U.S. aid to Georgia to increase from $64 million to $1 billion

Rkinis Rigi (iron row) in Old Tbilisi

That's a big increase. Dick Cheney is in Azerbaijan today, which is a huge producer of oil, a lot of which had been going through Georgia through two pipelines, but the BTC Pipeline was shut down for a few days and the other one is still shut down if I remember correctly. Azerbaijan has been scrambling to find other ways to ship out all the oil it's producing, including sending more oil to Russia and also through Iran, both of which are not what the U.S. (and Europe) wants to see, hence the huge aid package to send a signal that Georgia will still be a feasible country to send oil through.

The International Monetary Fund said this week it would lend Georgia $750 million to replenish its foreign currency reserves. The government in Tblisi last month sold 12.8 percent of its reserves on international markets to prop up its currency in the wake of the week-long invasion by Russian troops.

Russia has said that it was defending South Ossetia from attacks by Georgian forces. But it then sent thousands of armored troops, supported by air strikes, into Georgia proper. Most of those troops have now withdrawn, although Russian forces remain in some strategic locations, including the Georgian Black Sea port of Poti. U.S. naval vessels carrying humanitarian aid were rerouted last week to dock at a different port to avoid encountering the Russians.

The provision of $1 billion of U.S. aid--some of which must be approved by Congress--will exponentially increase the level of assistance to Georgia, which totaled about $64 million in fiscal 2008. About a third of that money was spent on training and equipping the Georgian military to meet NATO standards and allow Georgian troops to continue participating in the U.S.-led international coalition force in Iraq. About 100 U.S. military trainers remain in Georgia, along with a team sent by the Pentagon to assess the country's humanitarian needs.

The U.S. military transported Georgia's 2,000 troops in Iraq back home shortly after the conflict with Russia began.

This increases tensions but I don't see it as a large problem because the breakaway regions of Abkhazia and South Ossetia are in the north and far away from any pipelines, Russia has repeatedly said that it has no interest in damaging the pipelines from Azerbaijan, and without another war there would be no excuse to come in and damage them again. I suspect this could be another Cyprus-like situation: Russia would fortify the two regions up north, Georgia would continue to claim them and improve its economy down south, and if there is an international force in between Georgia proper and the two breakaway regions it should be harder to flare up next time, because a lot of the provocation before happened from firing back and forth between villages in and near South Ossetia where there really isn't a clear border (like the Inguri River between Georgia proper and Abkhazia), which made it that much easier to find a pretext to start a war.

So, how much is $1 billion to a country like Georgia? Well, the recent war itself is probably going to end up costing exactly that much, so it's an amount that added to the aid given by other countries and organizations will be able to show that the entire cost of the war will be covered. Georgia has annual revenues of $3.6 billion, so the provision of a full billion dollars is like giving a country like Canada a free $150 billion, which is equivalent to some ten times the budget surplus when Canada is having a really good year. Georgia has a public debt of $1.7 billion.

Edit: Obama talked to Saakashvili on the phone today, and confirms that this $1 billion will be going to Georgia regardless of who wins the White House in November:

Mark Lippert, a foreign policy adviser to the senator, told ABC News that the two men discussed three items.

First, Saakashvili thanked Obama for mentioning Georgia in his Democratic nomination acceptance speech.

Obama, in criticizing President Bush's foreign policy, said, "You can't truly stand up for Georgia when you've strained our oldest alliances. If John McCain wants to follow George Bush with more tough talk and bad strategy, that is his choice, but that is not the change that America needs."

Second, Obama and Saakashvili discussed the $1 billion in aid the U.S. government today announced it is sending Georgia, "pursuant to the Biden-Obama billion dollars they proposed a couple weeks ago," Lippert said. "The administration signed onto that."

Third, Obama received a briefing on the current state of affairs in Georgia.

The whole conversation lasted somewhere between 10 and 15 minutes.