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MPs Back Loan Agreements to Finance Air Defense Acquisition
Civil Georgia, Tbilisi / 23 Dec.'15 / 19:36

Parliament ratified on December 23 loan agreements to finance two contracts signed by Georgia in Paris in summer on EUR 77.63 million acquisition of air defense system.
One of these two defense deals was signed by the Georgian Ministry of Defense with a producer of ground-based surveillance radars and air defense command and control systems ThalesRaytheonSystems on June 15.

Another contract was signed by the MoD with missile manufacturer MBDA France on July 10.

Neither values nor content of the two contracts were reported by the officials at the time.

Information about type of the equipment and services Georgia is purchasing still remains confidential, but the value of the contracts was made public as a result of loan agreements Georgia has signed to raise funds for air defense system acquisitions.

The loan agreements with French bank Société Générale were signed by the Georgian Finance Ministry on December 8.

5-year EUR 82.82 million loan is backed by the France’s export credit agency Coface and is split in several portions with interest rates ranging from 1.27% to 2.1%%.

EUR 52.65 million from the total loan amount will be used to finance purchase of unspecified equipment and services from ThalesRaytheonSystems, which produces ground-based surveillance radars and air defense command and control systems.

EUR 24.98 million will be directed to finance acquisitions from missile manufacturer MBDA France.

The remaining amount of loan – EUR 5.19 million – is for risk mitigation and other costs, including Coface’s premium.

The French air defense deals became a source of accusations between ex-defense minister Irakli Alasania’s Free Democrats party and the government in spring, 2015.

In early April, Alasania claimed the government abandoned preliminary deal – a non-binding memorandum of understanding, which he negotiated in France in late October, shortly before being sacked from Defense Minister’s post. The allegation was strongly denied at the time by then defense minister Mindia Janelidze, who is now secretary of the State Security and Crisis Management Council; he was saying that talks were underway to sign the deal. The two agreements were finalized within following couple of months and signed by Defense Minister Tina Khidasheli, who replaced Janelidze in early May.

During brief discussion of loan agreements in the Parliament before ratification on December 23, MP Irakli Chikovani from Alasania’s Free Democrats party welcomed that the contracts on air defense system acquisition were signed.

“This is a significant step forward towards increasing our defense capabilities, but we believe that capabilities should further be improved, which could have been possible in frames of a project of larger scale,” MP Chikovani said.

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