The new bill that consists of 451 pages has the same title (Emergency Economic Stabilization Act of 2008) as the previous bill.

The bill was also approved by both US presidential candidates - Democrat Barack Obama and Republican John Mccain. Senator Joe Biden also approves the plan.

US president George W. Bush thanked senators for support and expressed hope that the plan will be approved by the house of representatives as well, since the major corrections were made to it.

He also emphasized that stabilization plan aims to support Small and Medium Enterprises (SME) that is dependent on paying the salaries and managing inventories.

Secretary of Finance Henry Polson also supports the plan. He claims that this is a strong signal that emphasizes our readiness to defend US economy and allow provide for Americans with credit facilities that is an essential tools for conducting a business.

The bill allows Secretary of Finance to use 250 billion US $ from federal budget to buy out troubled loans and stabilize the economy.

Additional 100 billion $ may be provided by the US president and the rest 350 billion $ may be provided only based on the decision of US congress.

It very hard not to agree with Michael Had’s position. Historically Russian society at some point created a concept of so-called “member of smaller nation”. This is a person, who is a Russian citizen, is integrated in Russian society, shares Russian culture, but at the same time hates the society he/she is part of and by all means tries to harm it. In this way Russian society created a group of individuals towards which the entire “xenophobic energy” of the nation was diverted. Anyone could be regarded under this concept: Jew, Georgian, Azeri, Armenian, Chechen, Latvian, Lithuanian, Kazakh, Kirghiz and so on.

At different points in the history of Russian state different ethnic groups were regarded under this concept. During Tsarist Russia and Soviet Union period this stereotype was applied to Jewish minority. People that lived in Soviet Union remember that Jews were considered to be “mean and ungenerous, selling smuggled goods illegally and hiding proceeds in the form of gold and jewelry in the ground or in the wall of their house”. At that given period Jews were the ones, who were blamed for the problems of the system and the state and the overall hatred was directed to them. There were numerous jokes about Jews emphasizing how mean they were even towards their family members.

With the abolishment of the Soviet system “Jewish smaller nation” lost its importance and was “successfully” substituted by a “new threat”: an uncivilized person with black hear and mustache, having Caucasian or Middle-Asian origin, speaking “fractured Russian” and having excess sexual energy. He came to Russian soil to “make money” and does so by selling flowers or fruits and vegetables on the bazaar. Russian society often refers to such individuals as “Лицо Кавказской Националности” meaning a person of ethnic Caucasian origin. Since for ordinary Russians it is difficult to distinguish among different Caucasian and Middle-Asian ethnicities they use one single concept to refer to the people described above. It is widely believed that “people of ethnic Caucasian origin” often sexually harass women in the bazaar, while they are making purchases for their families. Besides these group of people are also regarded to be extremely unloyal to the law and they are solely blamed for high crime rates in the Russian state. This is how an image of the new enemy was created.

It is worth noting that TV channels also facilitate such thinking. They often sacrifice valuable TV time for making reportage how Caucasian or Middle-Asian guy seduced Russian woman, lived with her for some time lying on the sofa with a can of beer, watching TV and wasting her savings that she gathered through tough work. Then, when the savings were over he left her stealing her jewelry and selling it out on the bazaar for half-price. This is a typical story that is shown every day with minor variations.

What concerns to Russian politicians as Michael Had stated they often make extremely xenophobic statements. Politicians often blame ethnic minorities for hard social problems in the country. It is worth illustrating here a political ad that political party “Rodina” (Motherland-National Patriotic Union) used for the elections elections in the Moscow City Duma in 2005. In the ad a group of immigrants (dark haired, unshaved and wearing caps) are gathered up in the typical Moscow yard of large living blocks eating a watermelon and throwing garbage on the ground. The ad is accompanied with the Caucasian folk music as a soundtrack. Further in the clip a “typical Russian” woman with blue eyes and blond hair passes near them with a baby carriage. One of the immigrants expresses his dissatisfaction about this by shouting at her. Then we see head of the party Mr. Dimitry Rogozin and his partner Mr. Iuri Popov that advise uncivilized immigrants to keep clean. Iuri Popov asks them whether they understand Russian language to emphasize that these are those “bad guys” that Russian TV keeps talking about and the ones that “don’t let Russian people live in peace and prosperity”. The ad ends with the following slogan: “Let’s clean our city from garbage”.

After displaying this clip political party Rodina was banned from the elections of Moscow City Duma. It is not hard to imagine what would happen to the politician displaying similar ads to the public in any European country. Most probably that person would have to leave the political arena and never come to the surface again. However it turns out that xenophobic aspirations are not deemed that unacceptable for Russian authorities. In January 2008 Dmitry Rogozin was appointed as Russian representative to North Atlantic Treaty Organization (NATO). In other words, a person sharing extremely xenophobic views will represent Russian state in front of 26 countries. It is really very hard to comment here.

