EurasiaNet Eurasia Insight - Georgia: US Plans an Investment Summit in Tbilisi in Late October

EURASIA INSIGHT

GEORGIA: US PLANS AN INVESTMENT SUMMIT IN TBILISI IN LATE OCTOBER
Molly Corso 10/02/08

The US Department of Commerce is working with two private American-Georgian business associations to stage a trade summit in Tbilisi in late October. The initiative is part of a general effort to bolster investor confidence in Georgia.

The Bush administration has been a leading backer of Georgia as the Caucasus country rebuilds following Russia’s August invasion. [For background see the Eurasia Insight archive]. The US Congress has already approved an administration-sponsored aid package worth as much as $1 billion. [For background see the Eurasia Insight archive]. The idea for the business summit reportedly came from the "highest level" in Washington, and it is seen as a means to stimulate private-sector interest in Georgia’s economic recovery.

While the guest list for the summit has not been publicly released, organizers note that some Fortune 500 companies, as well as large private equity firms, have expressed an intention to attend. According to a partial list of confirmed companies made available to EurasiaNet, investors are considering multi-million dollar projects in several sectors including hydro-power production, power transmission, wind energy, hospitals and wine. The summit will be chaired by Deputy Commerce Secretary John Sullivan. In addition to organizing the Tbilisi summit, the US Trade Office is pushing Congress to expand Georgia’s eligibility for duty-free imports to the United States.

According to Tamara Koziridze, a deputy economic minister, the Georgian government is "hoping" that summit will bring new investment into the country. "We hope very much it will be productive in the sense that companies with a real interest in Georgia will participate and will have sufficient follow up," Kovziridze said.

The US government push for new investment in Georgia coincides with the publication of reports showing the local economy is losing steam at an alarming rate. According to figures released by the Georgian Prime Minister’s office, second quarter GDP growth for 2008 (7.9 percent) was well off the figure for the corresponding period during the previous year (13.4 percent). The latest figure doesn’t reflect the economic damage inflicted by the Russian invasion, as the third quarter ended in September and statistics for the period have yet to be released.

Georgia’s annual GDP growth rate in 2007 was 12.4 percent, according to the Department of Statistics. For this year, the International Monetary Fund is presently predicting a drastic decline due to the clash with Russia. According to an IMF statement issued September 15, Georgia is projected to have only 3.5 percent growth for all of 2008.

Local economists are questioning the IMF’s growth projection, with some believing it to be too small. Eduard R. Raupp, the founder of Georgian Forecast, an economic development research group, estimates the GDP will register around 7.4 percent growth this year. "That growth rate in 2007 was spectacular beyond anyone’s imagination. So it had to come down," Raupp said.

A slowdown, he continued, is "not a bad thing." He added that the economy, when it was growing in the 12 percent range, was in danger of overheating. "I think 7-8 percent is a very robust growth rate," he added.

During a recent trade mission to Georgia, Ambassador John K. Veroneau, stressed the American government’s commitment to helping the Georgian economy regain traction. "[T]he [business executives] I spoke with are very bullish on Georgia’s future," Veroneau told EurasiaNet. "I think they see Georgia as a very strong market to be in for the long term."

According to Sarah Williamson, the vice president of the American Chamber of Commerce in Georgia -- one of the October summit’s organizers -- the gathering represents a "vote of confidence" in the Georgian economy. "There have been some extreme difficulty this year, but we are still here, our businesses are still operating," Williamson said. "Most of them are getting back on track after a very short downturn." The summit’s other organizer is the American-Georgian Business Council.

Editor's Note: Molly Corso is a freelance reporter and photojournalist based in Tbilisi.

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