Order Code 97-727
Updated April 5, 2007
Georgia [Republic]:
Recent Developments and U.S. Interests
Jim Nichol
Specialist in Russian and Eurasian Affairs
Foreign Affairs, Defense, and Trade Division
Summary
This report examines Georgia’s efforts to democratize and bolster its free market
economy, while surmounting separatism, crime, corruption, and other problems. U.S.
policy and assistance are discussed. Basic facts and biographical information are
provided. This report may be updated. Related products include CRS Report RL33453,
Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
Interests, by Jim Nichol.
U.S. Policy
According to the Administration,
“sustained development” is necessary in order
for Georgia to serve “as the beacon of reform
President Bush identified it as in 2005 (see
below)” that will link Europe, Eurasia, and the
Middle East. Georgia’s transition to a free
market democracy “will increase the appeal for
residents of the separatist regions of Abkhazia
and South Ossetia to re-integrate with
Georgia,” which will enhance regional stability.
However, the peaceful resolution of these
separatist conflicts is “hindered” by Russia, which also threatens Georgia’s deepening
Euro-Atlantic ties and its development as a transit corridor for Caspian region energy to
international markets.1
President Bush visited Georgia on May 9-10, 2005, and praised its 2003 peaceful
rose revolution for “inspiring democratic reformers” and freedom “from the Black Sea to
the Caspian and to the Persian Gulf and beyond.” He cautioned Georgians that it might
1 Department of State. Congressional Budget Presentation for Foreign Operations, FY2008.

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take them “generations” to fully establish
Georgia: Basic Facts
democracy, but praised their progress in Area and Population: 26,872 sq. mi., slightly
creating free media, fighting corruption, larger than West Virginia. The population is 4.66
respecting minority rights, permitting diverse million (The World Factbook, mid-2006 est.).
Administrative subdivisions include the
political parties, and setting up an independent Abkhazian and Ajarian Autonomous Republics.
judiciary. He urged that Georgia stick to Ethnicity: 70% are Georgian; 8% Armenian; 6%
peaceful means to settle separatist conflicts. Russian; 6% Azerbaijani; 3% Ossetian; 2%
He offered to “make a phone call or two” to Abkhazian; and others (1989 census; a 2002
help resolve the conflicts, but stressed that the census did not include breakaway Abkhazia and
South Ossetia).
United States could not impose a solution. He GDP: $17.8 billion in 2006; per capita income is
offered unspecified U.S. aid so that Georgia about $3,800 (World Factbook est., purchasing
could qualify to join NATO. He also offered power parity).
U.S. mediation on the issue of Russian Political Leaders: President: Mikhail
Saakashvili; Prime Minister: Zurab Noghaideli;
military bases in Georgia. Saakashvili hailed Speaker of the Parliament: Nino Burjanadze;
the Bush visit as marking “final proof that Defense Minister: Davit Kezerashvili; Foreign
Georgia is an independent state with Minister: Gela Bezhuashvili.
inviolable territory” and praised the United Biography: Saakashvili, born in 1967, received
States as the foremost backer of Georgia’s his Master’s at Columbia Univ. and his Ph.D. at
George Washington Univ. He was elected to the
democratization. He emphasized that this legislature in 1995 and 1999, where he chaired
U.S.-Georgian “partnership” was based on the Constitutional Committee and headed the
“our shared belief in freedom,” and was the ruling party’s faction. In 2000, he became
reason Georgia had sent troops to Iraq to end Minister of Justice, but resigned in September
“enslavement” there.2
2001, accusing the government of corruption and
forming the National Movement party bloc. In
2002-2003, he chaired the Tbilisi city council.
The United States has been Georgia’s
largest bilateral aid donor, budgeting
cumulative aid of $1.76 billion in fiscal years 1992 through 2006 (FREEDOM Support
Act and agency funds). Georgia has regularly ranked among the top world states in terms
of per capita U.S. aid, indicating the high level of concern for its fate within the
Administration and Congress. Budgeted aid to Georgia for FY2006 was $153.01 million
(FREEDOM Support Act and agency funds) and the Administration has requested $66.4
million for FY2008 (FREEDOM Support Act and other foreign assistance, not including
Defense and Energy Department funds). The Administration has stressed that a major
new assistance program — the Millennium Challenge Account (Section D of P.L. 108-
199) — will bolster U.S. support for Georgia’s development and poverty alleviation. A
newly established Millennium Challenge Corporation (MCC) announced in May 2004
that Georgia met required democratic and economic reform criteria and would be one of
the first states invited to apply for aid. In August 2005, the MCC approved a five-year,
$295.3 million agreement (termed a “compact”) with Georgia to improve roads, repair a
gas pipeline, create a small business investment fund, set up agricultural grants, and
improve water supplies, sanitation, and irrigation. As of February 2007, $21.9 million
had been disbursed by the MCC to Georgia.
