- The Washington Times - Monday, June 15, 2009

TBILISI | Nearly a year after a war with Russia drove tens of thousands of ethnic-Georgian refugees from two rebellious provinces, Georgia continues to struggle with the aftermath of a conflict in which it lost 20 percent of its territory.

Following the August 2008 war, Georgia managed to quickly construct housing for refugees before the winter set in. But after the spring thaw, high unemployment remains a threat to the nation’s efforts to rebuild, said Koba Subeliani, Georgia’s minister of refugees and accommodation.

The conflict forced some 26,000 people from their homes in South Ossetia and Abkhazia, regions of Georgia that have since declared themselves independent nations and turned to Russia for protection from Georgian efforts to regain control.

Refugees were initially housed in tents, Mr. Subeliani said. The Georgian government, together with international organizations, rushed to build about 4,000 new houses and renovate 2,500 apartments in three months.

“We had some experience building large infrastructure projects fast over the last few years,” he said. “But in this case, the scale was enormous.”

The emergency construction was completed in November and included modest furnishings and a monthly food supply, Mr. Subeliani said.

The biggest refugee-housing development is about 15 miles from the Russian military line.

The current challenge is unemployment, Georgian officials say. People without jobs were given arable land to grow their own crops. The U.S. Agency for International Development (USAID) in Tbilisi supplied high-yielding seeds and helped with cultivation. Yet most refugees are without work.

Restoration of investor confidence is also a priority for Georgian officials. Prior to the conflict, gross domestic product rose at annual rates often exceeding 10 percent, making Georgia a tiger economy of the Caucasus region.

Before the war, successful reforms that attracted large inflows of foreign investment prompted the World Bank to praise President Mikhail Saakashvili’s “small, effective government.”

The war changed everything.

Mr. Saakashvili, a graduate of Columbia University in New York and a former lawyer, faces daily pressure from the political opposition, who have camped out in tents on Tbilisi’s main street demanding his resignation.

The United States has pledged $1 billion for Georgia’s post-conflict rebuilding out of a total $4.5 billion in pledges from donor countries. About $250 million of the U.S. pledge has already been delivered, much of it going to help Georgia meet its 2008 budget.

The initial cash boost helped stabilize Georgia’s banking system amid the global economic meltdown that hit shortly after the war, said Alexander Rondeli, president of the Georgian Foundation for Strategic and International Studies, a Tbilisi-based think tank.

“Georgian banks were able to pay back credits to foreign banks,” Mr. Rondeli said. “Georgia is now healing itself.”

In May, the release of a $53 million tranche of U.S. aid was earmarked for good-governance projects, elections, media reform and energy infrastructure, said Joakim Parker, acting mission director of USAID in Tbilisi.

In addition, Rep. David Dreier, California Republican, and Sen. John Kerry, Massachusetts Democrat and chairman of the Foreign Relations Committee, are calling for a U.S.-Georgia free-trade agreement to boost the economy.

The war caused an estimated $1 billion in damage to Georgia’s infrastructure, which is under repair. Buildings were looted, schools destroyed and tanks and heavy military vehicles tore up roads. Infrastructure repair is important in restoring investor confidence.

After Russia occupied South Ossetia and Abkhazia, it formally recognized them as independent nations, creating complex problems.

Repatriation of split families and former residents will be difficult, said Alexander Nalbandov, Georgia’s deputy minister of foreign affairs. For years, Russia practiced “passportization,” issuing Russian passports to citizens of the two regions through a consular office in the nearby Russian city of Sochi, he said.

Ethnic Georgians living in the occupied regions were often driven out by local authorities or expelled if they refused to take Russian citizenship.

“The overwhelming majority hold Russian citizenship,” Mr. Nalbandov said. “Tskhinvali has been cleansed of Georgians,” he said, referring to the capital of South Ossetia.

Russia has defended its military intervention, saying it was necessary to “protect the life and dignity of Russian citizens wherever they may be.”

Recognition of the breakaway territories may result in demands for state-to-state negotiations, which Tbilisi would most likely refuse.

Thus far, productive dialogue between Georgia and its neighbors has been limited to shared infrastructure. The Enguri hydroelectric power plant on the west coast has its main dam in Georgia and its power-management controls in Abkhazia. After being repaired, the complex resumed operations.

“Both sides were interested in having the plant in workable condition, so we had to negotiate and work together,” Mr. Nalbandov said.

More difficult was South Ossetia’s cutoff of irrigation water to the surrounding regions in Georgia. It was restored after tough negotiations by international organizations, he said.