it is to attract 
the higher class clientele it desires from Georgia and 
abroad.  Keeping it running will be an expensive proposition 
for the GOG otherwise.  End Comment. 
 
TEFFT

Wikileaks

06TBILISI2938, GORKONI FRUIT PROCESSING COMPANY: AFTER STALIN,

WikiLeaks Link

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Reference ID Created Released Classification Origin
06TBILISI2938 2006-11-03 04:31 2011-08-30 01:44 UNCLASSIFIED Embassy Tbilisi

VZCZCXRO8290
RR RUEHLMC
DE RUEHSI #2938/01 3070431
ZNR UUUUU ZZH
R 030431Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 4554
INFO RUEHAK/AMEMBASSY ANKARA 3967
RUEHKB/AMEMBASSY BAKU 1729
RUEHRL/AMEMBASSY BERLIN 0969
RUEHLO/AMEMBASSY LONDON 0687
RUEHMO/AMEMBASSY MOSCOW 7922
RUEHFR/AMEMBASSY PARIS 0275
RUEHYE/AMEMBASSY YEREVAN 1935
RUEHVEN/USMISSION USOSCE 2093
RUEHNO/USMISSION USNATO 3881
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION
RUEHRC/USDA WASHDC

UNCLAS SECTION 01 OF 02 TBILISI 002938 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/CARC AND EB/TPP/ABT 
 
E.O. 12958: N/A 
TAGS: EINV ECON ETRD PGOV KFIN GG
SUBJECT: GORKONI FRUIT PROCESSING COMPANY: AFTER STALIN, 
ANOTHER PRIDE OF GORI 
 
 
1. Summary.  The city of Gori in the Shida Kartli region of 
central Georgia prides itself on many things: the birthplace 
of Josef Stalin, the home town of current Georgian Defense 
Minister Irakli Okruashvili, and host to the country's top 
fruit processing factory.  Econoff visited the Gorkoni fruit 
processing plant on October 3 at the invitation of a Ministry 
of Agriculture official.  The plant has yet to realize its 
high potential, but with little domestic competition, the 
company is in no hurry.  It relies on government purchases 
for a quarter of its revenues, and has developed export 
markets in Ukraine, Israel and Germany.  End Summary. 
 
---------------------------------------- 
Georgia's Orchard - Unrealized Potential 
---------------------------------------- 
 
2. The Shida Kartli region of Georgia is traditionally known 
as "Georgia's Orchard" and supplied fresh produce to the 
Russian market during Soviet times.  Recently imposed Russian 
sanctions and disruption of traditional trade links dictates 
reorientation to alternative markets and value-added 
production.  The high potential for produce processing in the 
region remains unrealized, although Tornike Mgaloblishvili, a 
Ministry of Agriculture official, told us that a few 
factories are under construction and will open soon. 
 
3. For now, Gorkoni, located in Gori, is the only food 
processing facility in the entire Shida Kartli region.  It 
produces fruit and vegetable preserves, juices, jams, and 
sauces for domestic consumption and export.  The company's 
bestseller is a Georgian plum sauce "Tkemali," produced in 12 
varieties.  Gorkoni's operations are seasonal and in the 
high season it has 200 employees.  It purchases its inputs of 
produce from local farmers.  As an employer in Gori, Gorkoni 
is unrivaled in size except perhaps by a new military 
hospital, which opened on the day of our visit. 
 
4. The factory was privatized in 1994 and is 20 percent 
Russian-owned.  Twenty-five percent of Gorkoni's output is 
for domestic consumption -- almost entirely in the form of 
government contracts to supply kindergartens and the 
military.  The other 75 percent of production is exported to 
Israel, Ukraine, and Germany.  Gorkoni has established 
contacts with Japanese and UK partners for future export 
expansion.  Despite its partly Russian ownership, Gorkoni has 
not targeted the Russian market, and has not felt any major 
ill effects because of Russia's ban on agriculture products. 
 
