Investors don’t rush to ever-dependent Georgia23.07.2010 | 17:58
Mikheil Saakashvili and Georgia's minister of economy and sustainable development Vera Kobalia, the president's current favorite, express their displeasure over foreign investors who allegedly fail to comply with their obligations. Why do investors massively flee Georgian economy? Manana Nachkebia, Right Opposition party leader and David Darchaishvili, director of Soros Foundation in Georgia have opposite points of view on the issue.
Georgia, like a black hole, devours foreign finance and is getting greedier and more exigent still. That is why it's little wonder that Mikheil Saakashvili is upset over the outflow of investments from the country. Lately several billion dollars and euro have been invested in the Georgian economy, but where is all that money going to?
The author of the article made some calculations to find out that an estimated amount of finance invested in the decrepit body of the Georgian economy this year is only USD 76 mln. As it turns out, this is only 6% of the expectations of the authorities that planned to attract USD 1.2 bn. The biggest investors in Georgia are: Turkey (26.8%), the Czech Republic (26.1%), Egypt (23.8%) and Japan (20.7%). Other countries that consider Georgia's economic climate as eligible, share remaining 2.6% of the investments making Mikheil Saakashvili acknowledge: "The investments have resumed but this is not enough. There is a positive outlook. A lot of investors have come to invest in Georgia for a number of geopolitical factors". The question is: what sectors of economy are foreign investors ready to invest in?
- I'm saying this with absolute confidence that in the aftermath of the Russian aggression the situation was not absolutely beneficial for economic activity, putting it mildly. Then it was aggravated by the global economic crisis that influenced the investment flows. The world now has less money than it used to, but processes connected with investment policies are getting adjusted. Now we see the rise in activities, assessment of the situation. As for the exports: Georgian authorities have started talks on a free economic zone with the European Union that will take months, but these are promising possibilities. Besides, agriculture and tourism ask for investments. The banking sector is well developed in Georgia. Routes of communication, ports, Georgia's location - all that is attractive to investors, - David Darchashvili states.
Certainly the Soros Foundation has contributed a lot to the development of banking sphere of Georgia allocating USD 5 mln for development of state administration. As can be easily assumed these millions are still rotating in Georgian banks supporting visibility of the bank sector's well-being and providing a decent interest yield to public officials. I think the Soros Foundation well known for its "games" is perfectly aware of that.
In this case, except for the lack of investors, it is necessary to remind of the external debt that hangs above Georgia like Damocles's sword - USD 3.46 bn, 2.5 times bigger than the state budget. Among creditors is that very Russia whose "aggression" caused drastic downturn in Georgian economy. Russia lent Georgia USD 117,428 mln which is only USВ 338 thousand less than the leader of donor infusions - Germany.
Manana Nachkebia believes that the current authorities must stop digging into external problems on the pretext of instable relations with Russia and ensure loyalty at least inside the country:
- I understand why the president and the new minister are disappointed over the outflow of investments but the activities they carry out won't be of any use. Investments is an economic sphere that needs proper legislative basis. But businessmen are under constant pressure of authorities that literally rob them, and the law can't protect them. Foreign investors simply go back on their obligations. This is common fact that stability in the country, a suitable geopolitical situation and legislative basis - first of all, i.e. protectability of private property are most important for investments. Georgia has nothing here. Figures show that over the recent time capital investments have considerably shrunk. After the August events in 2008, strangely enough, investments in Georgia on the contrary grew. I believe that not only European and Western investors can bring investments, but Arab and Russian too. The capital has no nationality. The Georgian nation is not against Russian capital unless the money goes to black economy. But the money is not going to Georgia now. The government has no political will to protect businessmen, and the situation provides no guarantee that some large amounts will be invested in our country.