07TBILISI1298, Georgia Bi-Weekly Update June 1

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Reference ID Created Released Classification Origin
07TBILISI1298 2007-06-01 13:45 2011-08-30 01:44 UNCLASSIFIED Embassy Tbilisi

DE RUEHSI #1298/01 1521345
R 011345Z JUN 07

E.O 12958: N/A 
SUBJECT: Georgia Bi-Weekly Update June 1 
1. This cable contains current items of political, economic, and 
social interest concerning Georgia during the weeks of May 19-June 
Government Demolishes Church in Adjara 
2. On May 21, residents of the village of Peria, in the Khelvachauri 
region of Adjara, together with opposition politicans and local 
clergy, held a protest action against the local government's 
demolition of a church under construction.  Although local officials 
claimed that the construction was illegal, the opposition has seized 
on the issue, and especially on reports that the Adjara Governor 
Levan Varshalomidze had told church officials that the new church 
had to go because President Saakashvili wanted to build an amusement 
park on the site, which is on a mountain overlooking Batumi.  As the 
controversy spread, Saakashvili met with Patriarch Illia II to 
discuss the issue, and the President's spokesperson said the 
incident was a result of misunderstanding and poor coordination 
between church officials and the local government in Adjara.  In the 
end a compromise was reached: church construction was resumed, but 
local government will also build a wedding palace, amusement center, 
and other objects in the area.  In an ironic postscript, within a 
week after the demolition of the church, the Khelvachauri 
municipality building collapsed in an unrelated accident. 
Accusations against Special Operations Department 
--------------------------------------------- ---- 
3. On May 24, Embassy representatives attended a screening of a new 
documentary backing up charges of abuses committed by the Ministry 
of Internal Affairs Special Operations Department (SOD).  In a news 
conference May 22, Public Defender Sozar Subari demanded that SOD 
chief Irakli Kodua be suspended from the office for involvement in 
the arrest of innocent men, their torture and fabrication of 
evidence.  As described by Subari and the documentary, the case 
involved three men detained by SOD operative in the Mestia district 
in western Georgia in February 2007 for alleged illegal possession 
of arms and drugs.  Subari said his office had determined that 
evidence against the men was fabricated.  Kodua allegedly did this 
for "personal revenge" after being angered when a friend of one of 
the men made a late night phone call to his girlfriend, Nanuka 
Zhorzholiani, a former reporter of Rustavi 2 TV and now head of the 
NATO Information Center. 
Independence Day Celebrations 
4. May 26, Georgia's independence day, was marked by the 
largest-ever military parade with the participation of 15,500 
soldiers, military hardware, multi-purpose and attack helicopters, 
and fighter jets.  Addressing the crowd, President Saakashvili 
stressed that Georgia was "one nation" made up of different 
ethnicities.  He said "it is our responsibility to maintain a 
Georgia that is multi-ethnic and multi-confessional, which has been 
left to us by our ancestors, because multi-ethnicity is a treasure 
and religious diversity is a treasure."  As in last year's address, 
Saakashvili spoke about the responsibility to maintain Georgia's 
borders "as our fathers have left to us." 
Saakashvili on Tolerance 
5. President Saakashvili participated in an international conference 
on "Globalization and Dialogue among Civilizations," held in Tbilisi 
May 24.  In his speech Saakashvili spoke extensively spoke about 
religious tolerance and promotion of a multiethnic culture in 
Georgia.  "When I was in opposition, I said it and I'll say it again 
and again: for those people who hate Armenians in Georgia, I will be 
Armenian; for those who hate Azerbaijanis, I will be Azerbaijani. 
Recently, someone said I was Ossetian, which I take as a compliment. 
 Of course, it would be a great honor for me to be Jewish," 
Saakashvili said.  Speaking of violations of the rights of the 
ethnic groups, Saakashvili expressed frustration that the 
international community has been silent about human rights abuses in 
Georgia's breakaway regions.  He referred specifically to a recent 
incident in which Georgian books from schools in Gagra (Abkhazia) 
were reportedly burned in the town center. 
Russian Embassy to Issue Some Visas 
6. Starting May 29 the Russian Embassy in Georgia resumed the 
issuing of visas to a limited number of Georgian citizens.  Visa 
issuance was suspended in September 2006 during a dispute over the 
Georgian arrest of four Russian officers for espionage.  Under the 
new policy, the Embassy will issue visas on the basis of private 
invitations to close relatives (parents, brothers/sisters and 
children) of Russian citizens, as well as to Georgian citizens who 
have temporary residence status in Russia.  Visas will allow a stay 
of only 3-4 months.  Embassy officials described the change as "a 
