Georgian President Mikheil Saakashvili delivered his annual address to parliament on 15 March, covering a broad range of issues such as relations with Russia, defence, conflict settlement, the economy and plans for tax reform. Saakashvili said that "threats" against Georgia had been "counterproductive" and the country had overcome sanctions imposed by Russia. He also announced a readiness to establish "official relations" with the "alternative" government of South Ossetia led by Dmitriy Sanakoyev and called for a "sharp" international reaction to the recent bombing of the Kodori Gorge in Abkhazia. Saakashvili spoke at length about reforms carried out since the Rose Revolution and praised the level of economic growth, but added that tackling unemployment would be a priority in coming years. He acknowledged that "serious problems" remained in the prison system. The following is an excerpt from the speech carried live by Georgian Public Television Channel 1 on 15 March:

[Nino Burjanadze, parliament speaker] Dear audience, your holiness, honourable representatives of the diplomatic corps, dear friends, as you know, the Georgian president has come to the Georgian parliament today in order to address the Georgian parliament and the entire population of Georgia in accordance with the Georgian constitution and the Georgian parliament's rules of procedure.

Honourable colleagues, I would like to sincerely welcome the president of Georgia, Mr Mikheil Saakashvili, and ask him to speak and present to you his view of past events and Georgia's future development. Please, Mr President.

[Saakashvili] Honourable speaker, your holiness, honourable members of parliament, dear audience, presenting a report to parliament is a special occasion for me because, when I come here, it is not just a legislative body that I come to. I come to you as a very important and strong team of my cohorts and associates. This report is not just a president's account to parliament. It is our common account to the Georgian nation about the work that we have done. It was the people who brought us all here and it was in this building that the Georgian nation set the objectives for our work. I often think of the days when all of us, not just 200 or 300 people but tens of thousands of us entered this building, this hall of parliament. Afterwards, those people left but they gave us a task. We received a task from them and we are presenting an account to them every year.

Praises parliament, lists achievements

Neither the president, nor the government, nor anyone else would have been able to take the steps that our country needs without the parliament's support and your energy, without the selfless reformist work by the parliament speaker, heads of the committees, and every deputy. Over these years, we have developed a truly strong parliamentary tradition whose foundation was laid by Zurab Zhvania and I would like to say that today we have one of the cleanest, one of the most reform-minded, if not the most reform-minded, and one of the best parliaments in Europe.

The people have bestowed great trust and great responsibility on us and they expect us to live up to their hopes. The people tasked us with changing the ruined country completely, ending its decline, restoring its strength and creating development opportunities for everyone. We were tasked with restoring the country's dignity, bringing order to the country and defeating the criminal world which had poisoned the people's lives, defeating corruption and ending the practice whereby money was extorted from the people at every corner, every state body at every level demanded bribes and all officials constantly meddled with the people's money. We were tasked with increasing the size of the budget which had been wasted, raising pensions and wages, paying the multimillion arrears that had been accumulated over many years and overcoming the longstanding energy crisis, so that the people would be able to turn on the lights and make their homes warm, switch on their TV sets, get a 24-hour power supply instead of just two hours a day and would not have to use candles and oil lamps in the 21st Century.

We were tasked with creating conditions in which education and justice would be valued, in which an honest and industrious individual would succeed, not a lazy and dishonest one. The people tasked us with ending Georgia's helplessness and weakness, restoring its strength and forming a Georgian army that would be able to defend the country's integrity and security.

It order to attain these objectives, it was necessary to implement a lot of reforms and carry out extremely radical changes, while the government and parliament had to work in a very mobilized, thoughtful and unified manner. It required wisdom, a high pace of work and very strong nerves.

