The FINANCIAL — It is time for the Georgian Government to move from verbal statements to concrete action, said the Ambassador of Kazakhstan to Georgia. There are some investment risks and losses being experienced by Kazakh businessmen in Georgia, accordingly the Ambassador suggests that the Georgian Government provide a 100% guarantee of private business protection.
“There was a private company called Aksai that invested USD 5 million in searching for oil but due to the decision of the Georgian Government, had its license revoked in the summer of 2013. The company sued the Georgian Government, and have appealed to a UK court. This is one example. In the business community such news spreads very fast. As a result, other representatives of Kazakh SME business have become cautious. You can revoke a license with one decision but at the same time you should be prepared for the fact that the FDI will be stopped. You should know that you will then have to pay for everything yourself,” Ermuhamet Ertisbaev, Ambassador of the Republic of Kazakhstan to Georgia, told The FINANCIAL.
“There should be a 100% guarantee of protection of private investments. And if due to various reasons a license has been revoked then the loss should be compensated. A private company invested USD 5 million and created 80 job places. It was beneficial for the Georgian economy. A total of 80 Georgian families could receive income for a period of 2-3 years. It was really valuable. Investment is life. So, from this viewpoint, that is what the Georgian Government should work on, to really improve the investment climate,” said Ertisbaev.
Despite the governmental crisis that took place in Georgia a month ago, Ertisbaev says that there is political stability in the country. “I start my every day by having contact with ordinary people. In this way I try to get information regarding their attitude towards the Government. I am anxiously seeing that there are many critical attitudes out there. The expectations of people are much higher. There should therefore be a strong focus on the final results of economic reforms,” said Ertisbaev.
“We have 110 billion in the country’s National Fund. We really can afford to issue investments for the development of a gas distribution pipeline of KazTransGas. The opportunities of Kazakhstan are huge and should be used well. At present I do not see any aligned and effective cooperation,” Ertisbaev said.
Bilateral economic relations between Kazakhstan and Georgia used to be very active under the previous Georgian Government. Kazakhstan’s total OFDI to Georgia exceeded USD 2 billion in 2008, making it one of the largest sources of foreign investment in the country. The investments in Georgia were mostly in banking, construction, energy and tourism. For example, Kazakhstan has invested in several Tbilisi hotels, including the Radisson; built and upgraded energy export facilities (the oil terminal in Batumi), grain terminals, and other infrastructure. Other investments included tourism development in Georgia’s Adjara region and KazTransGas-Tbilisi.
However, earlier in 2009, a special manager was appointed to KazTransGas-Tbilisi, under the decision of a court in the Georgian city of Kutaisi on the initiative of the Georgian Oil and Gas Corporation. The measure was taken due to KazTransGas-Tbilisi’s GEL 80 million debt (about USD 48 million). Since then, the news regarding the return of KazTransGas to Kazakh management was announced first in June 2013, by Kakha Kaladze, Minister of Energy of Georgia. Subsequently, another promise regarding the return of the company under Kazakh management was delivered by Kaladze in November 2014.
“It is currently time to return the company to Kazakh management. I am optimistic that the issue of KazTransGas will be resolved soon. Kazakhstan’s PM offered Gharibashvili the chance to turn the page and start afresh. We asked them to supply us with concrete projects for investment. The project should be very precise and rentable. There should be no risks. Upon meeting these demands, then investors will invest,” said Ertisbaev.
Ertisbaev said that he is not in a position to comment on the task regarding Russian gas that might be imported in Georgia through the company. “Currently there is quite successful cooperation with Azerbaijan which provides gas at a very cheap price to Tbilisi. I am not aware of the pricelist of Kazakhs or Russians,” he said.
Q. What are the main distinguishing features between the governments of Saakashvili and Gharibashvili?
A. The approach during the administration of President Saakashvili was different. All the big projects were implemented during the previous government’s rule. However, the big losses were also raised during those years. Many Kazakhs talk about the reforms made since the Rose Revolution. The reforms were really important. They should not be ignored. When I studied the Georgian experience in more detail, I found that it was only possible under a dictatorship. Saakashvili was certainly not democratic; he was a dictator. He could not govern the country otherwise. He would fail to implement reforms if he were not a dictator. Of course he was not a classic dictator like Pinochet though. I heard about abuse of power from his subordinates, maybe Saakashvili was not aware of it at all. Meanwhile, there were many things done between the two countries in terms of bilateral relations during that time. Decisions made at that time were very prompt. For example, our two presidents pledged a stone, stating that upon it would be built the hotel Radisson – and there it stands now. There are many such examples. Saakashvili was eager to transform the country rapidly. He was lacking the resources though, as Georgia does not have many natural resources, so illegal methods were used to fill this gap. And the work was moving forwards. What is going on now is that we only hear statements, but do not see any precise actions.
Q. Do you think that Georgia’s decision to switch to a semi-presidential system was premature?
A. Kazakh society is conservative and patriarchal. Men are the heads of families, states, regions and everything. And Georgia’s society is even more patriarchal than Kazakhstan’s. This is a country where females are working more than males. So, from this point of view, during its period of transformation, a presidential republic would be more effective in Georgia. For Georgia the question is not whether it should be a parliamentary or presidential republic. The unity of the country’s political elite and its people is more important for Georgia. Due to your geopolitical location Georgia is facing many challenges. So, unity is very important. The main factor that caused the success of Kazakhstan in 23 years was because of the unity of the people. Currently Georgia has switched to a system of government to which Kazakhstan will move after three generations. We are also eager to increase the power of parliament but we will do it step by step.
Q. Where do you see Georgia’s place in view of the strained situation in the region?
A. Considering the Ukrainian crisis, Georgia should find a model that will help it to work actively in two directions during the next ten years: a general strategic direction towards the EU, and at the same time probing the opportunities of the Eurasian Customs Union. Georgia should accurately study what it can earn on the Belarus, Kazakhstani and Russian markets. You should not only focus on wine and certain other food products. In a free capital market the most important thing is brain power. A month ago a rector of Kazakh-British University visited Georgia, offering scholarships to six students. He came to Georgia to find the six best minds to take to Kazakhstan. Ultimately we will earn much more in this way rather than by selling tons of wheat or oil. Such brains will stay in Kazakhstan and continue to work to our country’s benefit. If we consider the U.S. company Apple, its capitalization is much more than the capitalization of all Russian companies, including Gazprom.
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