Area: approx. 43,300 sq. miles slightly smaller than South Carolina
Population: 4,693,892 (July 2004 est.)
Population Growth Rate: -.36% (2004 est.)
Annual Inflation: 4.8% (2004 est.)
Gross Domestic Product (GDP): $12.18 billion (purchasing power parity, 2004 est.)
Life Expectancy: Male: 72.35 years; Female: 79.44 years; (2004 est.)
GDP Per Capita: $2,500 (purchasing power parity, 2004 est.)
Infant Mortality: 19.34 deaths/1,000 live births (2004 est.)
Real Annual GDP Growth: 5.5% (2004 est.)
U.S. STRATEGIC INTERESTS
The U.S. Government's (USG) priorities in Georgia are to promote democratic reform, bolster regional stability, and foster economic growth. Since the November 2003 "Rose Revolution," the Georgian Government has shown an increased commitment to democratic and economic reforms and has demonstrated the political will to begin tackling the continuing problems of public corruption; outdated criminal, civil and administrative codes; and decaying infrastructure. The USG rewarded these extraordinary efforts by naming Georgia one of only 16 countries deemed eligible for its new performance-based assistance program,- the Millennium Challenge Account (MCA). In addition, over $1 billion (over three years) was pledged to Georgia at a special donors' conference for Georgia held in June 2004 and sponsored by the European Union and the World Bank. International observers considered the March 2004 repeat parliamentary elections to be the most democratic since the country's independence, and major reform initiatives were subsequently initiated in the areas of law enforcement, education, the judiciary and the tax code. Georgia continues to be a strong ally in the Global War on Terrorism and currently has over 800 soldiers serving in Iraq. Police brutality and judicial corruption remain problems, however, and unemployment and poverty are prevalent. Solving the two "frozen conflicts" in Abkhazia and South Ossetia continues to be an important goal for the USG.
OVERVIEW OF U.S. GOVERNMENT ASSISTANCE
In FY 2004, the USG provided an estimated $167.07 million in assistance to Georgia (including $3.01 million in FY 2003 FREEDOM Support Act funds):
In FY 2004, some 283 Georgians traveled to the United States on USG-funded training and exchange programs implemented by USAID and the U.S. Departments of Agriculture, Commerce, Justice and State, bringing the cumulative number of Georgian participants in such programs to date to over 4,000.
U.S. ASSISTANCE PRIORITIES
Democratic Reform Programs: The Rose Revolution provided a unique opportunity to implement reform in every sphere in Georgia in 2004. In FY 2004, USG assistance to Georgia focused on the reform of many outdated legal codes, including the Criminal Procedural Code, the Tax Code, and the Administrative Code. Programs were also aimed at improving local governance, strengthening the independent media and the rule of law, and developing a stronger, more active civil society advocating on behalf of citizens' interests. The USG continued its successful academic exchange programs, which have provided many of the current government's highest officials - including President Saakashvili, a former Muskie Fellow - an opportunity to study in the United States. Georgia's independent media played a pivotal role in democratization, and demonstrated independence during this time. In FY 2004, the USG continued to work with the judiciary in an effort to help increase its independence.
Economic and Social-Sector Reform Programs: The current government has demonstrated a willingness to tackle the serious issues it faces in the sphere of economics. USG assistance has focused on increasing tax revenue, legalizing the enormous shadow economy, and increasing agricultural income. The agricultural sector remains a key part of the economy, generating roughly twenty percent of GDP. The USG has assisted in efforts to privatize and register land, to increase farm yield and agricultural exports, and to integrate territories populated by ethnic minorities into the national economy. In close cooperation with other donors, the USG continued to provide technical assistance to the energy sector, with an emphasis on improving collection of electricity revenues. Assistance also focused on reforming the health care system, especially on improving regional medical facilities and the diagnosis and treatment of tuberculosis.