We are presenting an account to our people today and I am standing very proud at this tribune. Through our great joint efforts and, most importantly, through the people's support and efforts, these objectives are being attained. Instead of a devastated country steeped in the backwater of failure, we now live in Georgia which is one of the most dynamically developing countries in the world. Instead of a stagnating and backward country, we now live in a new Georgia which has been recognized by the world as the leading country in terms of reforms. Instead of a completely corrupt country, we now live in a new Georgia that is a world-leader as far as the pace of the struggle against corruption and its results are concerned. [Passage omitted]

Success in tackling "crime bosses"

We now live in a new Georgia where the backbone of the system of crime bosses has been broken. This is the first point of the account. Last year, I asked you to adopt a law against crime bosses. You probably remember that some of the people who sat in this room said that the parliament of a little independent Georgia would hardly be able to do something that Stalin himself was unable to do. I would like to report to you today that, contrary to the views of the sceptics, dozens of crime bosses have faced trial and have been isolated from the public. It was done not through the planting of weapons or drugs on them but according to the law and the procedures, which is very important in terms of the formation of a state mentality founded upon the rule of law. [Passage omitted]

Education

We lived in a country where knowledge had no value. Those who had a greater number of friends and relatives or had more money were the ones who succeeded. [It was a country] where diplomas were sold for money and education was mostly a luxury accessible only to the elite, where one could usually only get admitted to a university through illegal deals. An ordinary person had almost no chance of providing his or her child with education and opportunities for applying knowledge. We live in a new Georgia today where knowledge is valued and a good diploma can only be acquired through learning and diligence. Today, it is the most talented and diligent young people that receive state funding for higher education. [Passage omitted]

"Phenomenal support" for government

The support of the people for our reformist course is the foundation of our successes. Contrary to the predictions made by sceptics, four years on from the revolution, according to every poll, we have phenomenal support that even the most popular leaders of any democratic country would envy. We enjoy this support despite the fact that we are being criticized night and day and despite the fact that saying something good about the government in the media is considered bad form. In spite of this, we have phenomenal support according to every poll.

All our reforms are aimed at changing things for the better for every citizen, for every family. Every reform, regardless of the sphere in which it is carried out, is ultimately aimed at making our lives better and there is no such thing as unpopular but good reforms. It has often been argued that every reform is unpopular. Georgia is an example that shows that, together with the people, it is possible to implement even the most difficult reforms. Our people are a hundred and even a thousand times smarter than some politicians that oppose the reforms from the very outset and whose primary instinct is to object to reforms. You have seen that the people never supported campaigns against these reforms. [Passage omitted]

Russian "threats" against Georgia

The last year was a year of major challenges and most significant victories. During that year, they did to us what they had been threatening to do since 1992. They were threatening to do those things but they rarely did them. They used to say: You will see what happens to you when you are deprived of the market and the price of gas rises, when you are not able to travel, when you have the strictest possible visa regime imposed on you or do not get visas at all, when we oust the members of your families who are working abroad and you are left with no income.

They imposed an energy blockade on us and left our children to freeze in the cold. Our largest trade partner imposed a complete economic blockade on us. Georgian farmers were deprived of their largest traditional market. The market that we had accessed for 200 years was closed to our citrus fruit, apples, other kinds of fruit, greens, wine, Borjomi [mineral water] and all the other Georgian products. They decided that all of this was not enough and they began punishing and deporting Georgians in front of TV cameras, so that the entire world and other former Soviet republics could see it. I know very well that when the Georgians who were stopped in the streets by the police asked what they were guilty of, they were told to ask that question to their president in Tbilisi once they had been sent back there.

Despite this, despite the fact that they spent millions [of dollars] to label Georgia as an unreliable partner and a country unsuitable for investment - [changes tack] On the one hand, there was a blockade while, on the other hand, there was a virtual blockade and millions spent in the media in order to discredit us, so that we would not get any investments and funding from other countries. On more than one occasion, they tried to destabilize the political situation and they resorted to the worst possible political methods, including terrorism. On many occasions, they tried to get us involved in acts of provocation. They tried to deliver a most serious blow to Georgia in Upper Abkhazia. Crime bosses and organized crime, which has mostly been eliminated in Georgia, attempted to take revenge and take Georgia back to the criminal chaos.

