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U.S. AMBASSADOR-DESIGNATE TO GEORGIA KENNETH YALOWITZ

USIS 17 June 1998
TEXT: U.S. AMBASSADOR-DESIGNATE TO GEORGIA KENNETH YALOWITZ
(Statement at SFRC confirmation hearing June 16) (540) Washington
-- Kenneth Yalowitz, President Clinton's nominee to be U.S. ambassador to Georgia, testified before the Foreign Relations Committee at a confirmation hearing June 16.

Following is the text of his statement:
(Begin text)

(End text)

US Ambassador to Georgia Mr. William H. Courtney, Speeches...
Source: Welcome to The USIS Tbilisi Home Page! [All rights reserved]
Updt: 24 Nov, 1996

...Since mid-1994, under the leadership of now-President-Elect Shevardnadze, Georgia has launched bold reforms to pave the way for economic recovery and growth...

...The government has drastically cut spending. ...The number of government employees is down sharply. Over 130,000 health sector personnel were removed from the budget. Most patients will pay for services... Private services are the best way to assure quality health care for most people...

...State bread monopolies are a second example. Bread subsidies and monopolies are inefficient ways to help vulnerable persons. Last year subsidies were sharply cut. Rising bread prices have spurred grain planting in Georgia...

...New economic opportunities will emerge not only through reform, but also as Georgia improves its transit capability. International oil companies want to ship oil westward from the Caspian area. Georgia should encourage this by allowing maximum leeway for private investment. Private pipelines and ports, regulated but not owned by the state, would bring your country the most rewards.

...America, the IMF, the World Bank, and other donors are assisting Georgia to advance its reforms. For example, the United States allows Georgia to sell a portion of its humanitarian aid on domestic markets. This helps Georgia fund its official budget, and thus qualify for credits from international financial institutions...

...Georgia has an ideal location and ports to transport and ship goods for an entire continental area. A new Eurasian Corridor reaches from the Black Sea across the Transcaucasus, the Caspian Sea by barge, and Kazakstan and Central Asia to China. Last year, tens of thousands of trucks crossed from Turkey into Georgia. Many continued eastward through the Eurasian Corridor. This represents a phenomenal shift in transport patterns in just a few years. Railway and truck transport from Russia to Georgia and vice-versa has dried up because of the Abkhazia and Chechnya disputes. The Western oil pipeline, which America strongly backs as one of multiple routes, will reinforce the Eurasian Corridor by spurring competitive export routes for Caspian energy...

...A century ago, the great British economist Alfred Marshall stated that it was the transportation industry which had done the most to increase England's wealth. Now, Georgia has a similar opportunity. Rarely in world history do new channels of transport and communications open so quickly, and on such a vast scale, as is now happening in the Eurasian Corridor. The emergence of this "Silk Route" of the 21st century heralds exciting possibilities for much of the Eurasian continent. One route in the Corridor runs from Turkey and the Black Sea, via the Transcaucasus, across the Caspian Sea by barge and other means, and on through Central Asia and Kazakstan to the edges of China. Much of this route goes through southern tier republics of the former Soviet Union. Other regional states will play key roles in the Corridor's emerging, multi-directional transport and communications networks. The Corridor will offer alternative, lower cost routes for the export and import of many goods, from oil to food and wine... How can Georgia, which stands at a crossroads, best take advantage of the promise of the Eurasian Corridor? In a nutshell -- by encouraging private investment in every aspect of transport and communications. Only private investors can generate the amounts of capital -- billions of dollars -- and modern technology required to realize the full potential of the Corridor in Georgia... Costs are high at the ports in Batumi and Poti. Privatizing them would promote Georgia as an intermodal transport nexus for the Eurasian Corridor. Port services should be privatized. These steps would encourage fuller use of existing ports, and investment in new capacity as demand grows... The Western oil pipeline will likely be built much sooner than was once expected. By moving ahead in a pragmatic and expeditious way, Georgia has gained a stronger reputation as a place for investment. Private investors will play a major role in financing pipeline construction. Allowing maximum leeway for private investment will enhance Georgia's prospects to transport and export much larger volumes of oil in the future... ...In conclusion, Georgia has notable advantages of geographic position, port potential, and momentum on economic reform which can help it develop the Eurasian Corridor through its territory. The Corridor should become a tremendous contributor to prosperity and stability in Georgia and the Eurasian continent. Americans wish you well in this historic endeavor.

