Commission staff working document - Accompanying the Communication from the Commission to the European Parliament and the Council - Taking stock of the European Neighbourhood Policy (ENP) - Implementation of the European Neighbourhood Policy in 2009: Progress Report Georgia {COM(2010) 207 final} {SEC(2010) 513 final} {SEC(2010) 514 final} {SEC(2010) 515 final} {SEC(2010) 516 final} {SEC(2010) 517 final} {SEC(2010) 519 final} {SEC(2010) 520 final} {SEC(2010) 521 final} {SEC(2010) 522 final} {SEC(2010) 523 final} {SEC(2010) 524 final} {SEC(2010) 525 final}
Date: 2010-05-04
Institutions: European Commission
Subjects: European neighbourhood policy, Georgia, democracy, economic integration, energy policy, environmental protection, geographical mobility, human rights, legal system, political cooperation, report, settlement of disputes

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EUROPEAN COMMISSION  

Brussels, 12.5.2010 
SEC(2010) 518 final 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 
Taking stock of the European Neighbourhood Policy (ENP) 

Implementation of the European Neighbourhood Policy in 2009: 
Progress Report Georgia 

{COM(2010) 207 final} 
{SEC(2010) 513 final} 
{SEC(2010) 514 final} 
{SEC(2010) 515 final} 
{SEC(2010) 516 final} 
{SEC(2010) 517 final} 
{SEC(2010) 519 final} 
{SEC(2010) 520 final} 
{SEC(2010) 521 final} 
{SEC(2010) 522 final} 
{SEC(2010) 523 final} 
{SEC(2010) 524 final} 
{SEC(2010) 525 final} 

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1. 

BACKGROUND AND OVERALL ASSESSMENT 

Georgia and the EU first established contractual relations in 1996 through a Partnership and 
Cooperation Agreement which entered into force in 1999. On this basis, the EU-Georgia ENP 
Action Plan was approved in November 2006 for a period of five years.  

EU–Georgia  meetings  took  place  at  the  level  of  the  Cooperation  Council,  the  Cooperation 
Committee  and  subcommittees  on  trade,  economic  and  related  legal  issues  and  on  justice, 
liberty and security issues as well as the two rounds of the EU-Georgia dialogue on Human 
Rights initiated in 2009.  

This  document  reports  on  progress  made  on  the  implementation  of  the  EU  –  Georgia  ENP 
Action Plan between 1 January and 31 December 2009, although developments outside this 
period are also taken into consideration when deemed relevant. It is not a general review of 
the political and economic situation in Georgia. In addition, for information on regional and 
multilateral sector processes, please refer to the sectoral report. 

The  EU  and  Georgia  agreed  to  move  forward  with  deepening  and  broadening  of  the  EU-
Georgia  relations.  In  parallel  and  within  the  Eastern  Partnership  framework  the  EU  started 
preparations  for  upgrading  contractual  relations  with  Georgia.  Negotiating  directives  for  an 
Association Agreement were adopted by the EU in May 2010. In the framework of the future 
Association Agreement, negotiations on a deep and comprehensive free trade area (DCFTA) 
will start once the necessary conditions have been met. 

Overall,  Georgia  made  progress  in  the  implementation  of  the  ENP  Action  Plan  priorities 
throughout  2009,  especially  in  the  areas  of  rule  of  law,  reform  of  the  justice  system,  fight 
against  petty  corruption,  trade  facilitation  and  improvement  of  business  climate.  The 
Government increased its efforts for reforming the justice sector. The new criminal procedure 
code which was pending since 2007 has been adopted by the Government and will enter into 
force in 2010.Continuous and effective implementation of related legislation will be the key 
in  ensuring  the  long-term  success  of  the  reforms,  thus  meeting  ENP  Action  Plan 
commitments.  Also,  Georgia  will  need  to  continue  its  democratic  reform  efforts  and 
consolidation  of  democratic  institutions,  especially  political  pluralism  and  media  freedom. 
Other  major  future  challenges  include  poverty  reduction,  employment  and  social  policies, 
agricultural  development  including  sanitary  and  phyto-sanitary  issues  and  civil  service 
reform. 

The  year  2009  in  Georgia  was  marked  by  mass  demonstrations  organised  by  the  extra-
parliamentary political opposition between April and July. The authorities kept a low profile 
and  did  not  attempt  to  break  these  demonstrations  by  force,  marking  progress  from  similar 
events in 2007. The implementation of the ‘second wave of democratic reforms’, announced 
by  the  President  in  2008,  continued  throughout  2009.  The  ‘second  wave  of  democratic 
reforms’ includes a stronger role for Parliament vis-à-vis the executive through constitutional 
changes, broader involvement of the opposition in decision-making processes, amendment of 
the election code, improved judicial independence and greater media freedom.  

The  opposition  was  granted  more  power  in  Parliament.  Some  representatives  of  the  extra-
parliamentary  opposition  accepted  to  participate  in  a  few  enlarged  sessions  of  the  National 
Security Council, but some of them subsequently withdrew, describing the ‘second wave’ of 
reforms as mere window-dressing. Polarisation of political life in Georgia continues to be a 

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serious  obstacle  to  genuine  political  reform  and  inclusiveness.  In  this  context,  the  effective 
impact of the ongoing reform process remains to be seen.  

On  the  economic  side,  the  effects  of  the  August  2008  war  combined  with  the  international 
economic  downturn  increased  pressure  on  the  Government  to  address  long-standing  socio-
economic challenges. In the first half of 2009, domestic demand declined and remittances and 
foreign direct investment levels fell. Signs of economic recovery were observed in the third 
quarter of 2009 and inflation remained low in 2009. For the year 2009, a contraction of 3.9% 
of real GDP was forecasted. 

In the second half of 2009 Georgia showed determination to fulfil key EU's recommendations 
linked  to  its  preparedness  for  starting  DCFTA  negotiations.  As  a  result,  some  progress  was 
achieved, notably the preparation of the first drafts of the necessary strategic reform plans. By 
deploying  additional  efforts  in  particular  in  order  to  properly  complete,  adopt  and  make 
progress  in  implementing  the  agreed  reform  plans,  Georgia  would  become  ready  to  start 
DCFTA negotiations.  

The  Georgian  authorities  and  civil  society  representatives  participated  actively  and  had  a 
constructive  input  to  the  multilateral  framework  of  the  Eastern  Partnership,  in  particular 
through open dialogue and their contribution to the working programmes for the four thematic 
platforms. Together with the bilateral elements of the Eastern Partnership, this contributed to 
the overall strengthening of EU-Georgia relations and reinforcement of the follow-up on the 
priorities of the ENP Action Plan.  

2. 

POLITICAL DIALOGUE AND REFORM  

Democracy and rule of law 

Following  the  OSCE/OIDHR  reports  in  2008,  which  outlined  several  irregularities  in  the 
conduct  of  elections,  the  Government  embarked  on  reforming  the  election  code.  The 
parliamentary and some extra-parliamentary opposition members joined the Working Group 
on Election Code, but the parties failed to agree on the threshold for the direct election of the 
mayor  of  Tbilisi.  The  threshold  for  victory  in  the  first  round  was  set  at  30%,  which  was 
considered  by  most  opposition  parties  as  too  low.  The  election  code  was  also  amended  to 
include  changes  in  the  procedure  for  electing  the  Chairman  of  the  Central  Election 
Commission,  but  the  amended  code  does  not  adequately  address  potential  abuse  of 
administrative resources during elections. The conduct of the May 2010 local elections will be 
an  important  indicator  of  progress  on  the  election  code  reform  and  implementation  of 
international recommendations.  

In  order  to  draft  a  new  constitution,  as  outlined  under  the  ‘second  wave  of  democratic 
reforms’, a State Constitutional Commission was established, I which representatives of non-
governmental organisations and opposition parties, as well as legal experts are also actively 
participating.  The  aim  of  the  Constitutional  Commission  is  to  prepare  a  new  constitution 
which  would  ensure  further  clear  separation  of  powers,  an  improved  system  of  checks  and 
balances, a more independent court system and better protection of human rights. A first draft 
of the constitution is now expected by autumn 2010.  

Following the period of demonstrations by the opposition parties, the amendments to the Law 
on Assembly and Manifestations and the Law on Police adopted in July 2009 raised concerns 
as they limited the right to assembly and did not specify how the law enforcement agencies 

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could  use  non-lethal  force  to  disperse  demonstrators.  Furthermore,  the  Public  Defender  and 
local  non-governmental  organisations  reported  cases  of  threats  and  beatings  of  opposition 
supporters during the demonstrations. These acts of violence against the opposition were not 
thoroughly investigated by the Government and no perpetrators were identified or brought to 
justice. During the demonstrations some political opponents were arrested and sentenced on 
alleged politically motivated charges. Thorough investigation of all these alleged crimes and 
charges would be a solid indicator of the improved independence of the judiciary. 

There was progress in 2009 on the reform of the criminal justice system as the new Criminal 
Procedure Code that had been pending for two years was adopted in October 2009. The Code 
should come into force in October 2010, introducing a number of substantial changes to the 
current  system  of  criminal  proceedings  in  Georgia,  notably  the  introduction  of  jury  trials  in 
criminal cases. The new Code provides for a major change in the system of administration of 
justice in criminal matters, which will present a challenge in implementation and will require 
continued  and  amplified  training  to  judges,  court  personnel  and  parties  to  criminal 
proceedings.  

On  strengthening  the  independence  of  the  judiciary,  lifetime  appointment  of  judges  by  the 
Higher Council of Justice has not been ensured, as it requires a constitutional amendment and 
is  part  of  the  development  of  the  new  constitution.  The  judicial  vacancies  in  district  and 
appeal courts are gradually being filled under a new procedure for the appointment of judges, 
which requires judges to enrol in the 18-month training at the High School of Justice.  