They raised the price of gas for us. I do not know of any other case in the modern world of a developing young state suffering so many economic blows in a single year and having to face such difficult challenges. Such shifts would have been enough to cause a complete economic and political breakdown in many countries that are much stronger than us and, unfortunately, some people, some groups in Georgia hoped that it would happen so. However, Georgia and, first and foremost, the Georgian people, showed the whole world their strength and their ability to fight, their purity and determination. In spite of it all, last year was a year of major economic progress and also a turning point. [Passage omitted]

"Geopolitical revolution", energy

Last year was the beginning of a major geopolitical revolution and it was Georgia that started it. What did the post-Soviet area look like after 1991? What was the structure of the Soviet Union? Let us think how it was planned by its creators. They were quite sly. For example, Georgia had hydropower resources but they only constituted one fifth of Georgia's energy balance and the rest was gas because Georgia had to be dependent on the import of gas. [Passage omitted]

All of that remained unchanged for 12 years. This year, last year and the year before that have been the years when it all has been changing and a geopolitical revolution has been taking place. We are opening new energy pipelines. Two oil pipelines and one gas pipeline have been launched and we are talking about a trans-Caspian gas pipeline now. I believe that this project has a great future. The construction of a new railway that will link China to the Bosporus via Central Asia, Georgia and Turkey will begin this year and we have already signed a relevant contract. The volume of cargo on Georgia's roads has increased several times. We are expanding the capacity of our ports and building new airports. Georgia has effectively accepted a transit role for six isolated countries of Central Asia. [Passage omitted]

"Successful struggle against crime and corruption"

Last year was the year of a major and, most importantly, successful struggle against crime and corruption. Anyone, any of your neighbours or relatives, will tell you - at least my relatives, friends and acquaintances are telling me - that the crime rate has been reduced in Georgia - not only in terms of numbers but also in reality, in streets and in yards. People are no longer afraid to park their cars in their yards or in front of their houses. In most cases, people are no longer afraid to let members of their families leave their homes. It happened after we all announced a slogan which angered many people: zero tolerance towards every type of crime. The number of inmates increased by a few thousand. It is a regrettable development and we should create better conditions there within the limits of the existing standards. However, the most significant change is the fact that, for the first time, Georgia has a police force that is really serving the people. [Passage omitted]

Georgia and Europe

Last year was a year of significant international progress and recognition for Georgia. I do not want to simply talk about the fact that we have never had so many friends and we have never had so much respect. I accidentally read comments by Mr Taro Aso, foreign minister of Japan and one of the leading Japanese politicians. He wrote that there is a new arch of stability, freedom and democracy stretching from the Scandinavian countries to Japan across Asia. He listed countries such as Laos, South Korea, the Baltic countries, East European countries and the Scandinavian countries. He wrote that Georgia is an exemplary country, a model country of this arch, of this new union. It was the Japanese foreign minister who said this. He said that Georgia should receive special assistance. [Passage omitted]

Georgia is returning to its historical European family. We are not simply Europeans, we are the oldest Europeans. Europe is coming back to Georgia just the way Georgia is returning to Europe. However, Europe first came to Georgia through its myths, in search of the Golden Fleece. Europe came here to free Prometheus. Europe came here when Georgia became one of the first Christian states and it was from here that Europe went to many European countries. This is very important because Europe is our most important political vector. Europe above all - this is the main slogan of our foreign policy and it is the main landmark. For this reason, we are cooperating with Europe in every structure, in every area. We are participating in the EU Neighbourhood Policy and we want to have full coordination in every field: in economic, political and security affairs.

Abkhazia and South Ossetia

Naturally, it is still the top priority of our foreign policy to secure greater international support for the restoration of our territorial integrity and raise the level of the international community's awareness in this respect. In 2006, Georgia implemented a very proactive foreign policy. At the same time, we were involved in a constant dialogue with the United Nations, the OSCE and all the other international bodies. We are extending a hand to our compatriots who are ethnic Abkhazians and ethnic Ossetians. We are ready to offer them a highest degree of autonomy in accordance with the European standards. We are urging them to work together towards the social and economic rehabilitation of the conflict regions with the international community's involvement and through its assistance. However, the terms Georgian-Abkhazian conflict and Georgian-Ossetian conflict have been invented by silly and uninformed people. What does it mean? Who is Abkhaz? Is Malkhaz Akishbaia, head of the legitimate Abkhaz government, not an Abkhaz? Of course he is an Abkhaz. Abkhazia's population was some 600,000 and there are less than 100,000 remaining today. Are the 500,000 people who were ousted from Abkhazia legitimate residents of Abkhazia? Of course they are legitimate residents of Abkhazia.

