Georgia (11/98)

For the most current version of this Note, see Background Notes A-Z.



Area: 70,000 sq km; slightly larger than South Carolina.
Cities: Capital--Tbilisi (pop 1.3 million 1994).
Terrain: Mostly rugged and mountainous.
Climate: Generally moderate; mild on the Black Sea coast with cold winters in the mountains.

Nationality: Noun and adjective--Georgian(s).
Population (1997 est.): 5.16 million.
Population growth rate: -1.09%.
Ethnic groups: Georgian 70.1%, Armenian 8.1%, Russian 6.3%, Azerbaijan 5.7%, Ossetian 3%, Abkhaz 1.8%, other 5%.
Religion: Georgian Orthodox 65%, Muslim 11%, Russian Orthodox 10%, Armenian Apostolic 8%.
Language: Georgian (official), Abkhaz also official language in Abkhazia.
Education: Years compulsory--11. Literacy--99%.
Health: Infant mortality rate--22.5 deaths/1,000 live births. Life expectancy--68 years.

Type: Republic.
Constitution: October 17, 1995.
Branches: Executive--president with State Chancellery. Legislative--unicameral parliament, 235 members. Judicial--supreme court, prosecutor general, and local courts.
Subdivisions: 63 districts, including those within the two autonomous republics (Abkhazia and Ajaria ) and seven cities.
Political parties: Citizens Union of Georgia, National Democratic Party, People's National Democratic Party, United Republican Party, Georgian Popular Front, Georgian Social Democratic Party, All Georgia Revival Union, Greens Party, Agrarian Party, United Communist Party of Georgia Socialist Party, and others.
Suffrage: Universal over 18.

Economy (1997)
GDP: $4.9 billion.
Per capita income: $980.
GDP growth: 11.3%.
Inflation rate: 7%.
Natural resources: Citrus fruits, tea, wine, nonferrous metals, textiles, chemicals and fuel re-exports.
Industry: Types--steel, aircraft, machine tools, foundry equipment (automobiles, trucks, and tractors), tower cranes, electric welding equipment, machinery for food packing, electric motors, textiles, shoes, chemicals, wood products, bottled water, and wine.
Trade (1996): Exports--$199.4 million. Partners--Russia, Turkey, Azerbaijan, Armenia. Imports--$656.6 million; Partners--Russia, Turkey, Azerbaijan, U.S.
Work force (2.4 million): Agriculture--23.8%; trade--23.2%; transport and communications--10.5%; industry--10.2%; construction--5%; unemployment (1996 est.)--21%.

Georgian history dates back more than 2,500 years, and Georgian is one of the oldest living languages in the world. Tbilisi, located in a picturesque valley divided by the Mtkvari River, is more than 1,500 years old. Much of Georgia's territory was besieged by its Persian and Turkish neighbors along with Arabs and Mongols over the course of the 7th to the 18th centuries. After 11 centuries of mixed fortunes of various Georgian kingdoms, including a golden age from the 11th to 12th centuries, Georgia turned to Russia for protection. Russia essentially annexed Georgia and exiled the royalty in 1801. Pockets of Georgian resistance to foreign rule continued, and the first Republic of Georgia was established on May 26, 1918 after the collapse of Tsarist Russia. By March 1921, the Red army had reoccupied the country and Georgia became part of the Soviet Union. On April 9, 1991, the Supreme Council of the Republic of Georgia declared independence from the U.S.S.R.

Beset by ethnic and civil strife from independence in 1991, Georgia began to stabilize in 1995. However, more than 230,000 internally displaced persons present an enormous strain on local politics. Peace in the separatist areas of Abkhazia and south Ossetia, overseen by Russian peacekeepers and international organizations, will continue to be fragile, requiring years of economic development and negotiation to overcome local enmities. Considerable progress has been made in negotiations on the Ossetian-Georgian conflict, and negotiations are continuing in the Georgia-Abkhazia conflict.

The Georgian Government is committed to economic reform in cooperation with the IMF and World Bank, and stakes much of its future on the revival of the ancient Silk Road as the Eurasian corridor, using Georgia's geography as a bridge for transit of goods between Europe and Asia.

Georgians are renowned for their hospitality and artistry in dance, theater, music, and design.

Georgia has been a democratic republic since the presidential elections and constitutional referendum of October 1995. The President is elected for a term of 5 years; his constitutional successor is the Chairman of the Parliament.

