VZCZCXRO3819
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #3046/01 3241308
ZNY CCCCC ZZH
P 201308Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC PRIORITY 4685
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 003046 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR DAS BRYZA AND EUR/CARC 
 
E.O. 12958: DECL: 11/19/2016 
TAGS: PREL PGOV GG RU
SUBJECT: GOG NEEDS STRATEGY FOR THE DEVELOPMENT AND 
INTEGRATION OF AKHALKALAKI 
 
 
Classified By: Ambassador John F. Tefft for reasons 1.4 (b) and (d). 
 
 ¶1. (C) Summary: On November 7-8, PolEcon Chief and Poloff 
traveled to the multi-ethnic region of Samstkhe-Javakheti to 
meet with newly-elected local officials, NGO leaders, media 
representatives, and university students.  The purpose of the 
visit was to reinforce the USG's commitment to increased 
integration of ethnic minorities in Georgia's political and 
economic development and to urge the newly-elected officials 
to use their increased powers to address the needs of their 
constituents.  The key obstacle to the development of 
Akhalkalaki, the region's most volatile city and home to a 
Russian army base which is set to be withdrawn by 2007, is 
geographic isolation and pervasive poverty.  Despite 
promising ideas from newly-elected officials, local 
authorities need to do more to coordinate a regional economic 
and political development strategy in order to reduce ethnic 
tensions in the region, increase investment, and create jobs. 
 Local authorities also need to identify economic 
opportunities that will grow out of the Millennium Challenge 
Compact's $100 million road-building project linking the 
region with Tbilisi and Armenia and other USG assistance 
activities.  GOG officials need to spend more time in the 
region and appoint a new Presidential Representative for 
Civil Integration who can focus government efforts to 
incorporate the region's ethnic minorities.  The Embassy team 
passed the first  two messages to the local authorities, 
NGOs, and the public, while Ambassador passed the last to 
Presidential Chief of Staff Giorgi Arveladze.   End Summary. 
 
----------- 
USG Message 
----------- 
 
¶2. (C)  On November 7-8, PolEcon Chief and Poloff traveled to 
the multi-ethnic region of Samstkhe-Javakheti to meet with 
newly-elected local officials, NGO leaders, media 
representatives, and university students.  PolEcon Chief 
underlined the USG's commitment to increased integration of 
ethnic minorities in the nation's political and economic 
development.  PolEcon Chief cited the Millennium Challenge 
Compact (MCC) road-building project which will link 
Akhalkalaki with Tbilisi and Armenia and USAID projects 
supporting newly-elected local officials as evidence of the 
USG's commitment to the region. 
 
¶3. (C) PolEcon Chief also urged local government officials to 
use their new budgetary and political authority, enacted as 
part of this year's local government reforms, to address the 
concerns of their constituents.  PolEcon Chief advised them 
to look at the MCC road project as a catalyst to attract 
investment so that once the project is complete investors and 
infrastructure would be ready to take advantage of it.  In 
meetings with NGO leaders, media outlets, and university 
students, PolEcon Chief encouraged people to consider how to 
make profitable businesses out of the highly prized goods of 
Akhalkalaki: cheese, trout, and milk.  She urged the 
community to work with newly-elected local governments to 
develop a strategy for economic growth with a focus on 
getting Akhalkalaki's produce to market in Tbilisi, Armenia, 
and beyond. 
 
--------------------------------------------- ---------- 
Meeting with The President's Rep for Samstkhe-Javakheti 
--------------------------------------------- ---------- 
 
¶4. (C) In a meeting with PolEcon Chief and Poloff, Giorgi 
Khachidze described his role as the President's 
Representative to Samstkhe-Javakheti as that of a 
"supervisor" over local government activities in the region. 
He said he has the right to suspend any Sakrebulo (municipal 
council) decision but acknowledged that the Sakrebulo could 
challenge his suspension in the courts.  Khachidze sees his 
role as a "motivator" for local governments.  He described a 
program he proposed to Parliament to increase local 
government activity in his region by measuring Sakrebulos 
against each other on their success in meeting budgetary 
targets and fighting corruption. 
 
¶5. (C) On minority issues, Khachidze said that elements in 
the ethnic-Armenian city of Akhalkalaki play the ethnicity 
card to foment tensions and operate outside Government 
controls.  He said that his Government has had to scale back 
tax inspections and unpopular business registration drives in 
order to avoid claims that the GOG is "suppressing 
minorities."  He believes that the "rule of law" will be 
easier to establish once the Russian military base in the 
city is withdrawn at the end of 2007, but acknowledged that 
the withdrawal would also have a negative effect on the local 
economy. 
 