5. Gorkoni's final product is tasty and visually appealing, 
but the factory and equipment is very outdated.  The only new 
addition is a sterilization device, donated by the Ministry 
of Agriculture.  The factory needs upgrading, especially to 
reach its potential, but it has an established brand name in 
Georgia and contacts abroad.  Its management needs to work 
hard to attract investors and partners to renovate the 
factory and expand its market.  Such value-added agricultural 
processing is one of the more promising sectors of the 
Georgian economy for foreign investors. 
 
---------------------------------------- 
A Good Judge Makes a Good Businesswoman? 
---------------------------------------- 
 
6. The company's director is a former judge who recently 
abandoned her judicial career at the request of government 
authorities to direct Gorkoni.  (Note: It is likely that some 
of Gorkoni's shareholders are government officials who have a 
vested interest in its success.)  Despite her dedication, the 
director lacks management education and experience.  The 
company takes its government contracts for granted, and has 
done little to market its natural and organic products in 
domestic stores. 
 
----------------------------- 
Gori's Golden Boy Okruashvili 
----------------------------- 
 
7. Gori still respects Stalin's cult of personality, and it 
 
TBILISI 00002938  002 OF 002 
 
 
supports the idea of a strong leader.  Not surprisingly, Gori 
and the Shida Kartli region is a stronghold of Defense 
Minister Irakli Okruashvili, who is from the region. 
Okruashvili's name in Georgian translates to "Golden Boy." 
When we asked Gorkoni's director her opinion about 
Okruashvili's promise to be in Tskhinvali for New Year's, her 
eyes sparkled and she confidently responded, "We believe in 
him!  He will be there!" 
 
8.  Comment:  Gori is one city in Georgia that can be assured 
a steady trickle of tourists because of the Stalin Museum and 
birthplace.  Gorkoni's fruit processing
factory is an example 
of the kind of business whose potential could be realized 
with the help of foreign investment in Georgia. 
TEFFT

Wikileaks

06TBILISI2937, KVITSIANI ON FIRING IN UPPER KODORI: I DID IT

WikiLeaks Link

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If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06TBILISI2937.
Reference ID Created Released Classification Origin
06TBILISI2937 2006-11-02 14:32 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

VZCZCXRO7653
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #2937 3061432
ZNY CCCCC ZZH
O 021432Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4553
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE

C O N F I D E N T I A L TBILISI 002937 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR DAS BRYZA AND EUR/CARC 
 
E.O. 12958: DECL: 11/02/2016 
TAGS: PREL PGOV GG
SUBJECT: KVITSIANI ON FIRING IN UPPER KODORI: I DID IT 
 
REF: TBILISI 2915 
 
Classified By: Ambassador John F. Tefft for reasons 1.4(b)&(d). 
 
1. (U) Abkhaz television broadcast November 1 a video, 
quickly picked up on Georgian channels, in which ousted Upper 
Kodori warlord Emzar Kvitsiani took responsibility for the 
October 25 missile attack near the Georgian village of Azhara 
during the visit of Georgian Minister of Internal Affairs 
Vano Merabishvili.  Kvitsiani, appearing in a wooded area 
dressed in camouflage and sunglasses, said he and his 
followers would continue to fight against the Georgian 
government, which ended Kvitsiani's rule in the area in a 
brief operation in July.  In the video, Kvitsiani said "The 
incident which took place on October 24-25 was once again to 
remind you of us and that we have not left Kodori and we do 
not intend to leave.  Therefore, I once again want to tell 
you, my dear fellow countrymen, that there were no foreigners 
there.  It was a clash between us and the forces of the 
current fascist state -- not state, government -- of 
Saakashvili.  Therefore we once again gave a warning, by 
actions rather than words." 
 
