Day: January 22, 2024

The State Security Service of Georgia (SSSG) reported that on January 21 it received a call about the possible planting of explosive devices at various locations, including educational institutions and shopping centers, in the city of Batumi. However, no explosives were found after anti-terrorist units of the SSSG and the Ministry of Internal Affairs conducted special operations at the locations.

The Security Service reports that according to the analysis of the operational data received so far, the false alarm was sent from outside the country. The mobile phone number of a minor Georgian citizen was deliberately used to send the messages.

“A criminal investigation is underway into the false reporting of terrorism. As part of the ongoing operational and investigative efforts to identify the originator of the messages, partner country authorities have been requested for assistance,” – reports SSSG.

In addition, the Georgian Security Service informs the public that earlier false reports of a terrorist attack on a shopping mall in the capital city “Galleria Tbilisi” were received from abroad on December 30, 2023 and January 17 of this year. According to the service, these reports are linked to international online games involving minors from various countries, including Georgia. The instigators of these messages have been identified as a specific group of individuals residing abroad.

Also Read:

• 19/09/2013 – Punishment for False Bomb Threat to Be Tightened

In recent years, Georgians have witnessed a trend of broken promises and unfulfilled commitments by Chinese state-owned engineering companies, which have been entrusted with numerous ambitious infrastructural projects in Georgia. Despite the stalled constructions and breached deadlines, the ruling Georgian Dream party remains loyal to many blacklisted and sanctioned companies, paying double for projects, some of which have not been completed for years.

Khulo-Zarzma road project

In 2014, residents of the Khulo municipality brought the importance of the Khulo-Zarzma road to the attention of Prime Minister Irakli Garibashvili. The rehabilitated road would provide a direct link between Samtskhe-Javakheti and Adjara, crossing challenging geological terrain. It would also boost tourism and improve the region’s socio-economic conditions by connecting the Beshumi mountain ski resort to Batumi and Tbilisi.

The Roads Department of Georgia announced in 2016 that the rehabilitation of the road would begin in one year and would be financed by the Kuwait Fund for Arab Economic Development (KFAED). In August 2018, the Italian company TODINI COSTRUZIONI GENERALI S.P.A. won the tender worth GEL 110.2 million for the construction of the 42-kilometer section of the road, but the contract was terminated in February 2020. According to the Ministry of Roads, the company had failed to “mobilize and carry out the works required by the contract”.

A few months later, the renewed tender was won by the Chinese state-owned company Sinohydro Corporation LTD. This was not the first project entrusted to Sinohydro. Since 2013 the company has been working on the Tbilisi-Rustavi road, Samtredia-Grigoleti highway, the Rikoti highway, Kobuleti bypass, the construction of Zemo Osiauri-Chumateleti section, etc. While working on these projects, the company caused GEL 2.8 million worth of damage to Georgia’s environment, for which it was fined a mere GEL 49 thousand.

The company has a questionable track record. In 2014, the World Bank temporarily blacklisted Sinohydro in Africa for project irregularities. Similarly, in 2017, the African Development Bank blacklisted the company for fraudulent practices in Uganda. The Georgian organization “Young Barristers” published a report in 2018 highlighting Sinohydro’s misconduct both locally and internationally, noting that in public procurement processes, Sinohydro would bid with a very low amount in order to win the tender, and later would implement the projects with significant flaws due to lack of resources.

Sinohydro Corp. LTD was supposed to complete the Khulo-Zarzma project in 2 years with only GEL 95.7 million. In August 2023, concerns were raised about the completion of the works, but there was no official response from the government. In September of the same year, the European Investment Bank reached a settlement agreement with Sinohydro to address misconduct in five EIB-financed projects, including those in Georgia. The company was excluded from EIB-financed projects for 12 months from 30 August 2023.

Finally, after three years and a court case against the state initiated by the Chinese company in November 2023 (there is no publicly available information on what prompted the court case) on January 15, 2024, the Georgian government decided to terminate the contract with Sinohydro. According to Levan Davitashvili, the Minister of Economy and Sustainable Development of Georgia, the contract was terminated due to the company’s inability to fulfill its obligations within the agreed timeframe. The Georgian government plans to launch a new tender soon to find a company capable of successfully completing the project within the current (election) year.

