US Aid Cut: a Political Blow to the Government

The U.S. decision to further cut the financial aid delivered yet another blow to the Georgian authorities on the eve of the November 2 parliamentary elections. Observers suggest Georgian government’s poor performance and shifts in its foreign policy are to blame.

Thomas Adams, Acting Coordinator of the U.S. Assistance to Europe and Eurasia at the U.S. State Department, stated after the meeting with Georgian President Eduard Shevardnadze on September 24 that his government has decided to reduce financial assistance as the reforms in Georgia have slowed down.

He said that of the 27 countries that receive aid from his office, Georgia is near the bottom of the list.

“Georgia’s neighbors are implementing their economic programs more vigorously. We call on the Georgian government to step up its fight against corruption,” he added.

The aid will mainly be reduced for the rehabilitation of the power plants and other energy facilities in Georgia. However Thomas Adams said that the USA would continue to fund the USAID program, which covers the electricity costs for the socially vulnerable groups.

Georgia has been a second largest recipient of the U.S. financial assistance, second only to Israel, for many years. According to the U.S. embassy in Tbilisi, Georgia received up to USD 700 million in assistance since 1992, plus USD 376 million USAID assistance since 1996.

The U.S. official assistance to Georgia reached its peak in 2000, when Georgia received USD 108,4 million. Since then amount of the assistance has been decreasing year after year and consisted USD 83,8 million in 2003.

According to Thomas Adams exact amount of the assistance cut is to be determined early in 2004 as a group from the State Department again visits Georgia to evaluate the progress of the reforms.

President Shevardnadze in his radiobroadcast on September 29 said that Georgia will meet its commitments and hasten reforms.

“We have problems and we admit that Georgia failed to meet some of its commitments, due to our tolerance to those who did not pay their dues. But this problem will be solved and our tax recovery indications will improve. The reforms will be implemented as well,” Eduard Shevardnadze said.

He said that cooperation with the U.S. will continue in the future. 

Observers say that the U.S. decision to cut aid “is quite logical as Washington is disappointed with Georgia.”

Ghia Nodia of the Caucasus Institute for Peace, Democracy, and Development (CIPDD) who has recently visited the United States together with other Georgian civil activists, says the United States administration is disappointed and rather tired of Georgian government’s inability to solve even the most basic problems.

“Georgians are incapable of doing something good with the internal policy and still ask for assistance from their foreign partners. Therefore Georgia’s reputation is constantly decreasing,” Nodia told Civil Georgia.

Observers also suggest that that the entry of the Russian energy giants Gazprom and Unified Energy Systems of Russia to the Georgian energy market revealed shifts in the Georgia’s foreign policy unfavorable to the U.S. administration.

“Shevardnadze sees that recently the United States does not provide the unconditional support to him and is inclined to support the opposition. He [Shevardnadze] uses this kind of ‘blackmailing.’ If you do not support me, I might change my foreign policy – this is his message,” Gia Nodia says.

Experts expect that official Washington would finalize its policy towards Georgia after November 2 elections, the conduct and outcomes of which may significantly affect country’s prestige and policies.