Economy Minister Kakha Bendukidze has vigorously pushed for privatization policies since the very first day of appointment.

“Implementation of this new economic policy is connected with the attraction of investments. The key principle in this regard will be carrying out an ‘aggressive’ privatization policy,” Prime Minister Zurab Zhvania told lawmakers on June 10, before the approval of a reshuffled cabinet, which included the appointment of a new Minister of Economy.

Georgia’s new Economy Minster Kakha Bendukidze, who was recruited by the Georgian authorities from Russia, where he run the Russia’s largest heavy engineering corporation, has vigorously pushed for these privatization policies since the very first day of his arrival in Georgia, in early June.

“Everything can be sold, except conscience,” Minister of Economy Kakha Bendukidze said.

This stance by the influential, Russian-based tycoon over privatization has created an increased sense of caution, even among some members of the government. Bendukidze has reacted to this by saying that the government will take a selective approach to privatization and listed the enterprises which will not be sold.  

“The railway, gas pipelines and the Enguri hydro power plant, as well as other hydro power plants, which are located in the conflict zone, will not be privatized,” the new Economy Minister said.

However, some members of Parliament are not content with this list, feeling that it’s flawed in its brevity.  “Television towers and landing strips should not be sold,” MP Roman Gotsiridze, the chairman of the Parliamentary Committee for Budget and Finance and a member of the ruling National Movement-Democrats party, told Civil Georgia.

Kakha Bendukidze, who has recently been granted Georgian citizenship, but still retains his Russian passport, said, “it makes no difference who will buy Georgian state-run facilities – Russians, Americans or others. The important thing is to receive as much money as possible from the privatizing these enterprises.”    
 
Bendukidze vowed that behind these radical, ultra-liberal reforms, the “economic growth in Georgia will reach 12% annually by 2007.”
 
Mr. Gotsiridze commented further to these reforms by suggesting a list of 28 large facilities in Georgia currently which might be put on the privatization list, including ports in Poti and Batumi, a manganese mining enterprise in Chiatura and the Rustavi Metallurgical Plant. 
 
The government excludes the repeated privatization of facilities that have previously been sold. However, it does plan to privatize Poti’s port, despite the fact that 80% of the port’s shares are already in the private sector.
 
MP Lado Papava from the ruling party, who was the Minister of Economics from 1996-2000, says that the government should be cautious and take into consideration the national interests before privatizing state-run firms.
 
“I think privatization of the railway is much safer than the privatization of ports. If Russian companies pay the most amount of money for the ports, I will not agree with this. Russia has only one port on the Black Sea at the moment,” Papava told Civil Georgia.

The Parliament passed a special decree in 2002, which prohibits the executive government to sell so called ‘strategic’ facilities without prior approval of the Parliament.

“The privatization process should be transparent. The Parliament’s decree is still in force and, naturally, the government is unable to independently approve the privatization of strategic facilities without agreement with the Parliament,” MP Gigi Tsereteli, one of the co-authors of the 2002 decree, told Civil Georgia.
 
The Georgia State Property Privatization law, which lists those state-run enterprises that cannot be privatized, is also in force,

According to the Law of Georgia on State Property Privatization, the following state property is not liable to privatization: water resources, ports and landing piers of national importance, hydraulic engineering constructions, railways, gas pipelines, highways, aircraft flight management systems and landing strips, state postal communications, TV-radio broadcasting, trunk-line and international telephone communications, etc.

“Under current legislation, the government will fail to implement all its declared measures. In any case, it won’t be able to carry out the privatization program while bypassing the Parliament,” Lado Papava said.

However, it is most likely that the Parliament, dominated by President Saakashvili’s supporters, will amend the current legislative base and give a green light to the privatization.