2. (C) Comment: UNOMIG's report (reftel) made a compelling 
case that the three missiles had not come from the 
Abkhaz-controlled Tkvarcheli district, as originally 
reported, but from the mountainside on the southern ridge of 
the Kodori Gorge overlooking Azhara.  It is quite plausible 
that a group of Kvitsiani's supporters infiltrated this 
rugged, largely unoccupied area.  It is also plausible that 
they had access to GRAD missiles and improvised launchers. 
The Georgians seized a number of such weapons in the July 
operation, and Kvitsiani supporters may have kept some of 
their stocks hidden away to continue the struggle.  End 
Comment. 
 
TEFFT

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06TBILISI2935, FINANCE MINISTER HEARS USG RECOMMENDATIONS FOR

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Reference ID Created Released Classification Origin
06TBILISI2935 2006-11-02 14:02 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tbilisi

VZCZCXYZ0002
RR RUEHWEB

DE RUEHSI #2935 3061402
ZNR UUUUU ZZH
R 021402Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 4551
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS TBILISI 002935 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/CARC AND EUR/ACE 
COMMERCE FOR 4231 DANICA STARKS 
TREASURY FOR OIA 
 
E.O. 12958: N/A 
TAGS: EFIN EAID GG
SUBJECT: FINANCE MINISTER HEARS USG RECOMMENDATIONS FOR 
REVENUE AGENCY MERGER AND IMPROVING TAX COLLECTIONS 
 
REF: TBILISI 2749 
 
1. (U) On October 25, Econoff presented Finance Minister 
Aleksishvili with a non-paper on consolidation of the GOG 
revenue agencies (the tax administration, the customs service 
and the financial police) that the Ambassador gave to PM 
Noghaideli at their meeting on October 13 (reftel).  Econoff 
also gave Aleksishvili a copy of a letter that Paul Sunkes, 
the Treasury-funded USG advisor to the tax administration on 
collections issues, sent to Aleksishvili in September. 
Sunkes' letter contained final words of advice, since his 
program has now ended.  Econoff stressed that the USG 
suggestions for the reorganization of the revenue agencies 
stemmed from our several ongoing programs of assistance for 
all three agencies and an INL-sponsored conference in Gudauri 
that focused on cooperation among the agencies, as well as 
concerns voiced by the local American Chamber of Commerce. 
He stressed that the main need is for written, coordinated 
regulations that allow the tax and customs authorities to 
develop cases and refer them to the financial police, rather 
than having the financial police driving enforcement efforts. 
 He also reminded Aleksishvili of the concerns expressed by 
the revenue agencies about the threat of criminalization of 
their good-faith decisions by the financial police. 
 
2. (U) Aleksishvili told Econoff that the consolidation 
process was going well, that legislation is being drafted and 
that it should be enacted by parliament in December. The 
actual implementation of the merger will take place in early 
2007.   He said that the decision of who should run the new 
agency has not yet been made.  He admitted that he had heard 
rumors the new revenue agency will be headed by the financial 
police and that the business community is not happy about 
that.  He said that the decision of who will head the agency 
is a political one that will involve the Prime Minister and 
the President.  He said he understands that the leadership of 
the new agency will set the tone for its activities, and he 
supports the concept that customer service, rather than 
police enforcement, should become the theme of the tax system 
under the combined revenue agencies. 
 
3. (SBU) Econoff also explained Sunkes' strong recommendation 
that the government use authority it already has under law to 
create imputed tax returns for persons who have not filed any 
return at all, based on information available to the agency 
from past returns or independently-acquired information. 
This action is intended to force the taxpayer to file a 
return to contest the tax assessment.  Once Aleksishvili 
understood what Sunkes is talking about, he brightened at the 
idea.  Although Sunkes' letter has been in Aleksishvili's 
possession for some weeks, he did not seem to have focused on 
it until this meeting. 
 
4. (U) Copies of the Embassy non-paper on consolidation of 
the revenue agencies and the Sunkes letter are being faxed to 
EUR/CARC. 
TEFFT

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