Much is Promised, But What Will It Deliver?

$2 billion from the USA, Euro 1 billion (almost $1.5 billion) from the EU, a 750 million credit line from the IMF, over 300 million from the World Bank: the developed West is compensating Georgia for its losses during the war. Besides direct monetary assistance, Europe is offering other economic cooperation as well, although a lot is still to be done to ensure proper redistribution of the assistance which will be received from the West.

The Georgian Government is actively working on a plan for distributing the financial assistance allocated by various countries and international organizations aimed at rehabilitating the Country’s infrastructure, damaged as a result of Russian aggression against Georgia, and assistance to IDPs, Zurab Melikishvili, Chair of the Parliamentary Financial Budget Committee, has told The Georgian Times.

Turkey, the Baltic States, Italian Red Cross, France and Ukraine have already made statements on the allocation of several millions for assistance. According to Melikishvili, “As of today, Georgia has received official assistance from the USA and International Monetary Fund (IMF). Other countries have made statements on the allocation of assistance, although agreements have not officially been concluded.”

As Dick Cheney, US Vice-President stated during his official visit in Georgia on 5 September, the US administration will allocate USD 1 billion for assistance to Georgia. On 4 September, Condoleezza Rice, US Secretary of State, declared that at the initial stage the US plans to allocate USD 570 million from the overall aid package of one billion. The additional USD 430 million will be allocated in a separate phase.

The European Commission, through its Humanitarian Aid department (ECHO), has now allocated €5 million in humanitarian aid for vulnerable people affected by the conflict. The new aid package comes on top of the €1 million fast-track humanitarian aid released by the Commission on 10 August, shortly after the conflict started . ECHO experts remain in the region, evaluating needs, coordinating activities with relief partner organizations and monitoring the use of Commission funds.

According to Lado Gurgenidze, the Georgian Prime Minister, there is also talk about calling a donor conference, the purpose of which will be the extension of financial and economic assistance to Georgia. This commitment formed part of a resolution adopted by the special summit of the EU on 1 September 2008. The USD 750 million credit line the IMF has allocated to Georgia is aimed at supporting the economic policy of the Georgian Government and reducing the economic and financial implications of the recent crisis. According to Gurgenidze, the IMF funds will be used by the National Bank for the replenishment of the reserves, which will facilitate the sustainability of the financial system and the strengthening of Lari.

Thus, the Georgian Government is expecting significant aid funds. The West promises Georgia billions to restore things damaged by the war. According to the Government of Georgia’s information, initial data suggest that the hostilities have caused around USD 1 billion damage to civil infrastructure alone. The group of USAID experts visiting Georgia to establish the losses stated on 22 August that aid in the amount of USD 2 billion would be needed to get things back to how they were when war broke out, without carrying out any substantive improvements to that baseline situation. Yet while these millions of dollars are expected to come, the NGO sector says there is a need to monitor the distribution of these funds, an issue it says has not been looked into thus far.

Georgia has dismal experience of squandering Western aid. For several years, Georgia enjoyed the status of Washington’s second largest per capita aid recipient, behind only Israel. The US provided Georgia with about $778 million in aid between 1992 and 2000. But in the Shevardnadze era this vanished without trace and became a source of corruption. Saakashvili’s administration has been praised for reversing the tide and stamping out corruption. Transparency International downgraded Georgia’s corruption index. But the NGOs say they still have to be on watch.

Giorgi Chkheidze, head of Georgian Young Lawyers Association, says that “the Georgian Control Chamber will the most important monitor of spending but the role of the NGOs and civil society who have experience in doing this is also very important.” He explained that the GYLA Gori office is already monitoring the distribution of humanitarian aid to IDPs and conflict victims in the Kartli region. However, “most of the aid now comes from international organizations and it is difficult to monitor their activities. With stage funds, the national legislation obliges the donors to provide timeous information about their activities and to make these transparent,” he added. In 2004-2006 Chkheidze’s GYLA investigated the spending of the President’s and Government’s reserve funds in its controversial report “The Georgian Government in the Sunshine.”

[Source: The Georgian Times, Tbilisi, 08Sep08]

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The Question of South Ossetia
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