Will the Arrest of Two Israeli Businessmen in Georgia Hurt Economic Relations?

Georgia's minister of economy and sustainable development talks to Haaretz about the future of ties with Israel.

Vera Kobalia, 29, is Georgia's minister of economy and sustainable development. Born in Sukhumi, she lived, studied and worked in Canada for 15 years.

Vera Kobalia Tali Mayer
Tali Mayer

In 1999 she graduated from King George High School, and in 2004, she received a degree from the British Columbia Institute of Technology. She returned to Georgia in February, and on July 2 she was appointed to her present position.

Honorable minister, where is the potential for developing Georgia-Israel economic relations?

"I see it in three main areas. We are still importing 60 percent of our agricultural produce, mainly because agricultural lands are not distributed proportionately in our country. Israeli firms with agricultural experience and power could bring effective development.

"Second, we're interested in learning how to maintain our so-called 'human capital.' In the first decade after the Soviet Union collapsed, our best minds - mathematicians, physicists - left Georgia and went abroad, to Switzerland, the United States and other developed countries. We must learn how to keep the human capital here, as, to the best of my knowledge, Israel manages to do, by creating suitable conditions.

"And tourism too - there is tremendous, unfulfilled potential here. Israel, after all, has a large Russian-speaking population and almost everyone speaks English, which improves the chances of developing tourism in both directions. We, as one of the oldest countries in the Caucasus, have something to display - not to mention Israel, the center of civilizations."

How many tourists does Georgia currently get?

"Under the Soviet Union, 7 million people would come every year. The 1990s were bad for us, when we had virtually no economic capabilities. Now we have 2 million tourists a year and we are investing in infrastructure, mainly highways and hotels. You could say that Georgia, like Israel, is one of the only countries in the world where you can ski and go to the beach at the same time. The Georgian government is offering special terms to anyone who agrees to invest in a 15-kilometer strip of beach on the Black Sea, by August 1, 2011. Investors will be exempt from taxes."

Have you already seen Jerusalem?

"In the six hours (at the time of the conversation ) that I've been in Israel I've already been to Jerusalem, but only for a work meeting. On Wednesday I'll devote every free minute to a visit. After all, I've been aware of the significance of the holy city since childhood."

Let's get back to economics. Is an investment in Georgia worthwhile for Israeli businessmen?

"To some extent we're in a similar situation, with an environment that's not always friendly. When investors from the U.S. or the European Union plan to close a deal, they always ask about the possible risk level, especially from the north, from Russia, after the conflict in 2008. Investors from Israel don't ask about the risks at all - after all, they're in a mostly hostile environment and understand us and our needs very well."

Won't the arrest of two Israeli businessmen, Ron Fuchs and Zeev Frenkel, damage economic relations between the two countries?

"Look, the Georgian government has carried out quite a few reforms in many areas, including in the police force [about 30,000 policemen were sent home almost simultaneously]. The objective was to eliminate the corruption that devoured everything in our country. Now our businessmen are protected and have to pay only taxes, nothing more. Everyone is equal before the law and an attempt to give a bribe will be handled in keeping with the law. Of course Frenkel and Fuchs are presumed innocent as long as it hasn't been proven otherwise. They will receive proper defense, in order to prove their innocence."

But doesn't a 60-day detention prior to trial indicate the severity of the suspicions against them?

"Those are the court regulations, I'm not sufficiently versed in them."

Will the request by President Shimon Peres to his Georgian counterpart Mikheil Saakashvili, to release the two, achieve results?

"I speak to Saakashvili mainly about economic issues. I can't answer that question."

How did you react to the Russian boycott of your products, including high quality Borjomi mineral water and Saparavi wine? It sounded like the Russians discovered all the elements on the periodic table in them.

"It looks as though they only did us a favor with their embargo. Before the boycott the exports to Russia were relatively poor quality, what they call 'wines with water and sugar.' Now we have higher standards, in order to export to the West and to Israel too."

What is the trade volume between the countries?

"I believe it is very low, only about $100 million. It needs to be upgraded tremendously. Incidentally, I think this will bring bilateral benefits. After all, there aren't too many countries that are interested in trading with Israel and are only two hours away by plane."

Don't you think that relations between Israel and Georgia are lacking in the realm of culture and sports, even though there are about 55,000 Georgian speakers living in Israel?

"I will definitely speak about that with our minister of culture. Incidentally, today we managed to reach an agreement that will increase the number of weekly flights from Tel Aviv to Tblisi and back to 10, up from 6. All these flights are packed and there's a need for more."

What about the story about the nightclub, in which you starred, that was publicized extensively this summer?

"Nobody knows whether he or she will be appointed to a senior position one day. And if you want a serious answer - years ago, when I was studying in Canada, we took a vacation in Florida with friends. We went to an ordinary night club, and danced. After I was appointed minister, an opposition newspaper in Georgia reported on the outing and published a picture.

"The Russian media took advantage of it and blew up the story beyond all imagination. In one newspaper it became a strippers' club, in another a masochistic strippers' club, with various delicacies. It's all nonsense. In Georgia they took it calmly. I really don't care about those stories."