...Americans are proud that they have helped the people of Georgia survive and regain their vitality. Now, Georgia has turned the corner and new horizons of cooperation are opened. President Shevardnadze told you Georgia would never yield its independence. America strongly supports Georgia's independence, sovereignty, and territorial integrity...

...To stimulate competitive and reliable transport of Caspian oil to world markets, our advisors assisted Georgia to conclude an accord on a Western pipeline. They helped design the Georgian International Oil Company to be transparent and accountable... ...For investors, Georgia's good relations with neighbors are a big asset. From a vast area stretching from China to the Black Sea, Georgia will export to world markets oil, cotton, metals, and other goods. Georgia is a lifeline to Armenia....

...Some underlying conditions for resolving the Abkhazia dispute may be improving. First, by oving briskly ahead on democratic and economic reforms, Georgia and Russia are bolstering their capacity to cooperate. Second, international isolation and CIS economic prohibitions are causing Abkhazia to lose ground and are creating internal strains. Third, both Georgia and Russia have interests in peace. Georgia wants to alleviate the burden of displaced persons. Recovery of rail and road transport to Russia and beyond would benefit Georgian agriculture, industry, and transportation. Russia, too, is eager to reopen transport to Georgia and Armenia, for strategic reasons and to compete with growing Western economic activity in the Transcaucasus. Torn by the Chechen conflict, Russia seeks to discourage separatism in the region.

Georgia's move to join WTO will bring immense trading benefits, and accelerate other reforms, from intellectual property to insurance. An open trading regime is vital. Georgia seeks to become a major gateway to the emerging Eurasian Corridor of transport and communication, stretching from Turkey and the Black Sea eastward to China, and encompassing north-south and east-west routes in vast Eurasia. Turkish and European trucks sweep across Georgia through the Corridor. Uzbek cotton and Kazakstani oil are beginning to be shipped across Georgia and exported from its ports. Not surprisingly, external trade is up sharply.

...We applaud pioneering American investments, such as California-based Chalice Wines. More needs to be done, however, to create better conditions for private investment, especially in agriculture and agribusiness, transportation, infrastructure, and tourism. In common with such countries as the Netherlands and Belgium, Georgia has a tremendous potential to serve as an import and export point for a continental-sized area.

An important step came in March when the Azerbaijan International Oil Consortium (AIOC), which includes Amoco, signed an agreement with Georgia to construct the Western pipeline for the transportation of "early" oil from a Caspian sea project. Georgia is also a contender for participation in a main export pipeline. New cooperation spawned by the Western pipeline accord has already facilitated shipments of oilfield equipment to Azerbaijan from the Georgian port of Poti.

The Western pipeline will be the first step in what we hope will be a modernization of Georgia's other infrastructure -- railways, intercity roads, ports, energy pipelines, telecommunications, and aviation.

In pursuing bold reforms, Georgia is building a brighter future. But what kind? One model for the future might be The Netherlands. Like it, Georgia has very well-educated people who are oriented not only to their own country but to a world beyond. Second, Georgia is becoming a transport nexus for a vast area, from Turkey and the Black Sea to China, through the Eurasian Corridor. Third, Georgia has exceptional potential for export of high-value agricultural products, from wine to fruits and nuts...

...By offering healthy competition, private schools spur improvements in public education. Private schools in transportation, for instance, could train specialists and help Georgia take full advantage of the dynamic eurasian Corridor.

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