Regarding access to justice, the free legal aid service of the new Ministry of Corrections and 
Legal Assistance continues to provide legal aid to citizens throughout the country, including 
to vulnerable groups, on criminal cases and legal counsel on civil and administrative issues. In 
2009  two  new  offices  were  established  and  as  of  May  2009  the  Service  had  access  to  123 
private lawyers in addition to its core staff of up to 180. The bi-lingual website in Georgian 
and  English  became  operational  in  January  2009  offering  the  possibility  of  on-line 
consultation. The Legal Aid Service also printed information brochures in Russian, Armenian 
and  Azeri  and  distributed  them  in  all  offices  of  the  Service  that  serve  the  regions  where 
minority communities live.  

Civil service reform was at a standstill in 2009. The Public Service Council, responsible for 
piloting reforms in this area, has not met since 2007 and the Public Service Bureau activities 
has  been  confined  to  designing  and  maintaining  an  on-line  system  of  civil  servants’ 
declarations of assets. The Parliament made an attempt to improve the situation by preparing a 
new Civil Service code. Presented in a public seminar in November 2009, the draft text was 
strongly criticized and was eventually not proposed for parliamentary approval.  

Only  few  concrete  achievements  were  noted  as  far  as  decentralization  is  concerned.  The 
related draft strategy is maintained at a technical level. Some amendments to the legislation 
applicable to self-government were proposed at the very end of 2009, tackling such issues as 
internal  organisation  of  self-governments  and  rules  applicable  to  municipal  property.  These 
changes are related to the prospect of approval of the regional development strategy, expected 
in March 2010. The crucial issue of fiscal decentralization was not tackled at all, with most 
self-governments  still  depending  on  the  central  Government  for  about  90%  of  their 
expenditures. 

In  the  area  of  fight  against  corruption  Georgia  made  significant  efforts  to  comply  with 
Council of Europe’s GRECO recommendations, through legislative changes and reforms. The 

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amendments to the Criminal Code included the criminal liability of legal persons; the law on 
the Chamber of Control was adopted in January 2009; and the Law on Conflicts of Interest 
and  Corruption  in  Public  Service  was  amended.  The  effective  implementation  of  these 
amended laws will be crucial in consolidating the reform process. 

Human rights and fundamental freedoms 

Georgia is party to the main international and regional human rights instruments, and to most 
of their optional protocols. In July 2009, the country signed the UN Convention on the Rights 
of  Persons  with  Disabilities  as  well  as  its  Optional  Protocol.  Georgia  has  been  party  to  the 
Rome Statute of the International Criminal Court since 2003. The country is currently late in 
submitting  a  total  of  four  mandatory  periodic reports  to  UN  treaty  bodies.  No  progress  was 
made on issuing a standing invitation to UN special procedures. The EU-Georgia dialogue on 
Human Rights, initiated in 2009, focused on issues such as detentions.  

A new Public Defender (Ombudsman) was appointed in September 2009. The Office of the 
Public  Defender  is  being  strengthened  in  order  to  assume  the  new  function  of  the  National 
Preventive  Mechanism  (NPM)  and  in  spite  of  severe  budgetary  constraints,  financial 
allocations from the Government were slightly increased in the 2010 budget. The Parliament 
took  careful  note  of  the  Ombudsman's  reports  in  2009,  but  the  real  impact  indicator  of  the 
Public  Defender’s  Office  will  be 
the  Ombudsman's 
recommendations  by  the  relevant  Government  bodies.  Development  of  regional  offices  is 
ongoing.  

implementation  of 

the  actual 

To meet the obligations under the Optional Protocol to the UN Convention against Torture 
(OPCAT),  the  Public  Defender’s  Office  was  designated  as  the  NPM  in  July  2009  and  the 
recruitment of the necessary human resources to the Public Defender’s office is in progress. 
The  Georgian  Interagency  Coordination  Council  against  Torture,  Inhuman  and  Degrading 
Treatment presented a new action plan for 2008-2009 which takes into account a number of 
recommendations  of  the  Committee  for  Prevention  of  Torture  (CPT).  The  report  on  the 
implementation of the action plan from January 2008 to July 2009 was released in September 
2009, but the mandate of the Inter-Agency Coordination Council expired in December 2009. 
To  date,  the  anti-torture  action  plan  has  not  been  renewed  or  the  Coordination  Council 
reactivated.  

However, detention conditions and overcrowding in prisons remain areas of concern, as well 
as  inhuman  and  degrading  conditions  often  caused  by  overcrowding.  The  use  of  parole  or 
alternatives  to  imprisonment  is  still  inadequate,  in  contradiction  with  Council  of  Europe 
standards. The Code of Administrative Violations of July 2009 was amended, prolonging the 
length of administrative imprisonment from 30 to 90 days, which is not fully in compliance 
with  international  human  rights  standards.  The  European  Court  of  Human  Rights  and  the 
Public  Defender  of  Georgia  underlined  the  systemic  problems  in  administering  adequate 
medical care to prisoners. A new Ministry of Corrections and Legal Assistance was formed in 
2009, following the merger of the Prosecution Service with the Ministry of Justice. This new 
Ministry  is  in  charge  of  developing  systematic  actions  to  address  problems  in  detention 
conditions, which made limited progress so far.  

The ‘second wave of democratic reforms’ outlined measures to encourage media pluralism 
in Georgia. The granting of nation-wide satellite broadcasting to all TV channels only had a 
limited impact, since the high prices of satellite licences constitute a problem for opposition-
minded  TV  channels  which  struggle  for  funding  and  revenues  from  advertisements.  The 

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Georgian Public Broadcaster’s (GPB) board of trustees has been enlarged and now includes 
independent media experts. However, the broadcast media remain an issue of major concern 
in  Georgia,  where  the  television  environment  is  reported  to  be  highly  polarised  and  biased. 
The GPB’s news coverage and political programmes are criticised for lacking the impartiality 
required of a public broadcaster and being biased in favour of the ruling party. Transparency 
of  ownership  is  considered  crucial  in  ensuring  media  pluralism,  but  the  availability  of 
information  and  documentation  relating  to  the  owners  of  media  outlets  and  broadcasting 
licences still remains problematic in Georgia. The European Union organised a ‘Civil Society 
Human  Rights  Seminar  on  Media  Freedom’  in  November  2009  with  the  aim  of  increasing 
awareness  on  media  freedom,  identifying  problems  and  facilitating  the  formulation  of 
solutions.  A  number  of  actions  were  taken  by  the  Government  to  improve  prison 
infrastructure and capacity in 2009, including through the construction of new prisons.  

Integration  and  the  rights  of  minorities  in  Georgia  remains  an  area  of  concern.  The 
Government elaborated a “National Integration Strategy: National Concept for Tolerance and 
Civic  Integration”,  which  was  adopted  in  May  2009.  The  concept  and  the  action  plan, 
covering  the  period  of  2009-2014,  foresee  the  improvement  of  infrastructure  in  remote 
minority  regions  and  development  of  classes  in  Georgian  as  state  language.  The  Council  of 
Europe  Framework  Convention  on  Protection  of  National  Minorities  is  not  fully  transposed 
into domestic  legislation and the European Charter for Regional and  Minority Languages is 
still not signed by Georgia. On the repatriation and integration of the Meskhetian population 
to  Georgia  the  period  for  applications  to  return  was,  once  again,  extended  an  additional  six 
months to cover the period until the end of 2009. The capacity of the Ministry for Refugees 
and Accommodation to deal efficiently with the applications is a subject  of  concern  and no 
specific  action  plan  to  effectively  ensure  the  repatriation  of  Meskhetians  has  yet  been 
developed.  

As  regards  women’s  rights,  the  package  of  amendments  to  Georgian  legislation,  envisaged 
by the action plan 2009-2010 for elimination of domestic violence and protection of victims 
of domestic violence, was adopted in December 2009. The inter-institutional Council on the 
elimination of domestic violence is operational. During the reporting period, the Ministry of 
Health, Labour and Social Affairs took the decision to open shelters for victims of domestic 
violence and identified two premises for this purpose, which are going through rehabilitation 
to  meet  the  minimum  standards  already  identified.  The  draft  law  on  gender  equality  was 
elaborated with the participation of local NGOs, international organisations and government 
bodies, and is expected to be adopted in spring 2010. Women still suffer from a gender pay 
gap: the average monthly salary of formally employed women was 43% less than men in the 
first quarter of 2009.  

The  Government  launched  the  reform  of  the  juvenile  justice  system,  together  with 
international  partners.  As  a  result,  the  strategy  for  Juvenile  Justice  System  Reform  and  its 
action  plan  were  adopted  in  September  2009.  This  strategy  foresees  to  reverse  the 
amendments adopted in 2007 for lowering the minimum age of criminal responsibility from 
14 to 12, a reversal recommended by the UN. Progress was also reported in the development 
of rehabilitation and education activities in detention centres for juvenile offenders.  

Cooperation on Foreign and Security Policy, conflict prevention and crisis management 

Since June 2007, Georgia has been invited to align with CFSP declarations on a case by case 
basis. In 2009, Georgia aligned with 97 out of 137 CFSP declarations to which it was invited 
to  join.  There  was  good  political  dialogue  with  the  Georgia  in  2009,  including  through  two 

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Political  and  Security  Committee  Troika  meetings  in  February  and  December  2009,  and  an 
EU Foreign Ministers' Troika visit to Georgia in July 2009. 

