Georgia - The Economy Obstacles to Development

Obstacles to development

Several noneconomic factors influenced the broad decline of the Georgian economy that began before independence was declared in 1991. National liberation leaders used strikes in 1989 and 1990 to gain political concessions from the communist leadership, and a 1990 railroad strike, for instance, paralyzed most of the Georgian economy. In 1991 the Gamsakhurdia government ordered strikes at enterprises subordinated to ministries in Moscow as a protest against Soviet interference in South Ossetia.

Although combat in Georgia in the period after 1991 left most of the republic unscathed, the economy suffered greatly from military action. Railroad transport between Georgia and Russia was disrupted severely in 1992 and 1993 because most lines from Russia passed through regions of severe political unrest. Georgia's natural gas pipeline to the north entered Russia through South Ossetia and thus was subject to attack during the ethnic war that began in that region in late 1990. In western Georgia, Gamsakhurdia's forces and Abkhazian separatists often stopped trains or blew up bridges in 1992. As a result, supplies could only enter Georgia through the Black Sea ports of Poti and Batumi or over a circuitous route from Russia through Azerbaijan.

In both the Soviet and the post-Soviet periods, conflicts between Georgia and Moscow broke many vital links in the republic's economy. Official 1988 data showed imports to Georgia from other republics of more than 5.2 billion rubles and exports of over 5.5 billion rubles. As a result of Gamsakhurdia's policies, goods destined for Russia were withheld by Georgian officials. The Soviet leadership, encouraged by conservative provincial leaders in the Russian regions bordering Georgia, responded with their own partial economic blockade of Georgia in late 1990 and 1991. All-union enterprises in Georgia stopped receiving most of their supplies from outside the republic. The strangling of energy resources forced much of Georgian industry to shut down in 1991.

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