Georgia is a country rich in various natural resources and, at the same time, with a significant tradition of the industrial economy. This tradition includes, on the one hand, the extraction of existing resources, and on the other hand, processing/enrichment enterprises built in the Soviet period and other heavy industries, some of which are still functioning in the country.
Why should I be interested in this topic?
A country that has been living in poverty and depopulation for decades has such valuable and significant resources as gold and copper, manganese, coal; Moreover, crucial industrial production, such as ferroalloys, metallurgical factories of Rustavi and Kutaisi, and others.
However, Georgia’s economy does not sufficiently benefit from these resources and industries. The fact is that after three decades of the collapse of the Soviet Union and the replacement of three long-term governments, Industrial cities in Georgia are in a severe social, economic, ecological and demographic crisis, even though the resources extracted and the products produced there are an essential source of wealth in the global or local market.
It is necessary to know what resources the country has so that they can be used primarily for our well-being and development, and not for the enrichment of private individuals – moreover, for the environment that provides us with this wealth to survive pollution and destruction; And the people who create this wealth to be relieved from the experiences of despair, oppression, poverty, illness, social hopelessness and finally – leaving the country.
Our comment:
Georgia’s regulatory legislation, inspection bodies, and their enforcement mechanisms still doesn’t ensure humane, non-exploitative, socially and ecologically fair mining conditions in the country.
Georgia’s tax policy does not provide adequate taxes for large businesses, the profit tax in the country is only 15%, and the tax imposed on minerals is minimal. This kind of tax policy leaves industrial and natural potential of our country as mostly a source of enrichment for private owners.
All of the above stems from the fact that for decades, Georgia has chosen a “Small government”, minimal intervention, i.e. non-interference and investor-oriented policy, which leads to visible and clear social and ecological consequences and significant economic losses for the development of the country.
Recent history
After the collapse of the Soviet Union, the country went through a large-scale and, one might say, shocking period of deindustrialization - industrial production facilities were destroyed, closed, or were left the country as scrap dismantled machinery.
However, the interest in valuable natural resources and large strategic production facilities has not decreased even in the post-Soviet period, especially in the conditions of the new market economy where this wealth became alienable and enriching means for private individuals.
In the second half of the 2000s, the policy of aggressive privatization of natural resources and the production sector, which was accompanied by a wave of tax reduction to historic minimums and labor market deregulation, left the industrial cities of Georgia and the surrounding villages in the hands of new, private owners, without minimum social or ecological standards. It turned mono-industrial settlements into life and health-threatening, polluted areas full of open-pit houses, or houses damaged by underground works, and also the modern springboards for migration.
What should we know?
- The largest mono-industrial cities of Georgia are Chiatura, Tkibuli, and Kazreti. Industries can be found in other cities and settlements as well, such as Zestafoni, Rustavi, Poti, Kutaisi, Kaspi, Ksani, and others.
- In these cities gold and copper, manganese and its alloys, coal, metallurgical products, glass products, cement, and others are mined and produced.
- Today, all existing strategic minerals and their extraction/enrichment enterprises are privatized and belong to private individuals. Companies owning mono-industrial cities are mostly registered offshore, which is why it is impossible to trace their exact owners. However, the controlling stakes are mostly owned by Russian and Ukrainian billionaires.
What is the problem?
- In all mono-industrial cities of Georgia - Tkibuli, Chiatura, and Kazreti, as well as in industrial enterprises - Zestafoni, Rustavi, Kutaisi, and others labor safety is not adequately ensured, and workers' wages are still insufficient to live on.
- All mono-industrial cities have severe employment problems since there are no alternative jobs and the only places of employment are mining enterprises.
- In all mono-industrial cities, the involvement of intimidation, terror, control, local criminal or other types of authorities, and other types of informal processes occur. Due to this, it becomes difficult to express protest and dissatisfaction.
- In all of these cities, there is a lack of infrastructure, scarcity of local budgets, and basic infrastructural or social costs are often borne by companies instead of the state, which are considered as their social responsibility.
- All these cities are depopulated - there is a high rate of migration, especially the outflow of women - into domestic work, as caregivers. Their financial remittances help industrial settlements to survive.
- Industrial cities of Georgia have a lot of experience of strikes and resistance. Among them are the large-scale strikes of workers to which sometimes other industrial cities of Georgia declare their solidarity.
For example, the public especially remembers the wave of strikes that started in the winter of 2016, in which the employees of Tkibuli "Saknakshiri", Chiatura "Georgian-Manganese", Ksani "Ministar" and Georgian Railways simultaneously participated and expressed their support to each other. Later, they expressed their solidarity to the workers released from the Rustavi Nitrogen Plant.
What is the solution?
There are a number of successful international practices that protect and empower extractive industries and their employees socially, environmentally, and economically. Listed below are some examples that are suitable for the Georgian context. Therefore, it is important to start the discussion on this issue and take steps to correct the situation (It should also be noted that the list below is neither exhaustive nor final):
- Mono-industrial and industrial cities should be a special segment of the Georgian economy, the tax policy towards them should be changed, so that local and central budgets benefit more from the mining process;
- Economic reports of companies - the information about their expenses, salary distribution, distributions, profits, and turnovers - should become transparent;
- Labor conditions, labor safety, and environmental impact standards should improve, legislation and their enforcement mechanisms should become more efficient and effective;
- Cities should be granted mining status and various benefits should be established, and income, pension, and other types of benefits should be provided to those directly employed in mining and heavy industries.
- In mono-industrial cities, the state should create alternative jobs so that the mining areas are be the only place of employment and people could return to such cities;
- The environmental damage caused to each settlement should be calculated and the companies should be charged with appropriate compensations for specific terms, and in case of failure to meet them, they should be fined and/or nationalized;
- Decent and large compensations and/or annuity obligation mechanisms should be established for families whose family members and others have been killed or injured as a result of industrial accidents at the workplace.
It is crucial that we, as a society, also have more solidarity towards workers' strikes and opposition to environmental degradation in industrial cities. First of all, to be informed about what is happening in these settlements, we can support and demand the above-mentioned changes for our country and a better society.
It shall be noted that the public should also be informed about the areas where mining is not yet carried out, although it is planned for the future - so that, through democratic involvement, society can decide the issues of disposal of the country's resources. Such places, where local resistance practices already exist, are today Shkmeri (Racha) and Mushevania (Bolnisi).
The article was prepared with the support of Friedrich-Ebert-Stiftung. The views expressed in this publication are not necessarily those of the Friedrich-Ebert Stiftung. Commercial use of all media published by the Friedrich-Ebert-Stiftung (FES) is not permitted without the written consent of the FES.
