Will dollar and euro replace Georgian currency

One of the leaders of the opposition group 'New political center', an ally of ex-president, a member of parliament and a professional economist, Zurab Japaridze, propose a loud initiative to strengthen the national currency by its strong dependence on the dollar or the euro. This proposal was made in the days when Georgia celebrated the 20th anniversary anniversary of the introduction of lari into circulation as the sole legal payment instrument. Lari replaced the Russian ruble and the Georgian coupon - interim currency was put into circulation in the spring of 1993, when the leadership of the Russian Federation held a regular monetary reform and refused to supply banknotes (rubles) to Georgia, as well as other former Soviet republics.

Fortunately, by that time a great number of coupons were already printed in one of the Western countries, but turnover of the ersatz currency led to the catastrophic financial and economic consequences. Inflation of the coupon was monstrous 7000% per year. People tried to get rubles by hook or by crook because the ruble was still reliable. And only in the autumn of 1995 the administration of President Shevardnadze has introduced a real currency - lari - a ratio of $ 1 - 1.34 GEL. Today, the dollar is 2.39 lari. It would seem that the Georgian currency is holding on more or less, but many economists believe that the creeping devaluation is greatly damaging the economy, making it difficult to attract investment. And for a country that does not have significant natural resources, an investment is a top priority.

At the firsts stage Zurab Japaridze offers to remove all restrictions on the circulation of the dollar and the euro. Today, foreign currency transactions are formally prohibited, but in fact big sales and purchase agreements in estate or car market from hands to hands occur exclusively in the US or European currencies. However, through the banking system one can transfer only lari. In addition, all the operations in accordance with tax legislation, are permitted only in the national currency.

Japaridze claims that if these limitations will be removed, the potential investor may start his own investment project in the currency he trusts, whereas he is not sure about the stability of lari and avoids contact with it. The implementation of the idea requires many changes to the legislation, but the proponents believe this problem can be solved - where there's a political will, there's a way.

According to Vestnik Kavkaza, the exemption of the US dollar and the euro on the territory of Georgia is the first step towards even more important and risky revolutionary breakthrough: full transition to one of the world's currencies, first in parallel with the lari, and then the abandonment of the national currency, following the example of states included in the euro zone.

The project of refusal from the lari in favor of the euro or the dollar was quite seriously discussed during the reign of President Saakashvili at the initiative of the "guru" of the Georgian reformers - the former state minister for structural and economic reforms, Kakha Bendukidze. Ex-Mayor of Tbilisi Gigi Ugulava (currently jailed on charges of embezzlement) recently recalled one of these "stormy debates": "Saakashvili listened in silence and finally said a remarkable phrase:" If we give up the lari, we will be accused in the rejection of the motherland!"

Apparently, this circumstance has forced the president-nationalist to reject the idea, which seemed quite attractive to him in all other respects. Indeed, the lari is perceived not only as payment instrument and financial and economic phenomenon, but also a symbol of a hard-won statehood.

But even if the current government or the team of Mikhail Saakashvili will try to return to the idea of Bendukidze, ignoring the emotional perception of the public, how will they implement it in practice? Georgia is not part of the euro zone, and the relationship with the US is not so deep that Washington could give green light to a similar experiment with its own currency - the main resource of its superpower status. It is necessary to have a solid guarantee of a regular supply of banknotes, including metallic money to put one of the world's currencies into circulation. In addition, one must reformat all banking communications, all the rules of mutual payments and so on.

Georgia is unlikely to join the EU in the next decade, and the Association Agreement between Georgia and the EU does not say anything about the use of the euro as legal payment instrument on the territory of far Caucasian country.

However, Zurab Japaridze and his associates, keeps their spirits up in full compliance with their revolutionary style. They offer the authorities to conduct a "comprehensive negotiations with Brussels or the United States" as soon as the restrictions on the free circulation of the euro (dollar) will be lifted at the first stage, convincing their partners in the potential of such an experiment.

Naturally, the head of the 'New Policy Center' is implicitly means that the present government of the Georgian Dream coalition led by the Prime Minister Irakli Garibashvili hardly dare to take such a radical step. That is a historic reform will be implemented by the "revolutionaries" after the return to power at the end of the next parliamentary elections. Japaridze is openly criticizing ex-president Saakashvili for the "lack of courage and flexibility" in considering the draft of the monetary reform.