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Reference ID Created Released Classification Origin
07TBILISI2308 2007-09-13 03:05 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tbilisi

DE RUEHSI #2308/01 2560305
R 130305Z SEP 07

E.O. 12958: N/A 
REF: A) 07 TBILISI 2169, B) 07 TBILISI 2221 
1. (U) Summary: On September 7, the Georgian Parliament approved the 
new Cabinet of Ministers (ref A) at its first fall session after the 
summer holidays.  The nomination of the former Minister of Finance, 
Aleksi Aleksishvili, to be President of the National Bank of Georgia 
was not considered (ref B).  Parliament may consider his nomination 
around the end of September.  The changes to the Cabinet were 
announced by Prime Minister Noghaideli on August 29, but as the 
changes affected more than one third of the Cabinet, parliamentary 
approval was required.  The six new ministers are not unknown, as 
all have previously held leading positions in the government.  End 
2. (U) Davit Tkeshelashvili - confirmed as Minister of Labor, Health 
and Social Protection, has held the position of Minister of 
Environment since 2006.  Tkeshelashvili was a member of Georgia's 
parliament since 1995, where he held various positions from Deputy 
Leader of the Majority to Head of the Subcommittee on Media 
Relations of the Human Rights Committee.  A lawyer by background, 
Tkeshelashvili completed his master's degree in law at Emory 
University on a Muskie fellowship.  At one of the committee 
hearings, Tkeshelashvili said that while he does not have a medical 
background, he is not going to interfere with the professional work 
of medical doctors.  Even so, the government intends to reform the 
entire system. 
3. (U) Nika Gilauri - confirmed as Finance Minister, held the 
position of Energy Minister since 2004, he served longer as minister 
in one position than any other person.  Prior to his ministerial 
appointment, Gilauri held the position of financial manager at the 
Irish Company, ESBI Tbilisi, and financial consultant at Iberdola, a 
Spanish Consortium in Tbilisi, Telecom Georgia, and Center for Small 
Business Development, Philadelphia.  Gilauri holds a master's degree 
in International Business Management from the University of 
Philadelphia.  PM Noghaideli has characterized Gilauri as a 
"stubborn," principled person.  He is bright, witty and energetic. 
4. (U) Gilauri enjoys the confidence of PM Noghaideli and President 
Saakashvili, not least because of the remarkable recovery of the 
Georgian energy sector under his administration.  USAID provided 
policy advice under one program and a contractor who managed the 
electric utility UEDC under another while he was Minister.  In the 
last few years, he insisted that renewing the policy advice program 
was unnecessary.  Although he does not have financial experience, 
Noghaideli indicates that he is relying on Gilauri's intelligence 
and drive to make him a good Minister of Finance. 
5. (U) Davit Chantladze - confirmed as Minister of Environmental 
Protection and Natural Resources, has held the position of Deputy 
Minister in that Ministry since 2005.  Before that, Chantladze held 
various positions in private business and worked as a business 
specialist at the US Embassy, Tbilisi.  Chantladze holds a diploma 
from the London School of Economics. 
6. (U) Eka Tkeshelashvili - confirmed as Minister of Justice, was 
formerly the Chair of the Tbilisi Court of Appeals.  Prior to that, 
Tkeshelashvili held positions as Deputy Minister of Interior and 
Deputy Minister of Justice.  Tkeshelashvili has a master's degree 
from the University of Notre Dame, Indiana and is a Muskie/FSA 
graduate fellowship recipient. 
7. (U) Alexander Khetaguri - confirmed as Energy Minister, worked at 
the Georgia National Energy Regulation Commission after 1999. 
Khetaguri holds a master's degree in Energy Management from Tbilisi 
State University, and has a degree in computer science. 
8. (U) Khetaguri was Deputy Minister of Energy under Gilauri from 
2005 until 2006.  He became President of the Georgian Oil and Gas 
Corporation after its previous head resigned due to corruption 
charges.  He led Georgia's negotiation team with the Azeris last 
year and secured additional amounts of gas when supplies from the 
Shah Deniz line were delayed.  Khetaguri has a more serious mien 
than Gilauri, but is technically fully as competent, if not more so. 
 He attended two short training programs on utilities management and 
finance in the United States. 
9. (U) Aleksi Aleksishvili - nominated for the position of the 
president of the National Bank, held the position of the Finance 
Minister since June 2005.  Prior to that, Aleksishvili was Minister 
of Economic Development and Deputy Minister of Finance. 
Aleksishvili is another recipient of a Muskie fellowship, and holds 
a Master of Arts in Public Policy from Duke University, North 
Carolina.  During parliamentary debate on his nomination, Speaker 
Burjanadze stated she would not support Aleksishvili's candidacy. 
She fears that Aleksishvili will not be independent as the head of 
the National Ba
nk.  He was elected to the National Bank Board on 
September 11.  Parliament is expected to consider Aleksishvili's 
TBILISI 00002308  002 OF 002 
nomination as bank president by the end of September. 
10. (SBU) Aleksishvili was neither a vocal nor controversial member 
of the Cabinet as Finance Minister.  He was overshadowed by the 
Prime Minister, a former finance minister himself with strong 
opinions about how the job should be done.  During Aleksishvili's 
term as Minister, tax and privatization revenues skyrocketed as 
better collections and new, lower tax rates reduced the gray economy 
from an estimated 70% of production to 20% after the Rose 
Revolution.  A consolidation of the revenue agencies was undertaken 
and the notorious Financial Police somewhat reined in.  These 
decisions were most likely Noghaideli's.  If Aleksishvili is 
confirmed as President of the National Bank of Georgia, he will be 
far more deferential to Noghaideli than was its former head, Roman 
Gotsiridze.  The central bank has a leading role to play in the 
fight against inflation, which is currently the number one threat to 
Georgia's economic stability.  Noghaideli once told us that but for 
IMF restraints on government spending and the tight money policies 
it counseled, growth in 2006 would have been two or three percentage 
points higher than the 9.4 percent it was.  While he went along with 
IMF recommendations Noghaideli has wondered aloud with us on several 
occasions whether Georgia should follow the policy prescriptions of 
advisors like Andrei Illarionov, who counsel that countries at the 
stage of development of Georgia must be ready to tolerate inflation 
for the sake of faster growth.  It remains to be seen whether the 
National Bank under Aleksishvili will be able to jawbone the 
government into controlling spending and limit the growth of the 
money supply to a rate where inflation remains in control. 
11. (U) The shuffle of Ministers is intended to infuse new energy in 
the work of the Cabinet.  "The goal of the latest cabinet reshuffle 
is to achieve even more efficiency," said PM Noghaideli, while 
President Saakashvili stressed that despite some changes in the 
Cabinet, Georgia has a stable, united team.  "This is a stable group 
which speaks with one voice and is result-oriented," said 
Saakashvili.  Opposition is not supporting the changes, claiming 
that the reshuffle is only a signal that preparations for next 
year's parliamentary and presidential elections have begun.  The 
reshuffle was also criticized by speaker Burjanadze, who complained 
that the government had not consulted with her on the proposed 
changes beforehand (ref B). 


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