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Six difficult months

By Messenger Staff
Thursday, December 18
To make a prognosis is a thankless task, and long term prognoses are even more difficult to made. One does not need to be a fortune teller to see that Georgia is facing a difficult time over the next six or maybe more months. The administration admits this, but gives different reasons for those difficulties, and different ways in which they can be overcome, than those given by independent analysts.

On December 15 the Georgian President informed the workers of the Rustavi metallurgy factory, which is on the edge of bankruptcy, that the coming six months will be very hard for Georgia. The population has to be tolerant to overcome this hardship. But Saakashvili promised that his administration will do its best to maintain the country’s progress. He stated that he had ordered the Government to elaborate Georgia’s economic rescue plan. The question, however, is whether the Government knows or cares what the problem is, as they cannot solve that problem without knowing what it is.

Georgia’s authorities think that the country’s difficulties are mainly the result of the August war and the world financial crisis. They highlight that due to appropriate reforms the country’s economy can resist hard blows. Saakashvili draws parallels with 1993-94 when the entire infrastructure of the country collapsed, including the financial system, which forced the devaluation of the local currency, and the energy system. Independent analysts however have some doubts about this. “The leadership is trying to blame the global crisis for its problems,” considers economist Gia Khukhashvili, adding that the global crisis’ share in Georgia’s problems might be 20%. Khukhashvili suggests that a crisis in Georgia was already foreseen in spring, long before the global crisis had taken hold.

The world financial crisis and August war have made the problems the country is facing more visible. But the difficulties already existed long before. Economic analyst Soso Tsiskarishvili suggests there is a systemic crisis in the country. According to him the country needs radical changes in economic policy, as the country has failed to create an internally-compatible environment and the ‘nomenclature capitalist’ system has created instability. The administration is the director of business under this system, which makes it impossible to develop entrepreneurship. Consequently there are no jobs created, the precondition of normal and sustainable development and the creation of a middle class.

The administration thinks it is doing well and has no intention of radically altering anything. “Today Georgia’s economy is in a comparatively more difficult situation but with united effort we will overcome the existing problems together. Our priority is the revival of enterprises and the creation of jobs for the population,” stated Saakashvili in Rustavi. He is sure that the country’s forward moves will be secured by the promised international donations and the signing of free trade agreements with the EU and USA. Throwing good money after bad, however, does not tend to achieve anything expect exhausting both the money and the goodwill which led to its initial donation.

Here is another prognosis: the continuing economic problems will certainly create political difficulties for the administration. The sooner this is realized by the authorities the better it will be for the country. Turning a blind eye to the realities of daily life and waiting for miracles could be disastrous for Georgia. We are looking forward to the anti-crisis measures package the President asked the Government to elaborate, but how can you fight a lion if you are dressed to catch a butterfly?