Issue 1, 2013. February-March



Not much has changed in Kutaisi since the Georgian Parliament came to town. With Parliament now considering a move back to Tbilisi, some are wondering what, if anything, will change if Parliament leaves. While Georgia's President Mikheil Saakashvili's vision of Kutaisi as a hub of civil society and international culture may be dead on arrival, the economic heart of Kutaisi - trade, industry, and agriculture - beats on.

Neal Zupancic

In the eight months since the inauguration of the new House of Parliament, Kutaisi has not seen much of a surge in business, according to Daan Harmsen, financial manager of GeoCapital, a microfinance organization based in Kutaisi.

"I know of one restaurant that opened... I don't know of a lot of other places. There are some new places in downtown Kutaisi that I'm not sure are actually related to Parliament. I haven't seen a big boom in business activity because of Parliament," he said.

A few chain stores and restaurants - such as Whisky House, Beermania, and Caffe Vergnano 1882 - have expanded from Tbilisi into Kutaisi recently, but other notable national and international chains, such as Populi, Mirzaani, and McDonald's, had already paved the way, demonstrating their economic viability in Kutaisi before Parliament arrived. The renovation of several Kutaisi tourist sites, like the city center, Prometheus caves, and Bagrati Cathedral, also deserve credit for bringing new businesses (and new tourists) into town.

Harmsen says that while Parliament has not caused an increase in the rate of people seeking out loans to start a small business, GeoCapital has issued loans used to renovate homes in hopes of attracting Parliamentary rent money. "What we've seen a couple of times is that people actually fix up their houses, because they expect Parliamentarians and people working in Parliament to come in and want to rent houses," he noted. For these Kutaisi residents, unfortunately, the Parliament's move back to Tbilisi could mean fewer renters, potential trouble recouping the cost of renovations, and difficulty paying back loans.

On the other hand, lower rents could benefit Kutaisi's growing industrial sector by helping companies attract skilled labor to Kutaisi. Mikheil Tigishvili, Director of Georgian International Holdings, says Parliament has meant recruiting trouble for the manufacturers operating in the Kutaisi Free Industrial Zone (FIZ) that his company organized. "When the government built the Parliament the real estate went up too much and the rent was not acceptable. For example if you pay engineers and technicians 1000 lari or 1200 lari...half of the salary he has to spend on rent, plus he needs food, he needs transportation, and [he will have] no savings."

According to Tigishvili, the Kutaisi FIZ currently employs 1725 people and plans to add seven or eight hundred new employees this year. By the end of 2013, the FIZ will consist of fourteen factories, including Fresh Ceramic and a new textile plant that will import Egyptian cotton and produce clothes for sale in the US. Tigishvili says prospects are good. "Our investors are happy, they are planning to develop and develop, and honestly Parliament will be in Kutaisi or will be in Tbilisi; for us it's not a big deal," he said.

With the economic engines of Kutaisi firing on all cylinders, Harmsen thinks Kutaisi is just getting out of its post-Soviet slump. "There's a lot of trade going on here, and there's lots of agriculture taking place in the region." Harmsen also cites the newly renovated David the Builder Kutaisi International Airport as indicative of the economic potential of Kutaisi. "I see a lot of people are taking jobs at the airport. For young people who have some education there's not that many job opportunities in Kutaisi..." Provided the airport offers flights to more destinations, Harmsen says, "I think it could have a very positive impact."

According to marketing professional Giga Vashakidze, the airport will bring economic benefits with or without Parliament, due to how it is being marketed and developed. "The way I see that they are developing the airport there is a clever way: they are developing it as a low-fare airport," he said.

Vashakidze noted this could help promote tourism in the region: people who have wanted to visit Georgia but were deterred by Tbilisi airport's high prices, will now fly into Kutaisi airport instead - and will "stay in the region for several days, which will draw the economic growth into the region."

The airport would only serve to cement Kutaisi's position as a regional hub. According to the Kutaisi mayor's office, the city is already an important crossroads between eastern, western, and northern Georgia, connecting via highway and rail to the rest of the country and the rest of the Caucasus. From Imeretian farmers bringing their goods to market, to Turkish container trucks stopping to refuel at the gas stations, and Turkish restaurants dotting the highway on the western outskirts of town: the city continues to play an important role in local and regional trade - as it has for over 3,500 years. With or without Parliament, Kutaisi has history and geography on its side.

Vashakidze, who lives in Tbilisi, says that while the move to Kutaisi at least had the potential to benefit the city economically, a move back to the capital would not have any effect on Tbilisi. "Moving Parliament to Kutaisi was a way of bringing more people with higher income to a city which would bloom - at least the restaurant market there and some services markets... I don't think anything will change directly for Tbilisi. We didn't lose much when the Parliament left and we will not gain anything back."