Strengthening regional cooperation  

The Southern Caucasus Integrated Border Management (SCIBM) promoted by the EU among 
Georgia,  Armenia  and  Azerbaijan  was  to  start  in  January  2009  but  was  delayed  to  address 
issues  raised  by  Azerbaijan.  The  conditions  for  implementation have  now  been  accepted  by 
all three countries and implementation started in March 2010 (see chapter 5 on cooperation 
on justice, freedom and security.) 

The South Caucasus Anti-Drugs Programme (SCAD V) came to an end in 2009. Discussions 
continue on how best to bring forward the results of the action and pursue regional efforts in 
the fights against illegal drugs. 

The new management (a Troika consisting of Armenian, Azerbaijani and Georgian executive 
directors) of the Regional Environmental Centre for Caucasus (REC) took office in January 
2009. It consolidated the REC both financially and in terms of internal organisation. The REC 
carried  out  regional  activities  in  2009  notably  in  the  fields  of  information  and  public 
participation,  environmental  policy  and  local  environmental  action  plans,  the  protection  and 
sustainable  development  of  mountain  regions.  It  is  an  important  tool  to  promote  regional 
cooperation and stability for the future of the South Caucasus. 

In  the  area  of  higher  education,  universities  from  Armenia,  Azerbaijan  and  Georgia 
cooperated  together  on  a  distance  and  e-learning  project.  This  is  the  first  time  that  such 
regional cooperation emerged under the Tempus programme. 

Cooperation for the settlement of Georgia’s internal conflicts 

The EU remains committed to respecting Georgia’s territorial integrity and sovereignty and to 
the peaceful resolution of  the  conflicts in Georgia. Following the August 2008 war, the EU 
provided  substantial  political,  financial  and  practical  post-conflict  support  to  Georgia, 
including a post-conflict assistance package of up to EUR 500 million from the EU budget for 
2008-2010.  The  projects  have  been  aiming  at  improving  the  living  conditions  of  people 
affected by the conflict, notably the needs of internally displaced persons (IDPs), both from 
1992  and  2008,  and  where  possible,  the  local  population  living  inside  the  conflict  affected 
areas.  The  confidence  building  measures  which  continue  to  be  supported  by  the  EU  aim  at 
creating conditions for the return of IDPs and facilitating progress in a constructive dialogue 
between opposing social groups (see chapter 8 on financial cooperation). The EUSR for the 
South Caucasus and the EUSR for the crisis in Georgia have also been actively engaged in the 
conflict resolution efforts. 

In  May  2009,  an  action  plan  was  adopted  for  implementation  of  the  State  Strategy  on 
Internally  Displaced  Persons  (IDPs)  for  2009-2012,  covering  all  IDPs,  as  requested  by  the 
EU. The action plan allowed the set-up of proper coordination mechanisms on IDP issues but 
does not outline the link between the actions foreseen with the funds available and the total 
population of IDPs whose situation still need to be addressed. There is also lack of clarity on 
the  selection  criteria  for  those  IDPs  who  will  receive  housing  during  the  process  of 
privatisation of collective centres. An updated and more concrete version of the Action Plan is 
to be adopted through a Government decree in April 2010. An information strategy launched 
by  the  Government  aims  at  overcoming  the  lack  of  awareness  among  internally  displaced 
persons on their rights and status.  

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The EU has also been taking an active role as a co-chair, together with the UN and the OSCE, 
of the “Geneva talks”, set up in 2008 as a forum for dialogue and the only platform allowing 
for  an  on-going  political  conflict  resolution  process.  In  the  course  of  2009,  five  rounds  of 
“Geneva talks” took place and some results were achieved; notably, the establishment of the 
Incident  Prevention  and  Reporting  Mechanism,  restoring  water  and  gas  supply  to  the  South 
Ossetian region, and discussions on a comprehensive set of Agreed Undertakings focusing on 
humanitarian issues related to conflicts, which show that the process is beneficial, albeit slow. 
Throughout  2009,  the  EU  continued  to  remind  Russia  of  its  commitments  under  the  EU-
mediated  ceasefire  agreements  with  Georgia  of  August  and  September  2008,  which  are  not 
yet  completely  fulfilled.  In  December  2009,  the  EU  also  developed  its  non-recognition  and 
engagement policy towards the breakaway regions of Abkhazia and South Ossetia. 

An  EU  civilian  monitoring  mission  (EUMM)  with  340  observers  was  set  up  in  2008  to 
monitor and analyse the stabilisation process. In September 2009, the EUMM’s mandate was 
extended for another year, until 2010. However, refusal of access to the breakaway regions for 
the EUMM results in asymmetrical implementation of the Mission’s mandate. 

The  independent  international  fact  finding  mission  on  the  conflict  in  Georgia  released  its 
report in September 2009 on the events that led to the August 2008 war between Russia and 
Georgia,  outlining  that  the  war  was  avoidable.  The  report  made  an  assessment  of  the 
responsibilities  of  both  Georgia  and  Russia  in  the  conflict,  as  well  as  on  the  role  of  the 
international community. 

The Law on Occupied Territories (see last progress report SEC(2009) 513) raises serious 
concerns about the possibility of delivering humanitarian and rehabilitation assistance to the 
two  breakaway  regions.  In  January  2009  the  Government  and  the  European  Commission 
issued a joint statement on political conditionality linked to increased EU budget assistance, 
accompanied  by  a  series  of  commitments  by  the  Georgian  Government,  which  included  the 
aim of finding mutually acceptable implementing rules for the Law on Occupied Territories. 
The Council of Europe Venice Commission was consulted and expressed a number of serious 
concerns.  

After the reporting period, in January 2010, the Government adopted the new “State strategy 
on Occupied Territories: Engagement through Cooperation”. This strategy envisages a policy 
of  engagement  to  complement  the  Government’s  efforts  towards  the  peaceful  resolution  of 
conflicts. This is generally in line with the EU’s non-recognition and engagement policy and 
Confidence  Building  approach  and  was  welcomed  by  the  international  community  as  a 
positive  development.  In  line  with  the  aims  of  this  strategy  and  the  Venice  Commission’s 
opinion, the authorities announced their intention to amend the Law on Occupied Territories 
in the course of 2010.  

3. 

ECONOMIC AND SOCIAL REFORM 

Macroeconomic framework and functioning market economy 

The  global  financial  and  economic  crisis  strongly  affected  Georgia  and  thus  further 
exacerbated  the  economic  downturn  caused  by  the  August  2008  war.  The  economic 
contraction  was  driven  by  the  decline  in  domestic  demand  caused  by  a  tightening  in  bank 
credit, a fall in remittances and in foreign direct investment inflows which subsequently led to 
a  decline  in  output  and  consumption.  The  economic  sectors  that  were  especially  hit  were 

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manufacturing  and  construction.  First  signs  of  economic  recovery  appeared  in  the  third 
quarter of 2009. For the year 2009 as a whole a contraction of 3.9% of real GDP is forecasted. 
As a result of the economic slowdown inflation was low, at 1.7% on average for 2009, while 
at  the  end  of  2009  the  Consumer  Price  Index  (CPI)  was  expected  to  increase  somewhat  to 
3.5%.  

2009 was characterised by strong adjustments in trade and capital flows. The current account 
deficit decreased from 23% of GDP in 2008 to 12% in 2009. This rebalancing was driven by 
the trade balance adjustment: exports and imports of goods and services declined by 16% and 
30%  respectively,  thus  reducing  the  trade  deficit  from  30% of  GDP  to  23%.  2009  was  also 
marked  by  a  strong  decline  of  capital  inflows:  in  comparison  to  2008,  worker  remittances 
declined  by  more  than  20%,  while  FDI  inflows  more  than  halved  (from  EUR  1.5  billion  to 
EUR 0.8 billion). 

Due  to  the  economic  contraction  the  fiscal  position  of  Georgia  deteriorated.  The  budget 
deficit during the first three quarters reached 6.7% of GDP. For the year 2009 as a whole, the 
budget deficit reached 9.2% of GDP. The deficit was financed by external assistance from the 
International  Financial  Institutions  (IFIs),  bilateral  partners  and  by  issuance  of  domestic 
Treasury bills. The external public debt increased from 21% of GDP in 2008 to 32% of GDP 
in 2009. Higher external borrowing provided funding for public infrastructure projects which 
were intended to support growth in the post-conflict period.  

An  18-month  Stand-By  Arrangement  (SBA)  for  EUR  535.7  million  approved  by  the 
International Monetary Fund (IMF) in September 2008 enabled Georgia to draw EUR 471.4 
million from the Fund, most of it in 2009, to strengthen its balance of payments and improve 
its macro-economic policy framework. During the third review approved by the IMF Board in 
August 2009, the SBA was extended until June 2011 and the financing package was increased 
by  about  EUR  302.9  million,  bringing  the  whole  programme  to  EUR  835.7  million.  In 
addition  the  European  Commission  provided  a  grant  of  EUR  46  million  of  Macro  Financial 
Assistance to Georgia (more on this in chapter 8). 

To  limit  the  depreciation  of  the  lari  the  National  Bank  adopted  a  more  interventionist 
exchange policy. However, depreciation pressures were high and following the autumn 2008 
depreciation against the US dollar by around 17%, since spring 2009 the authorities allowed 
for greater exchange rate flexibility. During 2009 the GEL exchange rate against the "hard" 
currencies remained stable with the lari experiencing only a small depreciation of 2% against 
the USD and 4% against the euro in the course of 2009. The National Bank performs regular 
auctions of foreign currency in order to avoid too strong fluctuations of the exchange rate but 
the practice of almost daily interventions was abandoned. In terms of monetary policy tools, 
an  important  phenomenon  of  the  Georgian  economy  is  its  high  level  of  dollarization:  in 
September 2009 around 73% of deposits were in USD. Due to this high level of dollarization 
rather  than  the  National  Bank's  refinancing  rate,  it  is  the  domestic  interest  rate  on  the  USD 
that  influenced  the  economic  activity.  Consequently,  in  2009,  it  was  the  high  domestic 
lending  rate  in  USD  of  around  23%  on  an  annual  basis  which  hampered  the  economic 
recovery. 

