The President of Georgia Mikheil Saakashvili met with representatives of small and medium businesses.
It is a great honor for me to meet with the most important business representatives. The people, who represent various circles of our business friendship.
I would like to inform you about the changes in the government. I would like to hear your questions and opinions regarding our current economic condition.
I would like to inform you the reason behind the recent relocations in the Georgian government.
Georgia, along with other countries, is under a huge risk zone.
I saw what the world crisis embodies for the economies of different countries.
Entire bank system collapsed in Latvia.
Latvia is a part of the European Union, with economy stronger than ours.
There are catastrophic problems in Czech Republic. I went to our neighboring country, Azerbaijan, which has a lot of money, but almost 100% of construction is stopped.
We were recently in Qatar, where income per capita is 40 times more than it is Georgia.
Incoming investments and entire state financial activities are halted throughout other countries. The world is under the condition of economic turmoil.
Car sales decreased twice more in the United States than in Georgia.
Georgia and the entire world are in the most difficult economic situation.
There are debates in the United States regarding unbinding their auto-industry.
It was stated on television that because of the war, tourism decreased in Georgia.
Tourism in the world has decreased by 3 times. Our small ship is entering a storm which would even sink big ships.
After the war with Georgia, Russia is already in this storm.
80% of stocks collapsed in Russia. 13% of economy is income debt. Therefore relocations have to take place in our ship. We have to secure the sail, repair the engine, and grease up everything in order for our ship to be more durable in storm conditions and avoid fate of Titanic.
I consider Russian economy to be in the condition of Titanic. Oil price is between 35-40 dollars. Income debt is enormous. "Gasprom" stopped providing meals for Russian kindergartens. Social advantages are no longer available in schools neither for teachers nor for students.
They were counting on increasing oil prices. Russia has practically nothing else to export.
What should Georgia do in these conditions?
First of all Georgia should survive as a State.
In 1990s, we had two major crises. One, after the war of 1992-93, which was followed by the collapse of the financial sector, which was connected to catastrophic politics of the national bank. This was then followed by the destruction of national currency, derangement of main state principles, destruction of economy and energetics. This is the first model of economic crisis.
What took place in Russia, in 1998 is the second model of the economic crisis. Russian economy collapsed.
This was followed by the collapse of Georgian bank sector, which caused a several year delay in economy.
Despite the fact that Georgian economy seemed to have increased in 2002-2003, the State was unable to give out salaries and pensions; there was a debt.
Because of corruption and internal disorder, government was not able to cope with elementary missions.
What is our mission today?
Our mission is to make sure the electricity sector does not collapse before winter.
Within the last 4 years, we invested 250 million dollars in electricity sector. In this sector, we will not have a problem. Georgia will not be dark this winter. This means, that we will be able to provide our industries and our families with electricity, on the terms that we have a five year contract with Azerbaijan, our hydroelectric stations are repaired, we have electric power protection contract with Armenia, Turkey, Azerbaijan, Russia, though Russia needs us more; this way we will be able to provide the territory of Georgia with electricity.
Second issue refers to salaries and pensions. Even in war conditions, when the country was split in two, when parts of income and profits did not come in the country, we did not stop giving out salaries and pensions.
Another macroeconomic complication is not expected if the new budget is balanced out correctly.
We stand firm.
We will not have the same problem as Russia and majority of Eastern Europe-collapse of financial sector.
All this needs new energy and new governmental group.
We invited those people who know European experience well. This was the biggest and timely replacement of the government; in order for Georgian government to meet the crisis with action plan and vision.
After the war, we received unprecedented aid from international friendship-four and a half million dollars from an international currency fund.
On top of this, we received 750 million dollars, which kept our economy from collapsing.
Georgian budget did not come undone because United States gave us 250 million dollars. Next is opening up credit lines again.
Major problem for business today is inaccessible credit.
From European institutions we now receive more than 200 million. We are saving up to 400 million dollars, in order to resurrect the banking sector in year 2009. We are working with the construction sector.
Today, people buy older apartments more than the ones under construction, because they do not believe that the new apartments will actually be built.