humane act" that "has nothing to do with politics."  Previously, 
visas were issued only for medical emergencies. 
Saakashvili Visi
ts Jordan 
7. President Saakashvili visited Jordan May 18-21, where he took 
part in a World Economic Forum meeting and a summit of the so-called 
TBILISI 00001298  002 OF 002 
G11 countries.  Saakashvili gave a speech entitled "Georgia: A 
Formula for Success" on his country's reforms.  Saakashvili also met 
with Jordan's King Abdullah.  On the margins of these events Jordan 
and Georgia signed a framework agreement that will form the basis 
for future cooperation between the two countries.  King Abdullah was 
quoted as saying he was impressed with the reforms that are being 
carried out in Georgia.  It was reportedly agreed that Abdullah 
would visit Georgia in mid-June. 
Public Transportation Costs May Go Up 
8. Following the recent decision of Tbilisi authorities to increase 
fares for subway and bus transport, a new resolution is pending that 
would double fares for minibuses (commonly called by the Russian 
name marshrutkas).  Marshrutkas are a preferred means of 
transportation for most Georgians because of their flexible routes. 
The fare increase would affect a broad portion of the population, 
already affected by recent increases in cost of gas, electricity, 
water, and other means of public transport, as well as the rising 
price of consumer goods. 
Batumi Airport Builds Ties to Turkey 
9. Batumi International Airport, on Georgia's Black Sea coast, 
opened May 26.  The airport is designed to accommodate domestic and 
international flights, and (thanks to a special arrangement with 
Turkey) flights that are treated as domestic Turkish flights. 
President Saakashvili and Turkish Foreign Minister Abdullah Gul 
attended the opening ceremony.  The airport was constructed by the 
Turkish company Tepe-Akfen-Vie (TAV), the same company that built 
the Tbilisi International Airport opened earlier this year.  TAV has 
a management contract with the Georgian government to operate both 
Free Trade Zones May Become Reality Soon 
10. Parliament has passed a draft Law on Free Industrial Zones in 
the first reading without major changes.  The law was initiated by 
President Saakashvili to attract investment and technologies, and 
create jobs.  It would allow the creation of free economic zones on 
territories with an area of at least 10 hectares.  The law envisages 
0 percent of VAT and property tax on all activities within the zone. 
 In some cases, companies may be exempt from the profit tax as well. 
 The law also envisages elimination or simplification of licensing 
procedures.  Transactions can be carried out in any foreign 
currency.  Business-related disputes will be referred to 
international arbitration courts.  Several ministries have requested 
clarification of certain clauses in the law before its second 
reading.  The law will likely receive final passage by the end of 
June and be fully in force by September 1, 2007. 
IMF Delegation Visits Georgia 
11. An International Monetary Fund mission headed by John 
Wakeman-Linn arrived in Tbilisi on May 24 for a one-week visit. 
Roman Gotsiridze, President of the National Bank of Georgia (NBG), a 
recent target of parliamentary criticism for the increased inflation 
rate, announced that the IMF fully supports the fiscal and monetary 
policy implemented by the NBG.  IMF mission member David Owen said 
after meeting Georgian officials that the keys to keeping inflation 
below 9 percent were foreign currency reserve accumulation, export 
growth, and increasing competitiveness of local production through 
continuing structural reforms.  He said the NBG should proceed with 
capital inflow regulation by means of interventions in the currency 
market.  The IMF is currently considering giving Georgia a USD 
20-million tranche within the framework of the Poverty Reduction and 
Growth Facility (PRGF) program. 
Reform of Business Dispute Resolution 
12. On May 21, Finance Minister Lexo Alexishvili made a presentation 
for the Georgian business community on the GoG's efforts to 
facilitate tax and customs dispute resolution with the goal of 
improving the business climate.  The plan calls for the introduction 
of a dispute case management and tracking system, including 
statistical analysis, process monitoring and training of the 
Georgian government staff.  The USAID/Business Climate Reform 
Project has invited a former Commissioner from the Department of 
Taxation and Finance of New York, Georgian-American Andrew Sidamon 
Eristoff, to assist with the reform.  In 2006, the Finance 
Ministry's Council of Appeals received 78 cases, of which one-third 
were resolved in favor of the entrepreneurs.  In the first quarter 
of 2007, the Council received 44 appeals.  Alexishvili said the 
increased number of appeals was a sign of the increased credibility 
of the Council.  He also stressed the importance of strengthening of 
the judiciary system, because half of the cases declined by the 
Council are eventually filed with the courts. 


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