In November 2009 amendments to the Constitution of Georgia and the draft organic "law on 
economic freedom, opportunity and dignity" were published as a Presidential initiative. The 
proposed  law  will  legislatively  and  constitutionally  (two  thirds’  majority  is  required  in  the 
parliament) determine the macroeconomic indicators to be adhered to by the Government. It 
will also restrict increasing of rates of current taxes through the referendum. Furthermore, it 

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will  impose  restrictions  on  the  establishment  of  new  regulatory  bodies  or  new  types  of 
licences.  The  intention  of  the  proposed  law  is  to  re-build  investor  confidence  which  was 
damaged  after  the  August  2008  war.  This  initiative  is  a  continuation  of  the  Government's 
policy which limits state intervention in social and economic life.  

Employment and social policy 

Poverty remains high in the country, affecting an estimated 27.8% of the population in 2009, 
and  it  is  aggravated  by  the  impact  of  the  crisis  on  employment  and  incomes.  Measures  to 
address poverty included a doubling of old-age pensions, one-off cash assistance and in-kind 
benefits (including fuel and basic food products). The implementation of the 2008 programme 
“Georgia without Poverty” was hampered by the global crisis and its focus was shifted from 
addressing poverty to facilitating job creation and improving social assistance.  

As  regards  employment,  Georgia  has  no  specific  employment  strategy  in  place  and  no 
employment implementing agency (therefore, no employment promotion policy exists in the 
country).  There  is  a  need  to  thoroughly  address  the  mismatch  between  skills  and  labour 
market needs.  

Further  to  the  October  2008  joint  statement  by the  International  Labour  Organisation  (ILO) 
and  Georgia,  a  number  of  consultations  were  held  during  the  reporting  period  between 
representatives  of  the  Government,  the  trade  unions  and  the  Association  of  Employers,  to 
review the provisions of the Labour Code which were not in line with the ILO Conventions 
on core labour standards.  

The  social  dialogue  of  October  2009  led  to  the  issuing  in  November  2009  of  a  Decree 
institutionalising  the  tripartite  National  social  dialogue  commission.  A  working  group  was 
created to review and analyze the legislation’s conformity with ILO core conventions and to 
draft  the  charter  of  the  newly  established  social  dialogue  commission.  The  commission’s 
charter  defines  its  role,  functioning  and  objectives,  remains  to  be  finalised.  Georgia’s 
commitment to promote social dialogue and implement ILO Conventions will be assessed by 
the  ILO.  Georgia  submitted  in  November  2009  its  report  on  the  implementation  of  the 
European Social Charter.  

As  regards  social  assistance,  the  Government  elaborated  in  February  2009  the  Medical 
insurance  programme  for  those  in  the  population  below  the  poverty  line.  It  targets  families 
that  are  registered  in  the  united  database  of  socially  unprotected  families  and  displaced 
persons.  

The  State  Programme  of  disabled,  elderly  people  and  homeless  children  rehabilitation  was 
approved  in  February  2009.  It  provides  several  kinds  of  social  services  to  persons  with 
disabilities, elderly people and homeless children (GEL 13.7 million, approximately EUR 5.8 
million,  in  2010).  There  are  no  allowances  or  any  kind  of  social  assistance  for  unemployed 
persons. 

Since January 2009, child care is under the responsibility of the Ministry of Labour, Health 
and  Social  Affairs.  The  Child  Care  programme  was  approved  in  March  2009.  It  aims  at 
supporting  homeless,  socially  unprotected,  disabled  children,  and  children  who  became 
victims of violence. It also aims to support deinstitutionalization and prevent abandonment of 
children.  The  decrease  of  the  number  of  children  in  residential  care  continued  over  the 

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reporting period. The Children Action Plan was revised in July 2009 to include the specific 
targets and activities to be implemented in the period 2009-2011. 

The agriculture sector remained neglected and performed poorly during 2009. The Strategy 
for  the  Agricultural  Development  of  Georgia  2009-2012,  prepared  by  the  Ministry  of 
Agriculture  in  2008,  was  not  endorsed  In  the  meantime  the  main  programming  tool  for  the 
MoA is the Midterm Action Plan, which was approved in 2009 and will run until 2013. Public 
investment  to  the  agriculture  sector  was  low,  only  1.5%  of  the  budget  allocation  in  2009. 
Supply of tractors to farmers, providing financial assistance to wine producers and one-time 
assistance continued to be the main form of support to the farmers by the Government. The 
Ministry  of  Agriculture  established  nation-wide  product-oriented  associations  which  will 
represent the common interest of their members and develop common marketing strategies.  

In  the  reporting  period  there  was  no  progress  regarding  sustainable  development.  The 
Ministry of Environment and Management of Natural Resources has still not started drafting 
the relevant strategy. 

4. 

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

As  regards  bilateral  trade,  in  2009,  as  a  result  of  the  global  slow-down  of  the  economic 
activity due to the financial crisis, EU exports to Georgia declined by 27.9% compared to the 
previous year, while exports of Georgian products to the EU decreased by 34.8%. Georgia’s 
exports  to  the  EU  remain  very  low,  with  a  low  value  added  and  non-diversified  –  in  2009, 
almost three quarters (71.6%) of them consisted of mineral products and almost one tenth of 
respectively agricultural and food products (9.4%) and chemicals (9.0%). 

Under the new EU Regulation providing for the Generalized System of Preferences (GSP) for 
the years 2009-2011, Georgia continued to benefit from the special incentive arrangement for 
sustainable  development  and  good  governance  -  GSP+.  These  enhanced  preferences  should 
contribute to diversifying of Georgia's export structure and improving its export performance. 

In March 2009 Georgia endorsed the assessment of the European Commission (in the form of 
key  recommendations)  on  its  preparedness  for  the  start  of  negotiations  on  a  deep  and 
comprehensive  free  trade  area  (DCFTA).  Following  this  endorsement,  in  the  second  half  of 
2009  the  Georgian  authorities  prepared  the  first  drafts  of  the  strategic  plans  aiming  at 
implementing the necessary reforms recommended by the EU. Intensive dialogue took place 
between  both  sides  on  these  issues.  By  deploying  additional  efforts  in  particular  in  order  to 
properly  complete,  adopt  and  make  progress  in  implementing  these  agreed  legislative  and 
administrative  capacity-building  plans,  Georgia  would  become  ready  to  start  DCFTA 
negotiations. 

The  negotiations  between  the  EU  and  Georgia  regarding  the  agreement  on  protection  of 
geographical  indications  of  agricultural  products  and  other  foodstuffs  continued  positively 
during the reporting period. Georgia is expected to improve the institutional control system to 
ensure the effective protection of geographical indications. 

In the area of customs, some progress was achieved, in particular in the area of simplification 
and trade facilitation. There were improvements in the post clearance control system and “on 
the spot audits” started in September 2009. A new regulation on risk management came into 
effect in January 2009 to implement the risk management changes to the Customs Code and a 

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special Risk Analysis Department and a Risk Management Committee were set up within the 
Revenue Service. Since the first quarter of 2009 risk-based cargo selectivity is applied also to 
exports and customs warehouses and the Revenue Service is working on the introduction of 
a “green  corridor”  and  a  “blue  corridor”,  which  are  currently  available  only  to  authorized 
operators within the Golden List programme. From January 2009, new provisions on dispute 
resolution and on customs penalties entered into force. A first step to involve customs in this 
process  of  issuance  and  verification  of  preferential  certificates  of  origin  was  initiated  by 
means  of  an  amendment  to  the  Customs  Code  which  specifies  that  the  criteria  and  rules  to 
determine origin and to issue certificates of origin. Continued efforts are needed in particular 
with  regard  to  security,  safety  controls  and  combating  customs  fraud.  Georgia  should  bring 
customs  valuation  practice  in  line  with  the  WTO  standards,  as  well  as  abolish  customs 
administrative fees. The implementing provisions to the Customs code remain to be adopted.  

On  free  movement  of  goods  and  technical  regulations,  some  progress  was  made.  In  May 
2009,  the  Working  Group  on  Standardisation,  Accreditation,  Technical  Regulations  and 
Metrology  was  created  in  the  context  of  the  DCFTA  preparations.  In  September  2009, 
Georgia  presented  a  draft  strategy  in  standardisation,  accreditation,  conformity  assessment, 
technical regulation and metrology and a draft programme on legislative reform and adoption 
of technical regulations. These documents provided the basis for a further technical dialogue. 
Georgia  adopts  European  standards  directly  as  its  own  legislation  in  particular  since  the 
country became a member of CEN in 2008. The upgrading of the quality infrastructure and 
capacity  building  efforts  are  also  on-going.  The  Georgian  National  Centre  of  Accreditation 
signed a cooperation agreement with the European Accreditation (EA) in November 2009.  

Regarding sanitary and phytosanitary (SPS) issues, progress was limited. Georgia drafted a 
first version of a food safety strategy, which was discussed in a technical dialogue. Georgia 
also prepared draft laws on hygiene, registration of food establishments and labelling of food 
products. Implementing legislation was adopted (for example on phytosanitary certificates) or 
prepared.  The  aim  is  approximation  to  EU  rules.  It  continued  the  upgrading  of  laboratories 
and training of experts. In June 2009, Georgia and the European Union signed a memorandum 
on participation in the EU’s Rapid Alert System for Food and Feed. In 2009, Georgia decided 
to  start  implementation  of  the  Law  on  food  safety  in  several  stages  from  2010  until  2018. 
Georgia  will  start  with  the  progressive  registration  of  food  establishments,  but  it  suspended 
again  the  implementation  of  key  provisions  on  controls  and  traceability,  until  2011.  During 
2009,  some  (voluntary)  controls  took  place  and  some  establishments  applied  strengthened 
hygiene rules.  

