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Mainstream, VOL XLIX, No 22, May 21, 2011

On Indian Participation in a Refinery Project in Georgia

Tuesday 24 May 2011, by Bashir Mohammad

India is learnt to be seriously considering whether or not to join an oil refinery project in Georgia, one of the former Soviet republics now an independent state; it has presently been turned into the closest ally of the US in the region headed as it is by a figure who is in effect an American national (a bizarre deve-lopment!) and consistently subserving Washington’s interests, and his stewardship of the country has resulted in disastrous consequences for Georgia.

Any step from the side of New Delhi to forge close economic ties with the Caucasian state is indeed fraught with considerable danger.

The unstable situation in Georgia barely offers confidence to develop economic relations with it. Due to their utter political dependence on the US, the immature bunch of leaders currently in power in Georgia could anytime take unwarranted and unpredictable decisions leading to even reversing agreements reached earlier with other countries.

Moreover, there are other factors which cannot be ignored. Georgia has to fully rely on foreign suppliers of oil. Its inflation rate rose to 9.8 per cent in 2010. For the last several years foreign direct investments (FDIs) in Georgia have been continually on the decline because the investor states are fearful of investing money into the unstable Georgian economy. As far as India is concerned, it should not cooperate with Georgia and invest money into any economic project there because experts believe there is every possibility of a revolutionary scenario enveloping the country in the near future, and if that happens New Delhi would stand to lose all investments made in the unstable country.

Yet another possible outcome of Indo-Georgia negotiations for economic projects in that state cannot be ruled out. Any Indian move to cooperate with Tbilisi on oil and gas projects would inexorably impact on New Delhi’s intimate relations with Moscow. In that eventuality Russia could well review and alter its decision to favour Indian companies which are interested in exploring and exploiting the Trebs and Titov oilfields, and this is understood to have been indirectly conveyed by the Kremlin to the South Block.

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