Security, Regional Stability and Law Enforcement Programs: In FY 2004, USG security and law enforcement programs focused on countering proliferation of weapons of mass destruction (WMD) and related expertise, strengthening border security, military training and professionalism, as well as judicial and law enforcement reform. The USG's Georgia Train and Equip Program (GTEP) completed its mission, and the USG has announced a new training program to support the Georgian military in its increased participation in Operation Iraqi Freedom. USG assistance to the Georgian Coast Guard and Border Service helped to strengthen its capacity to combat smuggling and increase revenue collections. The USG also contributed to advances in judicial reform and law enforcement, including the creation of a new draft Criminal Procedural Code, the training and reorganization of the General Procuracy, professional and human rights training in the Police Academy, and communications assistance for law enforcement agencies.
SECTORAL ASSESSMENTS
Democratic Reform
The "Rose Revolution" of November 2003 brought to power a young, energetic team of reformers who declared themselves committed to bringing Georgia up to Western standards in the fields of democratization, economic reform, and the rule of law. Both the extraordinary presidential election in January 2004 and the repeat parliamentary elections in March 2004 marked a substantial improvement over the elections of previous years. The government set as its first task eliminating corruption in the public sphere. Several high profile arrests were made, and large numbers of employees were released in many prominent agencies, including the Ministries of Justice and Internal Affairs. While some NGOs have voiced concern that the government's anti-corruption campaign sometimes crosses over the line into a lack of respect for the rule of law, public confidence in the government has increased. However, corruption at lower levels of government continues to be a serious problem. In 2004, there continued to be allegations against police officers concerning torture of pretrial detainees and the planting of weapons and illegal narcotics as a pretext for arrest. Georgia's NGO sector continues to be vibrant and active, as does the media, although self-censorship by the media appears to have increased during FY 2004. The new government took concrete steps to improve religious freedom, arresting defrocked priest Father Basili Mkalavishvili, and the major instigator of violence against religious minorities.
In FY 2004, the USG sought to strengthen government institutions and their legal framework by providing technical and financial assistance and consultation to several governmental bodies, by conducting public education campaigns, and by assisting in revising Georgia's laws. In order to enhance the execution of the central government's policy priorities, the USG provided technical assistance, training, and equipment to the offices of the President and Prime Minister. The USG also provided newly elected members of parliament with training on legislative procedures. Legal and financial assistance was provided for the drafting of Constitutional amendments passed in 2004, for the redrafting of the Administrative and the Criminal Procedural Codes, and for the drafting of the law on Freedom of Expression. Numerous activities were implemented through Georgian civil society NGOs, including the Georgian Young Lawyers Association, which provided almost 30,000 legal aid consultations during the year through regional offices, seminars, workshops, roundtable discussions, town hall meetings, and mobile legal services. Assistance was also provided to administer the second sitting of the bar examination. The USG also helped promote greater awareness of gender issues through Georgian civil society NGOs.
The USG also recognized the need for local administrative bodies to increase their capacity to address development issues in over twenty municipalities, city managers adopted formal regulations for open council meetings with agendas published in advance to encourage citizen participation, and new budget procedures allowed local governments to develop and publish city budgets for review by citizens, NGOs, and media outlets in advance of public budget hearings. The USG supported open and participatory dialogue in ten cities, bringing citizens and officials together in working groups to establish feasible measures and set realistic targets for key services such as street cleaning, water supply, and rehabilitation and maintenance of public spaces. The USG supported these efforts by matching local community resources with equipment and supplies (for example, computers for customer databases, and water sanitation).
Improvement to media outlets continued, building on the successful major election assistance program funded by the USG that contributed to balanced media coverage of electoral processes in Georgia. The National Television Ratings System was expanded to include the foreign investor AGB Neilson, and as a result the television advertising market in Georgia has increased more than twofold since January 2004.
USG support strengthened the capacity of political parties to address constituency-based issues. A series of training seminars for women leaders was held throughout the country to help encourage and prepare them to run for elected office and positions within their political parties, as well as provide them with general leadership skills. The USG conducted training for over 600 political party lawyers so they could effectively use the courts to resolve election disputes. The USG fielded 2,000 domestic observers for the March 2004 Parliamentary elections with matching funds from OSCE.