The Georgian state is highly centralized, except for the autonomous regions of Abkhazia and Ajaria, which are to be given special autonomous status once Georgia's territorial integrity is restored. Those regions were subjects of special autonomies during Soviet rule and the legacy of that influence remains. In most locations local elections took place on November 15, 1998, marking the first elections under the 1995 constitution. Candidates from 11 political parties and two political blocks presented candidates.

Principal Government Offcials
President--Eduard A. Shevardnadze
State Minister--Vazha Lortkipanidze
Secretary of the Security Council--Nugzan Sajaia
Chairman of Parliament--Zurab Zhvania
Foreign Minister--Irakli Menagharishvili
Ambassador to the United States--Tedo Japaridze

Georgia maintains an embassy in the United States at Suite 424, 1511 K Street, N.W., Washington, D.C. 20005, telephone (202) 393-5959, fax (202) 393-4532.

Since surviving assassination attempts in August 1995 and February 1998 by reactionary forces opposed to reform, President Shevardnadze has consolidated his leadership and moved ahead with an ambitious and courageous reform agenda. Elections on November 5, 1995, described as the freest and fairest in the Caucasus or Central Asia, gave him the presidency and resulted in a progressive parliament led by sophisticated reformers.

The Abkhaz separatist dispute absorbs much of the government's attention. While a cease-fire is in effect, more than 230,000 internally displaced persons (IDPs) who were driven from their homes during the conflict constitute a vocal lobby. The government has offered the region considerable autonomy in order to encourage a settlement that would allow the IDPs, the majority of whom are ethnic Georgians from the Gali region, to return home, but the Abkhaz insist on virtual independence.

Currently, Russian peacekeepers, under the authority of the Commonwealth of Independent States, are stationed in Abkhazia, along with UN observers, but both groups have recently had to restrict their activities due to increased mining and guerrilla activity. Negotiations have not resulted in movement toward a settlement. Working with France, U.K., Germany, and Russia and through the UN and the OSCE, the U.S. continues to encourage a comprehensive settlement consistent with Georgian independence, sovereignty, and territorial integrity. The UN observer force and other organizations are quietly encouraging grassroots cooperative and confidence-building measures in the region.

The parliament has instituted wideranging political reforms supportive of higher human rights standards, but problems persist, largely as a result of the unwillingness of certain law enforcement and criminal justice officials to support constitutionally mandated changes. Mistreatment of detainees is a significant and continuing problem, as is corruption within certain state agencies and monopolies. In 1998, increased citizen awareness of civil rights and democratic values has provided an increasingly effective check on the excesses of law enforcement agencies.

Political Parties
There are 11 main political parties and two political blocks in Georgia. Of these, four are pro-government and seven are opposition parties. The Citizens Union of Georgia (CUG), a pro-government party formed in late 1993, is dominated by young reformers but also includes Soviet bureaucrats connected to Shevardnadze from his days as leader of Soviet Georgia. The CUG's name recognition, financial support, and organization give it a distinct advantage over the other political parties.

The National Democratic Party represents the opposition in parliament. The party was formed in 1981 and has strong name recognition throughout most of the country. The Union of Democratic Revival is a vehicle in Tbilisi for political representation of the Ajarian region. The Abkhaz faction remains vocal and influential in pushing for resolution for the Abkhaz conflict.

Georgia's economic recovery has been hampered by the separatist disputes in Abkhazia and South Ossetia, a persistently weak economic infrastructure, resistance to reform on the part of some corrupt and reactionary factions, and the Russian and Asian economic crises. Under President Shevardnadze's leadership, the government has nonetheless guided the economy to impressive gains: slashing inflation, meeting most IMF targets through its July 1998 review, and qualifying for economic structural adjustment facility credit status, introducing a stable national currency (the lari), introducing free market prices of bread products, preparing for the second stage of accession to the World Trade Organization (the first stage has already been met), signing agreements that allow for development of a pipeline to transport Caspian oil across Georgia to the Black Sea, and passing laws on commercial banking, land, and tax reform. However, as a result of the fallout from the Russian and Asian economic crises, Georgia has been unable to meet IMF conditions recently.

