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Georgia concerned over US wallet20.08.2010 | 16:09
Over the past few years Georgia has been monitoring US economy more attentively than its own and it's clear why: lion's share of the republic's budget income comes as the aid from overseas. Curiously enough, Tbilisi is openly hinting at Sakartvelo's dependence on Washington's donations. This time local experts think that the economic crisis expected in the States must not have a dangerous effect on Georgia's living standards.
"As expected, a new crisis won't be as large-scale as the one in 2008, - Caucasian Information Portal quotes David Narmania, executive director of Caucasian Institute for Economic and Social Studies. - It will not have a dangerous effect on Georgia".
Well, Western experts have repeatedly stated that the United States will face a new financial crisis, but what does Georgia have to do with it? There is an impression that the debts the republic is so proudly sinking in only make the country's leaders more relaxed. The analogy with a millionaire's son that fully depends on his rich father suggests itself: naturally, the son doesn't care about work and self-growth.
For truth's sake it should be remarked that the current regime is actively seeking investors trying to develop tourism. But, anyway you slice it, over the recent years Georgia has adopted certain tendencies in accumulating the external debt. In 2008 the debt amount was USD 2.5 bn, a year later it was USD 0.5 bn more. Georgia owes over USD 3 bn to its donors. The indebtedness to multilateral creditors - The World Bank and the International Monetary Fund - is growing too.
Here is a question: will there come a day when money stops falling down on Georgia, and the debt will have to be paid back? As some politologists remark, the new US administration that received Georgia as Bush's heritage shows little affection toward the country and its president. Europe's attitude to Saakashvili has been reconsidered too. Thus, isn't it better for Tbilisi to think about the paycheck and stop monitoring changes in Uncle Sam's economy?
GeorgiaTimes correspondent discussed the issue with Sergey Demidenko, expert of the Institute for Strategic Analysis and Evaluation and Artyem Malgin, docent of international relations and foreign policy department at Moscow State Institute of International Relations.
Why does Georgia stick to the position of open dependency?
Demidenko: "There is only one explanation: this is an attempt to calm down public opinion. It's common knowledge already that Georgia is seriously dependent on the United States. But in reality everyone depends on the USA's powerful economy. Particularly Georgia. That is why there have been various opinions in the press on further developments. Given Georgia's dependence on the States, panic is really starting to spread. The propaganda apparatus reacts accordingly since Saakashvili pays a lot of attention to this segment in his policies. Yes, the Georgian leader does make effort to develop the republic's economy. The question is what it will lead to in the end. If the Georgian president's economic policy discredits itself, the republic will remain US dependent".
Malgin: "Experts' statements are connected with low budgets allocated to Georgia nowadays. The point is that US senators that try to please domestic voters are oriented on what the voters understand. Now Georgia is not in the spotlight for a common American. This is not 2008, and if any cuts are possible, it is enough to point to this source: like, why should we feed Georgia at the time of crisis when we have a choice between cutting domestic programs and rejecting support for this country? After all Georgia is not starving like Africa. That is why, if an interested person appears to point to Tbilisi, Georgia might suffer. Certainly this will not happen before the end of this financial year, but it should be remembered that the financial year in the USA ends in autumn, not in winter. Let's wait and see - there isn't much time left to wait".
Is it possible that in future Georgia will have to repay debts to its overseas partners?
Demidenko: "All will depend on the political climate. If the United States continue to be interested in Georgia and Saakashvili's regime, all debts will be calmly written off, and nothing extraordinary will happen. In this case Washington acquires another tool for putting pressure on Georgia and increasing its influence in South Caucasus. It's clear that presently the US influence on the republic is close to total, but it still makes sense to think about the future. For the time being I see no prospects for the situation to change. Georgia will look up to Washington, it has no other choice.
Malgin: "I don't think so. The money won't be claimed back since, as a rule, this politically motivated aid is gratuitous. These are not loans. Besides, if small states are asked to pay back the debt or there are such hints, they immediately start searching for a new sponsor. That is why Obama's administration, given how different it is from Bush's administration, won't come up with such a demand".