USG programs also sought to improve advocacy skills and strengthen institutional capacity and networking capability of civil society NGOs. The USG supported a draft package of Tax Code amendments that introduced charity legislation, which will be reviewed in the Fall 2004 parliamentary session. Student councils and Civic Education Resource Centers were established in twenty schools, and a mentoring program was introduced to increase the number of participating schools to 40. In April 2004, an Annual Youth Day was held in 20 cities of Georgia, at which youth implemented projects to benefit communities, including street cleaning and other community services. The USG provided grants to local NGOs to address challenges in public administration and policy, civil society, and mass media. As a result of one grant, Internet cafes were established in the cities of Chiatura, Gurjaani, and Gali (in the breakaway region of Abkhazia) and one for disabled people in Guria.
In FY 2004 the USG implemented several academic exchange programs and programs for professionals. Many alumni of these programs have now assumed high government positions, including President Mikheil Saakashvili, who was a Muskie Fellow. The USG also sponsored several university and high school partnership programs, linking Georgian and U.S. institutions to improve the Georgian education system by developing new curricula and training new professionals. The USG continued to provide funding to several academic institutions, including the Georgian Institute of Public Affairs, where the U.S. funds a Masters Program in Public Administration, a Masters Program in Journalism, and a course on Local Self-Governance. Continuing funding was also provided to the Georgian Foundation for Strategic and International Studies to provide an education program on Advanced Security Studies. Many current government officials are also graduates of this program. A USG grant provided Georgian language classes to ethnic minorities in order to promote their integration into Georgian society.
Economic and Social-Sector Reform
The Georgian economy is currently experiencing steady growth, which is particularly notable since the new government is in the midst of launching a new phase of major reforms. The government's efforts have resulted in reducing widespread corruption, which was viewed as the principal obstacle to the country's economic growth. Improved revenue mobilization and aggressive and effective anti-smuggling measures have led to this year's successful budget. Effectively, these reforms have brought large parts of the shadow economy into the legal realm, which will only increase with draft legislation to rationalize the tax code and the new financial amnesty program. Some estimates suggest that over a one-year period the shadow economy decreased from eighty percent to forty percent and will continue to decrease next year.
Georgia's overall economic growth was reflected in its GDP growth rate, which was 9.4 percent over the first half of 2004 (the projected annual rate for 2004 was six percent). The highest growth rates were observed in the industry, construction, transport and telecommunication sectors, though the main driver of the growth trend was the construction of the Baku-Tbilisi-Ceyhan pipeline. Agriculture accounted for 20.3 percent of GDP in 2003, and 19.3 percent in the first six months of 2004. Both exports and imports grew in the first half of 2004 by sixty-six percent and fifty-seven percent, respectively. Key exports by value include aircraft, ferrous waste and scrap, wine, copper ores and concentrates, sugar, mineral waters, gold, and fertilizers. The Georgian government's monetary policy continued to be tight, and the exchange rate for Georgia's national currency, the lari, remained stable, with a significant strengthening against the U.S. dollar in the third quarter. In 2004, for the first time since independence, actual state revenues (including foreign grants) were higher - by one hundred nineteen percent - than projected, demonstrating a sixty-eight percent improvement over the previous year.
The USG has helped Georgia increase tax and customs revenues, decrease corruption, and rationalize the economy. The USG provided direct technical assistance to the Ministry of Finance, which helped increase excise tax revenues by eighty-four percent in 2004 and also assisted in redrafting the Tax Code. The USG provided a resident government debt advisor, who has assisted in ongoing efforts to restructure government debt and in the issuance of treasury bills, helping to broaden the investor base in these bills. A USG-supported partnership of government and private stakeholders facilitated the closure of more than a dozen illegal refineries processing stolen crude oil. The USG also supported the government of Georgia in drafting and advocating laws on alternative dispute resolution, a movable property registry, secured transactions, bankruptcy, licensing, establishment of a credit information bureau, and leasing. With the support of the USG, the Ministry of Agriculture set up an Internal Control Unit to fight corruption and introduced export-oriented standards, increasing awareness of the opportunities and limitations of WTO membership. In cooperation with other donors, the USG has helped draft and advocate passage of veterinary, food safety, and seed laws.