Rikoti Highway

The Rikoti Highway is of strategic importance to Georgia, serving as a vital link between the eastern and western regions of the country. As a key transit route, the highway facilitates the transportation of goods from the Turkish border and the port of Poti to eastern Georgia. Work on the road began in 2019 and included the construction of 51 tunnels and 97 bridges. By the end of construction, the journey time from Tbilisi to Batumi will be reduced from 6-6.5 hours to 3 hours.

The road through the Rikoti Pass is part of the East-West Highway or the European Transit Road E-60, which is the second largest European transit corridor, starting in Brest (France) and ending in Irkestam (Kyrgyzstan). In Georgia, E-60 starts near the border with Azerbaijan and ends near Poti. The length of the corridor in Georgia is 392 k.m.

Four Chinese companies are involved in the construction of the road, which is divided into four sections. The table below provides a list of the contracted companies, including links to reports conducted by the NGO “Civic Idea”, which studies Chinese-Georgian relations, on three of these companies:

Section	Length	Company
Chumaleti-Khevi Section	11.7 k.m	China State Construction Engineering Corporation LTD
Khevi-Ubisa Section	12.2 k.m	️Hunan Road & Bridge Construction Group Corp.
Ubisa-Shorapani Section	13 k.m	China Road and Bridge Corporation
Shorapani-Argveta Section	14.7 k.m	Guizhou Highway Engineering Group and China National Technical Import & Export Corporation

Source: Roads Department of Georgia

The entire project is financially supported by the World Bank, the European Investment Bank and the Asian Development Bank. The cost of the road is GEL 2.6 billion. Despite the fact that the project was scheduled to be completed in 2023, almost half of the road is still under construction. In October 2023, only the 27-kilometer Khevi-Shorapani section of the road was officially commissioned, which includes 65 bridges and 38 tunnels.

Aside from the seismic and environmental concerns surrounding this massive project, there are also concerns about the questionable reputations of the companies involved in its construction.

Civic Idea highlights the key issues with the companies:

• China Road and Bridge Corporation – The World Bank has sanctioned the China Road and Bridge Corporation for fraudulent practices in connection with the Philippines’ National Road Improvement and Management Program (NRIMP 1).
• China State Construction Engineering Corporation – The World Bank blacklisted China State Construction Engineering Corporation Ltd. in the Philippines for its involvement in collusive practices and a corruption scandal involving the Philippine NRIMP 1 Program. In 2020, the Trump administration accused CSCEC of cyber espionage and banned U.S.-registered companies from becoming shareholders in CSCEC.
• HUNAN ROAD AND BRIDGE CONSTRUCTION GROUP CO LTD – Due to their poor construction, 328-meter Tuojiang Bridge in China collapsed in 2009. As a result, 64 people died, 22 were injured, and the economic loss reached 39.747 million yuan (about 6 million U.S. dollars). 20 local government officials and HNRB board members were sentenced to 19 years in prison in China for bribery, malfeasance, negligence and racketeering.

In Georgia, the obvious problems with the companies are poor working conditions, failure to install landslide prevention structures and huge environmental impact. The incidents include: death of workers (e.g. June and August, 2023), strike of workers, and landslides (e.g. June and July, 2023).

Other concerning companies

The Civic Idea also points to other companies that are not part of the mainstream projects, but whose active involvement in Georgia rings alarm bells:

• Nuctech Company Limited (serves the borders of Georgia with a scanning system) – In 2009, the European Union accused Nuctech Company Ltd. of dumping and imposed anti-dumping duties on imports of Nuctech scanning systems. In the United States, the Transportation Security Administration (TSA) initially banned Nuctech’s equipment in 2014 and, based on its international experience, presented a detailed review of the company’s misdeeds in a secret document, which led to restrictions on its services by various countries. One of the last was Lithuania, whose authorities officially decided in 2021 to ban the supply of Nuctech equipment to three international airports in Lithuania.
• CEFC China Energy Co – Ye Jianming, former head of CEFC China Energy Co, was arrested in New York on various charges. In 2018, the state investment company took control of CEFC’s foreign assets after Jianming’s disappearance. Despite CEFC officially declaring bankruptcy in 2020, Georgia’s government and courts, allegedly influenced by individuals tied to Ivane Chkhartishvili and Bidzina Ivanishvili, have not acknowledged the bankruptcy documents. The Poti Free Industrial Zone, owned 75% by CEFC, remains in the company’s possession.