In order to implement the Action Plan and prepare for a deep and comprehensive free trade 
area with the EU, Georgia would need to progress considerably in the sector. Issues such as 
the enactment and implementation of legislation, the functioning of institutions and increased 
animal  disease  surveillance  need  specific  attention.  For  example,  despite  some  progress, 
enhanced coordination is necessary between the National Service on Food Safety, Veterinary, 
and Plant Protection (under the Ministry of Agriculture) and the Revenue Service (under the 
Ministry of Finance) which is responsible for certain SPS controls at the border. Georgia took 
initial steps towards authorisation for export to the EU of fishery products.  

Some progress can be reported on business climate, establishment and company law. The 
Law on Entrepreneurs, which was amended in November 2009, reintroduced the requirement 
of submission of the company’s charter for registration purposes. It also defined the minimum 
mandatory content of the charter. However, additional efforts are needed to meet the Union’s 
requirements on transparency issues, disclosure requirements, grounds for nullity and certain 

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rules  on  publicity  of  registers.  Online  assistance  (legal  consultation)  for  registration  of 
companies  became  available,  while  the  registration  itself  is  still  not  available.  A  Corporate 
Governance Code with a special focus on banks is being drafted within the frameworks of a 
non-governmental initiative, but with support of the Government. However, further efforts are 
needed  to  align  with  Union  standards  in  respect  of  the  formation  of  public  limited  liability 
companies, the maintenance and alteration of capital, grounds for nullity and certain rules on 
publicity of registers. 

Georgia continued to make some progress in the field of financial services. A new law on the 
National  Bank  of  Georgia  was  adopted  in  September  2009,  and  entered  into  force  in 
December 2009. The Law aims at expanding and strengthening the functions of the National 
Bank  of  Georgia,  which  should  contribute  to  the  stability  and  transparency  of  the  financial 
system,  and  perform  other  functions.  The  most  significant  risk  for  Georgian  banks  remains 
their indirect foreign currency exposure. The Financial Supervision Agency (FSA), the unified 
supervision  body  for  banking,  insurance  and  securities  markets,  continued  its  regulatory 
activities.  

Other key areas 

The  process  of  upgrading  the  structures  and  the  operational  capacities  of  the  State  Revenue 
Service  (SRS)  following  the  merger  of  the  tax  and  customs  administrations  was  continued, 
with  major  reductions  of  employment  and  structural  modifications.  Despite  the  entry  into 
force  of  the  measures  to  facilitate  VAT  deduction,  the  VAT  invoices  system  needs  to  be 
further improved. The Financial Police (Investigative Service of the Finance Minister) was re-
established  in  2009  with  the  aim  to  improve  the  compliance  with  the  tax  and  customs  law. 
However,  no  effective  appeal  mechanism  was  set  up.  It  is  important  to  ensure  that  the  new 
institution  does  not  create  unjustified  pressure  on  legitimate  trade/business.  Agreements  on 
avoidance of double taxation with France, Ireland, Luxembourg and Malta await ratification. 
The agreement with Spain is still to be signed, while negotiations are ongoing with Cyprus, 
Hungary, Slovakia, Slovenia, and Sweden. 

With  regard  to  competition  policy,  limited  progress  was  made.  Georgia  prepared  a  draft 
Comprehensive  Strategy  in  Competition  Policy  (CSCP)  in  September  2009.  It  provided  the 
basis for a technical dialogue with the European Commission services on competition policy. 
The Strategy should foresee drafting of a comprehensive Law on Competition and setting up 
of a reinforced Agency for Competition in the near future. This includes provisions for state 
aid. The 2005 Competition Law, currently in force, does not regulate anti-trust and the Free 
Trade and Competition Agency lacks independence and has only an advisory role. 

In  the  area  of  Intellectual  Property  Rights  (IPR),  Georgia  adopted  in  October  2009  the 
amended Law on Drugs and Pharmaceutical activities dealing with data exclusivity and non-
reliance  whereby IP  right  holders enjoy  the right  to  control,  on their own initiative, parallel 
import and to regulate this issue by distribution agreements or according to the exhaustion of 
rights  clause.  However,  the  draft  laws  on  industrial  designs  and  the  revised  Patent  law 
including new provisions on supplementary protection certificate remain to be adopted. Both 
legal drafts are in the process of governmental approval procedure, before submission to the 
Parliament. Georgia also worked on the text of the draft agreement of mutual legal protection 
of geographical indications with CIS countries.  

In autumn 2009, Georgia launched a study on piracy and counterfeiting aiming at identifying 
measures  for  improvement  of  IPR  enforcement.  The  study  is  expected  to  be  completed  in 

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Spring 2010. However, additional substantial efforts are needed to improve IPR enforcement 
in line with EU standards, in particular to adopt measures aiming at strengthening powers and 
capacities  of  the  institutions  in  charge  (e.g.  give  ex  officio  power  to  the  police  and 
prosecutors).  Very  few  court  cases  or  raids  were  carried  out  in  the  reporting  period.  No 
progress can be reported as regards the establishment of IPR units in courts or an IPR unit in 
the police. 

The  new  law  on  statistics,  which  is  in  line  with  Union  requirements,  was  adopted  by  the 
Parliament  in  December  2009.  It  provides  in  particular  for  the  creation,  organisation  and 
functioning  of  the  new  Statistical  Agency  (Sakstat)  which  entered  into  force  after  the 
reporting period, in February 2010. The staff of the statistics department needs to be trained to 
ensure  effective  implementation  of  the  new  legislation  and  the  reliability  of  the  statistics 
produced. 

On  enterprise  policy,  the  Entrepreneur  Service  Centre  was  established  in  the  Ministry  of 
Economic Development of Georgia in 2009 in order to promote a ‘one-stop shop principle’. 
Furthermore, a Department on Export Promotion in the same ministry was established. With 
the  aim  of  enhancing  cooperation  between  Georgian  and  foreign  businesses,  the  Georgian 
National  Investment  Agency  organised  several  business  forums  in  different  European 
countries. There were also many projects which support Small and Medium Sized Enterprises 
(SMEs) and business development. A public discussion on SME development in Georgia was 
held in July 2009 and a ‘Wider Small Business Forum’ in September 2009. Also, a draft law 
on  supporting  SME  development  in  Georgia  was  forwarded  to  the  Parliament.  Also,  in 
October 2009, an Inter-organisational Small Business Committee was established.  

With  regard  to  public  finance  management,  as  a  response  to  the  Public  Expenditure  and 
Financial Accountability (PEFA) findings, the Ministry of Finance revised the Public Finance 
Management Reform Strategy and issued a new Policy Vision paper, which replaced the 2007 
PFM Strategy  reform. The current Policy Vision focuses only on the areas which are under 
the  mandate  of  the  Ministry  of  Finance:  Budget  preparation,  resource  management,  internal 
control  and  accounting  &  reporting.  While  there  may  be  some  discussion  as  the 
appropriateness of the level of details of the vision, Ministry considers it a realistic reflection 
of what can be done with the existing capacity.  

The  PFM  Vision  also  includes  a  plan  of  actions,  implementation  of  which  is  spread  across 
2009  to  2013,  and  a  more  detailed  list  of  activities  for  2009.  The  Minister  of  Finance 
presented  the  most  recent  status  of  the  reform  implementation  during  a  meeting  in  October 
2009, underscoring the achievements in various PFM areas, e.g. drafting of the new Budget 
Code, implementation of programme and capital budgeting, enhanced transparency of budget 
execution,  extensive  development  of  sub-legislation,  establishment  of  simplified  Customs 
procedures for selected entrusted traders, establishment of risk based selection procedures for 
tax  auditing  and  introduction  of  e-services,  including  filing  of  returns  and  enquiries,  now 
available for taxpayers. 

In terms of public internal financial control, the Ministry presented a policy paper and action 
plan in March which led to the submission of a draft law on Internal Audit in October 2009 to 
the  Parliament.  Enactment  of  the  law  will  enable  the  progressive  development  of  additional 
control  functions.  However,  secondary  legislation  remains  to  be  enacted  alongside  further 
development  of  auditing  tools  and  administrative  capacity.  The  effectiveness  of  this  reform 
will  in  part  hinge  upon  the  success  of  measures  to  implement  common  standards  and 
procedures and to limit staff turnover. 

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The Chamber of Control has developed its own strategy to implement the new law which was 
approved in January 2009. The activities envisaged for upcoming years are: the establishment 
of a sustainable training system for auditors; development of a methodology for all kinds of 
audits  according  to  INTOSAI  standards;  improvement  of  the  relations/communication  with 
the Parliament, Ministry of Finance and the broader public. 

The amended Law on State Procurement was adopted by the Parliament in November 2009 
and entered into force in December. It provides for the introduction of electronic tenders in 
March  2010  leading  to  the  abolition  of  paper-based  procedures  in  September  2010.  It  also 
foresees  the  establishment  of  a  complaint  review  mechanism  comprising  the  representatives 
of  State  Procurement  Agency  and  non-governmental  organisations  in  March  2010.  Further 
efforts are needed to ensure full transparency throughout the procurement process. 

