FROM THE EDITOR

Dr. Emzar Djgerenaia

There is an unusually cold winter in Georgia, and what is more, it expanded its limits at the expense of two beautiful autumn months – October and November.

There were intensely cold days in the end of September and in the beginning of October, which has gone on till now. It looks like winter is also going to involve spring and its first month – March that is likely to be cold, too. The frost will not, probably, leave us till Easter.
Some people would, probably, ask, “What makes these economists worry about weather?” The matter is that economists associate coldness with diminishing abundance of energy supply. The frost has spread in both nature and economy. Therefore, economic activity and coldness are two harmonious processes. Nature and economy conspired against Georgia. By the end of 2002, circulation of funds has decreased thrice. Energy resources occupy 34% in the population’s basket of goods (oil, gas, electricity). Consumption goods (bread, sugar, potatoes) make up 56,0% . Communications (mobile telephones, transport) make up 10,0%. Consumption of light industry goods is 37% down on last year. At first sight, the construction business seems to flourish. In reality, there is a deep crisis in this sphere, too. The source of this crisis is the so-called “black money” and the “gift” of our businessmen to make their business “this way” hoping for the better future. People do not have money today, they will have far less tomorrow. Flats will be sold for nothing and afterwards, bargained away. New shops and restaurants are set up, but their profitableness equals 0. They (the owners) are not expecting profits yet, – they (excepting two or more) are just establishing a system. The amount of (real) bank accounts is decreasing. We may regard Mo M1 as money indices. Yet, there is no money for fulfilling the function of bank accounts. There are no perspectives that there will ever be money to invest in a business. There is nothing new in economy and what is more, the “Argentine syndrome” is becoming quite obvious. Our research has shown that income from a private business totals 0. The businessmen are losing economic stimulus. They pay their employees less and less so that the latter lose their work motivation. The greater part of their salary (60-150 GEL in private business) goes on transport – 30-40 GEL per month. It is more and more difficult to find a job. Six pensioners fall at one worker in our country whereas in developed countries 2.5-3.5 workers fall at one pensioner. Given this fact, there will always be indebtedness of pensions. Those who are employed now, lose their work motivation. No matter how much they work, their pensions will not increase. Moreover, the great part of superannuation fund (160-180 mln. GEL) is filled by collaborators of state sector who receive their salaries from the state budget. It looks like the country takes money from one pocket and puts it into another.
Profitableness of trade and legal business is decreasing day by day and is unable to stand the growing “pressure of taxation”. Naturally enough, this causes legal business to transform into illegal one, which serves to destroy economy. Unfortunately, illegality is the only way out for saving business. The state must save legal business, inure everyone ranging from petty street merchants to coaches, taxi drivers and ministers to legal life. Yet, the matter is only confined to talks and discussions.
The situation in the regions is getting worse and worse. Everything depends on agriculture here. The situation in agricultural business is much worse. Peasants’ productions does not reach consumers (buyers). There is a middleman between them who adds 30-50% to the value. For example, a peasant (farmer) sells his production at 3.8-4 GEL, a consumer buys it at 6.0 GEL with 50% extra charge. This year price for meat is 50% up from last year. It cost 4 GEL + 10% of inflation. These testify to the 60% deterioration of buyers’ life standard. Despite it, a producer does not gain his money back, he does not have any economic stimulus. That is why grain, meat, poultry and grease production was 23.0-34.0% down on last year. Among other things, import of this production has fallen considerably. Given the fact that a great part of population receives less than 1400-1500 calories, buyers’ health is placed under threat, too. They have crossed the poverty line. Percentage wise, this amount ranges from 35 to 55% (of all population). Commodity turnover and production of electric power has considerably decreased. The principal part of the whole industry excepting these two ones fall at the share of food industry, non-alcoholic drinks and grain products. Export structure in 2001 that was built on metal, ore, aluminum and wood is a clear example of it. Added to this are investments from international organizations, which, naturally, becomes a reason of Argentine syndrome”. All this is influenced by stagnation in the world economy and economic downturn. The important thing is that icicles hung down from economy due to the freeze in nature and economy, in policy or vice versa. There is no “strong” leader. There will not be anything new in policy for at least one year. The present Parliament will not allow self-liquidation. There is a general awareness that there are political battles, small intrigues and the so-called “protest actions” with their participants standing before the microphones and demanding something unreal. One party plays up to the other and “launches operative measures”. This is the way the political establishment tries to recreate, and it is now waiting for regular holidays to go to Bakuriani or Gudauri, to the weather-beaten forests and hospitals.