USG-supported microfinance institutions (MFIs) and rural credit and leasing programs saw steady growth in credit portfolios. Three large, USG-supported, non-bank financial institutions, each with outstanding loan portfolios, attained operational sustainability. Necessary legal and regulatory changes to improve the environment for MFIs were identified, and technical assistance agreements were concluded with four MFIs. The USG also trained 100 loan officers from eight MFIs and two commercial banks. A public information campaign was launched to promote the benefits of MFIs, and a small grants program was initiated to support MFI capacity building.
The USG continued providing assistance in land privatization and real estate reform. A bill was drafted with support from USG advisors to support the privatization of large tracts of agricultural land, and is currently being discussed by the Government of Georgia. Land registration activities in Ajara were launched in September 2004 with support of the USG, following the autonomous republic's change in regime. USG assistance also facilitated increased access to credit by supporting development of the real estate market through sales and mortgages and establishing titled property that can be used as collateral. It also supported the registration of ownership rights for small landholders, the development of a secondary land market through advocacy, and support in drafting and implementing appropriate legislation. USG programs also sought to increase the capacity of local producers and processors to identify new markets and increase market share.
Another focus of U.S. economic support was the energy sector. In FY 2004, the USG assisted the United Electricity Distribution Company (UEDC) in streamlining its staff, increasing electricity collections (which have risen by over $2.2 million from April to August 2004), and thereby increasing by almost three times the payments to the Georgia Wholesale Electricity Market. The USG also assisted the Minister of Energy in clarifying and documenting plans for meeting winter energy needs and developing a communications and outreach plan. As a result, the government is much more prepared to meet the winter demand for energy.
In FY 2004, USG agricultural programs lent support to largely ignored andimpoverished minority communities and rural villages, with the common theme being agricultural and rural development to create jobs and incomes. USDA developed a diverse set of activities that sought to identify economic opportunities in rural communities through regionally placed agricultural development experts. It also conducted a targeted agribusiness education program aimed at young future farmers and agricultural-sector leaders, including farm-focused demonstration programs, youth-based activities, community and school internet connectivity (as a precursor to building local extension capabilities), dairy and cheese production improvement, and support for private sector agricultural entrepreneurs. As a result, USG rural programming established a new milk collection station in Didi Gomareti serving 400 farmers; women in development (WID) programs in Javakheti and Marneuli serving 160 women; nine internet cafes with rural school connections have been established; seven small and medium enterprises producing meat, cheese, or feed have been launched; and hybrid seed/production practices have been improved, increasing corn yields up to four hundred percent and affecting several hundred small farmers in West Georgia. The USG helped establish the first Future Farmers of Georgia (FFG) chapter, and in FY 2005, this program seeks to increase yields and profits for private farmers in East Georgia while giving students valuable experience in setting up and running small businesses.
In FY 2004 USAID agriculture projects worked in all ten regions under central government control, introducing ten new product lines, two new technologies, and two new packaging innovations. Thirteen new export markets were identified and established in Russia and Western Europe. Four producer associations were organized (88 members) and 21 associations assisted (2,441 total members), a Leasing Law was drafted, and leasing transactions commenced.
With U.S. assistance, the Georgian government has begun to reform its health care system. USG implementer trained and evaluated health professionals (TB physicians, nurses, lab technicians, and Ministry of Justice doctors working in prisons) at all five tuberculosis (TB) dispensaries in Tbilisi. The USG also supported the preparation of a Government TB action plan for 2004 and a successful Global Fund application for TB worth $6.1 million. Four Tbilisi dispensaries were equipped with binocular microscopes and laboratory supplies. Two clinics for STD diagnosis/treatment and voluntary counseling and testing services were established to serve high-risk groups and pregnant women in Tbilisi and Batumi. STD/HIV hotline services reached over 5,000 members of the general population. Eight primary health clinics in Tsalka were rehabilitated, and all 40 primary care doctors who serve the entire Tsalka area were trained. USG support also led to a Ministry of Health immunization decree issued in April 2003 that includes a special section on the management of information services for immunizations, providing a policy framework to institutionalize this information at the national level.
