Sad prognosis

The Georgian leadership has paid the utmost attention to attracting foreign investments to Georgia and has facilitated different steps in this direction. In 2008 the government hoped to receive more than USD 2 billion in foreign investments.

However this year Georgia’s economic climate has altered very dramatically. The first half of 2008 was dedicated to Presidential and Parliamentary elections and protests against the results. Now the Russian aggression has obviously made Georgia a less attractive investment prospect as Moscow has deliberately undermined Georgia’s economy, transit function and free industrial zone at Poti. The Russians are digging trenches in that city, not showing the slightest sign of moving out.

On August 29 Time Magazine drew a stark picture of Georgia’s prospects. No new investors will enter the Georgian market in the near future as the country is in a state of war and Russia is not leaving. The first and most urgent step to counter this will be to return the Russian occupation forces to their positions as determined by the Sarkozy-brokered document, those of August 6. However it looks as if Russia will ignore this document, though it was signed by President Medvedev as well.

The Georgian administration is trying its best to create some extra benefits for foreign investors. Recently the Ministry of Economic Development issued a decree that until the end of the state of war all financial liabilities for all investors should be lifted. It remains to be seen however whether this will prove to be enough.