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44

World Bank Intervenes in Georgia's Deal on Fees for Caspian Gas Pipeline

In an unusually blunt approach, the World Bank has warned Georgia that it will lose all financial assistance if it does not negotiate higher tariffs on a proposed gas pipeline from the Caspian through Georgia to Turkey.

In an unusually blunt approach, the World Bank has warned Georgia that it will lose all financial assistance if it does not negotiate higher tariffs on a proposed gas pipeline from the Caspian through Georgia to Turkey.
The threat was made in a letter to President Eduard A. Shevardnadze of Georgia, which depends heavily on foreign assistance, from a senior official of the World Bank. The bank sent the sharply worded letter after it appeared that Mr. Shevardnadze was ignoring advice from bank officials that he seek higher fees.
"This failure to heed the advice that has been provided will also call into question the justification for future support to Georgia from institutions such as the World Bank," Judy M. O'Connor, the bank's director for Georgia, wrote in the letter. A copy of the letter was provided to The New York Times by officials involved in the pipeline negotiations.
Mr. Shevardnadze, who had postponed signing the pipeline agreement, responded to the letter by reopening negotiations on the transit fees. This will further delay approval of the pipeline agreement that negotiators worked out in July.
Although the World Bank and other international lenders play important roles in Georgia and other developing countries, they have been criticized for becoming too involved in country decisions. The letter to Mr. Shevardnadze was considered an unusually strong example of how the bank sometimes expands its role.
Nicholas van Praag, a spokesman for the World Bank, said that the warning had been intended to help Georgia negotiate a better deal for itself and that the tough language was because Georgia receives loans on extremely good terms.
Neftegaz.ru