USG funding also focused on the well being of internally displaced people (IDPs)from the Abkhaz and Ossetian conflicts. The USG funded several organizations to rehabilitate collective residence centers throughout Georgia for IDPs who fled conflicts in Abkhazia and South Ossetia.
Security, Regional Stability, and Law Enforcement
Georgia continues to face several dangers to its security, including separatist movements, insecure borders, smuggling, organized crime, and trafficking in weapons, humans, and narcotics. In May 2004, the Georgian government successfully regained control over Ajara, which had for years rebuffed efforts by the central government to bring it under constitutional rule. The two separatist conflicts of Abkhazia and South Ossetia remain unresolved, and the United States remains actively engaged in finding a peaceful resolution to these conflicts.
The USG has helped Georgia transform its military, bringing it closer to NATO standards. One of the principal engines of this change was the highly successful Georgia Train and Equip Program, which ended this year. The USG will continue a military assistance program that will allow the Georgian military to continue its participation in Iraq. Georgia also contributed troops to Bosnia and, more recently, to Afghanistan to provide security for the October presidential elections. The USG worked with the Government of Georgia to establish civilian control over the Ministry of Defense. Within the Ministry there is a group of eight U.S. advisors who assist in operational and strategic issues. In FY 2004, the USG hosted several training sessions and conferences for Georgian military personnel and also sponsored educational exchanges to the U.S. for Georgian military officers. FMF and IMET programs continue to promote interoperability with U.S. and Coalition forces and democratization of the Georgian military.
The USG runs several border security programs that have been instrumental in decreasing smuggling and increasing customs revenues. In FY 2004, USG border security and law enforcement programs focused on countering proliferation of weapons of mass destruction (WMD) and related expertise, strengthening border security, increasing customs revenue collection, working on interagency command and control interoperations, combating smuggling, increasing revenue collections, and instituting organizational reforms. In 2004, the USG emphasis moved from major infrastructure installation to increased professional training and utilization of facilities provided. Borders continue to be a problem in Georgia, allowing for illegal smuggling and human trafficking. In FY 2004 the Georgian Border Security and Law Enforcement (GBSLE) Program continued to facilitate training for the Georgian Coast Guard and the Border Service and the Georgian Customs Department. This training included border inspection and interdiction, dual use commodity identification, Numerically Integrated Product Systems, and customs valuations. Customs collections improved markedly, with increases of two hundred twenty percent from February 2004 to September 2004. The central Customs Department now manages its data using a modern fiber optic and satellite-based data carrier, and receives timely information from throughout Georgia. The Coast Guard, after receiving a one-time fuel assistance allocation from the USG, conducted a record number of interdictions in Georgia's territorial waters, detecting numerous violations of customs laws, illegal border passage, and contraband smuggling.
A number of other important reforms and advancements in Georgian customs and border control were instituted with USG assistance in FY 2004. Eight Georgian students were trained in the United States at U.S. Coast Guard schools, and one student has since been assigned to command a radar surveillance station. The Land Border Service was reorganized into functional regions, and they are beginning to show more professional management of resources and personnel. With extensive U.S. infrastructure and training assistance, a modern port of entry with western standard security features will be opened at Red Bridge on the border with Azerbaijan in March 2005. Additional ports of entry are planned in subsequent years on the borders with Russia, Turkey, and Armenia, and construction of the Kazbegi crossing will move forward in spring 2005, placing Customs in an excellent position to control the flow of cargoes through the border crossing with Russia. Introduction of the PISCES personnel identification software and systems at passport control sites will further deter illegal entries and exits in Georgian territory.
In FY 2004, USG funded a VHF data and voice carrier network that will connect the Ministry of Internal Affairs (including Border Guard and Coast Guard), Ministry of Defense, Ministry of State Security, SSPS (Pipeline Security), and other elements of the Georgian executive branch. The Customs Department will install additional data comparison capabilities and will identify its employees at all sites using uniforms and card identifiers.