TBILISI 00003046  002 OF 003 
 
 
 
------------------------------------------ 
Meetings with Akhalkalaki's New Government 
------------------------------------------ 
 
¶6. (C) The team met with the newly-elected Chairman of the 
Akhalkalaki Sakrebulo, Khachatur Aivazian, in his unheated 
and sparsely furnished office.  Aivazian, an Armenian, 
offered a rose-hued assessment of the situation in 
Akhalkalaki and lavished praise on the Saakashvili 
administration for bringing "democracy to Georgia."  Aivazian 
described Akhalkalaki's problems as "economic" rather than 
"ethnic" identifying agricultural development and 
reconstruction of the city's sanitation system as critical 
tasks for the Government.  He added that his budget was "too 
small" and hoped that the central government would contribute 
more than the planned 50 percent.  PolEcon Chief encouraged 
Aivazian to also consider ways that he could increase the tax 
base by improving the economy rather than relying only on 
subsidies from Tbilisi. 
 
¶7. (C) Sakrebulo member Artur Yeremian said that the MCC road 
would help attract investment in Akhalkalaki as it would link 
the region with Tbilisi and Armenia.  He said the local 
government needs to focus on energy issues in order to 
consolidate and capitalize on any investment that develops 
out of the MCC project.  He said the Government needs to 
target the region's potential for hydro-electric power 
generation and develop the infrastructure necessary for 
gasification.  He said the region has historically relied on 
agriculture as the dominant feature of the economy.  He 
believes the Government needs to develop agricultural 
technology in the region in order to increase yields and 
guarantee the consistency in the region's produce. 
 
¶8. (C) Opposition Sakrebulo member and former-Mayor of 
Akhalkalaki Nair Iritsian known for his inflammatory 
rhetoric, told PolEcon Chief that the October 5 local 
elections had been "rigged" by the government.  He claimed 
that his independent group of candidates -- who are linked to 
Armenian nationalist groups -- won 70% of the vote while the 
National Movement picked up only 30% - the opposite of the 
official election results.  (Note: We doubt this claim as 
Iritsian was unable to provide any clear evidence to support 
his assertion and USG and NGO election observer teams in 
Akhalkalaki reported no irregularities which would have 
completely reversed the results of the election.  End Note.) 
 
----------------- 
The NGO Community 
----------------- 
 
¶9. (C) During a meeting with a large group of NGOs in 
Akhalkalaki, community leaders expressed the need for 
economic development and job growth in the region.  The 
leaders voiced concerns over recent cuts in public sector 
jobs as the numerous local governments consolidated into 
regional structures as part of recent local government 
reforms.  PolEcon Chief delivered the unpopular message that 
the Government could no longer build a factory to employ 
citizens, as in Soviet times.  Rather, the local government, 
in concert with civil society groups, need to take steps to 
make the region more attractive to investors by re-building 
the infrastructure in order to increase investment in the 
region.  PolEcon Chief described USG assistance projects 
which are providing technical assistance to local 
governments, civil society, and small businesses to help them 
do this.  The NGO leaders said that more funds needed to be 
allocated to civil society groups from the local budget and 
from assistance organizations in order to develop the 
capacity of local NGOs to serve as watchdogs on local 
government activities. 
 
----------------------------- 
Media and University Outreach 
----------------------------- 
 
¶10. (C) In interviews with Akhalkalaki TV and the news 
journal Southern Gates, and in a meeting with University 
students in Akhaltsike, PolEcon Chief reinforced the USG's 
commitment to see the region play a more active role in the 
political and economic development of Georgia.  PolEcon Chief 
emphasized that the October 5 elections were a key step in 
the consolidation of democracy in Georgia.  PolEcon Chief 
also expressed the hope that the newly elected 
representatives will use their increased powers, including 
budgetary powers, to address the concerns and needs of their 
citizens.  PolEcon Chief also underscored how U.S. assistance 
is helping toward that end and reiterated the importance of 
using USG assistance to help build the local economy. 
 
TBILISI 00003046  003 OF 003 
 
 
 
------------------------------ 
Comment: The Need for Strategy 
------------------------------ 
 
¶11. (C)  Comment: Although many promising ideas for economic 
development and civil integration were proposed by the local 
government and NGO leaders, a clear strategy needs to be 
developed in order for residents to make the best use of 
economic assistance from abroad and from Tbilisi to rebuild 
an economy based on their natural assets - highly prized 
produce - rather than an unprofitable factory put their by 
the Government.  It is also clear that the role of the 
appointed Presidential Representative needs to be worked out 
in a way that allows local governments to act independently 
to achieve locally-defined objectives. 
 
¶12. (C) The pervasive poverty, isolation, and the withdrawal 
of the Russian military base weigh heavily on the minds of 
local residents and make them susceptible to Russian efforts 
to foment instability in the region.  The local government, 
the Presidential Representative, and especially central 
authorities from Tbilisi, can help to neutralize Russian 
efforts by simply meeting with local residents and listening 
to their concerns.  We are encouraging the GOG to take this 
step and also urging them to appoint a new Presidential 
Advisor for Civil Integration - preferably from an ethnic 
minority community.  End Comment. 
TEFFT