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Georgia Connecting point between Europe and Asia
In the past two decades, the Georgian government has undertaken major efforts to consolidate democracy and the rule of law, achieve alignment with European legal standards, fight corruption and create a more conducive climate for investment. For a long time, Georgia was thus considered a “reform leader” among the former Soviet republics in the Caucasus. However, more recently, the country's development has been slowed down by political dispute between the government and the opposition. Important processes have bogged down. There is growing concern that the country might become politically unstable. Yet the need for reform continues to be great. Large sections of the Georgian population continue to suffer under poverty and unemployment.
Russia's war of aggression against Ukraine has had major impacts on Georgia, too. Russia is an important market for Georgian products. Moreover, remittances from migrant workers account for a significant proportion of Georgia's gross domestic product. The territorial conflict over Abkhazia and South Ossetia continues to be unresolved. The two breakaway regions are striving to achieve independence from Georgia, and are being supported by Russia in this endeavour. Since the war between Russia and Georgia in 2008 and the beginning of the presence of Russian troops in Abkhazia and South Ossetia, which continues to this day, Georgia and Russia have not had diplomatic relations.
Georgia seeks to build closer relations with Western nations. In 2016, an Association Agreement entered into force between Georgia and the EU, with the aim of bringing the country closer to the EU in political and economic terms. In March 2022, Georgia – just like Ukraine and Moldova – applied for EU membership. The country would also like to become a member of NATO.
German development cooperation with Georgia
The Federal Ministry for Economic Cooperation and Development (BMZ) has assisted Georgia since 1992 in its transition to a social market system, the rule of law and democracy. Previously, cooperation was based on Germany working with the three countries of the South Caucasus region – Georgia, Armenia and Azerbaijan – as a group. As part of the BMZ 2030 reform process, Georgia became a partner for bilateral cooperation and has since been one of the “transformation partners” for German development cooperation in the European Union's eastern neighbourhood.
At the government negotiations in November 2021, the BMZ confirmed that it would continue to support Georgia's course of reform and of moving closer to the EU. The German side also underlined the need to make further progress on reforming the justice system, protecting the rights of minorities and achieving reconciliation within society.
The BMZ committed 85.1 million euros for 2021 and 2022. 32.1 million euros of this was grant funding.
The BMZ also provided a total of more than 206 million euros to help Georgia deal with the economic and social consequences of the COVID-19 pandemic in 2020 and 2021. For example, a policy-based loan from KfW Development Bank of more than 180 million euros helped to strengthen the competitiveness of Georgia's economy during the pandemic. The BMZ also provided 15 million euros in loans and nearly 9 million euros in in grants to support public social protection programmes. This made it possible to provide social benefits for about 138,000 pandemic-affected, financially vulnerable households with children.
In the future, cooperation between Germany and Georgia will focus on the following core areas:
- Sustainable economic development, training and employment
Areas of intervention: technical and vocational education and training, private sector and financial sector development
- Climate and energy, just transition
Areas of intervention: renewable energy and energy efficiency, sustainable urban development
The BMZ also assists Georgia in the field of good governance, for example regarding public financial management reform and regarding processes to foster civic participation. Thanks to the establishment of 35 citizens' offices and the introduction of electronic data management and processing systems in 63 municipalities, up to 85 per cent of the population now benefit from improved public services.
Regional cooperation, too, continues to play an important role. It is taking place between the six countries covered by the European Union's Eastern Partnership (External link), focusing on transboundary issues such as trade and digital technology.
As at: 08/06/2022