Contributions to the Campaign Against Terrorism. The former President
of Georgia, Eduard Shevardnadze, immediately condemned the attacks on the United
States on September 11, 2001, and offered “airspace and territory” for use by U.S. troops
2 The White House. Office of the Press Secretary. President Addresses and Thanks Citizens in
Tbilisi; and President and President Saakashvili Discuss NATO, Democracy, May 10, 2005.

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for coalition operations in Afghanistan. In February 2002, President Bush announced that
the United States would help Georgia combat several dozen al Qaeda and other terrorists
who had fled from Afghanistan, some of whom had sought refuge in Georgia’s Pankisi
Gorge area. Georgia was among the countries in 2003 that openly pledged to support the
U.S.-led Operation Iraqi Freedom — offering the use of airbases — and to assist the
United States in rebuilding Iraq. In August 2003, Georgia dispatched 69 troops to Iraq,
and boosted them to over 850 in March 2005 (making Georgia the second largest per
capita contributor). In March 2007, Saakashvili announced that troop deployments to Iraq
would increase to 2,000 and that 100 troops would be deployed to Afghanistan.
A $64 million Georgia Train and Equip Program (GTEP), one of several U.S.
security programs in Georgia, began in May 2002. U.S. troops provided training in light
infantry airmobile, mechanized, and mountain tactics, and medical and logistical methods
to 200 officers, some 2,000 soldiers, and a small number of Interior (police) Ministry
troops and border guards. According to the U.S. Defense Department, the GTEP aimed
to help Georgia “to resist pressure to allow the Russian military to pursue Chechen rebels”
into Georgia, help it combat terrorists inside the country, and block those trying to
infiltrate Georgia. Small arms, communications and medical gear, uniforms, and
construction materials for some base refurbishment were provided. The program formally
ended in April 2004 but a follow-on 16-month Sustainment and Stability Operations
Program (SSOP) was launched in early 2005, funded at $64 million. SSOP provided
training for 2,000 troops, in part to support U.S.-led coalition operations, along with
advisory assistance for defense reforms and maintenance for previously supplied
helicopters. In July 2006, the United States announced that the SSOP would be extended
another year and funded at $30 million.
Foreign Policy and Defense
In his inaugural address in January 2004, Saakashvili proclaimed that Georgia hoped
to become the first former Soviet republic to successfully integrate with Western
institutions, including the European Union. Among its neighbors, Georgia has developed
close ties with Azerbaijan and maintains good relations with Armenia. Georgia has an
ongoing interest in ties with about one million Georgians residing in Turkey and about
50,000 Georgians residing in Iran. In his annual address in mid-March 2007, Saakashvili
stated that the past year had witnessed the nadir of Georgian-Russian relations, with
Russia imposing far-reaching economic sanctions on Georgian imports, boosting the price
of gas, restricting transport and travel, and deporting many Georgians working in Russia.
He had just returned from the Kodori Gorge in Abkhazia (see below), where unknown
helicopters allegedly had bombed some Georgian-held villages. Before this incident,
however, he had welcomed some recent thawing in Georgia-Russia ties, including the
reduction of harsh Russian rhetoric accusing Georgia of war-mongering.
In 1995, an economically and militarily weak Georgia reluctantly granted Russia the
right to maintain four Soviet-era military bases there through the year 2020. After
reported heavy U.S. lobbying (during multilateral talks on adapting the Conventional
Armed Forces in Europe Treaty), Russia declared in late 1999 that it would close its
Georgian military bases at Gudauta and Vaziani by July 1, 2001, and that Georgia and
Russia would agree by the end of 2000 on the disposition of two other bases. Russia
turned over the Vaziani base by the deadline. It reported in June 2002 that it had closed
its Gudauta base, located in Abkhazia, but announced that 320 troops would remain to

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support Russian “peacekeepers” in Abkhazia. In March 2005, the Georgian legislature
passed a resolution calling for Russia to come to an agreement by mid-May on closing the
remaining bases or face various restrictions on base operations. Spurred by this deadline,
Russia agreed with Georgia by the end of the month to close its base at Akhalkalaki by
the end of 2007 and the base at Batumi by mid-2008. President Putin explained that his
military General Staff had assured him that the bases were Cold War-era relics of no
strategic importance to Russia.
