Donors pledge $4.5 billion for Georgia recovery

By David Brunnstrom

BRUSSELS, Oct 22 (Reuters) - International donors pledged a higher-than-expected $4.55 billion on Wednesday to help Georgia recover from its war with Russia, and Washington called it an extraordinary sign of solidarity at a time of financial turmoil.

The European Commission said the sum pledged at a one-day conference in Brussels included $3.7 billion in public loans and grants and $850 million from the private sector.

"Four and a half billion dollars far exceeds the expectations we had ... At a time like this to show such support is something that no Georgian will ever forget," Georgian Prime Minister Lado Gurgenidze told a news briefing.

Henrietta Fore, head of U.S. government aid agency USAID told Reuters: "The message economically and politically is very strong for Georgia ... At a time of financial turmoil, this is extraordinarily strong."

The United Nations and the World Bank had estimated that Georgia, an energy transit route, would need $3.25 billion over the next three years to help tens of thousands of people forced from their homes and repair and develop infrastructure.

Russia sent in troops in August after Georgia tried to retake the breakaway pro-Russian South Ossetia region. Moscow has since withdrawn soldiers from Georgia proper, but the West accused Moscow of a disproportionate use of force.

In Georgia, EU ceasefire monitors challenged South Ossetia to grant them access after the separatists complained of Georgian attacks. The monitors are denied access to the region, where Russia says thousands of its troops will provide security.

Also on Wednesday, South Ossetia approved a former Russian official as its prime minister, prompting Georgian charges that Moscow had annexed the region.

Russia's bombing raids in August hit mainly military targets in Georgia, but Tbilisi also reported damage to civilian infrastructure and risks to its economic growth and investment.


The U.S. has offered at least $1 billion for rebuilding.

The European Commission, the European Union's executive, promised up to 500 million euros ($642.8 million) to 2010. It said pledges from the EU's 27 member states and the European Investment Bank brought the EU total to some 863 million euros.

Japan's Parliamentary Vice Minister for Foreign Affairs Yasutoshi Nishimura said Japan would provide $200 million.

Tbilisi said last month international institutions had pledged a loan package of about $1 billion to help soften the impact of the conflict on the banking sector.

Georgia had to scale down foreign investment forecasts and last month the IMF approved a $750 million programme aimed at rebuilding currency reserves and restoring investor confidence.

Representatives of the Georgian opposition sent an open letter to the Brussels meeting stressing the need to ensure the funds were not used to prop up the leadership, and demanded greater media freedom and judicial and electoral reform.

In Tbilisi, hardline opposition leader Levan Gachechiladze vowed to stage new protests from Nov. 7, exactly a year after the government sent riot police to disperse protests against what demonstrators called President Mikheil Saakashvili's "autocratic" rule.

At the news briefing following the Brussels meeting, EU External Relations Commissioner Benita Ferrero-Waldner said Georgia must pursue reforms and ensure freedoms.

European Commission President Jose Manuel Barroso said that although there was a moral imperative to help a neighbour in need, it was also in the European Union's interest.

"Any conflict on Europe's borders clearly has implications for European security and stability," he said. "This particular conflict also has potential costs for Europe in terms of our energy security and our diversification strategy."

Barroso noted that all of Georgia's main energy transit routes had been disrupted during the conflict.

(Editing by Elizabeth Piper)


Reuters - Thomson Reuters Foundation
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