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Wednesday, May 10, 2006

If You Can't Cut off the Gas, Try Cutting Off the Water

Is it just plain peevish, childish jealousy that has motivated Russia to ban the import of Georgian mineral water? Is Russia annoyed that Georgia outscored it on the Failure Index or is it annoyed that the President of Georgia has joined the long list of former Soviet states to give Russia the big kiss-off? If so, is it really the best Velikaya Rus can do to petulantly refuse to allow Georgia's much-beloved Borjomi into the country? Is Russia really so blind as to be unable to see how wretchedly pathetic this makes them look before the eyes of the world, and how it tends to drive Georgia deeper into the Western fold? Above all, is this neo-Soviet behavior at its most quintessential, or what?

As the Moscow Times reports:

has banned imports of Georgia's Borjomi and Nabeglavi mineral water, a little more than a month after clearing the country's supermarket shelves of Georgian wines.

Russia's chief epidemiologist, Gennady Onishchenko, revoked the sanitary certificates for Borjomi and Nabeglavi starting from May 7 and May 10 respectively, according to a letter posted on his agency's web site Saturday.

In the letter, Onishchenko also asked the Federal Customs Service to enforce the ban on Georgia's mineral water, citing poor quality and inaccurate nutritional information on the labels.

Sergei Rybak, a spokesman for Borjomi's producer and distributor, Georgian Glass and Mineral Water Company, said Tuesday that it was "an odd coincidence" that the mineral water ban followed so soon after the wine ban.

The Federal Consumer Protection Service banned wine from Georgia and Moldova on March 27, citing health concerns. The move was widely seen as politically motivated, given Russia's support of separatist regions within Georgia and Moldova and other factors contributing to strained relations with the two former Soviet republics.

The import and sale of Borjomi and Nabeglavi would be resumed when the companies addressed "the reasons behind and the environment for" the violations, Onishchenko said.

After Onishchenko announced the water ban late Thursday, Georgian and European officials on Friday rapped Russia over the move.

"The decision to ban Borjomi mineral water from Russia is undoubtedly political because it does not have any real basis," Georgian Parliament Speaker Nino Burdzhanadze told reporters in Tbilisi, Interfax reported. The head of NATO's parliamentary assembly, Pierre Lellouche, said the boycott of Georgian goods was alarming not only to Georgia, but also to the whole of Europe, RIA-Novosti reported.

Vakhtang Tatunashvili, a spokesman for the Georgian Embassy, could not be reached for comment Tuesday.

As much as 70 percent of Borjomi exports, accounting for about 35 percent of GG&MW's 2005 sales of $120 million, goes to Russia, Rybak said. Smaller Borjomi shipments go to 28 other countries, including the United States, Israel, and Germany, he said.

GG&MW, managed by French CEO Jacques Fleury, Dutch CFO Ruud Van Heel and Georgian president Mamuka Khazaradze, is controlled by the company's managers and Salford investment fund. Salford is believed to have links to exiled Russian tycoon Boris Berezovsky.

Nebeglavi mineral water's manufacturer, Tbilisi-based Healthy Waters, exports about 10 percent of its products to Russia, according to media reports. But it has a significantly smaller Russian market share than Borjomi.

Rybak said the water ban was unlikely to have as much of an effect on Georgia's economy as the wine ban because wine exporters poured far more into Georgia's coffers than water exporters.

Rybak did not provide an exact estimate, but said the bulk of GG&MW's tax payments, including customs and VAT payments, went to Russia, where the company employs the majority of its workers. The ban may prompt GG&MW to cut some of its more than 2,000 jobs in Russia, the company said.

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