CIVIL SOCIETY
3/09/07
A EurasiaNet Photo Story. Text by Marina von Koenig and Nino Taktakishvili. Photos by Sophia Mizante
Russian trade and transportation blockades may have weakened Georgia’s economic growth, but the country has managed to secure significant foreign investments. Last year’s economic expansion of 10 percent, according to government figures, is due not least to the emergence of new economic partners, among them Israel.
Since the early 1980s, more than 80 percent of some 50,000 Jews living in Georgia have left the country, mainly to go to Israel, according to Tbilisi Jewish Community, an organization that functions under the auspices of American Jews Joint Distribution Committee, a non-governmental organization which assists Jewish communities worldwide.
Economic hardship or a wish to return to the Jewish homeland motivated the exodus, commented Zaira Davarashvili, deputy director of the Jewish Community House in Tbilisi, but a desire to assist in Georgia’s development is now bringing many Georgian Jews back. "Jews have been living in Georgia for 26 centuries," said Davarashvili.
Georgia has long taken pride in its Jewish community and its relations with Israel, but in the post-Shevardnadze era these relations have taken on a much more pragmatic dimension.
Soon after the 2003 Rose Revolution, Georgia’s new president, Mikheil Saakashvili, went to Israel accompanied by what he described as "the largest delegation I have taken anywhere," which included his foreign, defense and finance ministers. "Georgia is two hours away from Israel," The Jerusalem Post, an English-language Israeli daily, quoted Saakashvili as saying, and compared him to a tour operator. "We have an extremely hospitable environment, ski resorts, seaside resorts, site-seeing, lots of culture and history, and a people that [are] very friendly towards Jews," Saakashvili stated and added that he saw immense potential in joint business ventures and tourism.
To make investments easier, especially for Israelis of Georgian origin, Saakashvili offered them dual citizenship. He made the offer as he took part in Hannukah festivities at the crowded Tbilisi Synagogue in December 2005.
However, Saakashvili’s charm offensive was also met with skepticism. "The problem," one Israeli government official said, as quoted by The Jerusalem Post in 2005, "is that the poverty-stricken country does not have a tourist infrastructure, and its capital, Tbilisi, only has two hotels that meet western standards."
Two years later, many of those problems continue, though observers attribute decreased taxes and simplified customs and licensing procedures as having boosted foreign investors’ interest in the South Caucasus state. In a March 1 interview with the online news bulletin service Civil.ge, IMF Resident Representative Robert Christiansen put estimated foreign direct investment for 2007 at a minimum of $1.2 billion, up slightly from $800-900 million for the preceding year.
The search for new investors and allies has intensified amid deteriorating relations with Georgia’s main trade partner, Russia. Relations between the two countries reached their lowest mark in September last year, when the Georgians arrested four Russian officers for espionage. Since then, Russia has banned direct flights between the two countries, and deported hundreds of labor migrants; trade embargoes on wine, mineral water, and tangerines were already in place. [For details, see the Eurasia Insight archive].
But instead of the expected destabilization, some local observers say, Russia’s pressure achieved the opposite; it accelerated economic development. "Georgia’s economy has continued its remarkable performance, in spite of the loss of major export markets and higher energy prices," a March 1 press release from the International Monetary Fund (IMF) quotes Deputy Managing Director Takatoshi Kato as saying.
This economic success has encouraged Jews who have left Georgia long ago to look for new opportunities in the country that once was their home. According to the Georgian National Investment Agency, Israel’s direct foreign investment in Georgia had increased twenty-fold by 2006 compared with the previous two years, climbing from some $500,000 in 2003 to almost $3 million in the first quarter of 2006 alone.
Saakashvili’s offer for dual citizenship has been well received. Three hundred and thirty-eight individuals of Jewish background obtained Georgian citizenship in 2006, according to the Georgian Ministry of Foreign Affairs.
Some have already bought an apartment or a house. "Georgian Jews living in Israel very much like the idea of having real estate in Georgia, especially as the prices are rising from year to year," said Israeli investor Zeev Frenkiel, whose company Tsavkisi Valley is now building 168 private villas in a Tbilisi suburb. Frenkiel also runs a telecommunications company, a medical center and an agro-business company in western Georgia that he claims are all profitable.
Aside from real estate development and construction, Israeli investors have shown interest in infrastructure projects, food industries and banking. In January of this year, the second-largest Israeli bank, Leumi Bank, signed a preliminary agreement with Georgia’s TBC bank to acquire 20 percent of its shares. "Israel is one of the leading investors in Georgia, which largely determined our choice to establish a partnership with Leumi Bank," TBC Bank Supervisory Board Chairman Mamuka Khazaradze told Georgian television station Rustavi-2 on January 26.
Israel’s energy ambitions and Georgia’s role as a transit country for Caspian Sea oil and gas also play a role. In recent months, Turkey and Israel have entered into a provisional agreement to carry Caspian oil from the port of Ceyhan in Turkey to Israel’s Red Sea port of Eilat, allowing for shipment of the oil to Asian markets. As a transit country for the Baku-Tbilisi-Ceyhan pipeline, Georgia benefits directly from these arrangements through increased transit free revenue.
Such deals are a sign that the country is consolidating its historical position as a vital crossroads between Europe and Asia. As this process continues, the government is hoping that the emotional ties that bind foreign investors in Israel to Georgia will help make the difference.
Editor’s Note: Marina von Koenig and Nino Taktakishvili are freelance radio and print journalists based in Georgia.