Progress in many areas of Public Finance Management continued; however, further reform is 
required and envisaged, notably in MTEF/budgeting, due to, inter alia, limited administrative 
capacity and lack of institutionalised sector consultation and procedure manuals. 

5. 

COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

In  the  area  of  border  management,  the  action  plan  for  the  implementation  of  integrated 
border  management,  foreseen  under  the  National  Strategy,  was  adopted  in  December  2009. 
The  EUSR  for  the  South  Caucasus  Border  Support  Team  helped  finalise  the  action  plan, 
supported  inter-agency  coordination  and  provided further  technical  assistance  to  the  Border 
Police. 

Georgia  continued  participating  in  the  Southern  Caucasus  Integrated  Border  Management 
(SCIBM) regional programme, formally agreed between Georgia, Armenia and Azerbaijan, in 
October  2007.  The  programme  aimed  at  enhancing  inter-agency  cooperation,  training  and 
capacity of customs and border guard services in line with agreed regional standards and EU 
norms.  Despite  the  regional  character  of  this  programme,  Azerbaijan  chose  to  pursue 
cooperation  only  through  its  bi-lateral  component  with  Georgia,  which  delayed  the  start  of 
implementation  until  March  2010.  Nevertheless,  in  the  framework  of  SCIBM,  Georgia’s 
customs  and  border  guard  services  participated  in  preparatory  training  sessions  in  Austria, 
Croatia, Italy and Slovenia alongside representatives from Armenia and Azerbaijan. 

Further  training  was  provided  for  border  and  patrol  police  including  cross-border  seminars 
with border officials from both Armenia and Azerbaijan in cooperation with OSCE. Similar 
training cooperation continued with Turkey as well as Germany, Poland and Romania in areas 
such  as  border  surveillance,  vessel  security,  and  operative  investigation.  As  was  the  case  in 
2008,  progress  on  delimitation  and  demarcation  of  borders  with  neighbours  other  than  with 
Turkey stills remains a cause for concern. Developing comprehensive education and training 
strategies  for  this  sector  as  well  as  improvements  to  institutional  capacity  to  effectively 
manage border crossing checkpoints requires ongoing attention and investment. 

The issuance of biometric passports to the citizens of Georgia did not start in 2009 as planned, 
although the Civil Registry took a number of preparatory steps to this end. Travel documents 
for refugees were issued in 2009 in line with the 2008 Law on Refugees. 

In  November  2009,  the  EU  and  Georgia  adopted  a  Mobility  Partnership.  Sixteen  EU 
Member States participate in the Partnership, offering various initiatives in three main areas 

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of cooperation: promotion of legal migration, fight against illegal migration and migration’s 
contribution to development. 

The  negotiations  on  visa  facilitation  and  readmission  agreements  were  technically 
concluded in November 2009 and signature is expected in 2010.  

Georgia  has  not  yet  developed  a  database  for  the  management  of  migration  nor  approved 
policies or passed legislation regulating labour migration. On asylum, Georgia has acquired 
buildings and is reconstructing a temporary reception centre for asylum seekers, with financial 
support,  notably  from  the  EU.  The  issuance  of  refugee  travel  documents  begun  and 
naturalization of refugees was made easier, with the period of required uninterrupted stay in 
Georgia reduced from 10 to 5 years.  

With  regard  to  the  fight  against  organised  crime,  Georgia  began  preparatory  measures 
leading to signature and ratification of the Third Protocol to the United Nations Convention 
on  Transnational  Organised  Crime  on  the  Illicit  Manufacturing  of  and  Trafficking  in 
Firearms, Their Parts and Components and Ammunition. In order to support implementation 
of  the  European  Convention  on  Cybercrime  signed  by  Georgia  in  2008,  the  Ministries  of 
Internal Affairs and Justice launched a one year project in June 2009 with the support of the 
EU and the Council of Europe. 

On the fight against trafficking in human beings, the Ministry of Internal Affairs continued 
implementation  of  the  National  Anti-Trafficking  Action  Plan  including  training  for  police 
officers  and  enhanced  cooperation  with  civil  society  on  rehabilitation  and  reintegration  of 
victims  and  measures  to  combat  child  trafficking.  Awareness-raising  was  given  particular 
attention by the launch of a specific police website. Moreover, Georgia continued cooperation 
with  law  enforcement  agencies  in  Turkey  and  Kazakhstan,  resulting  in  successful 
investigations and prosecutions. 

With  regard  to  the  fight  against  drugs,  Georgia  pursued  its  participation  in  the  SCAD  V 
regional programme, but failed to designate a national focal point for the programme.  

With regard to money laundering, Georgia actively pursued cooperation in the context of the 
Egmont  and  Eurasian  FATF  groups  and  Moneyval.  The  staff  of  the  Financial  Monitoring 
Service  (FMS),  the  Chief  Prosecutor’s  Office  (CPO)  and  the  Ministry  of  Internal  Affairs 
participated in international training seminars covering both money laundering and measures 
to  combat  the  financing  of  terrorism.  Moreover,  inter-agency  cooperation  was  enhanced 
through the signature of a Memorandum of Understanding between the FMS, the CPO and the 
Ministry of Justice. To enhance exchange of information, additional Memoranda were signed 
with  the  Financial  Intelligence  Units  of  Cyprus  and  Latvia.  However,  restrictions  on  the 
freedom  of  association  of  non-profit  and  civil  society  organisations  must  be  avoided  while 
implementing  national  policies  and  international  commitments.  The  Council  of  Europe 
Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and 
on the Financing of Terrorism remains to be signed and ratified. 

With  regard  to  international  and  regional  judicial  cooperation,  Georgia  submitted  draft 
agreements  on  legal  mutual  assistance  in  civil  matters  to  third  countries  in  May  2009,  but 
there was no progress since. 

No  developments  took  place  on  the  exchange  of  best  practice  information  on  judicial 
cooperation  with  EU  Member  States  or  with  regard  to  the  establishment  of  a  network  of 

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judicial  and  law  enforcement  agencies.  A  draft  law  on  Personal  Data  Protection  awaits 
adoption  pending  a  review  of  its  provisions  by  international  experts.  A  solid  system  for  the 
protection of personal data in terms of legislation and administrative capacity is essential to 
advance  cooperation  with  the  EU  Member  States  as  well  as  with  Europol  and  EUROJUST. 
The 2005 Council of Europe Convention on the Laundering, Search, Seizure and Confiscation 
of the Proceeds of Crime and the Financing of Terrorism remains unsigned. An independent 
data  exchange  agency  was  established  under  the  authority  of  the  Ministry  of  Justice  in 
January  2010,  as  part  of  preparations  for  the  signature  and  ratification  of  the  Additional 
Protocol  to  the  1981  Council  of  Europe  Convention  for  the  Protection  of  Individuals  with 
regard to the Automatic Processing of Personal Data.  

6. 

TRANSPORT, ENERGY, ENVIRONMENT, THE INFORMATION SOCIETY, RESEARCH AND 
DEVELOPMENT 

Although  the  recently  established  Unified  Transport  Administration  took  in  the  various 
transport modes and took significant steps to ensure safety oversight, there is still a need to 
strengthen administrative capacity. 

In  the  road  sector,  Georgia  continued  to  focus  on  improving  road  safety,  among  others  by 
aligning its road worthiness rules with international standards. With a view to strengthening 
multi-modal transport connections, Georgia paid particular attention to the development of a 
multimodal  (road-railway-ferry)  line  taking  less  time  than  the  Batumi-Poti-Ilichovsk  ferry 
communication. 

With regard to aviation safety, Georgia made substantial progress in 2009 since the release of 
the  International  Civil  Aviation  Organisation  (ICAO)  safety  audit  report.  A  follow-up  visit 
performed by ICAO in April 2009 showed that issues  of immediate serious safety concerns 
had  been  effectively  addressed  by  the  authorities.  The  Civil  aviation  authorities  deserve 
stronger political and administrative support to increase staff in some specific areas and to be 
in a position to recruit highly qualified personnel. Negotiations on a Common Aviation Area 
Agreement between the EU and Georgia started in October 2009 and significant progress was 
made in a second round of these negotiations in December. Through the agreement, Georgia 
will  gradually  take  over  EU  standards  in  the  field  of  aviation.  A  working  arrangement  with 
the European Aviation Safety Agency (EASA), signed in 2009, provides for a mechanism to 
strengthen  cooperation.  Further  efforts  are  needed  to  strengthen  the  Georgian  aviation 
authorities  after  the  frequent  restructurings  in  recent  years,  including  with  regard  to  safety 
oversight. Georgia is yet to ratify the Montreal Convention for the unification of certain rules 
for international carriage by air.  

In the maritime sector, Georgia started to strengthen flag state implementation and align with 
international standards by adopting a number of technical rules among others on “Recognition 
of  the  Classification  Society”,  “Minimal  acceptable  personnel  of  the  crew  necessary  to 
provide safety on the ship flying the flag of Georgia” and “Official Investigation of Maritime 
Incidents”.  However,  maritime  safety  remains  an  issue  of  great  concern.  The  Georgian  flag 
still  figures  in  the  ‘High  Risk’  category  of  the  black  lists  both  of  the  Paris  and  Tokyo 
Memoranda of Understanding on port state control.  

Georgia re-confirmed its wish to play a role in enhancing the EU’s energy security as a transit 
country  for  the  Caspian  energy  resources.  Both  the  EU  and  Georgia  have  an  interest  to 
develop  a  regulatory  framework,  in  line  with  the  EU  energy  acquis,  to  ensure  a  transparent 

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hydrocarbons  transport  to  the  EU.  Hydrocarbons  transit  through  the  Baku-Tbilisi-Ceyhan 
(Turkey)  oil  pipeline  and  the  Baku-Tbilisi-Erzurum  (Turkey)  gas  pipeline  remain  of  key 
importance.  Georgia  continued  to  support  the  development  of  the  Southern  gas  corridor 
including Nabucco and the trans-Caspian transportation project. In May 2009 it participated in 
the Prague Summit on the Southern Corridor.  