According to The Military Balance (February 2007), Georgia’s ground forces and
a small navy and air force number 11,320. There are also 5,400 border guards, 1,578
national guard troops, and 6,300 Interior (police) Ministry troops. Marking the shift
toward more security ties with the West, Georgia withdrew from the Commonwealth of
Independent States (CIS) Collective Security Treaty in 1999. Georgia assumed full
control from Russia over guarding its sea and land borders in 1999. Georgia has hosted
NATO’s Partnership for Peace exercises annually since 2001. Georgia participates in
NATO peacekeeping in Kosovo (150 troops) and rebuilding efforts in Iraq. NATO signed
an Individual Partnership Action Plan (IPAP) with Georgia in October 2004 to deepen
cooperation and launched an “intensified dialogue” with Georgia in September 2006 on
reforms necessary for possible NATO membership.
Political and Economic Developments
The U.S. State Department joined others in criticizing “massive vote fraud” in Ajaria
and other irregularities in the wake of a November 2, 2003, Georgian legislative election.
Mainly peaceful opposition protests (termed by National Movement head Saakashvili a
“revolution of roses”) led to then-President Shevardnadze’s resignation on November 23.
Russia and the United States appeared to cooperate diplomatically during this crisis to
urge Georgians not to resort to violence. The opposition National Movement (NM) and
the Burjanadze-Democrats (BD; co-headed by Nino Burjanadze) agreed to endorse
Saakashvili for a presidential election on January 4, 2004, where he received 96% of 2.2
million popular votes from a field of five candidates. OSCE monitors judged the vote as
bringing Georgia closer to meeting democratic electoral standards. Legislative elections
were held on March 28, 2004 involving the 150 party list seats (the November 2003
winners of 75 district seats retained them, as did ten deputies elected from Abkhazia
before it broke away). NM and BD ran on a joint list and captured 67.2% of 1.53 million
votes, giving the bloc a majority of seats, perhaps ensuring firm legislative backing for
Saakashvili’s policies. The New Rightist-Industrialist bloc won 7.6% of the vote. All
other parties received less than 7% of the vote, the minimum required to win seats. The
OSCE judged the election as the most democratic since Georgia’s independence.
According to the State Department’s Country Reports on Human Rights Practices
for 2006 (released March 2007), the Georgian government took significant steps to
improve the human rights situation during 2006, although serious problems remained.
Improvements included stepped up efforts to convict human traffickers, reform the justice
system, and combat corruption. Cases of torture and mistreatment of detainees were
reported, some related to a government campaign to crack down on organized crime.
Monitoring groups at police stations were successful in reducing police mistreatment of
detainees at the stations, but mistreatment continued during arrests. Prison conditions
remained poor and even worsened during the year, despite budget increases, in part
because of an increased prison population. Public confidence in patrol police increased,

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in part because higher salaries provided an incentive for them to refrain from extorting
money from citizens. In December, the legislature approved a constitutional amendment
to take away the president’s power to appoint and dismiss judges and to give it to the
High Council of Justice, composed of lawyers, judges, and others. Media generally
operated freely, although some instances of government harassment of reporters and
pressure to shape media content were alleged.
Georgia’s GDP increased 8.8% in 2006 and consumer price inflation was 10% (The
World Factbook). In March 2007, the International Monetary Fund (IMF) praised
Georgia’s economic performance in 2006 in the face of Russia’s economic sanctions and
attributed it to an improved business climate that attracted foreign investment. The IMF
raised concerns, however, that the sanctions might retard GDP growth in 2007 by
reducing worker remittances and exports to Russia and increasing gas prices, but it hoped
that foreign investment might bolster business. Perhaps troubling, Georgia has made little
progress in reducing a poverty rate of about 40%, but educational, health, and welfare
programs are planned for 2007. Georgia plans to finance its 2007 budget deficit through
international loans and proceeds from privatization auctions. Civil conflict and poverty
have spurred the emigration of about one-fifth (one million) of the population since 1991.
Georgia is a member of the World Trade Organization. U.S. exports to Georgia were
$213.9 million in 2005 and $265.7 million in 2006, over one-half of which consisted of
meat and automobiles. Georgian exports to the United States were $194.4 million in 2005
and $105.3 million in 2006 and consisted mainly of fuel re-exports.
Georgia is a transit state for a pipeline completed in mid-2006 carrying one million
barrels per day of Azerbaijani oil to the Turkish port of Ceyhan (the Baku-Tbilisi-Ceyhan
or BTC pipeline). Another pipeline completed in early 2007 initially carries 2.2 billion
cubic meters of Azerbaijani natural gas to Georgia and Turkey, lessening their
dependence on Russia as a supplier. In late 2005 and again in late 2006, Russia’s state-
owned Gazprom gas firm announced substantial increases in the price of gas shipped to
Georgia. In the winter of 2005-2006, unknown saboteurs bombed gas pipelines in Russia,
temporarily cutting off supplies to Georgia. That winter and the next, Georgia obtained
some alternative gas supplies from Azerbaijan, easing its dependence on Gazprom and
spurring Georgia’s efforts to develop alternative suppliers and hydropower resources.
