Surprisingly large financial aid package pledged to Georgia
23rd October 2008, 0 comments
Brussels -- Georgia was pledged an unexpectedly generous amount of 4.5 billion dollars by some 40 countries and 15 international organizations attending a donors' conference in Brussels on Wednesday.
The amount, which is to be paid over a three year period, is to help Georgia recover from its 5-day war with Russia.
The total amount far exceeded the 3.2 billion dollars that the World Bank had estimated Georgia would need to rebuild its infrastructure, settle its refugees and get its economy back on track.
"We are deeply moved and humbled by the demonstration of solidarity and support that we have received," said Georgian Prime Minister Lado Gurgenidze, noting that the pledges were being made as governments around the world were struggling to contain the effects of a global financial crisis.
The Georgian leader also moved to reassure foreign taxpayers that the aid would not be misspent.
"Every single, euro, dollar and pound will make Georgia stronger, more prosperous, freer, more democratic and more genuinely and thoroughly European,” said Gurgenidze. “(It) will alleviate, to a significant degree, the human suffering that has resulted in the aftermath of the Aug. 7 conflict."
"This is a day of joy," said EU External Affairs Commissioner Benita Ferrero-Waldner, who jointly hosted the conference with the World Bank.
This year's growth projections for Georgia's economy have been cut from 9 percent to 3.5 percent. This is as a result of the August conflict, which produced 127,000 new internally displaced people in and around the separatist enclaves of South Ossetia and Abkhazia.
At the start of the conference, European Commission President Jose Manuel Barroso said European countries had "a moral imperative" to help their neighbors in need.
However, experts say other considerations also play a key role.
Presently, two pipelines carrying oil and gas from the Caspian region to Turkey cross Georgia. In an effort to reduce its energy dependency on Russia, the EU is working on extending the Baku-Erzurum pipeline with a planned Nabucco pipeline that will eventually deliver gas Austria.
Furthermore, the EU seeks to bring Georgia closer to Europe by providing visa facilities to its citizens and arranging a free-trade deal with the government.
Notably, Russia was not invited to Wednesday's conference.
Of the total pledged on Wednesday, 2 billion dollars will be in grants and the remaining in low-interest loans covering the 2008-10 period, officials said. Most of the money will go to Georgia's public sector, with some 850 million dollars being invested directly in private companies.
The United States and the European Commission emerged as the biggest single contributors, respectively providing 1 billion dollars and "up to" 500 million euros (642 million dollars) each.
And while not all countries wished to divulge their individual contributions, diplomats in Brussels said Germany had pledged 33.7 million euros to add to a pre-war offer of 35 million euros.
Sweden ranked high in the list of most generous donors with 40 million euros while France, whose president brokered the peace deal that ended the conflict, pledged 7 million euros.
World Bank Vice-President Shigeo Katsu said it was now important for countries to move on from pledges to actual disbursements and to getting projects on the ground started.