The FINANCIAL -- “The political, economic and military support of the United States to
Georgia has been and will remain crucial for Georgia. The same holds
true for European engagement,” Ortwin Hennig, German Ambassador to
Georgia, told The FINANCIAL. He said that it is in the interest of Georgia that the United States and Europe continue to join forces and remain committed to this part of the world also in the years to come.
Hennig said that restoring relations with Russia will not be easily accomplished. But he thinks that such a policy is worth a try. “If and when the country has come to some sort of modus vivendi with Russia it might even facilitate Georgia’s course towards integration with the Euro Atlantic structures. Georgia’s western orientation will then no longer be accompanied by a fierce anti-Russian stance,” Hennig told The FINANCIAL.
According to the Ambassador, FDI from Germany grew by nearly 100% to USD 25.5 million in 2011. “Preliminary figures of investments in 2012 so far show that this can be achieved again. However the level of investor confidence in the Georgian economy that existed before the war still needs to be restored,” Hennig said.
Q. During the opening ceremony of Heidelberg Cement’s Supsa terminal you said that World Bank and international organizations positively rate the Georgian economy because of the low taxes and lack of corruption. But after the victory of Georgian Dream we heard numerous complaints from businessmen regarding prior pressure on business, tax problems and monopolies on the market. Is there a real difference in your view?
A. The business environment in Georgia remains a positive one: the general business environment is good, trade and investment, whether foreign or domestic, are stimulated and encouraged. The tax system is simple with low levels of taxes. It is thus very investor friendly; and the former government’s fight against corruption was successful.
Although it was known that the tax authorities were sometimes too rigid in the execution of their duties, and that monopolies - or to be accurate - oligopolies - had such an overriding influence on so many sectors of the economy, these factors did not change the overall image of Georgia as a place where doing business is easy, especially in comparison to other countries in the region. Nor did they obstruct the activities of German companies here.
This assessment is underlined by the fact that Georgia - according to Forbes Magazine, showed similar results to last year in the ranking of the Best Countries for Business. Georgia is ranked 50th among 141 countries. This is the best placement in the region.
Q. What is the role of German investments in the Georgian economy?
A. The role of German investments in the Georgian economy is quite an important one, materially and immaterially. German investors usually do not go for the quick Euro or dollar; they usually reinvest their profits in this country, thus creating jobs and increasing income, which in turn reduces the level of poverty and contributes to sustainable economic growth.
German investors not only provide Georgia with investment - since 2004 these investments amount to more than USD 300 million. Our investors, next to providing jobs, as I mentioned, bring along still-lacking technology and know-how. On top of that, companies train their Georgian staff, often in Germany, so that they have the skills required in a modern economy.
Q. Will Germany increase the volume of investments in Georgia?
A. The volume of investment depends solely on the decisions of individual German companies. The Government learns about investments only after the fact.
When we look at the figures of last year, 2011, we indeed see promising ones. FDI from Germany grew by nearly 100% to USD 25.5 million. Preliminary figures of investments in 2012 so far show that this can be achieved again. However the level of investor confidence in the Georgian economy that existed before the war still needs to be restored. The recent shift in political power and the relatively smooth change of government presented to the outside world the picture of a Georgia well on its way towards further democratization and - very important from an investor’s perspective - to mending fences with all its neighbours. This gives a new opportunity to leave behind the shadows of the war and to attract more potential investors again.
Q. The German Embassy was actively involved in the peace negotiation process between Tbilisi and Sukhumi. What is the current role and views of the German Government concerning the future status of Abkhazia and South Ossetia?
A. My country is interested in transforming and solving conflicts worldwide peacefully. This is true also for the Southern Caucasus.
Due to our membership in NATO , the EU, EUMM, OSCE and the Council of Europe Germany participates in the efforts of the international community to transform conflicts in this part of the world. Germany is not a participant in the Geneva talks, but through the EU co-chair we pursue an active interest. As part of the EU, Germany fosters engagement, dialogue and confidence building between the conflicting parties. The efforts of the international community cannot, however, substitute for the political will of the parties themselves to arrive at a solution.
This is the time to build bridges, not deepen trenches, to put questions of status aside, and instead try to agree on the implementation of small practical steps of cooperation in the interest of the people. But as I said, you need the political will of all the parties concerned. Such processes also require time.
Our policy is firmly anchored in NATO and the EU. That means European and NATO policies reflect Germany’s policy line, both NATO and the EU have a clear and principled position, we stick to Georgia’s territorial integrity and the policy of non-recognition of Abkhazia and the Tskhinvali region.
Q. Russian is threatening many of its political and trade partners because of their position regarding Georgia’s possible membership in NATO . Russia said it will be opposing this process. Do you think that there are other ways for Georgia to secure its security and territorial integrity without joining NATO ?
A. Russia is pursuing its interests, and we are pursuing our interests. It is the art of diplomacy to work towards balancing diverging interests peacefully and finding mutually acceptable solutions, but for this to happen you need to talk to each other not about each other.
Q. Some European analytics and US experts recently wrote that Georgia’s motivation to join the EU might disappear due to the economic crisis within the EU. Do you think that Georgia might lose interest in EU integration?
A. Georgia’s European integration process is well underway. The new government has restated this as one of Georgia’s foreign policy priorities. We are hopeful about achieving results on an Association Agreement, including a Deep and Comprehensive Free Trade Agreement, and a Visa Liberalization Agreement by the time of the Eastern Partnership Summit in November next year in Vilnius.
These negotiations are important because they signal that Georgia is on the right track, politically and economically. It is a signal that attracts foreign investors; and it is a signal that testifies to the fact that Georgia continues her path towards approximation with Europe.
But full-fledged membership of Georgia in the European Union is for the time being not on the political agenda. The EU is going through a critical stage; it is trying to consolidate and stabilize the existing difficult situation. Therefore, to speak loudly about Georgia’s - or any other country’s - entry into the EU is not timely.
Therefore, I welcome the attempt to start up dialogue with your neighbour, without sidetracking the EU and NATO relationships. If properly managed, it can be beneficial for both. In dealing with Russia you need strategic patience.
Q. What are your expectations regarding further cooperation of Georgia and Germany?
A. Our bilateral relations have a long-standing tradition. Georgians and Germans have been reliable partners and friends for a long time. Germany continues to support Georgia in achieving her political goals, while Georgia has understood that Germany is an important partner and friend if it comes to achieving those goals.
Since the coming into power of the new government, I see a new dynamism returning in our mutual relations. This is a good basis to build upon. As the German Ambassador, I have two aims: my first is to attract as many German investors as possible into Georgia. Germany is the second largest bilateral donor to Georgia after the United States. The focus is on energy, environment, economic development and rule of law. It shows that we trust in Georgia’s economic potential and development.
My second aim is to preserve the position of the German language in this country, which has a long-standing and good tradition. For Georgia’s place in the world and for young Georgians to get into leading international positions the knowledge of another foreign language next to English is of the essence. In this regard I am hopeful we can also find a new and better suited location for the young German International School Tbilisi with the help of the Georgian authorities.