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How should we allocate the assistance?

Monday, September 15
Georgia has lost its territories and neither the West nor the US will return them to us. Maybe one day they will, when Russia collapses, and it will inevitably collapse, but not in the near future.

The West has promised Georgia huge financial support and other assistance to compensate (partially, of course) for the loss it has received, although human losses can never be compensated. But now the country faces serious challenges. How can Georgia spend the promised money most efficiently and achieve the utmost benefit from it?

The promises are very impressive in scale: the US has allotted USD 1 billion, the EU is considering donating EURO 1 billion, the IMF is ready to issue a USD 750 million soft loan, and so on. A donor conference is to be held and the assistance Georgia receives might reach the colossal figure of USD 4 billion. It is not yet known however how this money will enter Georgia: will it be paid directly into the state budget, will it be given to agencies selected from a list of commercial or financial organizations or will the expenditure be monitored by the donor countries/organizations themselves?

Local analysts think that the allotted sums should firstly go to rehabilitating the infrastructure and improving the social conditions of IDPs. Economist Demur Giorkhelidze thinks that the most efficient method of aid distribution would be for donors themselves to monitor the expenditure. A special steering committee made up of distinguished persons could also be established. Some analysts however are rather more skeptical. One of the leaders of the National Forum, Rezo Shavishvili, thinks that the welfare of the country depends on its business environment, which is extremely unfavorable under present conditions. To change this environment needs political good will but the current administration does not have it. “I wish I were wrong when making such pessimistic prognoses,” Shavishvili says.

The President’s Estonian economic advisor Mart Laar also expresses his concern about the threats posed by unwise expenditure of aid money. According to him faulty expenditure influences and creates inflation. This huge humanitarian support could undermine local industry as well. According to Laar the Government should attract professionals, specialists and businessmen and through brainstorming find out what should be done and how. If the received amounts are correctly spent this could be very positive and Georgian could be in a better economic position that it was before the war, Laar suggests.