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Georgia Rebuilds: After the August Conflict with Russia, Political and Economic Challenges Remain
Wednesday, November 19, 2008

By Shelly Han, Winsome Packer, and Kyle Parker

From October 14-18, Commission staff traveled to Georgia to assess recovery efforts following the conflict with Russia in early August. Through a series of meetings with Georgian officials, the Organization for Security and Cooperation in Europe, the European Union, the U.S. embassy, as well as private companies, Georgian citizens, human rights groups, local and foreign analysts, and non-governmental organizations, the staff learned that tremendous progress has been made in restoring critical infrastructure and returning many internally displaced persons to their homes. However, the political and economic situation in Georgia remains fragile.

While the origins of the conflict that began on August 7 are still being debated, what is clear is the tremendous cost politically, economically and socially to Georgia. Human Rights Watch, one of the few NGOs that gained access to South Ossetia immediately after the conflict, estimates that 95 percent of Georgian villages in South Ossetia were razed, and an untold number of houses have been looted and burned. South Ossetians told HRW that the burning of houses was deliberate in order to prevent the return of Georgians. HRW estimates that most of the damage was done by South Ossetian irregulars or foreign “volunteers” - not Russian troops. Russian troops had effective control of the territory but chose not to enforce law and order, making them complicit in these crimes.

HRW was not able to corroborate any of the Russian allegations of Georgian atrocities inside South Ossetia, though it has accused Tbilisi of using cluster bombs. HRW has documented instances of excessive use of force by Georgian troops, but is still sorting out the facts surrounding these actions.

International Monitoring Efforts Lack Access, Coordination

Both the OSCE and the European Union have deployed monitors to Georgia, but have not been granted access to South Ossetia. Representatives of the EU Monitoring Mission to Georgia told Helsinki Commission staff that the monitors were unarmed and not there to provide security. Rather, their stated mission was to observe Georgian and Russian compliance with the August 12 and September 8 peace agreements between Russia and Georgia.

There also seemed to be little effort to coordinate the two observation missions. Both the EU and OSCE representatives downplayed questions about a lack of coordination (as reported in Vienna by the OSCE Head of Mission in Georgia). They said that it was a matter of time and process dictating how they proceeded.

Economic Cost of Conflict

The economic consequences of the conflict for Georgia have been staggering. One of the keys to recovery will be boosting consumer confidence, and also reassuring investors that Georgia is a safe and stable market. Almost 24 percent of Georgia’s GDP comes from foreign direct investment (Kazakhstan and Azerbaijan are significant investors) and there are signs that FDI may decrease following the conflict. Out of a pledged $1 billion in aid, the United States is providing $250 million in direct budget support to the Georgian government to help repair infrastructure and build houses for IDPs. Other donors have agreed to provide a further $3.5 billion in aid which, if distributed properly, will help Georgia weather the crisis.

Commission staff visited the Black Sea port of Poti. Georgia’s main transit point for imports and exports, the port was bombed during the conflict, resulting in the death of 5 workers and an estimated US$10 million in damages. But by mid-October, commerce was almost back to normal. Georgia’s Coast Guard offices, which had been substantially damaged, were almost completely repaired. The Navy and the Coast Guard lost eight ships during the conflict, but their newer ships were evacuated to the southern port of Batumi and escaped with only minor damage.

One of the hardest hit regions was the area surrounding the city of Gori, Georgia’s “breadbasket,” where up to 60 percent of the agriculture was destroyed. The U.S. Agency for International Development is spearheading a wheat seed program to help farmers plant the next crop. Irrigation is also a significant issue, since much of the water was coming from South Ossetia and irrigation canals were damaged. Alternative irrigation sources were being quickly developed to help farmers continue supplying the market.

The OSCE, which was implementing extensive economic development projects in South Ossetia, has been forced to cease all programs in that region. Other micro-enterprise development programs, such as trout farms and beekeeping located in the buffer zones around South Ossetia, have been quickly re-started.

