The port city of Poti has long symbolized Georgia's collapse, but Georgian President Mikheil Saakashvili sees potential for a Black Sea Dubai in its crumbling buildings and pot-holed streets — and Arab investors are listening.
As he woos voters ahead of parliamentary elections on Wednesday, Saakashvili has brought in a United Arab Emirates (UAE) investment firm to transform this dilapidated city into an investment magnet modeled on the success of Dubai and other Gulf cities.
A major industrial and transport hub when Georgia was part of the Soviet Union, Poti fell on hard times when Georgia’s economy floundered after its independence in 1991.
Unemployment is rife in the city of 50,000 and its infrastructure is collapsing. The Ras al-Khaimah (RAK) emirate is planning to pump hundreds of millions of dollars into the project, which is expected to create up to 20,000 jobs. Many here are welcoming the project as a much-needed boost to the regional economy, but others are skeptical that Saakashvili can pull off the radical plan.
Georgia’s opposition says the project is a fantasy and, with tensions rising over the nearby rebel region of Abkhazia, many wonder if it can succeed on the edge of a potential war zone. Poti’s mayor, Ivan Saginadze, is confident the plan will transform the city.
“For 15 to 20 years nothing has been done here, but this project is going to change everything,” he said. “In a few years this will be a completely different city.”
Under a deal reached last month, Georgia has sold a 51 percent stake in Poti’s port, the country’s busiest, and 400 hectares of land to the RAK Investment Authority for US$90 million.
The emirate has committed to spending more than US$200 million on tripling the port’s capacity and developing a “free economic zone” in Poti that Georgia hopes will lure several billion dollars worth of investments to the region. Based on similar projects in the UAE, the zone will allow companies to operate without paying any taxes except income tax.
Officials say they hope to attract manufacturers and high-tech firms looking to export throughout the Black Sea region. Many local residents said they welcome the project, which is being touted on billboards throughout the city. During anti-government protests last year that eventually turned violent, many critics accused Saakashvili’s pro-Western government of ignoring widespread poverty.
“I believe Saakashvili now when he says he wants to help people,” said Tamaz Chakua, a 48-year-old Poti resident. “You can see how much we need this project, there’s nothing here, no jobs, nothing to hope for. This can change everything.”
But others are skeptical, especially supporters of Georgia’s opposition, which is hoping to defeat Saakashvili’s United National Movement in Wednesday’s vote.
“I just don’t believe this is going to happen,” said Timur Tsanava, 47, as he attended a recent rally of the main opposition coalition in Poti. “It’s all lies. Saakashvili will say and do anything to stay in power.”
Some also wonder if the port’s proximity to Abkhazia, less than 50km up the coast, will deter foreign investors. In recent weeks, tensions have soared over Abkhazia, a Russian-backed region that broke away from Georgian control during a war in the early 1990s.
Saakashvili earlier this month warned that Georgia and Russia were close to war over the region. But Georgia’s deputy minister for economic development, Vato Lezhava, said the RAK Investment Authority’s willingness to invest in the port was proof that others will follow.
“The Poti investment was a test of whether or not foreign investors believe in Georgia’s peaceful intentions and its commitment to resolve the conflict peacefully,” he said. “The international community is not afraid of Abkhazia’s proximity to [the Russian city] Sochi, where the [Winter] Olympics will be held in 2014. And Poti is as close to Abkhazia as Sochi is.”
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