Georgia supported the ongoing EU study for a Caspian Development Corporation, the central 
purpose of which is to aggregate gas demand in support of the said Corridor’s development. 
In October 2009, Georgia and Romania agreed to cooperate, inter alia, on the development of 
liquefied natural gas (LNG) facilities in view of the transport of Caspian resources to the EU. 
In  July  2009,  energy  companies  from  Georgia,  Azerbaijan,  Lithuania,  Poland  and  Ukraine 
completed a study on the Euro-Asian Oil Transportation Corridor Project (EAOTC). After the 
rehabilitation of the Baku-Supsa oil pipeline (in 2008), Georgia started reflections on building 
a refinery in Supsa.  

The  country  further  implemented  its  energy  policy,  inter  alia,  by  investing  in  the 
rehabilitation of hydro power plants, preparing the construction of new hydro plants and the 
strengthening  of  electricity  networks.  Rehabilitation  included  the  large  Enguri  hydro  power 
plant.  Georgia  continued  to  work  towards  the  preparation  of  an  Azerbaijan-Georgia-Turkey 
electricity interconnection. It rehabilitated internal gas pipelines and connected, in the context 
of the ‘Gas to every village’ programme, new customers to the grid. Georgia completed a pre-
feasibility  study  regarding  the  use  of  underground  gas  storage  facilities.  Georgia  adopted 
legislation  aiming  at  further,  progressive,  convergence  with  EU’s  internal  energy  market 
rules.  Georgia  pursued  the  preparation  of  a  new  electricity  tariff  methodology.  The  country 
continued to install electricity and gas meters in households, which contributed to improving 
bill collection rates. 

On  the  basis  of  the  2008  state  programme  for  renewable  energy,  Georgia  developed  small 
hydro power plants. There was no progress achieved with regard to the draft law on energy 
efficiency  and  renewable  energy.  A  draft  building  code  remained  at  preparatory  level. 
Enhanced  efforts  are  needed  to  advance,  in  line  with  the  Action  Plan,  on  energy  efficiency 
and the use of renewable energy sources.  

In the field of climate change, Georgia submitted its Second National communication to the 
UN Framework Convention on Climate Change with information on national circumstances 
and steps planned to implement the Convention. A Climate Week took place in October 2009, 
providing several large public fora gathering relevant stakeholders.  

Georgia identified its strategic priorities with regard to climate change policy for 2010-2012. 
It plans to prepare an overall climate change strategy, taking into account the findings of the 
second national communication. Steps were also taken to prepare adaptation action in climate 
change sensitive regions. 

Georgia  took  steps  to  prepare  and  approve  further  Clean  Development  Mechanism  (CDM) 
projects.  One  new  such  project  was  registered  at  UN  level,  bringing  the  overall  number  of 
registered  projects  to  two.  Georgia associated  itself  with  the  Copenhagen  Accord  and 
provided information on actions that it will implement. The European Commission continued 
to support Georgia to implement the Kyoto Protocol. 

With  regard  to  the  environment,  Georgia  started  to  pay  more  attention  to  development  of 
environment policy and legislation than it did a few years ago. The Ministry of Environment 

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and  Natural  Resources  Protection  continued  preparing  the  second  National  Environmental 
Action  Plan  and  drafted  a  strategy  setting  out  the  Ministry’s  basic  priorities  for  2009-2013. 
The legislative framework continues to require further development, in particular as regards 
implementing  legislation.  A  new  environment  protection  code  is  under  preparation, 
comprising a set of new framework laws on key environmental sectors. A draft convergence 
plan on water was elaborated. 

An integrated coastal zone management strategy was prepared but not yet adopted. A strategy 
on  the  management  of  protected  areas  was  prepared.  Efforts  are  still  on-going  to  develop  a 
policy  document  on  forestry.  Some  steps  were  taken  to  address  inventory,  collection, 
packaging  and  disposal  of  obsolete  pesticides.  Continued  attention  is  required  to  implement 
existing strategies and plans and to further enhance monitoring and enforcement. 

Further strengthening of administrative capacity at all levels of the country remained a major 
challenge.  Coordination  between  authorities  continues  to  require  attention,  even  if  certain 
measures  were  taken  to  promote  cooperation  between  the  Ministry  of  Environment  and  the 
Ministry of Health on licensing of medical installations emitting radiation. Some steps were 
taken  to  promote  the  integration  of  environmental  considerations  into  other  policy  sectors 
such as regional development. 

A  state-of-the-environment  report  covering  the  year  2006  was  prepared  but  not  formally 
adopted nor published. However, certain steps were taken to strengthen reporting guidelines 
with a view to preparing a report covering the years 2006 - 2009. Georgia also continued to 
carry  out  some  other  activities  to  provide  information  to  the  public.  (For  the  Regional 
Environmental Centre for the Caucasus, please see section on regional cooperation.) 

There were no developments on environmental impact assessment. Public projects can still be 
exempted  from  such  assessments.  Nevertheless,  some  steps  were  taken  to  promote  the 
implementation of strategic environmental assessments. Procedures and consultation with the 
public in the context of environmental assessments require particular attention. 

Some preparatory steps were taken towards becoming party to the UNECE Convention on the 
Transboundary  Effects  of  Industrial  Accident  and  ratifying  the  UNECE  Convention  on  the 
Protection  and  Use  of  Transboundary  Watercourses  and  International  Lakes.  There  were  no 
significant  developments  with  regard  to  the  accession  or  ratification  of  remaining  UNECE 
Conventions  and  Protocols1.  Furthermore,  the  implementation  of  several  already  ratified 
agreements requires particular attention. Georgia participated in the Danube - Black Sea Task 
Force  (DABLAS),  in  the  EU  Water  Initiative,  including  a  national  policy  dialogue,  and  the 
International Commission on the Protection of the Black Sea against Pollution.  

Cooperation  and  information  exchange  took  place  between  the  Commission  and  Georgia, 
including on water, forestry, waste management, environmental data, nature protection and air 
quality.  

In  the  field  of  civil  protection,  the  Government  adopted  its  annual  risk  assessment  and 
launched the state programme for establishment of regional emergency management services 
and search and rescue  teams under the  Ministry of Regional Management. Training of staff 

1 

The UNECE Convention on Environmental Impact Assessment in a Transboundary Context and its Protocol on Strategic Impact 
Assessment (the latter signed but not yet ratified), and the Protocols to the UNECE Convention on Long-Range Transboundary 
Air Pollution. 

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and  supply  of  equipment  started.  Thematic  emergency  response  plans  on  natural  and  man-
made emergencies are in the process of development. Georgia participated in the December 
2009  launch  event  of  the  Eastern  Partnership  flagship  initiative  on  prevention  on, 
preparedness of and response to man-made-made and natural hazards. 

As  regards  Information  Society,  the  Georgian  National  Communications  Commission 
(GNCC)  regulated  tariff  bands  or  caps  according  to  market  conditions.  However,  the 
Government  still  exerted  prevailing  influence  over  the  fixed  line  incumbent  operator 
responsible for international telephony. Another operator dealt with local and inter-city phone 
services  and  continued  to  dominate  the  fixed  voice  market.  For  Internet  service,  the 
alternative  operator  had  approximately  80%  of  the  market.  In  May  2009  GNCC  extended  a 
mobile operator’s 1800 MHz GSM licence by 10 years. 

The Russian Federation and the de facto authorities of Abkhazia signed in September 2009 a 
memorandum on cooperation in the field of communications. According to information, the 
Russian Federation assigned to the de facto authorities the right to use Russian calling codes 
for  both  fixed  (wire-line)  and  cellular  (wireless)  operators.  This  contradicts  the  standards 
developed by the International Telecommunication Union. 

Georgian  audiovisual  legislation  still  needs  to  converge  with  European  standards  on  media 
regulation  and  decisive  actions  in  this  field  should  be  taken.  Georgia  still  has  to  ratify  the 
Council of Europe Convention on Transfrontier Television.  

In  the  area  of  research,  Georgia  increased  its  level  of  participation  in  the  7th  Framework 
Programme  (FP7),  with  23  research  groups  being  successful  in  their  applications,  as  of 
November 2009, receiving some EUR 1.6 million of EU funding.  

The Georgian National Science Foundation successfully organised an Information Day event 
in Tbilisi in June 2009, within the framework of the S&T International Cooperation Network 
for  Eastern  European  and  Central  Asian  countries  (FP7  IncoNet  EECA  project).  This  event 
raised  awareness  of  the  scientific  communities  in  Georgia  and  more  broadly  the  Caucasus 
region on the scientific partnership opportunities and research cooperation within FP7 in the 
'Environment' theme and the 'People' specific programme.  

7. 

PEOPLE-TO PEOPLE CONTACTS, EDUCATION AND HEALTH 

Reform  of  higher  education  continued,  as  in  2008,  with  a  focus  on  alignment  and 
approximation  to  European  standards  in  line  with  the  principles  of  the  Bologna  Process.  In 
this  respect,  a  two  year  twinning  project  on  capacity  building  for  implementing  Bologna 
actions started in June 2009. Moreover, the Law on Higher Education was amended in August 
2009  introducing  a  differentiation  between  higher  education  institutions  in  terms  of  their 
research and teaching functions. Two Councils of Rectors, one for state and one for  private 
universities, were established (in June and October 2009) thereby strengthening universities’ 
autonomy  and  capacity  to  dialogue  with  the  state.  While  all  higher  education  actors  and 
universities  are  familiar  with  Bologna  Process  requirements,  systemic  reform  will  require 
structured national coordination and additional consensus-building support actions in order to 
secure implementation. 