We need to bring back the faith in developers and construction companies.
Within this aid limit, in the nearest 2-3 years, we will give more than billion to construction firms, in order for the apartments to be built for the victims; the government will encourage the construction sector within the limits of the aid.
We decided to take steps towards financing the work places. Government apparatus expenses should decrease.
Ministries should tighten their expenses.
We need to spend less. When there is a crisis, there is always a threat of deepening of corruption. There is almost no more corruption in Georgia, and that is our main accomplishment.
Our goal is to make Georgia whole again. Russia simply crossed everything out, shook entire world architecture and said, ‘I am ready to be a conqueror such as the Soviet Union of Stalin, ready to be careless, invade another country and say that I am conquering.' There are two answers for this: one, we need to get used to it because Russia is strong, in this case, Russia will completely take over and devour you. Second-none of the conquerors in the world have gotten away with what they did. All this is going to be short lived. No one, except for Russia has acknowledged this conquest.
Look at the statements Obama made, and the statements Rice made today.
They said that Russia did not win the war. In Georgia, we have great number of opposition members saying that Georgia lost the war and the United States Secretary of State is saying that Russia lost the war. How is this compatible? Are we really are own enemies?
Georgia has not lost the war as long as we are still alive, as long as the State of Georgia is alive, as long as the Georgian flag flies over this building, as long as the entire world is on our side, and Russia is kept isolated on this issue.
The solution to this issue is not in airplanes and tanks, but in rescuing and ensuring the success of Georgia's economy.
Economic crisis of the world will last for a year and a half. Next 6 months will be difficult. I am expecting us to restructure, since we have small economy we can shift around easily.
America will emerge from this crisis first, then Europe, few regions. Some large countries might not be able to withstand this crisis.
Russia will be first. Why? Because Russia's economy is based on corruption and high price of energy...
For Georgia, the solution to all the problems and the issue of territorial integrity lies in modernization and in developing into a modern European country.
When Europe comes out of this crisis, Georgia will also manage to do so.
We decreased income tax to 20 %, we are returning 250 million laris to business, we are restructuring developers, and simplifying tax code.
I was in Signagi, and I understand what it means to see how economy is connected to each other.
We decided, along with some of you to flourish Signagi, Kutaisi and Batumi.
In Signagi lives Ms Tsira, who was saying she did not want to die without seeing the President of Georgia. I decided to see her, good thing she was healthy, as she was sitting in Signagi without electricity or heat, and her pension was 13 laris.
Soon her street was lit up and became a main tourist attraction. Tens of thousands of tourists go there. She remembered she knew how to knit stockings.
She knit stockings and started to have income. This woman started to live; she even ended up on internet as she told me.
I full well understand what economic crisis means for this woman, in reality this means cutting off all her life resources. This is a big tragedy.
In fact, this means to push someone that has just gotten out of hardship back into it. So our main principle is for this people to never again end up in hardship.
Without a doubt there will be difficulties, but we need to make sure they can maintain certain level of life quality.
I understand how important Rustavi nitrogen is and putting metallurgic factory to work. This year we were supposed to exploit new "marten" ovens, which in 1992 stopped working. This issue today is under question mark.
Ferroalloy factory of Zestaponi is barely surviving since sales' indicators dropped by 70-80%. We need to overcome this problems since on this depend incomes of tens of thousands of our specialists, engineers, workers and families.
If we do not overcome this situation, Georgia will not develop into a modern country. We will lose the entire specialists' population, and it will take 40-50 years to raise the new generation.
The State exists in order to overcome all the difficulties together; government needs to work along with its people and serve them day and night in order to minimize losses during this crisis. We need to finance public work.
First six months will be most difficult, and in June-July billions of dollars will come into Georgia, with which we will build roads, new houses, health and power units.
We have serious projects for building new and big hydropower stations.
Yesterday, we opened up a new small hotel in Signagi, which only has 12 rooms, but 35 people are employed.
In Tbilisi 100 million dollars are being invested for building new district similar to the old one on the other side of river Mtkvari, and this is taking place while construction in the whole world has stopped.