Ethnic and Regional Tensions. Several of Georgia’s ethnic minorities stepped
up their dissidence in the late 1980s and early 1990s, resulting in the loss of central
government control over the regions of South Ossetia and Abkhazia. The Ajaria region
also asserted substantial self-rule, but Saakashvili succeeded in re-establishing central
control there in early 2004. A U.S. emissary (currently Deputy Assistant Secretary of
State Matthew Bryza) long has worked with regional and international officials to try to
resolve the South Ossetian and Abkhazian conflicts.
South Ossetia. In 1989, the region lobbied for joining its territory with North
Ossetia in Russia or for independence. Separatist conflict beginning in 1990 reportedly
led to about 1,500 deaths. In June 1992, Russia brokered a cease-fire, and a
“peacekeeping” force is stationed there, composed of Russian, Georgian, and Ossetian
troops. A Joint Control Commission (JCC) composed of Russian, Georgian, and North
and South Ossetian emissaries (and OSCE observers) was formed to promote a settlement
of the conflict. According to some estimates, some 25,000 ethnic Ossetians and 20,000
ethnic Georgians reside in the now largely vacant region. An apparent effort by

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Saakashvili to militarily reclaim the region failed in 2004. In 2005, he proposed a new
peace plan — which received OSCE backing — that provided for substantial regional
autonomy. South Ossetia rejected the plan, on the grounds that it was already
independent. A South Ossetian referendum on “independence” and parallel separatist and
pro-Georgian “presidential” elections in November 2006 heightened tensions and
contributed to a hiatus in JCC talks. In March 2007, the OSCE facilitated a meeting of
the JCC in Turkey and of donors for reconstruction efforts.
Abkhazia. In July 1992, Abkhazia’s legislature declared the region’s effective
independence from Georgia, prompting a Georgian attack. In October 1992, the U.N.
Security Council (UNSC) approved the first U.N. observer mission to a Eurasian state,
termed UNOMIG, to help the parties reach a settlement. Russian and North Caucasian
“volunteer” troops that reportedly made up the bulk of Abkhaz separatist forces routed
Georgian forces, leading in April 1994 to agreement by the two sides on a framework for
a political settlement and the return of refugees. Russian troops (acting as CIS
“peacekeepers”) were deployed in a security zone along the Abkhaz border with Georgia.
The conflict resulted in about 10,000 deaths and over 200,000 displaced persons, mostly
ethnic Georgians. A U.S. emissary works with the U.N. Secretary General, his Special
Representative, and other “Friends of Georgia” (France, Germany, Russia, the United
Kingdom, and Ukraine) to facilitate a peace settlement. A “New Friends of Georgia”
group was formed by the Baltic states, Bulgaria, Poland, and Romania in 2005 to advocate
increased EU and NATO attention to Georgia. Sticking points between Abkhazia and
Georgia have included the latter’s demand that displaced persons be allowed to return to
the region before an agreement on its status. Abkhazia has insisted upon effective
independence as a precondition to large-scale repatriation.
In July 2006, the Georgian government ousted a warlord in the Kodori Gorge area
of Abkhazia. Saakashvili asserted that the action marked Georgia’s efforts to re-establish
its authority throughout Abkhazia, and he directed that the Abkhaz “government-in-exile”
make the Gorge its home. In October 2006, the Abkhaz side suspended all talks pending
Georgia’s removal of the government representatives and alleged military forces. In
October 2006, the UNSC approved a resolution that among other purposes criticized
Georgia for introducing military forces into the Gorge in violation of cease-fire accords.
The resolution also criticized some violations by Abkhaz forces. The UNSC stressed the
“important” and “stabilizing” role played by Russian peacekeepers and UNOMIG. Some
Georgian officials viewed this language as not supportive of their calls for a more
multinational peacekeeping force. In January 2007, UNOMIG reported that its limited
patrols observed no Georgian military forces in the Gorge.3 At a meeting hosted by the
Friends of Georgia in Geneva on February 13, 2007, the Abkhaz de facto authorities
reportedly reiterated that they would not resume talks with Georgia until their conditions
were addressed.
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3 U.N. Security Council. Resolution 1716 (2006), Adopted by the Security Council at its 5549th
meeting, Oct. 13, 2006; Report of the Secretary-General on the situation in Abkhazia, Georgia,
Jan. 11, 2007.

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