BUSINESS & ECONOMICS
Molly Corso
3/12/07
It was the post-Soviet comeback that was never expected to happen. With the recent reopening of its steel works, the Georgian city of Rustavi, long a derelict memorial to Soviet industrial might, is slowly returning to life, officials say. But despite the optimism, some residents, media and non-governmental organizations argue that vexing problems linger on.
Once the industrial capital of Georgia, Rustavi, built in 1948 to house workers at the sprawling Rustavi Metallurgical Factory, has been particularly hard hit by the economic depression that engulfed the country after the collapse of the Soviet Union. Thousands of the town’s estimated 160,000 residents left during the 1990s, when the factory ceased operations.
But officials say that that dark era in the city’s past is now over. "It has started," said Zurab Melikishvili, governor of Kvemo Kartli, the southeastern Georgian region where Rustavi is located, in reference to the town’s huge construction boom, new infrastructure projects and recent privatizations. "That is the most important [thing]… I think that very soon Rustavi will reclaim its status as an industrial center and play a large role in the economy of Georgia."
The fate of the factory and the fate of the city have always been closely intertwined. Repeated attempts to sell the factory -- and the repeated failures at reopening it -- have paralleled the city’s own demise. Similarly, the revitalization of the one is seen as the rejuvenation of the other.
That connection has not been lost on Georgian President Mikheil Saakashvili, who has cited the restoration of the Rustavi Metallurgical Factory, purchased at a 2005 bankruptcy auction by the Energy and Industrial Complex, as "the best response" to the trade and transportation bans imposed on Georgia by Russia.
(A case brought before the London Court of International Arbitration by an Italian company, Metal Geo, that also claims ownership of Rustavi remains outstanding.) [For details, see the Eurasia Insight archive].
But, four months after its official reopening ceremony in November 2006, Rustavi’s return to full production -- and its host city’s comeback -- is a program that has not been playing out exactly according to plan, some observers say. Growing debate surrounds the factory’s future and the benefits it will actually bring to the city of Rustavi.
In early March, the Georgian newspaper Sakartvelos Respublika (Republic of Georgia) reported that the Rustavi factory is, in fact, no longer operating. Production had stopped, the paper claimed, soon after the 2006 opening ceremony.
In a telephone interview with EurasiaNet, however, Rustavi Factory Head of Administration Giorgi Tsabulkashvili refuted those claims, stating that a "small part" of the factory is still operating and that the rest is being rebuilt and rehabilitated. Although Tsabulkashvili could not say how much of the overall complex is working, he confirmed that repair work would be completed by October 2008.
Officials have claimed that the factory, which now reportedly has 1,000 workers, will employ as many as 8,000 people once the rehabilitation process is complete. Governor Melikishvili hopes that the reopened metallurgical factory will be an impetus for the rest of the city.
"We do not want to come up with a new function; Rustavi had a very good function as an industrial town," he said. "A lot of smaller factories depended on the metallurgical factory and when it starts to work, they will also start to work."
City Mayor Davit Nadashvili, however, cautions that even once the metallurgical factory is fully functioning, it will not be an instant salve for all of the city’s unemployment problems. Recent figures were not immediately available from Georgia’s State Department for Statistics, but 2004 official data put the city’s unemployment rate at roughly 11 percent. The US Agency for International Development, however, has projected that the true number for that same year stands at over 20 percent.
"Technology is such that those who worked before are not needed, unfortunately… they [factories] need educated workers," Mayor Nadashvili said.
The city is doing its part to create work, Nadashvili said, by promoting construction, which city statistics report has increased by 500 percent over the past two years. The city expects the projects to bring in fresh tax revenue for much-needed infrastructure projects like road construction and sewer rehabilitation. In addition, he said, the mayor’s office is investing in city maintenance to provide employment for unskilled workers.
But, as Mayor Nadashvili himself conceded, not all city residents want that type of work. A professional accountant for most of her adult life, lifelong Rustavi resident Luba Litaeyva bristled when the local government offered her a job as a housekeeper. "[F]or eight years, I cannot find a job in my profession," she said. "[Then] they tell me to go and sweep floors."
Zviad Devdariani, chairman of the board at the Civil Development Agency, a non-governmental organization that monitors the transparency of local government and operates a regional press service, credited the Rustavi government with making some improvements, including helping small businesses open, but noted that they mean little to a city waiting years for another giant employer like the metallurgical factory to start hiring.
"If we speak of small businesses, it is developing," Devdariani said in reference to the city’s economy. "That means that five or ten people work now who didn’t before... but in the big factories thousands of people worked."
Mayor Nadashvili states that all of the city’s factories are now "in the system," and should be operating again by the end of 2007.
Some non-governmental organizations like the pro-opposition Georgian Young Lawyers Association (GYLA), however, are still not convinced. Construction projects alone are not enough to assist an urban population mired in abject poverty for years, argued Eka Pavlenishvili, the director of GYLA in Rustavi. "I think that nothing is being done in a global sense… [they are] painting the facades, constructing buildings but nothing is being done for the people."
Rustavi resident Litayeva disagrees. "Some things are better and some things are worse," she said, noting improved supplies of electricity and water as among recent positive developments. But, nonetheless, despite the difficulties, Litayeva has no intention of leaving. "My mother and father built this town," she said. "I love [it]."
Editor’s Note: Molly Corso is a freelance reporter and photojournalist based in Tbilisi.
