07TBILISI2664, GEORGIA BI-WEEKLY UPDATE OCTOBER 26

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Reference ID Created Released Classification Origin
07TBILISI2664 2007-10-26 12:16 2011-08-30 01:44 UNCLASSIFIED Embassy Tbilisi

VZCZCXRO0468
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSI #2664/01 2991216
ZNR UUUUU ZZH
R 261216Z OCT 07
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 8009
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 TBILISI 002664 
 
SIPDIS 
 
SIPDIS 
 
E.O 12958: N/A 
TAGS: PREL PGOV PHUM ECON GG
SUBJECT: GEORGIA BI-WEEKLY UPDATE OCTOBER 26 
 
1. This cable contains current items of political, 
economic, and social interest concerning Georgia during the 
weeks of October 13-26. 
 
Deputy Governor Resigns, Levels Charges 
--------------------------------------- 
2. Deputy Governor of the Mtskheta-Mtianeti region Beso Sabashvili 
announced his resignation October 25 in a press conference at the 
headquarters of the opposition Labor Party.  Sabashvili blasted the 
government for corruption, charging specifically that two posh 
villas under construction in the village of Choportia belong to 
President Saakashvili's uncle Temur Alasania and to Saakashvili's 
in-laws, the parents of First Lady Sandra Roelofs.  Sabashvili 
displayed photos of the villas and claimed that the construction was 
taking place illegally within the preserved territory from where the 
Tbilisi population gets its potable water supply.  Sabashvili also 
alleged that the construction is financed from the state budget and 
is carried out by a government agency.  Members of the Labor Party 
supported Sabashvili and declared that if any "any damage was 
inflicted" upon Sabashvili or his family members after his 
statement, the entire responsibility would be placed personally on 
Saakashvili. 
 
Farmers Complain about Grape Prices 
----------------------------------- 
3. Georgian agriculture authorities have reported a record harvest 
of grapes this year.  However, winegrowers all over Georgia were 
frustrated with the falling price of grapes offered to them by wine 
producers.  The abundant supply of grapes, coupled with the 
continued loss of the Russian export market, prompted buyers to cut 
grape prices in half.  In the Racha region in western Georgia, which 
is famous for an expensive variety of grapes used for producing 
semi-sweet and dry red wine, the number of wine producers accepting 
grapes went down from seventeen to three and the price offered per 
kilogram from GEL 2 to 1.5 (around 92 cents).  In the Kakheti region 
of wastern Georgia, which is the main winegrowing area, farmers 
could collect as little as 40 tetri (25 cents) per kilogram, if they 
could find a buyer at all.  Some of them made a public demonstration 
of chopping down grape vines, to replace them with other more 
profitable agricultural plants.  The grape harvest has become part 
of a larger political standoff between the authorities and the 
opposition, with the latter accusing the government of failing to 
provide adequate measures to help winegrowers suffering from the 
Russian embargo. 
 
Inflation Raises Concern 
------------------------ 
4. According to the Statistics Department, consumer prices for food 
have risen by 6.23 percent within a month (September 20 - October 
18).  The price increase was particularly notable, in some cases up 
to 50 percent, for essential food products, such as oil, salt, 
sugar, and wheat flour.  The media is speculating that an increase 
in bread prices may be in the offing, and emphasizing the negative 
impact it would have on vulnerable social groups.  Twelve-month 
inflation was officially 9 percent at the end of September 2007. 
President Saakashvili publicly pinned blame for price increases on 
importers of consumer goods, who he thinks have monopolized the 
market and boosted prices artificially.  He tasked the Interior 
Ministry to probe into such monopolies. 
 
Cooperation with IMF Wrapping Up 
-------------------------------- 
5. The Georgian government is not going to continue cooperation with 
IMF, Kakha Bendukidze, State Minister in Economic Reforms, said 
after a government meeting on October 25.  Bendukidze noted that IMF 
will stay in Georgia for one year after completing the Poverty 
Reduction and Growth Facility (PRGF) program.   He added that the 
Fund's mission will visit Georgia next week.  The National Bank of 
Georgia received a total of USD 149.4 million under terms of the 
PRGF, which was approved in June 2004.  The IMF offered the Georgian 
government three options for cooperation after ending of this 
program -- continuing PRGF, the so-called annual stand-by program, 
and supporting policy instrument. 
 
Bidders for Port and Free Economic Zone in Poti 
--------------------------------------------- -- 
6. On October 17, Minister of Economic Development Giorgi Arveladze 
announced that eleven companies will compete in the tender for 
concession for 49 years of the Black Sea port of Poti and a new Free 
Economic Zone adjacent to the port.  The following companies are 
participating in the tender: RAK Investment Authority (UAE), ZIM 
PORTS (Israel), International Container Terminal Services 
(Philippines), D P and Jafza (UAE), a consortium established with 
coordination of the Turkish Exporters' Union (Turkey), ASHTROM 
International Silk Road Group (Israel), CMA CGM (France), Mark 
Worldwide (Korea), Hamburger Hafen - Und Logistic Aktiengesellschaft 
(Germany), Hutchison Westports (Great Britain), and ZER 
International Holding (Turkey).  The deadline for submission of 
proposals was October 15.  According to Ar
veladze, priority will be 
given to the company that presents the best proposal for development 
and operation of the port and the economic zone.  The winner will be 
announced two weeks after the deadline. 
 
 
TBILISI 00002664  002 OF 002 
 
 
Mayor of Tbilisi Shares Plans with AmCham 
----------------------------------------- 
7. Mayor of Tbilisi Gigi Ugulava, the key-note speaker at an 
American Chamber of Commerce Roundtable on October 24, outlined the 
city's draft development plan for the next 20 years, and identified 
the key priorities of the municipality as: tourism, education, and 
the financial sector.  Also, Ugulava said his office was working to 
develop city utilities and infrastructure, including water, sewage, 
electricity and gas, for multiple new buildings and districts that 
are under construction.  To improve traffic in the city, the Mayor's 
Office plans to privatize public transportation, including buses and 
the subway, and to announce a tender for a long-term concession for 
parking and electronic ticketing.  The Mayor's office is also 
looking to attract a private investor for waste management and water 
supplies.  Ugulava noted the ongoing construction of a new rail link 
between the airport and the city center, a USD 100-150 million 
project designed by the Turkish company Nurol, that he said would 
ease traffic congestion. 
 
TEFFT

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