Wed, Nov 26, 2003 - Page 1 News List

Georgian president sounds alarm over state of economy

REUTERS , TBILISI

Georgia's interim president warned yesterday the country stood on the brink of "economic collapse" after the ouster of Eduard Shevardnadze and said drastic steps had to be taken to reverse the situation.

Acting president Nino Burdzhanadze told top officials in a televised broadcast that the legacy of economic decline left by the discredited Shevardnadze administration was "even worse than we thought."

"The situation is very difficult. Yesterday's data shows that we are facing economic collapse," she said, adding the situation called for radical measures.

She gave no specific details beyond urging state enterprises to work at full capacity. But her warning clearly prefaced fresh appeals to the West to help her impoverished former Soviet country, where the average monthly income is about US$40.

"We have to ask our foreign colleagues to help us in this situation," she said.

Shevardnadze, a former Soviet minister who won plaudits in the West for helping end the Cold War, was hounded from office on Sunday by mass street protests triggered by alleged vote-rigging in a Nov. 2 parliamentary ballot.

His 11-year rule was marked by rising poverty, chronic corruption and separatist rebellions in the volatile Caucasus state of 4.5 million people.

Burdzhanadze, a 39-year-old lawyer, was scheduled to preside over a special session of the outgoing parliament yesterday in the hope of fixing a date for an early presidential election and getting political life back on track.

The Supreme Court formally cleared the way for a separate new parliamentary election by quashing the results of most of the disputed November ballot.

Under the constitution, an election for president has to be held by the end of the first week in January. But the situation after Sunday's resignation by Shevardnadze in a turbulent "people power" revolution was chaotic.

With some deputies using the threat of boycott to win concessions from the new leadership, there was a possibility the special session might not muster the required number of deputies to make it legitimate.

Georgia's new leaders, including Mikhail Saakashvili, a US-educated lawyer who led anti-Shevardnadze protests, face an uphill battle to turn round the fortunes of a country mired in poverty with a rickety social infrastructure and under constant threat from separatist forces.

The West is carefully monitoring the situation because of plans to build an oil pipeline across Georgia from Azerbaijan to the Mediterranean sea.

Georgia has fallen out with the International Monetary Fund, which refused to lend it money under a poverty reduction program until the Shevardnadze government dealt with mass corruption and tax evasion.

Sources close to the Paris Club of official creditors said Georgia would have to mend its fences with the IMF before it has any chance of a deal on debt relief with wealthy nations. It owes US$1.78 billion in external debt including some US$600 million to the Paris Club.

Burdhanadze secured some support from big northern neighbor Russia with promises that Moscow would maintain its vital supplies of electricity to Georgia, whose economic base is normally plagued by power outages.

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