September 25, 2014 / 2:43 PM / 5 years ago

Georgia eyes economic development, wary of Russia: deputy PM

NEW YORK (Reuters) - The Ukraine crisis has refreshed Georgia’s wariness in dealing with Russia, its former Soviet master with whom it fought a five-day war in 2008 that left it with two breakaway regions loyal to Moscow, the country’s deputy prime minister said.

“But at the same time we need to be in line with the European policy of de-escalation in the region. De-escalation is the most important thing now,” Georgian Deputy Prime Minister Giorgi Kvirikashvili told Reuters in an interview on Wednesday.

Moscow annexed Crimea from Ukraine in March, putting relations between the West and Russia at their worst levels since the Cold War. Armed conflict between Kiev and Russian-backed separatists in eastern Ukraine have led to harsh and escalating sanctions by Western nations against Russia.

Diplomatic relations between Georgia and Russia, severed after the 2008 war, have not been restored and Russia still controls the separatist-minded Abkhazia and South Ossetia regions.

Ukraine’s conflict with Russia began after protesters ousted then-President Viktor Yanukovich for pulling out of a trade deal with the European Union, and turned away from Moscow.

“We understand (Ukraine). We have similar problems on our territories, but it cannot be solved in a military way and in the short term,” Kvirikashvili, who also serves as the economy minister, said on the sidelines of the International Economic Alliance Symposium.

“We try not to irritate (Russia) by our hostile political rhetoric,” he said, adding: “I think the political temperature was very high, and it is not wise when the situation is so complex in the region to be more hostile. We understand it is not a solution.”

Georgia has pushed for political and economic integration with the EU and is seeking NATO membership. It signed an accord in June, at the same time as Ukraine, marking its shift away from Russia and on Sept. 1 free trade began to flow between Georgia’s 4.5 million people and the EU’s 28 nations and 500 million consumers.

“By approximating Georgia to the European Union, we are not hostile to anyone,” he said, referring to Russia. But he added: “Until Russia leaves Georgian territory we cannot have friendly relations with the Russian government.”

Kvirikashvili said the first step in rebuilding trust with Russia is to work on trade relations.

“Russia reopened its markets (to Georgia). Technically Georgia was never closed as a market to Russians,” he said.

Switching to the economy, Kvirikashvili said the government will announce a tender early next year for a nationwide waste recycling project to extract fuel from solid waste.

“We think it will happen in the first quarter, after finishing some feasibility studies,” he said.

A project expected for the second quarter is to build a road tunnel from 7 to 13 km (4.4 to 8 miles) long, linking two regions around the Gudauri ski resort north of the capital Tbilisi.

“According to preliminary calculations it is between $400 million and $550 million.”

Reporting by Daniel Bases; Editing by James Dalgleish

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