"There is no such thing as the Georgian-Ossetian conflict"

What does Georgian-Ossetian conflict mean? Who is the other side, the Ossetian side? Is Mr [separatist prime minister Yuriy] Morozov the Ossetian side? Is Mr [former separatist defence minister Anatoliy] Barankevich the Ossetian side? Are Petrov, Ivanov and other officers who work there the Ossetian side? Or is Dmitriy Sanakoyev [head of the pro-Georgian alternative South Ossetian government] the Ossetian side? Are there Georgian and Ossetia sides at all considering the fact that a few of the most famous Georgian kings were of Ossetian origin? There is no such thing as the Georgian-Ossetian conflict. We should understand this once and for all. It is another lie by the ideologists and spin doctors of the empire. It is their final attempt to keep Georgia within their imaginary sphere [of influence] through these conflicts, through these bonds. We should be able to develop sufficient patience, openness and flexibility in order to make sure that no-one is able to impose on us this scenario of violence and conflict with the people who might be of different ethnicity and speak a different language but are still our compatriots.

Need for change in peacekeeping format

In this respect, I would like to say that, naturally, we want the European institutions and the United States to participate in this much more actively. The current peacekeeping format has been discredited, it is ineffective and everyone understands now that it is effectively impossible to maintain it in this form. Through consultations with all the sides, we should manage to carry out a peaceful transition to a much more flexible and effective format. [Passage omitted]

Defence and NATO

Last year was a year in which Georgia's defence capabilities increased. We already have a top-level army in terms of equipment, training, determination and combat skills. Many accomplishments were made towards bringing Georgia's army into compliance with NATO standards and we have done a lot of work in this regard. The last mission that visited left Georgia with extremely positive conclusions. I can tell you this because I just recently returned from Brussels.

I also want to say that the resolution signed by various parliamentary factions, including opposition factions and the majority, on support for Georgia's accession to NATO has once again proved that joining the North Atlantic alliance is the wish of the entire Georgian people, not one particular group and that Georgia is ready to take on the responsibility that comes with being in the alliance. This is truly a very good example of cooperation between the majority and the opposition that is based on common values. And those elements who wish Georgia ill are very displeased with this.

Iraq and Afghanistan

Today our soldiers are deployed in the world's most dangerous hotspots. They are there together with soldiers of the world's most powerful army. They have distinguished themselves with their exemplary discipline, combat skills, determination, bravery and humanity.

I want to speak about what we are doing there. This is no longer the era when some empire would take our soldiers to fight in who knows what war without any regard to Georgia's own fate or its own problems. Each of these conflicts is a battle of good and evil. In reality, when good retreats just a little bit, just look at how the forces of evil and all manner of undesirable elements become more active against us. What weapon are they using against coalition forces in Iraq or Afghanistan? Exactly the same weapon that they have used against Georgia for years. Exactly the same consultations, the same tactics, the same methods. This is one and the same front. Therefore our presence there serves a very important purpose.

Today we are joined in this hall by a true hero of our time, 26-year-old Snr-Lt Misha Kutateladze and his wife Tea (?Khutsishvili). Misha went to Iraq with the commando battalion of the first brigade. In 2005 he was seriously wounded during an attack in Baghdad and it is no secret that doctors did not think he would survive. He was treated in Washington.

