May 10, 06

NEWS / Ukraine, Georgia May Lose Economic Benefits if They Leave CIS

Russian government is considering canceling economic benefits for Georgia and Ukraine if they decide to withdraw from the Commonwealth of Independent States (CIS), a Russian government source said on Sunday, May 7.

The statement was made after Georgian Foreign Minister Gela Bezhuashvili said that Georgia had started consultations with Ukraine on their joint withdrawal from the CIS, a loose economic and political association of former Soviet republics. ???In the wake of statements made by the leaders of Georgia and Ukraine about the possibility of their withdrawal from the CIS, the government of Russia is considering canceling a number of benefits, which these states enjoy within the CIS,??? the source said, quoted by RIA Novosti. ???No doubt, in this case Russia will review many agreements and accords concluded within the CIS, including in the social sphere.???

Russian experts say Georgia??™s withdrawal from the CIS will mean for a rupture or considerable weakening of traditional economic and humanitarian ties with Russia and other CIS countries for the majority of the country??™s population. Experts say Georgia could sustain the greatest losses in this case in the economic sphere, in particular, in agriculture, which employs half of the republic??™s working population and the products of which are sold mostly in the CIS countries.

According to Russian experts, it would be difficult for Georgia to find alternative markets because its products are frequently of low quality. The search for alternative markets would reduce the republic??™s export revenues and would lead to agricultural product overstocking and the bankruptcy of agricultural producing and processing businesses. This would also lead to a higher unemployment rate.

According to official figures, there were 370,000 unemployed in Georgia in mid-2005 ??” 18 percent of the workforce. According to unofficial figures, the unemployment rate was as high as 40 percent. Georgia??™s withdrawal from the CIS would also affect the republic??™s energy sector, which covers only 40 percent of the country??™s energy needs, while 60 percent of electricity is largely supplied from Russia, experts say.