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Georgia
>> Regional Overview >> Georgia Overview
Program Summary
Previous Years' Activities
2001, 2000, 1999, 1998, 1997
Last updated: 03
Introduction
Strengthening democracy and open markets in Georgia serves long-term U.S. regional, economic, and humanitarian interests. As the western portal to the Great Silk Road and the newest conduit of Caspian oil to world markets, Georgia has become a strategic gateway of energy and trade routes linking East and West.
Two primary themes establish the underlying basis for U. S. foreign policy objectives in Georgia: (1) the requirement for a politically and economically stable Caucasus region at a geographic crossroads that borders states with potential volatility, such as Russia and Iran; and (2) the vital position of Georgia as a Caucasus transit country of oil and gas for the United States and the West. Georgia maintains a policy of openness to the West, and actively seeks closer and stronger formal ties with the United States and Europe.
Development Challenge
Since independence in 1991, Georgia has endured civil war, armed conflict with the breakaway region of Abkhazia, separatist movements in Adjara and South Ossetia, several assassination attempts on President Shevardnadze, and economic devastation following the Soviet Union breakup. Recent difficulties have included the conflict in bordering Chechnya, interruption by Russia of energy supplies that have caused very limited electric power availability throughout the country, with associated growing civil unrest, the Russian economic crisis, a continuing severe drought, a low-growth economy, and a chronic budget crisis caused by falling revenues. Public opinion of the Government of Georgia's (GOG) performance probably has fallen to an all-time low. For most Georgians standards of living have not improved and in many cases have worsened. The drought has especially affected the country's most vulnerable, particularly those in the rural areas who largely survive on subsistence farming.
Corruption, rampant in society and government, received increasing attention in 2000 as the GOG under Presidential decree set up an interim body, the Anti-Corruption Commission (ACC), to develop a strategy and action plan. The strategy and action plan, though submitted on time, have gone unheeded, and momentum, at least for now, has waned. An opportunity for addressing one of the major constraints to not only economic development, but also confidence and participation in government, could be lost. In March 2001, the president signed a decree approving implementation of the ACC's recommendations. However, it is too soon to comment on whether this decree will stimulate change.
Many analysts believe Georgia has already put into place economic and political reforms that can be undertaken quickly. What remain are the more difficult, painful, and time-consuming reforms that conflict with the aims of vested interests. A young, well-educated, and aggressive cadre of senior government officials has been appointed in many ministries. Unfortunately, the depth of talent runs not very deep. Institutional development and reform will be necessary to build a critical mass of reforms and reformers in order to generate positive movement forward and to prevent backsliding. However, non-payment of even meager government salaries threatens reform efforts, especially in the judiciary where USAID and the GOG have had success in instituting qualification exams for judges.
In spite of these challenges, USAID's programs in FY 2000 contributed to many important policy changes at the national level, while providing tangible assistance to people outside Tbilisi. USAID's land titling program is well on its way toward meeting its end goal of 3 million land titles distributed to the people of Georgia, with a cumulative total of approximately 1.2 million land titles reached in FY 2000. This opened up the credit market as land became a principal means of collateral for loans, including mortgage loans. In energy, privatization of power generation plants accelerated in FY 2000 as nearly 23 percent of total power generation was provided by privately owned plants.
In FY 2000, the GOG adopted the Administrative Code, the first of its kind in Eurasia, which lays the ground rules and procedures for transparency in government. Included in this hallmark piece of legislation is a section on freedom of information. With USAID support in FY 2001 the Government's implementation of this important code will take place. On a negative note, the flawed presidential elections of April 2000 demonstrate that USAID's work in promoting free and fair elections is not finished. With local elections scheduled for FY 2002, USAID with its partners (including the GOG) will help apply key lessons learned so that the process improves.
With the poverty rate at 53 percent and growing (according to the World Bank's methodology on defining poverty), USAID assisted nearly one-half million persons in meeting their basic needs. USAID rapidly responded to the drought by providing relief to 38,000 farmers through credit, wheat seed, diesel fuel, and other commodities. During the winter months of 2000, USAID subsidized electricity costs for more than 100,000 of the country's neediest families.