This is the result of the war, that within the last four years we have been implementing reforms and have been obtaining results in order to achieve peace.
Two years ago, Russia tried to establish embargo, but when their desired result could not be reached, they implemented military intervention.
We have two answers for this.
First-we can say ‘no' to our territorial integirty and future of our children, we can give up and get used to everything being awful. Second-we can endure the hardship, because it will be impossible for them to reach their goal if we stand united, have faith in future, and work all together to save our country.
We can do everything.
We will overcome economic difficulties, create modern economy, and within the next 10 years we will turn Georgia into modern European country and with our development outrun some countries of European Union which right now are ahead of us.
We will soon sign a contract of free trade with United States and Europe; therefore we have to learn to work.
We regret losing our wine market in Russia.
At peak of our relationship with Russia, we sold 32 million bottle of Georgian wine.
Russian wine market is made up of 240 million dollars, American wine market, 2,5 billion dollars.
In one year, in the United States, we tripled wine sales indicators and sold approximately 2 million bottles; when we should sell minimum 10 million bottles within the next two years.
The people of the United States know where Georgia is. Our country is well-known and we need to support this with our wine, agriculture and high-technology products.
In the condition of free trade, it is easy to attract investments in high-technology and industry.
This is difficult today, since investors in the entire world have faded away.
Few years ago, along with Giorgi Arveladze and short time ago along with Ekaterine Sharashidze we brought serious investors from United Arab Emirates.
A while ago, when in Qatar, I saw that their investments were foreseen for the time period when oil price will reach 72 dollars.
Today, oil price is 38 dollars, in this conditions even these countries cannot invest money. Though this is a temporary condition and they will invest in countries, which they will consider most attractive.
Despite this hardship, a share of Poti port, in addition we sold few percents from where we get 65 million dollars. This is not only the money that came into the State, but an additional guarantee that this money will be used to create new job positions. We need this to ensure that additional 20-30 thousand people will be employed.
I also want to mention that these 65 million dollars will not be used for various small programs, but for creating jobs.
We need to determine and see in which area can be most jobs created for million dollars.
If this amount creates 50 jobs in one sector and 250 in another, we need to lean towards the second one. At this point, this is our main mission.
Our State is not rich-we do not have oil or gas funds, but everything that we do have, should be used for creating jobs. I am absolutely sure about this.
Before the situation gets better, it might get worse.
Catastrophe is not to be expected as we have acted correctly within the last few years.
What took place in the world could not have even been predicted by Nobel Prize-winners, but things will improve.
Our true success will be when Georgia will come out of the created situation, having incurred fewer losses compared to other countries. Then you will be able to see the amount of money that will be invested Georgia. This is our main test.
We will not be left without electricity or food and there will not be a catastrophe.
We will have to overcome difficulties, and if we do so, Georgia will be a wealthy and a successful country.
This is what I wanted to say today.
Mr. President, you evaluated the situation accurately as what to be expected in the conditions of economic crisis. I believe after this speech, government will have more specific plans for helping construction businesses. The problem is that we might encounter difficulties in starting new projects and gaining people's trust. It is interesting who we are going to have to deal with in this case.
At this time, the Minister of Economic Development is Lasha Zhvania. I have faith in his knowledge and experience. He has really worked a lot on these issues, and I would like to ask him to set up a meeting, and go over them with you. Afterwards we can discuss the above mentioned issues with the Prime Minister.
I would like to tell you good news. Five months ago, for the first time in European Parliament, Georgia was awarded for the innovative idea-invention. I am one of the authors of this invention. There is a lot of work put in this and it is progressing.
Now as far as my question, if we listen to the rumor spread in the society, in the spring premature elections will take place....
I think, one of the things we created within the last five years is Georgian State. There is a big difference between the State and a banana republic. I would like to remind you that in year 2008 we had three elections - Presidential, Parliament, and regional-Ajara elections, (we can count the fourth, that of deputy elections). In 2009, in approximately 10 regions, elections will be held for those deputies. This number might even increase. In 2010 we will have local elections where we will elect mayors of Tbilisi, Batumi, Kutaisi and of all those cities that are controlled by us.