Closer to China, further from the West?

In recent years, Georgia has strengthened its ties with China, culminating in the establishment of a bilateral Strategic Partnership. Although it has raised concerns among Georgia’s Western partners, this worrying ‘friendship’ hasn’t stood in the way of the European Union granting Georgia its long-awaited candidate status. However, there is a risk that the increasing dominance of the Georgian market by Chinese companies and, more importantly, possible convergence with Chinese practices in the political sphere, could lead to frustration among Georgia’s long-standing international partners, including EU member states.

Voicing the concern during an interview with Forbes Georgia in 2020, the Ambassador of Poland to Georgia, Mariusz Maszkiewicz commenting on the construction of highways in Georgia, openly stated that the Ambassadors’ Club of Georgia “was a bit surprised” when it found that Georgia decided to cooperate with China, using EU funds. Questioning whether price alone is the best evaluation criterion when deciding on the best bidder he said: “We have very good companies in Austria, Germany, Poland. We can offer high quality at a reliable price”.

Mari Imerlishvili/Civil.ge

Also Read:

• 22/09/2023 – Interview | “Government’s goal is to sell increased Sino-Georgian cooperation as a counterbalance to its total failure on the Western front”
• 08/08/2023 – The Tricky Business of Courting Three Suitors

On January 22, the National Statistics Office of Georgia (Geostat) published preliminary data indicating that in 2023, Georgia’s foreign trade increased by 12.5% compared to 2022, totaling $21.53 billion in value.

In 2023, exports from Georgia increased by 9.1% to $6.09 billion, while imports rose by 14.0% to $15.44 billion. As a result, the country’s negative trade balance was $9.35 billion, representing 43.4% of its foreign trade turnover.

In the same period, Turkey was Georgia’s largest trade partner with $2.98 billion in trade volume, followed by Russia with $2.40 billion, United States with $2.05 billion, China with $1.64 billion, and Azerbaijan with $1.52 billion.

During the reporting period, Azerbaijan was Georgia’s largest trade partner in exports with $862 million, followed by Armenia with $787 million, Kazakhstan with $703 million, Kyrgyzstan with $696 million, and Russia with $657 million.

In terms of imports, Georgia’s largest trading partners were Turkey with $2.6 billion, the United States with $1.95 billion, Russia with $1.74 billion, China with $1.33 billion, and Germany with $948 million.

In 2023, the largest commodity groups in exports were led by motor cars – $2.13 billion. Then come: copper ores and concentrates – $479 million US dollars; wine of fresh grapes – $259 million; spirituous beverages – $196 million; ferro-alloys – $181 million; nitrogenous fertilizers – $158 million; natural or artificial mineral and aerated waters, not containing added sugar – $132 million; medicaments put up in measured doses – $127 million; mineral and aerated waters, containing added sugar – $109 million; electrical energy – $95 million; other commodities – $2.23 billion.

As for imports, the major commodity groups here are motor cars – $3.16 billion; petroleum and petroleum oils – $1.17 billion; medicaments put up in measured doses – $543 million; petroleum gases and other gaseous hydrocarbons – $445 million; telephone sets and apparatus for the transmission or reception of voice, images or other data (including wired/wireless networks) – $375 million; copper ores and concentrates – $237 million; motor vehicles for the transport of goods – $172 million; automatic data processing machines and units thereof – $159 million; cigars, cheroots, cigarillos, and cigarettes – $158 million; bars and rods of iron or nonalloy steel – $136 million; other commodities – $8.88 billion.

Also Read:

• 15/01/2024 – Georgia’s Foreign Trade Up 12.5% in 2023
• 13/12/2023 – Georgia’s Foreign Trade Up 14.7% in January-November 2023
• 13/11/2023 – Georgia’s Foreign Trade Up 16.2% in January-October 2023
• 19/10/2023 – Georgia’s Foreign Trade Up 16.5% in January-September 2023
• 13/01/2023 – Georgia’s Foreign Trade Up 32.8% in 2022