I was told at the White House - not by him, because he does not like to boast - that he was visited in hospital by President Bush. He sat beside his bed and thanked him on behalf of the American people. He told him that Georgians were a brave and heroic people. Misha answered that he was proud to have fought alongside heroic American soldiers and that he was proud of the fact that he stood with them in a most difficult situation. Misha was given a medal of high praise and a (?Defender of Freedom) Certificate in America. He returned to Georgia and returned to his commando battalion and is now continuing to serve as a commander. He has American medals, but I also want to bestow on him the Order of Vakhtang Gorgasali for valour in battle. [Awards medal; applause]

Kodori, Abkhazia

Last year marked yet another important stage in our efforts to achieve Georgia's reunification. It was the year in which the Georgian government reasserted control over Upper Abkhazia [the Kodori Gorge], something which has so angered Georgia's opponents. Some people of not entirely sound mind had already come up with scenarios for Georgia according to which a deal was to have been made this year concerning the exchange of these territories against the backdrop of various other major deals being concluded in the world.

They wanted it to become a new cause of fragmentation, but instead of destruction they got rebuilding and development. They wanted it to be a place where bandits would run free and instead they got the transfer of the legitimate Abkhaz government to Upper Abkhazia, which is right on the road to Sukhumi. As a result of the very brave and decisive actions of our interior ministry forces, all the plans of the gangs of bandits in the impregnable Kodori Gorge were deflated in just a day and a half.

Two of our soldiers who were wounded during that operation, Mikheil Kokiashivli and Valeri Mujirishvili are with us here today [the two men rise; applause].

I would like to welcome not only them, but also those selfless doctors and nurses from Tsalenjikha [town near Kodori] who, during the 14 hours before they made it to Kutaisi - at that time the weather made it impossible to fly - truly performed a miracle, because one of them was very badly wounded. And then doctors in Kutaisi performed their very important function and miraculously saved our warriors.

Those who have been to Upper Abkhazia have all seen - I was last there just yesterday - all that was done in the two months we had [after the transfer of the Tbilisi-backed Abkhaz government to the Kodori Gorge was announced in August 2006] before the first snowfall there. This year we will have seven or eight months to develop the gorge. We will have much more time because the road will be open.

We also saw just how important it is to maintain the peace. We welcome the fact that a UN monitoring commission is working there and we hope that they will produce absolutely accurate findings on what is happening there. We have information that they will do just that. We hope that a very appropriate assessment of the disgraceful act of provocation that took place there several days ago will be made. We hope that there will be a sharp reaction on the part of the international community so that something like that is never repeated in the future. Precisely this belief is the reason why we did not consider it necessary to create any kind of complications at this stage.

Improvements in defence capability

But let no-one doubt our capabilities and our ability to take decisions. It seems to me that those who planned and executed this shameful operation failed to comprehend what has been happening in terms of Georgia's defence capabilities in the past few years. Questions have been raised concerning this issue, but I want all of us to carefully think through the difference between then and now. Four or five years ago we had slingshots whereas now we have air defence systems. At that time the army was without weapons and uniforms, unfed and unmotivated. [Parliament speaker] Nino [Burjanadze] and I saw this firsthand when we first started taking on this issue.

Now the armed forces are trained, equipped and prepared to the highest standard and have increased tenfold in number. Back then there was weakness and fear, now there is strength and courage. At that time it would have been technically impossible to respond appropriately. Now, however, this is not a matter of the technical means at our disposal, but rather an issue subject to a political decision. This is the political decision that - [changes tack] God forbid that such a necessity arises, but everyone must know that the Georgian people are ready to take on any challenge and take any decision and band together around this decision in order to maintain peace, in order to defend peace and in order to protect Georgia's honour and wholeness. [Applause]

Praise for Dmitriy Sanakoyev's South Ossetian government

Last year was very important for the people of Tskhinvali [South Ossetia]. Those of them who are free demonstrated that they trust local ethnic Ossetian leaders, who I think understand the situation very well and are trying to improve chances for the peaceful settlement of the conflict. Dmitriy Sanakoyev's movement was created. Sanakoyev [who earlier served as prime minister in the separatist South Ossetian government], [Uruzmag] Karkusov [prime minister in the alternative government] and others are the people, who, at one time, were on the front line of local separatism in the struggle against the central government. Today, however, when their programme implies peaceful coexistence within a united Georgia - naturally, with a full guarantee of protection of the interests of ethnic Ossetians - they have managed to find a common language with the Georgians living in the region, which is a unique development in the history of conflicts in general. I think that we must not let this chance slip away. I think that we should declare that we are ready to start official relations and negotiations with Sanakoyev's movement and are ready to show everyone how strong the true brotherhood of the Georgian and Ossetian peoples is [and demonstrate our] true aspiration towards peaceful and successful unity. We, with your permission, will do this in the near future.

