Tag Archives: Georgia

Kerry to visit Georgia

JUNE 30 2016 (The Conway Bulletin) – In a potential boost to Georgia’s aspirations to join NATO, US Secretary of State John Kerry will travel to Tbilisi on July 6, the US government said. The following dayMr Kerry will then travel on to Kiev. Joining NATO is a major component of Georgia’s foreign policy. Georgia has supported NATO’s military operations in Afghanistan and the US in Iraq over the past 15 years.

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(News report from Issue No. 287, published on July 1 2016)

Georgia’s economy grows by 2.1%

JUNE 30 2016 (The Conway Bulletin) — Data from Georgia’s state statistics agency Geostat showed that the economy had grown by 2.1% in the 12 months to end-May, a slow down from the 4.3% annualised growth to the end of April. Georgia’s government has estimated GDP growth of 3% for 2015. Like the rest of the region, Georgia has been dealing with the double dangers of a recession in Russian and a drop in oil prices.

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(News report from Issue No. 287, published on July 1 2016)

Russia released Georgian spy

JUNE 26 2016 (The Conway Bulletin) — In another sign of improving relations between Russia and Georgia, Russia released Zurab Abashidze, a Georgian national who had been imprisoned for spying. Russia said that it had now released seven people it imprisoned for spying between 2008 and 2011. Relations between Georgia and Russia improved when the Georgian Dream coalition took power from Mikheil Saakashvili’s National United Movement party in 2012.

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(News report from Issue No. 287, published on July 1 2016)

Georgia scraps army conscription

TBILISI, JUNE 27 2016 (The Conway Bulletin) — Georgia will scrap conscription into its army in 2017, the first country in the South Caucasus and Central Asia to ditch this Soviet military legacy.

Ditching conscription is considered a major step by Georgia towards becoming a modern army fit to join NATO, one of its key policy objectives. In reality, its 37,000-person army had already been remade in the image of a professional Western army, carrying US-made weapons, wearing US-style uniforms and fighting alongside NATO forces in Afghanistan and the US in Iraq.

Only 10% of this standing army was made up of conscripts and they filled non-combat roles. It was also relatively easy to opt out of conscription. This contrasts with the rest of the region’s militaries which are still heavily reliant on conscription and are rife with allegations of bullying.

Defence minister Tina Khidasheli said she had ditched conscription, first discussed in 2013, because it was simply no longer needed.

“The Georgian Armed Forces do not need a service member brought in on a compulsory basis,” media quoted her as saying.

The ditching of conscription will only apply to the army and not to other security services run by the interior ministry or the prison service which are still reliant on conscripts.

And the decision to scrap conscription received a mixed response in Georgia. Some remembered the role that conscription had played in bolstering Georgia’s large reserve army, mobilised in its 2008 war with Russia.

“This decision, like others taken in this period, has been made only because of the election campaign,” a 26-year old man told The Conway Bulletin’s correspondent in Tbilisi.

Georgia holds a parliamentary election in October.

Others said scrapping conscription showed Georgia was progressing. “It sounds good that in our country military service is not mandatory and we are not getting ready for a war,” said another 31-year-old man.

“This somehow emphasises that Georgia is a peaceful country.”

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(News report from Issue No. 287, published on July 1 2016)

Georgia is the best route, says Iran

JUNE 28 2016 (The Conway Bulletin) — Iran’s oil refining and distribution company said that it views Georgia as the best route to send its various petroleum products to Europe. Iran and Georgia have developed increasingly close economic and business relations over the past few years and there is now relatively high number of Iranian businesses and nationals living in Tbilisi. They had viewed Georgia as a potential route around sanctions.

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(News report from Issue No. 287, published on July 1 2016)

Brexit knocks economies in Kazakhstan & Georgia

JUNE 30 2016 (The Conway Bulletin) — Brexit, Britain’s vote to leave the EU in a referendum on June 23, pushed down stock markets, commodities and currencies worldwide, including in South Caucasus and Central Asia where politicians and business leaders warned of problems ahead.

Kazakhstan was hit by both currency instability and the sudden drop in oil prices, which fell below the $50/barrel threshold it had recovered to earlier this year after the rout of 2014 and 2015.

Uzakbai Karabalin, Kazakhstan’s former oil minister and now deputy chairman of the oil and gas lobby group KAZENERGY, said the government will have to revise down the baseline for oil prices in the national budget this year.

“[Brexit] has already affected oil prices,” he said. “The first response was a decline. Now the economic base price is $50/barrel.”

Previously, the government had said the baseline for this year could have grown to $60/barrel, so a drop to $50/barrel is a pessimistic assessment of the impact of Brexit.