Georgia's deficit fell from the 1996 rate of 6.2% to 3.6% in 1997. The Government expects to continue reducing the country's deficit to 3% in 1998. President Shevardnadze recently announced that tax revenues have risen dramatically, and recent tax reform, encouraged by the IMF, should lead to further increases. However, Georgia needs to implement its tax legislation and take concrete steps to meet IMF programs. Although total revenue increased from 1996 to 1997, these increases were lower than expected. International financial institutions continue to play a critical role in Georgia's budgetary calculations. Multilateral and bilateral grants and loans totaled 116.4 million lari in 1997 and are expected to total 182.8 million lari in 1998.

There has been strong progress on structural reform. All prices and most trade have been liberalized, legal-framework reform is on schedule, and massive government downsizing is underway. More than 10,500 small enterprises have been privatized, and although privatization of medium- and large-sized firms has been slow, more than 1,200 medium- and large-sized companies have been set up as joint stock companies. A law and a decree establishing the legal basis and procedures for state property privatization should continue to reduce the number of companies controlled by the state.

Due to a lack of investment, Georgia's transportation and communication infrastructure remains in very poor condition. Parliament has set an agenda to start the privatization of the telecommunications industry, although there is still resistance to the plan and Parliament needs to draft implementing legislation.

Georgia's electrical energy sector is in critical condition. Shortages of electricity have resulted in public unrest. In 1998, Georgia began to privatize its energy distribution system and expects to privatize its energy generation system by 2000. Privatization is the only means to generate the capital needed to rehabilitate the sector.

To encourage and support the reform process, the U.S. is joining other donors in shifting the focus of assistance from humanitarian to technical and institution-building programs. Provision of legal and technical advisors is complemented by training opportunities for parliamentarians, law enforcement officials, and economic advisors. The U.S. is increasingly willing to impose conditions on assistance in order to encourage improved performance on key issues and privatization of key sectors, including energy. Georgia continues to depend on humanitarian aid, which is increasingly targeted to most-needy groups.

Georgian agricultural production is beginning to recover following the devastation caused by the civil unrest and the restructuring necessary following the breakup of the Soviet Union. Livestock production is beginning to rebound, although it faces periodic disease. Domestic grain production is increasing, and will require sustained political and infrastructure improvements to ensure appropriate distribution and return to farmers. Tea, hazelnut, and citrus production have suffered greatly as a result of the conflict in Abkhazia, an especially fertile area.

While approximately 30% of the Georgian economy is agricultural, crops spoil in the field because farmers either cannot get their produce to market or must pay costs that drive market prices above those for imported goods. In concert with European assistance, Georgia has taken steps to control the quality of and appropriately market its natural spring water. Georgian viniculture, well supported during Soviet times, is internationally acclaimed and has absorbed some new technologies and financing since 1994.

Georgia's location, nestled between the Black Sea, Russia, and Turkey, gives it strategic importance far beyond its size. It is developing as the gateway from the Black Sea to the Caucasus and the larger Caspian region, but also serves as a buffer between Russia and Turkey. Georgia has a long and close relationship with Russia, but it is reaching out to its other neighbors and looking to the West in search of alternatives and opportunities. It signed a partnership and cooperation agreement with the EU, participates in the Partnership for Peace, and encourages foreign investment. France, Germany, and the U.K. all have embassies in Tbilisi, and Germany is a significant donor.

Georgia is a member of the UN, the OSCE, and the CIS. It is an observer in the Council of Europe.

U.S.-Georgia relations have been and continue to be excellent. Georgian leaders note that U.S. humanitarian assistance was critical to Georgia's recovery from civil war and economic difficulties following independence. U.S. assistance currently is targeted to support Georgia's economic and political reform programs, with emphasis on institution-building. The U.S. is working with the Georgian parliament on draft laws and establishing procedures and standards consistent with the country's 1995 constitution.

The U.S. also provides Georgia with bilateral security assistance, including through the International Military Education and Training (IMET) program. Evolving U.S.-Georgia partnerships include programs by the Georgia (U.S.) National Guard, visits by the Sixth Fleet and the Coast Guard to Georgia, and the Bilateral Working Group on Defense and Military Cooperation.

Principal U.S. Officials
Ambassador--Kenneth Yalowitz
Deputy Chief of Mission--Martin Adams
Political/Economic/Commercial Affairs--Sandra Clark
Public Affairs--Victoria Sloan
Defense Attache--David Penn
USAID Director--Michael Farbman

The U.S. embassy in Georgia is located at 25 Antoneli Street, Tbilisi 380026, telephone 995-32-98-99-67, fax 995-32-93-37-59.

Information about the U.S. embassy in Georgia can be found at: