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Wednesday, 25 April 2018


Sakartvelo’s economy dead numb

2011-02-11 19:21

13429.jpegThe entire economy of Georgia must be taken out of the hole it is stuck in, as recently decided by the experts invited for a dialogue by the Christian Democratic faction.  As a result, the economists presented their view of problems and solutions. Georgia's potential, as it turns out, is buried in "dead industries" such as chemical industry and mining whose enterprises were sold by auction to foreigners and Russians. The idea is to expropriate the companies and resell them. But it's unlikely the republic's government will risk this non-liberal act.


Since the collapse of the USSR Georgia's independence has relied on two pillars - loans and sell-out of Soviet inheritance. Presently both income items are cancelled: it's time to repay loans and all dainty property was sold out long ago. Contrary to the neoliberal ideology, many enterprises out of those that were sold do not yield expected profit to the state and offer no employments. The assets are simply sold for scrap like Rustavi metallurgical plant.

Georgia's exports rate reflects the state of economy with ferroalloys on top of the list in 2010. Passenger cars are ranked second in exports and imports meaning they are simply transited through the country. And metal scrap is ranked third! Last year Georgia exported metal scrap at the amount of USD 109 million, i.e. 7% of overall goods sales in Georgia.

Not all Soviet industries have been sold out yet. There are plants that operate and get modernized. Due to the brush-up of Ajaria's textile factory or a small workshop in Rustavi Mikheil Saakashvili has places to go to with his red ribbons and TV cameras. He thinks that presenting a free industrial zone in Poti with a couple of plants that operate Eastern Georgia will think that only here jobs are scarce. Or probably he thinks that going to Mtskheti district to open a new slaughterhouse and a meat-packing plant, meat products prices will go down. Yet, they will go up because of the slaughtering monopoly.

However, production plants that operate in Georgia won't change a generally pitiful state of economy pulled down by "dead sectors" like mining and chemical industries as nicknamed by economists at the meeting with Christian-Democrats.  

Former representative of the geology department in Georgian government Sandro Tvalchrelidze pointed to several almost decomposed giants like Askan bentonite deposit, for instance. "We issued a license for this open-cut to Silver and Barytes (Greece), the main bentonite manufacturer in Greece. As a result the company simply destroyed this industry to sell their low-quality raw stuff", - Tvalchrelidze told.  

According to him "Georgia has the world's best clay for tiling and bricks" but it is not excavated. Meanwhile, Turkey imports ceramic tiles of low quality at prices that could be twice lower if production facilities were located in Georgia.

Madneuli story is very similar. The factory produces copper and has a license for gold-fields in their mines. According to Tvalchrelidze, the company owns 37 deposits and only two of them are operating. Mines in Bolnisi, Racha, Ajaria and Guria are idle. "These licenses were obtained to avoid competition", - the expert explains.

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