In  the  area  of  vocational  education  and  training,  the  national  Medium  Term  Strategy  on 
vocational  education  and  training  2009-2011  was  approved  in  December  after  extensive 

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discussions  with  stakeholders.  The  National  Vocational  and  Education  Council  was 
established in December opening the prospect of improved coordination between stakeholders 
and strengthened links with social partners. It is particularly important that the training system 
produce  skills  that  respond  more  closely  to  employer  requirements  (see  chapter  3  on 
employment  and  social  policy).  Further  efforts  were  developed  under  the  leadership  of  the 
Ministry of Education and Science in the areas of teacher training, professional standards and 
the preparation of a quality assurance policy. 

Georgia  continued  to  benefit  from  its  active  participation  in  the  Tempus,  Erasmus  Mundus 
and  Youth  in  Action  programmes.  A  Tempus  Information  Day  was  held  in  December,  but 
information  on  Erasmus  Mundus  grants  should  be  spread  to  a  larger  number  of  potential 
applicants. Work began on the establishment of a national Youth Information Centre in Tbilisi 
which  should  open  branches  in  different  regions  of  Georgia  in  2010.  One  university 
participated in the Jean Monnet programme. Georgian universities are encouraged to continue 
submitting high-level applications for Jean Monnet projects. Nine Georgian students and two 
scholars were awarded scholarships for Erasmus Mundus Masters Courses for the academic 
year  2009-10  under  Erasmus  Mundus  Action  1  while  academic  and  student  mobility  was 
further  facilitated  under  Erasmus  Mundus  Action  2  through  the  award  of 58  mobility 
grants.Four  projects  were  selected  under  the  second  Call  for  Proposals  of  Tempus  IV  and a 
Tempus  Information  Day  was  held  in  December.  Work  began  on  the  establishment  of  a 
national Youth Information Centre in Tbilisi which should open branches in different regions 
of  Georgia  in  2010.  One  university  participated  in  the  Jean  Monnet  programme.  Georgian 
universities  are  encouraged  to  continue  submitting  high-level  applications  for  Jean  Monnet 
projects.  

In  the  field  of  culture,  the  Georgian  National  Museum  and  Georgian  cultural  associations 
took part in several EU-funded cooperation projects with EU and ENP partners. To advance 
its regional cooperation in the framework of the Eastern Partnership and the Kyiv Initiative, 
Georgia  is  encouraged  to  sign  and  ratify  the  2000  European  Landscape  Convention  and  the 
2005  Council  of  Europe  Framework  Convention  on  the  Value  of  Cultural  Heritage  for 
Society.  Georgian  cultural  organisations  participated  in  the  Call  for  Proposals  of  the  2009 
ENP Special Action under the Culture Programme. 

Georgia continued health sector reform, which aims, inter alia, at increasing efficiency and 
ensuring adequate health services to the most vulnerable groups. The reform included further 
work  towards  privatisation  of  primary  and  secondary  health  care  facilities.  In  2009  Georgia 
launched  state  programmes  on  free  emergency  health  care  and  on  medical  insurance.  The 
insurance programme should contribute to reducing the considerable out of pocket payments. 
In  November  2009,  stakeholders  presented  a  medical  reform  concept.  In  November  2009, 
Georgia  conducted  a  first  ever  survey  on  health  systems  performance  assessment.  In  May 
2009, Georgia established an experts  group  which started working  on a national monitoring 
and  evaluation  framework  for  HIV/AIDS.  In  September  2009,  the  law  on  HIV/AIDS  was 
adopted.  Georgia  took  measures  to  combat  influenza  A  (H1N1)  including  by  the 
establishment of guidelines and a vaccination strategy. In October 2009, Georgia participated 
in the newly established EU enlarged health information committee. 

8. 

FINANCIAL COOPERATION – 2009 KEY FACTS AND FIGURES 

The European Neighbourhood and Partnership Instrument (ENPI) envelope for Georgia under 
the  National  Indicative  Programme  2007-2010  is  EUR  120.4  million.  The  programme  is 

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geared  towards  supporting  the  achievement  of  key  policy  objectives  as  outlined  in  the  EU-
Georgia  Action  Plan  and  pursues  four  priorities:  (1)  Support  for  Democratic  Development, 
Rule  of  Law  and  Governance;  (2)  Support  for  Economic  Development  and  ENP  AP 
implementation;  (3)  Poverty  reduction  and  social  reforms  and  (4)  Support  for  peaceful 
settlement of Georgia's internal conflicts. 

The  implementation  of  the  measures  covered  by  the  2007  and  2008  Annual  Action 
Programmes (AAP) is underway. Under the 2007 AAP a Public Finance Management (PFM) 
Sector Budget Support programme was financed and the last tranche was released before the 
end  of  2009.  Under  AAP  2008,  a  Sector  Budget  Support  on  Justice  started  and  its  second 
tranche  was  released  in  December  2009,  following  the  major  reforms  carried  out  by  the 
Government in many justice-related areas, such  as: probation, juvenile justice, protection of 
human rights.  

In 2009, the European Commission programmed  assistance for a  total amount of EUR  27.4 
million under the ENPI 2009 Annual Action Programme. It focuses on Sector Budget Support 
in  Vocational  Education  and  Training  (EUR  19  million)  and  on  TA/Twinning  component 
(EUR 8.4 million).  

An  indicative  financial  envelope  of  EUR  180.3  million  will  be  available  to  support  co-
operation  activities  in  Georgia  in  the  period  2011-2013,  based  on  a  European  Commission 
decision of March 2010. 

In  addition  to  the  AAP,  a  Special  Measure  in  support  of  IDPs  was  approved  in  November 
2009 by a Commission Decision, therefore another EUR 43.5 million will be used for socio-
economic  integration  of  IDPs  within  the  Georgian  society  and  their  hosting  communities, 
representing  the  3rd  Special  Measure  adopted  in  favour  of  Georgia  in  the  aftermath  of  the 
August 2008 conflict with Russia. Previously funding was granted to Georgia in the form of 
two Special Measures in support of Internally Displaced Persons (IDPs). In 2009, EUR 61.5 
million  was  committed  and  nearly  EUR  50  million  already  disbursed,  principally  aimed  at 
ensuring decent living conditions and livelihood to all Georgian IDPs. In addition to the ENPI 
Special Measure, the Instrument for Stability (IfS) has also been mobilised in 2009 and a total 
amount  of  EUR  14  million  have  been allocated to (i) support confidence building measures 
between  the  conflict  parties,  (ii)  support  the  socio-economic  integration  of  IDPs,  (iii) 
contribute to further democratic reforms and (iv) support to civil society capacity building in 
the Gali district. 

Also  in  the  context  of  the  additional  post  conflict  assistance  to  Georgia,  the  European 
Commission provided a grant of EUR 46 million of macro-financial assistance, out of which 
50%  was  already  disbursed  in  2009.  This  measure  aims  at  supporting  Georgia’s  domestic 
efforts  towards  a  sustainable  economic  recovery,  and  in  this  way,  alleviating  the  financial 
constraints on the implementation of the Government's economic programme. 

In  addition  to  the  bilateral  allocations,  Georgia  also  benefited  from  cooperation  activities 
financed  under  the  ENPI  multi-country  and  regional  programmes,  as  well  as  horizontal 
thematic  programmes,  such  as  the  European  Instrument  for  Democracy  and  Human  Rights 
(EIDHR) and the DCI programmes: Non-State Actors and Local Authorities in Development 
(NSA/LA)  and  the  Food  Security.  Georgia  also  participates  in  the  ENPI  Cross  Border 
Cooperation (CBC) programme "Black Sea" (ar. EUR 18 million for the whole programme in 
the  period  2007-13).  The  priorities  of  this  CBC  programme  are  to  provide  cross  border 
support to partnership for economic development and networking resources and to strengthen 

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competencies for environmental protection and conservation as well as for establishment of a 
common  cultural  environment  in  the  region.  In  2009,  eight  proposals  from  Georgia  were 
submitted, but the financial decisions have not yet been taken.  

Under the Neighbourhood Investment Facility (NIF) contributions, one project in Georgia was 
approved in 20091, committing EUR 8.5 million in grants and technical assistance, expected 
to leverage EUR 250 million in loans of European Finance Institutions in the transport sector. 

The twinning instrument that was introduced in Georgia in 2007 slowly gained momentum in 
2009. However, the Georgian authorities seemed to show a certain reluctance to use twinning 
and the pace of identification and preparation of new twinning projects remained very slow.  

The  Government’s  efforts  in  donor  coordination  remained  weak.  Donor  coordination  rather 
focused  on  financial  tracking  and  sector  coordination  took  place  only  in  very  few  areas. 
Furthermore, the Government played no significant role in the programming, monitoring and 
evaluation  of  external  assistance  projects.  Unlike  other  donors’  funding,  European 
Commission  funding  was  coordinated  by  the  Ministry  for  European  and  Euro-Atlantic 
Integration.  However,  this  Ministry  suffered  from  significant  staffing  shortfalls,  which 
weakened its supervisory and coordination role. 

The  EU  Delegation  to  Georgia  supported  the  coordination  of  assistance  activities.  The 
Delegation started collecting information on EU donor activities, setting up specific sectoral 
working  groups  to  promote  better  donor  coordination  at  sector  level  and  encouraging  the 
Government to take a stronger role in donor coordination and to adhere to the principles of the 
Paris Declaration on Aid Effectiveness and the EU Code of Conduct.  

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