Of course we are ready to speak to all sides of this conflict without exception, but first of all we will talk to our own citizens, not some group of people who speak on the behalf of everyone as though they had a monopoly and especially not those who preach violence. We are talking to each of our citizens. We are talking to our young people. Our young people should not be holding weapons and looking at each other through the sights of assault rifles, rather they should be going out to discos together in the evening. We must not teach these young people hatred for each other, but rather we much teach them that we have nothing to divide and that we are each other's flesh and blood. With our patience and our flexible actions, we will all achieve this together.

Last year was also the year when Georgia's energy security was firmly established despite all manner of sabotage and other obstacles. We managed to for the first time - [changes tack] Last year was the first year when there was electricity in general while this year everyone everywhere was supplied with sufficient electricity. The main thing is that the energy system became much more sustainable.

[Passage omitted: acknowledges world champion Georgian national Judo team, rugby team]

Unemployment, tax reform

Of course much remains to be done in all areas. We must do our utmost to reduce poverty and to ensure that our economic development is reflected in the living conditions of each and every Georgian family. Poverty is our main challenge. Our task during this next stage in our development - over the next two to three years - is to ensure that unemployment is cut in half and that poverty is reduced dramatically. Employment and technical retraining programmes must be continued in Georgia, as must the legalization of the economy. We need to make our fiscal agencies work much more effectively. The problem here is not corruption - corruption has been almost entirely defeated. You saw yesterday that employees of the Tax Department were arrested. It was a good operation, naturally, which, if I am not mistaken, the prosecutor called Operation Left Pocket - or some kind of pocket.

But when we think about it - they discovered the whole scheme that was in place - we realize that there was talk about 100,000 lari in this Tax Department, which deals with many hundreds of millions of lari. Therefore, corruption has effectively been stamped out. We now also investigate corrupt deals involving one or two thousand dollars. But the main thing is not the fact that these people no longer take bribes. The main thing is that we must ensure that there are no queues; the main thing is that when cargoes come in they should undergo customs clearance immediately, the main thing is that when a person goes there, the employees should smile at him and serve him. This is because, when all is said and done, these people feed us. [Passage omitted]

We have begun an important reform. We have created a single Revenues Service [which unites the Customs and Tax Departments and the Financial Police] and we hope that there will be great progress in this regard.

We also want to create a commission to study tax-related disputes. This commission should resolve all economic disputes. We have already invited foreign judges to work with us on this. We are working on this issue with the countries of the EU. They [the commission] will have the final say on economic disputes.

You also know that two years ago we reduced taxes by 40 per cent and last year we reduced customs fees despite much resistance. But customs revenues have grown nonetheless. This is what we are talking about: if taxes are lower, the economy will be more legalized, the collection of tax revenues will increase and administering the tax system will be made easier. [Passage omitted]

Plans for tax cuts

I think that we must take a bold decision and begin discussing a reduction in the profit tax from 20 per cent to 15 per cent from 2008. I have also ordered the government to work on replacing the 12 per cent income tax and the 20 per cent social tax, which together amount to 32 per cent, with a single tax that should be reduced to 25 per cent.

[Passage omitted: says that revenues should be distributed between the central and local budgets in such a way as to ensure that regions develop at uniform pace]

Court reforms

We will continue to reform the court system. No matter how much criticism - [changes tack] It is very popular to criticize the court system and say that it is not independent. But I know what some people in many countries mean when they speak of judicial independence. I know several of our not-too-distant neighbouring countries where presidents, prime ministers and ministers pay bribes to judges. This is what true independence means to them: a proper judge is considered one who, once he takes a bribe from one person, does not hold an auction for people who want to bribe him so that he rethinks his initial decision. We will not accept or stand for such a judicial system in Georgia.

Accordingly, despite much resistance, many judges were punished by the disciplinary council. I think that this was an absolutely correct decision which purged the judicial system of these people. We can now say that on the whole there is no more corruption in the judicial system whatsoever. This is our common victory. It is the first important judicial reform and now we need to proceed to the next stage. The next stage envisages making the system prestigious and creating such self-regulation mechanisms that make it clear that is not necessary for outside forces to interfere in its activities.

[Passage omitted: promises renovated court buildings]

Human rights, "serious problems" remain in the prison system

We have a lot to accomplish in the area of human rights despite the fact that we have eliminated the single worst thing - the Soviet tradition under which all statements were extracted by beating people or by planting weapons or drugs on them. Now, several dozen policemen have been convicted and severely punished for such actions. There are, however, very serious problems in the prison system. We need to build many new institutions. And we are building them - the first will become operational this year. No matter how unpleasant it may be, we will spend much more money on this - almost as much as Mrs Elene [Tevdoradze, chair of the parliamentary human rights committee] asks for periodically.

[Passage omitted: stresses the need for more qualified and educated workers and the importance of embracing advanced technologies]

Plans for free economic zone in Poti

We are taking steps in order to utilize fully our geographical location. You are aware that in 2007 we are beginning active work towards creating free economic zones on the Black Sea coast, in the Guria and Samegrelo provinces. To this end we will look to Dubai's experience. This is a rather bold decision that of course is accompanied by a certain degree of risk. Of course we need to uphold the law as much as possible so that nothing slips through there, but we have a chance, given our geographical location, to attract tens of millions of dollars in the coming two or three years. We will not be able to recognize that place at all. Unimaginable changes will take place. I was in Dubai myself while some of you [MPs] have been in Singapore and Hong Kong and studied their experience. Georgia has a unique chance. This will benefit not only Poti and the Black Sea coast, but the whole of Georgia.

[Passage omitted: touts Georgia's potential as a tourist destination and notes progress in the development of tourism infrastructure]

Healthcare

I also want to emphasize that reforms in the healthcare system have been successful. The construction of 100 new hospitals means that wherever you go in Georgia, you will be no more than 30-40 minutes away from the nearest hospital. Not all of the new hospitals will be built in Tbilisi - there is not even one modern hospital in Ajaria. The nearest healthcare institution will be 30-40 minutes away no matter where you are. I want to point out the special efforts your committee has taken together with the Health Ministry, Mr Gigi [Tsereteli, chairman of the parliamentary committee for healthcare and social welfare] and also those by Mr Levan Metreveli and others who are working on this issue.

Need to tackle drug abuse, proposes property confiscation for drug dealers

As you know, our society is plagued by the horrible disease that is drug abuse. But talk alone will not suffice and we are taking steps in to combat this problem. We must make drug abuse a shameful activity. [Passage omitted]

The main front here is the battle against drug dealers. No one is above the law here. Before only poor peasant women would get arrested in Marneuli, Ponichala or other poor villages for selling one gram of drugs out of their back doors. When more important people were affected, some people said that it was not acceptable because so-and-so is a good person. Perhaps he or she is a good person, but everyone is equal before the law and no-one who kills people can be considered a good person - after all drug dealers kill people.

I propose that we adopt a law by which drug traffickers not only serve prison sentences, but also have all of their property confiscated, both real estate and movable property. This is property they acquired through ruining our people and our young people. As we did with organized crime, we should really do this in the next couple of weeks and put these people where they belong.

[Passage omitted: stresses the need to ensure children's safety in schools]

Military reserve

A very important programme has begun in Georgia to recruit reservists and military officers. I want to say with pride that today at institutions of higher education there are queues of students registering for reservist training. Thousands have already registered, if not tens of thousands. In the near future we should have a 100,000-strong reservist force if we want to be reliably protected. Georgia must manage to achieve total mobilization to protect its interests in critical moments.

Many MPs have undergone reservist training; I was in a reservist camp myself. Last year the whole government was conscripted for one day. I want to say that this is truly necessary now because the situation in our country is quite complicated, as you are well aware. We also have an officer recruitment programme. We need 1,000 new intellectuals in our armed forces - officers with university degrees, whom we will train and give relevant social guarantees. [Passage omitted]

Economic growth

In conclusion, in order to get a better picture of the dynamism of our development, let us look at where we were in 2003 and where we will be in 2010. In 2003, when the people brought us to this hall, the real expenditure part of the Georgian state budget was 600m-650m lari. The per capita Gross Domestic Product was 800 dollars. This year our budget expenditure will exceed 6bn lari, or maybe even 7bn, while the Gross Domestic Product per capita will rise to 2,000 dollars. Georgia's budget expenditure for 2010 should be at least 8bn lari.

Furthermore, at the end of this year Georgia will be taken off the list of low-income countries, or - to say it directly - poor countries (which was completely unacceptable given our country's potential), and put on the list of medium-income countries, which is a category that includes all of the worlds fastest developing economies.

Our goal is, by achieving a high level of economic development, to ensure that the main problem in Georgia in 2010 should be not unemployment, but other concerns such as salaries and so on. We must overcome unemployment as a systemic problem by 2010. I am convinced that we will manage to achieve this. We are creating such an economy that will allow all citizens to realize their potential, where citizens and the country as a whole will be protected and where each and every family will have much better prospects for the future.

"Threats" against Georgia "counterproductive"

It seems that everything we say is taken very seriously by everyone, both our friends and our ill-wishers. Georgia is no longer a country that is easy to slap around. Our main task has always been to be a country that is worthy of respect and that has its honour.

Everyone must know that it is very easy to be friends with us, because there are few people on this earth as open-hearted, as appreciative and as loyal as the Georgians.

But speaking to Georgia in the language of threats, in the language of force and by setting some kind of conditions will always prove to be counterproductive. I think that over the past year we have shown this to everyone who is capable of seeing or hearing. We want to be friends with everyone, we want to work with everyone and we want relations with everyone. We value friendship and we will not accept an unfriendly attitude. Together we have accomplished what many people thought impossible. Together we have shown that nothing is impossible. That which has happened in Georgia has become a catalyst for change throughout our whole region and in many other regions in the world. I say this without exaggeration. I travel a lot, you travel a lot, the parliament speaker has done a lot of work abroad, which we value very much - as we do work of the parliamentary foreign relations committee and the European integration committee - and you all know how much excitement there is surrounding Georgia

But the main thing is that we have maintained our focus, our faith in our abilities and the optimism that we have for the future. We are the most optimistic people in Europe according to all polls. That is why I am convinced that we will reach all of our goals and overcome all obstacles. We have stood together up to now and we will continue to do so. Strength is in unity [Georgia's state motto]. Everyone thought that it was easy to defeat Georgia because, according to the cliche invented by our enemies, Georgia was a country where everyone was at each other's throats, where there was great internal rivalry, where people were willing to sacrifice the country for their own personal ambitions and where no-one could rise above their own personal ambitions and comprehend the interests of their own state.

Everything that has happened in this hall, in our political spectrum and in our country proves just the opposite. We have managed to unite around our main goals. We truly have banded together when it was most necessary and when everyone predicted that we would fall apart and turn on each other and that there would be rivalry and schism among us. This did not happen. This is how we have achieved our most important successes, my friends. Our strength is measured not by the size of our territory, or even the high Caucasus Mountains. God has truly given us a unique border, he truly outlined clearly on the world map just what this country is and showed everyone that they should not bother with trying to revise geography. Our strength is not measured by our population either, though we have had a positive balance in this regard in the past three years. There have been certain improvements in the migration and birth rates, though we still must work on this.

Our primary strength is our faith, our determination and our unity. Strength is in unity. Thank you.

Translated by BBC Monitoring

Press Office
of the President of Georgia