Without a doubt, the government should always communicate with people, have an open dialogue with the members of opposition, and have television debates. Short while ago I was giving a 5 hour report to Parliament commission that studied the events of August war. Similar things do not take place in many countries. Government should always enter into debates, be accountable, and exchange opinions with opposition members and public. I would like to repeat that there is a big difference between the State and banana republic. If we want our country to be disregarded, we should hold elections 2-3 times a year. If we hold elections based on politicians that are unsatisfied with the results, we will no longer have a State. This will be a suicidal act towards the State. I believe that our people will not agree on this suicide because they are very developed and wise. They proved this during the war.
What do elections mean during the crisis?
When holding elections, money is spent not for people but for political powers. It is spending of tens and hundreds of million laris for political campaigns so that politicians can come to Parliament, as President, and etc. I also was a presidential candidate and I know that this campaign costs a lot. So I would like for the money to be more effectively spent on our people and for developing programs. We need to choose which road to take. During the economic crisis, Ukraine postponed their elections. My friends Victor Yushchenko and Yulia Timoshchenko were each others enemies, but they were constrained to get a long and refuse appointed elections, because during the crisis, a country ten times bigger than us cannot spare money for elections. In this condition, when everyone refrains from such actions, if nothing else, it would not be right to spend money not on our people and on saving and developing Georgia, but on politicians and their campaigns. This is for each one of us to choose.
I sympathize with those politicians who could not get into Parliament-they want to reach their goal, but let us ask ourselves, what a rational solution is. I think a government that is in dialogue with people, opposition members, business representatives and every small group.
The solution is creating the mood in the society for avoiding cataclysms, we should be rational, and find the most acceptable way.
All other paths will lead us to dead ends and will make us do what one of my "friends" was telling a population of 140 million: Georgia will derange on its own and collapse.
We need to choose and decide which path to take.
We know well how to justly win the elections, but this not an issue of elections and personal ego. This refers to an issue that is much more important-will this State be created and will Georgia be a successful country. At this point, success means saving of Georgia and coming out of this crisis with minimal losses. You understand how frequent elections badly affect business. You know what it means for money to be spent on politicians and not on people and economics.
During the world crisis, every country has financial problems. Assistance is very important, but what perspective do we have for next year, does the government have specific plans on how to attract investors?
I would like to thank you for this question. There are several specific recipes for financial aid. This is peace and stability. In 2008 we lost two periods, 3 months on Presidential elections, and 2 months for Parliament elections. This period is considered lost, since at that time no investments came in. Then Russia attacked us and the war started. We need to maintain stability, rationally liberalize economics and in the condition of aid, show everyone that modern infrastructure is being created.
Georgia will have highways, high voltage electric transmitting lines, gasification, air and railway communications. To sum it up, Georgia will be an attractive country for investors. If the country overcomes current difficulties, 5-6 times more investments will come in. I think there will be difficulties as far as investments within the next few months. But I would like to mention that investments are still taking place. Investments are taking place in real estate, Poti port. With the help of investments, we are building new airport in Poti, the money is also being invested for building new trade centers. For example, Hotel Kempinski which is being built in Tbilisi was supposed to be a 5-star, but is going to be a 7-star hotel. Construction of Radisson is almost done; they are soon going to sign a contract for building Hilton in Batumi and next year we will have a big hotel of this chain. So despite of everything, investments are still coming in to Georgia.
This period will be difficult and we will not have 2-3 billion dollar investments like last year and year before, but few million dollar investments will still be realized.
If we overcome this period, by 2009-10 5-6 times more investments will come into Georgia than some Black Sea countries that are part of the European Union. I am absolutely sure about this. This is our mission-to develop a closer contact with European Union and to develop as a competent country between at least the Eastern and Central countries of the European Union. We did not repeat the mistakes made by Baltic, Black Sea, and some of the Central European countries and we do not have the level of corruption nearly as high as in those countries.
of the President of Georgia