The USA has appointed a new ambassador hoping that nothing will happen till he comes here.
I call to mind a funny story that was popular in Brejnev’s times. Leonid Iliich traveled in a train. The train has suddenly stopped and he was informed about it. Brejnev ordered: “Swing, pretend that you move.” Time flies. We are “swinging”. That is why we are so cold.
No, the horse year does not make us happy. Can there be any talk of investments and production development with such a “lame” budget? We are waiting impatiently for the pipeline project to start working. Yet, investors can hardly trust the country that is stuck in crisis and social problems. They are at a loss. However, in spite of such a difficult situation western countries still spend 200 mln. dollars on Georgia. It is still helpful though not a single cent goes on our home industry. True, this assistance is provided for political aims only and implies concrete rights for energetic, transport and law-enforcement ministries. We agree to it without putting up any protests. It is criticized neither by Melia nor by non-government organizations. And here turns up our alternative “investor” – Tbilisi businessman, who is offended with us and who has escaped the dictatorship of the Russian Government, Badri Patarkatsishvili… A legend arises that he helps us to pay out debts for gas because he wants to put up “billboards” – advertisement hoarding – around the city. By the way, I would like to inform authors of the legends that city administration does not forbid it. Besides, “billboards” is imposed by high taxes that are difficult to hide. The main thing is not hoarding, but the question of what to stick to it. One may think that business is prosperous in the country and that there are great queues for advertisement. It is, certainly, absurd! Or will the investment of money in the production of silk and wool in Georgia bring him great profit? Or, perhaps, “Dinamo” is radiant with world standard stars that one can sell in Europe and derive a profit from it? Moreover, we are afraid lest he should buy anything else. What are we afraid of? Will he shoulder it and take it somewhere? Are we really able to care for ourselves or does anyone try to deprive us of it?
When you have such a rival as Putin, you try to obtain a foothold in your country. Mr. Badri is not, probably, a “philanthropist” , but when you control world’s sixth-eighth firm, you try to create elementary conditions for your friends, classmates, neighbours in Tbilisi. Frozen Tbilisi can hardly be of someone’s interest as far as business is concerned. A decent businessman would not worry. Given the world scale, it would be funny to call him a “businessman”. What is going on? Where does this disturbance wave against Patarkatsishvili come from? Why are the frozen city’s nerves so tickled?
Mr. Badri is trying to make business! Will he really manage to do anything? Will he really create workplaces for thousands of people? Will he really manage to promote one of the branches? It is even more terrible if Mr. Badri will not be among our friends.
Mr. Badri does not need any apologetics at all. I remember him inviting some people from the USA, Europe and Georgia to dinner and asking, “What is going on in economy?” Why did the Georgian businessmen keep silent? Why were Georgian entrepreneurs so embittered? Why can not politicians understand that the only way out lies in real market values, in the eradication of bureaucracy and in the management of economy by means of economic methods? We really have a unique country. What is the matter? Why do not we move forward? What is going on in economy? What can we do to help it?
He just asked, but the question generated many opponents. Why did he ask? What does it matter to him? What is the program? What does his care for people mean? He thought that there could, probably, be some way out of this crisis – and, God forbid, one half of “nation’s children” will really “fly”…
We are like a dog in the manger. What are we afraid of? Perhaps, it is that this businessman is not our co-worker or our subordinate? God forbid!
There are frequent unusual cold days in Tbilisi. Tbilisi population became cold towards each other, too. People became querulous. They do nothing. Shares come in fashion because it is easier to get warm together. The main thing is that we are in full view of those who are on the top. Thus, we will not be able to bring any good…