The IMF reports that Georgia's public sector external debt has remained just below 30% of GDP since 1996, indicating that public sector debt is not a problem at this time. Approximately 40% of Georgia's foreign debt is with the International Monetary Fund (IMF), World Bank, and the European Bank for Reconstruction and Development. The remaining 60% of foreign debt is bilateral, mostly with Russia, Turkey, Turkmenistan, Germany, and Austria.
Other Donors
The four largest donors to Georgia are the World Bank, the United States, The European Bank for Reconstruction and Development (EBRD), and the European Union (EU). Since 1993, U.S. assistance to these programs has totaled approximately $441 million. The World Bank has provided approximately $509 million to Georgia. World Bank assistance includes structural adjustment credits, agricultural development loans, assistance to the health and power sectors, and technical assistance to strengthen the private sector. USAID works closely with the World Bank and supports its economic reform conditionalities. EBRD provides direct funding for the power and transport sectors and in support of private sector development. The EU's technical assistance program has focused on the rehabilitation of transportation infrastructure, strengthening the private sector and food security. Since joining the IMF in 1992, Georgia has borrowed about $280 million through annual structural adjustment loans. USAID provides technical assistance to the Ministry of Finance and works closely with the IMF to address fiscal policy issues.
FY 2002 Program
An integral part of the Mission Performance Plan (MPP), the USAID program strategy for Georgia integrates institutional and policy reform at the national level with local and grassroots capacity building. FY 2002 funding supports economic and energy sector restructuring (although the percentage of resources allocated for these programs is expected to drop), strengthening the private sector, bolstering civil society, developing democratic local governance, promoting the rule of law, and fighting corruption. FY 2002 funding also supports social reform at the community level, especially in the regions outside of the capital city. As a means of having more people-to-people level impacts, USAID started four new programs in FY 2000: two community development programs, a local governance activity, and a comprehensive program for business development. Although there are many other activities carried out at the local level, USAID expects to use these four programs in FY 2002 and beyond as anchors of USAID's programs in the communities throughout Georgia, allowing more local-level coordination to take place among implementors as well as other partners and beneficiaries.
Under the ongoing electricity and gas sector reform program USAID will expand a pilot energy efficiency program to regions outside of Tbilisi demonstrating different types of industrial applications. A major continuing activity will be the development of a new energy efficiency law that will promote incentives to conserve and substitute more efficient fuel sources. Energy security is an issue of high importance for Georgia and an area for which USAID expects to provide assistance in FY 2002.
In the health sector, USAID will develop alternatives to over-dependence on hospital-based services in favor of maternal child care and post-natal care. It will also include private health providers in support of small scale entrepreneurs.
In the private sector, USAID will continue a broad, multi-year economic reform program that includes comprehensive banking sector reform, international accounting standards, land reform, improved fiscal policy and management, agricultural reform, and assistance to the small and medium enterprise sector. The focus in economic policy will begin to shift away from banking and fiscal reform toward implementation of commercial law and improvements in the business regulatory environment.
In the area of democratic reform, USAID will continue to support legal NGOs that provide effective legal training and maintain legal clinics. Activities also target regions outside of Tbilisi to ensure greater citizen benefits from reform laws. Programs also will enable the Georgian people participation in the oversight of the political process, and to have a greater voice in determining the types and quality of services they receive from their local governments.
Cutting across all sectors, USAID will continue a robust participant training program.
Activity Data Sheets
- 114-013 Accelerated Development and Growth of Private Enterprises
- 114-015 A More Economically Sustainable and Environmentally Sound Energy Sector
- 114-022 Legal Systems that Better Support Implementation of Democratic Processes and Market Reforms
- 114-023 More Efficient and Responsive Local Governance
- 114-031 Reduced Human Suffering in Targeted Communities
- 114-042 Cross-Cutting Programs
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
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Last Updated on: May 29, 2002 |