Another issue that could become a flash-point in the future is the Inguri Dam, a hydroelectric facility that supplies half of Georgia’s electricity needs. The dam itself is on territory that the Georgian government controls, but the facility that provides the electricity is on territory controlled by Abkhaz separatists and their Russian allies. They could theoretically turn off the electricity for many Georgians, but Georgian authorities could counter by shutting down the dam, thus denying the Abkhaz the ability to generate electricity.

Cost of Conflict is High for those Displaced from their Homes

The situation for internally displaced persons in Georgia is critical. On October 9 Commission staff visited an IDP camp in Gori that was slated to be dismantled later that day. Most of the residents were being returned to their homes in the “buffer zone” adjacent to the South Ossetian border that up until the day prior had been controlled by Russian forces. As the Russians withdrew, the Georgian government was working quickly to return the IDPs to their homes. In fact, international aid agencies believed Tbilisi was moving a bit too quickly, as safety concerns remained – specifically, unexploded ordinance in the buffer zone and reports of possible sabotage. Nevertheless, the IDPs were packing up their meager belongings and preparing to leave. Those who couldn’t do so - those from South Ossetia and Akhalgori - were going to be sent to centers in the Tbilisi area.

A number of aid agencies are providing assistance with food and other daily needs. One group, CHF International, provides assistance to IDPs that are living with relatives. These host families - many of whom were barely making ends meet - are stretched to the breaking point. CHF International provides fuel, extra bedding, food, or other aid that a household might need to support extra family members for an extended period of time.

The Georgian government has also launched a massive construction effort to build thousands of houses for the “new” IDPs. While this effort was praised by many, it could become a source of discontent among those displaced in previous conflicts and still living in substandard conditions.

Georgia Faces a Difficult Road Ahead

The effectiveness of international monitoring as a deterrent to future military conflict in Georgia is uncertain. It is clear from discussions with analysts that disagreements on the delineation of the South Ossetian “border,” particularly around the city of Akhalgori, will continue to be a point of contention. As more information becomes available on what actually happened in the lead-up to the conflict in early August, it also raises questions about the effectiveness of these missions as a deterrent. Independent reports suggest that there were nearly 100,000 Russian troops in the vicinity of South Ossetia immediately preceding the fighting and it is now clear that there was a serious breakdown of early warning mechanisms that were designed to prevent this type of conflict scenario.

The exact role of the monitors and their geographical range is in dispute. Russian officials continue to argue at the OSCE and other fora that the monitors are there to ensure stability and security. At the same time Russian officials are charging that the EU monitors are failing to maintain adequate security in the areas bordering South Ossetia and Abkhazia and that Georgian military and police forces are engaged in provocations and attacks against South Ossetians and Russian personnel inside South Ossetia. Ironically, the OSCE and EU Missions reported that their monitors still did not have access to South Ossetia, Abkhazia, and the Akhalgori district (now administered by Russian and South Ossetian forces). This raises concerns about Russia’s intent in denying monitors access to the regions now under their control, while demanding that the monitors ensure security in these areas.

Russo-Georgian relations, which have been tense for years, have reached a nadir in the wake of Russia’s invasion of Georgia and subsequent recognition of South Ossetia and Abkhazia. Russian Foreign Minister Lavrov made no attempt to conceal from U.S. Secretary of State Rice that getting rid of Georgian President Mikhail Saakashvili was a key Moscow aim. As of this writing, however, he remains in office, despite Moscow’s efforts to unseat him and attempts by opposition forces to call him to account. He has so far weathered the political consequences of presiding over a stunning military defeat, the loss of South Ossetia and Abkhazia, and having to deal with thousands more displaced people.

Responding to pressure from inside and outside the country, Saakashvili has pledged to introduce serious reforms, which would help promote stability within Georgia. How Tbilisi can reestablish normal relations with Moscow is harder to divine.

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