Georgia, less impacted by low oil prices, felt the Brexit effect on its currency, the lari. The lari has fallen by 4.5% since June 23 and Dimitry Kumsishvili, the economy minister, blamed the Brexit result.

“This is most likely a one-off that is directly connected to the UK’s decision to quit the European Union. Of course, this immediately affects our currency,” Mr Kumsishvili said.

He warned that the impact of Brexit had only just started to feed through into the world’s economy and that more economic shocks in the region were likely.

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(News report from Issue No. 287, published on July 1 2016)

Currencies: Kazakhstan’s tenge, Azerbaijan’s manat

JULY 1 2016 (The Conway Bulletin) – Since mid-2014, a strong US dollar and downward pressures on oil prices have hit economies across Central Asia and the South Caucasus.

Currencies in the region suffered and, despite all the efforts from Central Banks to keep the exchange rate steady by intervening in the market, the fall was inevitable.

Compared to two years ago, all currencies have lost between 15% to 50% of their value. Oil exporting countries (in green in the graph) have fared worse than oil importing countries (pictured in red).

The Kazakh and Azerbaijani Central Banks decided to abandon the currency peg to the US dollar in 2015, causing a plunge in the value of the tenge and the manat. In 2015, these two were among the worst-performing cur- rencies in the world, not just the region.

Oil importers have acted in the opposite direction. In Georgia and Kyrgyzstan, currencies stabilised in the second half of 2015 and Central Banks have tightly controlled exchange rates since.

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(News report from Issue No. 287, published on July 1 2016)

Editorial: Military conscription

JULY 1 2016 (The Conway Bulletin) — Georgia’s decision to scrap conscription for its army comes as no surprise. It has been moving in this direction for some time. The Georgian army is a modern Western army that has fought battles in Iraq and Afghanistan alongside members of NATO, a club it longs to join.

What is more critical is the timing of the announcement and the way it was delivered. Tina Khidasheli, Georgia’s defence minister, took it upon herself to cancel conscription from 2017. She sidestepped a debate in parliament and also presidential permission. It was a unilateral decision.

Ms Khidasheli is a member of the Republican Party, part of the Georgian Dream coalition government. The Republican Party, though, has said that it will fight a parliamentary election in October outside the government coalition. The problem with this approach, though, is that while it sets the Republican party apart it has to improve its polling, hovering around 1%.

The decision to scrap conscription in the Georgian army is a historic first for Central Asia and the South Caucasus. The timing, though, should perhaps be seen against the backdrop of an unpredictable election.

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(Editorial from Issue No. 287, published on July 1 2016)

Editorial: Georgia PM rules

JUNE 24 2016 (The Conway Bulletin) – It may sound like a technicality but the move to allow Georgia’s PM to keep his position and campaign to be an MP is an important one.

Rules that meant a sitting PM had to resign before an election were archaic and a hangover from the previous system of government that had steered more power to the president. Then, the PM and parliament were democratic window dressing, a talking house designed to buffer a highly centralised presidential system.

This system needed reform, and it has finally been given this makeover.

Changes to Georgia’s political system, which shifted power from the presidential palace to parliament and the PM, have made its politics more open and vital.

A parliamentary election in October promises to be a hard-fought affair between rivals who have grown to hate one another.

By allowing PM Giorgi Kvirikashvili to keep his job and campaign to become an MP, Georgia is strengthening and modernising its parliamentary system of government.

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(Editorial from Issue No. 286, published on June 24 2016)

Business comment: BREXIT, Oil & Crisis

JUNE 24 2016 (The Conway Bulletin) – As the results of the referendum on Britain’s EU membership came in early on Friday, the decision to leave the EU has shaken the global market.

The Leave vote has hit the London stock market, where most of the companies focusing on Central Asia and the South Caucasus are listed. Economists now expect more volatility in the short term for the London Stock Exchange.

The so-called Brexit also negatively affected oil prices, sending both Brent and WTI down by 6% in just a few hours. Analysts have said that the period of uncertainty regarding oil prices will now last longer.

Currency markets were also hit, as the British pound lost value against the US dollar, effectively strengthening the greenback.

This had an immediate domino effect on currencies across Central Asia and the South Caucasus, where local currencies weakened against the US dollar.

The increasing uncertainty and volatility is now poised to harm, at least in the short term, local markets in the region, prompting elites in from Tbilisi to Astana to brace for more tough times. It will also hit global markets in general, forcing investors to flee to safety and this means missing out Central Asia and the South Caucasus.

Now both the Fed in the US and the Bank of England will have to revise their economic policies and this is likely to insulate further their economies and pull investment back from Emerging Markets.

In these uncertain times, countries in Central Asia and the South Caucasus cannot but hope that Western investors will go against the tide and continue investing in the region.

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(News report from Issue No. 286, published on June 24 2016)