Cash-rich Batumi port

Georgian government’s success in Adjara increased its hopes for reviving country’s economy following return of the cash-rich region to Tbilisi’s control.

“As a result of abolition of the Choloki disgraceful [administrative] border between Adjara and the rest of the country, Georgia’s economic potential has significantly increased,” Prime Minister Zurab Zhvania said.

Adjara, whose contribution to Georgia’s entire GDP exceeds 9%, totaling GEL 900 million (USD 450 million), was cut off from Georgia’s economic space for past 13 years, during the rule of peacefully ousted ex-Adjarian leader Aslan Abashidze.

Experts say Adjara, with its cash-rich Sarpi customs at Turkish border, Batumi port and oil terminal, is Georgia’s economically strategic region.

Georgia’s GDP growth in 2004 is set at 6% compared with the 5% achieved in 2003. “But I assure you that it will further increase after the Adjarian success,” Irakli Rekhviashvili, Georgian Economy Minister says.

Decade-long tax row between Tbilisi and Batumi is put to an end as well. Abashidze’s regime refused to transfer taxes to the central budget, causing permanent disputes with Georgia’s central government.

Officials find it difficult to calculate exactly how much the central budget lacked as a result of Adjara’s refusal to transfer taxes.

“During Abashidze’s regime the economic environment was absolutely non-transparent,” Natia Turnava, the Deputy Economy Minister, told Civil Georgia.

Georgian Financial Police, which is in charge of fighting economic and financial crimes, already probes the Adjarian Tax Departments.  

Lado Papava, deputy chairman of the parliamentary committee for budget and finances and former Economy Minister says that indirect effect of Adjara’s return to Tbilisi’s fold would be much higher than taxes transferred from the region.

“The direct economic impact will be around 70 million Lari for the budget. But indirect impact is even more important, since the trust towards the country will increase that would lead to increase of foreign investments,” Lado Papava told Civil Georgia.

Deputy Minister of Economy Natia Turnava says that it was very hard to invest in Adjara, since Abashidze’s family and persons closely linked to his family had a tight control over each business in the region.

“It was absolutely impossible to invest or launch a business without paying shares to Abashidze’s clan,” she said.

Prime Minister Zurab Zhvania instructed Economy Ministry to assess investment and economy potential of the region.

“We should prepare investment climate in the region, as well as be ready for privatization process in Adjara,” Zurab Zhvania told cabinet members on May 7.

Meanwhile, government intends to enrich Adjarian coffers with sale of Abashidze’s assets. “Abashidze’s assets will be returned to the Adjarians,” President Saakashvili told reporters on May 8.

Ex-ruler of Adjara was notorious for the riches of his family that were collected, due to unilateral control over the economy of the lucrative seaside resorts, a port of Batumi and the border with Turkey.

“Assets owned by Abashidze’s family, including luxurious cars will be sold at auction,” General Prosecutor of Georgia Irakli Okruashvili said on May 7.