A major priority of the new Georgian Government has been to improve the professionalism of the law enforcement community. All of the ministries are being restructured and downsized to reduce redundancy and corruption, and various functions are being reorganized and placed under more appropriate ministries. Significantly, the Ministry of Interior troops are moving to the Ministry of Defense, and the Border Guards were moved to the Ministry of Internal Affairs. The Georgian Government disbanded the majority of the highway police department, and, on August 15, 2004, President Saakashvili unveiled the new Patrol Police. Though their training to date has been minimal, the Georgians have shown that they are working to address both the short- and long-term challenges of reforming a once very corrupt ministry. In response to the Government's initiative, the USG initiated two major projects - Police Academy Development and Police Communications Development - in addition to revitalizing the Independent Forensics Laboratory Project, with the intent of merging Georgian forensic capabilities into one centralized institution. All three projects aim to increase the professional capabilities of the law enforcement community through access to technology and advisors. In FY 2004, the USG also provided funding and consultations with U.S. experts for the Ministry of Justice's ongoing development of the Criminal Procedural Code, including training sessions for state prosecutors.
Georgia continues to face the challenge of complex, transnational crime in the form of money laundering and other financial crimes. To address this problem, the USG worked closely with Georgian experts and the Parliament to enact comprehensive anti-money laundering legislation compliant with Council of Europe, UN, and FATF requirements, as well as to establish a specialized, vetted Financial Monitoring Service to investigate and prosecute money laundering and terrorist financing cases under the new law. The unit, which opened in July 2004, is currently investigating a case involving shell companies, some of which are located in the United States. To enhance Georgia's ability to investigate and prosecute crime and corruption, the new Georgian leadership, aided by USG expertise, enacted a U.S.-style plea bargaining law, asset forfeiture provisions, and a law that allows for properly authenticated undercover video and audio tapes taken by journalists to be used as evidence in court. To date, these tools have contributed significantly to an increase in successful prosecutions against money laundering and other financial crimes.
In FY 2004, the USG provided Georgian Government officials with valuable training in WMD emergency response operations. This training will help Georgian officials better plan for and respond to incidents involving WMD in their country. A review and assessment of this program conducted in 2004 will be used to design further programs and trainings for FY 2005. Embassy and Georgian Ministry of Foreign Affairs officials signed a memorandum of intent with the State Department this year, which will serve as an important framework for the administration of future anti-terrorism courses to Georgia.
Additional and extraordinary, support was provided to the Government of Georgia in FY 2004 with salary supplements for U.S.-trained troops, and reimbursement for some of Georgia's costs for the Global War On Terrorism.
Humanitarian Assistance
In FY 2004, the USG provided approximately $17 million in humanitarian commodities that were distributed to IDPs, refugees, and other vulnerable populations. Distribution through private volunteer organizations and local NGOs included medicines, medical supplies and equipment, food, clothing, and emergency shelter items. USG also provided in excess of 200 computers and auxiliary equipment to the new government as they were getting established after the Rose Revolution.
The USG continued to support Georgia's vulnerable population groups with a food kitchen program meeting the needs of approximately 4,500 people. In addition, approximately $6 million in winter heat subsidies were provided to 230,000 households, 685 institutions, and 20,554 people in IDP centers during the winter of 2003-4.
One hundred thousand tons of wheat commodities were provided to Georgia in FY 2004, a portion of which was monetized to enable the new government to pay pension arrears. The remainder will be used for a variety of agriculture development programs in FY 2005.
COUNTRY PERFORMANCE MEASURES
Georgia's new government has made progress in its economic reform efforts since taking over in January 2004. The recently enacted tax code and amnesty programs, together with crackdown on smuggling and corruption should be reflected in improved economic and democratic reform indicators next year.
Economic & Democratic Reforms, 1991-2004
Data are drawn from EBRD, Transition Report (November 2004) & Freedom House, Nations in Transit 2004 & Freedom in the World 2004. Ratings are based on a 1-to-5 scale with 5 representing the most advanced.
Latest-year observation refers to 2004 economic reform data and 2003 democratic reform data; i.e., 2004 data for democratic reforms are not yet available.
Economic Structure and Human Development, 1990-2004
Increased tax collection and the government's commitment to fight corruption should continue to improve Georgia's business climate. The pervasiveness of poverty remains although greater attention to reform of social and educational programs has begun.
World Bank, World Development Indicators 2004 (2004); UNICEF, Social Monitor 2004 (2004); EBRD, Transition Report (November 2004); and UNDP, Human Development Report (2004).
SECTORAL PERFORMANCE MEASURES
DEMOCRATIC REFORM
Performance Indicators: Democratization Index, Drawing from Freedom House, Nations in Transit 2004 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest; data based on previous calendar year)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 target |
FY 2004 actual |
|
2.61 |
2.44 |
Not established |
2.44 |
FY 2004 Results: Since the Rose Revolution of November 2003, Georgia has made substantial progress in the area of democratic reform - progress that, unfortunately, is not yet captured by available indicators. It appears certain, however, that when these measures are available, they will show a marked increase in the Democratization Index as well as most of its component indicators. Taking these in order: political process has clearly advanced. After the flawed November 2003 parliamentary elections led to the Rose Revolution, the OSCE rated the extraordinary January presidential election and the March repeat parliamentary elections as the most free and fair since independence. NGO and civil society development were already fairly advanced in Georgia under Shevardnadze, and will not likely be much higher once 2004 figures are available. Independent media is more difficult to predict. While the international community positively evaluated the comprehensive law on defamation passed this year, many NGOs drew attention to the increase of self-censorship among media outlets. Governance and public administration has improved. Personnel in almost all government agencies have been overhauled, decreasing redundancy and corruption. Parliament has begun discussion of a major transformation of regional administration, seeking to increase local self-governance. Progress has been made in the rule of law, although citizens still complained about arbitrary arrests, police torture, and undue governmental influence on the judicial process. Several amendments have been passed to the Criminal Procedural Code (such as allowing a detainee immediate access to defense council) that have significantly decreased complaints of unfair judicial procedures. Perhaps the greatest progress has been seen in the area of corruption, identified by many Georgian and international organizations alike as one of the biggest problems of the previous administration. Saakashvili's government has moved to root out corruption in the police force and the administration, and early signs indicate that the program is successful. In sum, once 2004 figures on democratization become available, they are expected show marked improvement over 2003. The ultimate direction democratization takes will depend on how much Saakashvili and his government stays the course outlined when they took power.
ECONOMIC AND SOCIAL REFORM
Performance Indicators: Economic Reform Index, Drawing from Freedom House, Nations in Transit 2004 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest; data based on previous calendar year)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 target |
FY 2004 actual |
|
3.07 |
3.07 |
Not established |
3.11 |
FY 2004 Results: Despite the major changes in Georgia's political landscape, economic reform in Georgia has not improved dramatically since the Rose Revolution. Of the nine component indicators of the Economic Reform Index above, only one - bank reform - has shown an improvement from 2003 to 2004 (this was enough to nudge the overall index from 3.07 to 3.11). The lack of major progress over the last year should not, however, be taken as an indication that there are no major reforms underway. In fact, nearly every sector of the economy - from tax code to banking, from small-scale entrepreneurs to large state-run enterprises - is currently being overhauled, although the results are not yet known. Small-scale privatization, trade and foreign exchange liberalization, and price liberalization had largely been completed before 2004. Some changes have been seen in large-scale privatization as the government seeks to streamline the Georgian State Railways by selling off some of its unrelated assets - including a soccer team. Bank reform has shown some improvement in 2004, as the National Bank of Georgia instituted bank consolidation and reform, imposing increasingly stringent reporting requirements. The final four areas - competition policy, government and enterprise restructuring, securities and non-bank reform, and infrastructure reform - have all shown some improvement, although these are longer-term trends that will require more time to be borne out.
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