Recent conflict in Georgia left much space for evaluation and analysis. These events turned out to be absolutely unexpected for western leaders. Russia’s step - invading into sovereign country, occupying parts of its territory and declaring there independence was something that western leaders thought could have happened in 19-20th centuries, but deemed unacceptable for world of 21st century. Most probably West considered such a scenario having the same chance as an gigantic asteroid falling on the planet earth and probably that was why it took west so long to respond to this challenge. Besides the nature of this response left an impression that it was made without any clear strategy or plan. Initially EU leaders talked about imposition of economic sanctions, exclusion of Russia from G8 and preventing it from WTO membership. However later on they found these proposals to be unfeasible and eventually EU just expressed “concerns” several dozen times and “deep concerns” a bit fewer times that seems quite weak measure in the given circumstances.

Actually why this crisis was allowed to happen was improper signaling. It is important to understand that Russia is not a typical European country sharing values of liberal politics. Russia is a country with difficult background, present and maybe even future. Geopolitical location and cold climate has always been natural defensive fortress for Russia, therefore an empire that emerged in 15-16 centuries had tremendous potential. It gradually expanded its territories for the last three centuries reaching the peak during Soviet times. However after the collapse of Soviet Union Russia lost direct control over surrounding states (countries of Former Soviet Union), but for last 17 years still retained indict control over them.

It is worth illustrating how this indirect control was imposed. Russia created so called ”managed chaos” in these states through provoking ethnic tensions, such as Transnistria in Moldova, Abkhazia and so called South Ossetia in Georgia and Nagorno-Karabakh between Azerbaijan and Armenia. It is worth noting here that in Karabakh case these problems were beneficial for Armenia as well. But this really does change anything: Russia gained control over both Armenia and Azerbaijan. The formula is quite simple: Armenia can only survive with Russia, since is surrounded by enemy states and in case it deviates from its influence, the results will be fatal. On the other hand, Azerbaijan is also under the control. If Azerbaijan makes step towards EU or NATO, Russia can support Armenia and even provoke a new war. This creates a vicious circle, where Russia ”divides and rules”. As a result even after the collapse of Soviet Union population of surrounding territories stayed integrated into Russian culture: they watched Russian TV channels, read Russian newspapers, watched Russian translated films. Russian language dominated at all levels of social, cultural, economic and political life. This type of control turned out to be much stronger than actual military presence in these countries. Taking into consideration this in some sense Kremlin rightfully considers this region to be under it’s dominance and this is where the Georgian tragedy begins.

Russia’s Interests

There are at least four good reasons why Georgia is so special for Russian state. First of all Georgia is pioneer among surrounding states making the real attempts to overthrow Russian influence and making choice towards EU and NATO. If Georgia succeeds, this may ‘’spoil” other surrounding states and they may start questioning Russia’s dominance over this region. Therefore problem is not in Georgia only, but also in other surrounding states. If Russia loses Georgia, it may also lose it’s influence over all surrounding states.

The second reason is control over energy routes. Georgia holds key location on the energy route that can connect middle Asian and Azeri oil and gas suppliers to European oil and gas receivers. This route leaves aside Russia and is considered to serve as an alternative source of fuel to the Russian one. If Russia controls Georgia, it also controls all the routes supplying oil and natural gas to the Europe and therefore can retain monopolistic position over fuel supply to Europe. Georgia is a real threat to the Russian energy empire.

The third reason lies in differences between Georgian and Russian political and economic models. Georgia moves towards building free society, democratic political system and free market economy, while Russia made a choice towards totalitarism, control and nationalization of economic assets. If Georgia succeeds on its way, this will clearly show that ”Georgian way” is more efficient and successful and this will be an additional reason why other surrounding states may ”’spoil”.

The fourth reason originates from intra-Russian ethnic tensions. Russia is ethnically quite unstable country composed of many small or large ethnic groups that are prone to separatist inspirations. From this point of view North Caucasus has historically proved to be ”cradle of separatism”. Chechnya is a good example of this. To justify its presence in Caucasus Russia has long been developing the stereotypes that Caucasus region does not have enough resources to leave without Russia, that Russia brought wealth and prosperity in this region, when it occupied this region in 19th century and the most important: “Russia is guarantor of peace in Caucasus.” These words became like a slogan for Russia’s actions. It is not in the best interests of Russian state to have on southern border a neighbor that is politically and economically developed, its citizens live much better than those people living over the boarder and they managed to achieve piece in their country without Russian “help”. This is extremely dangerous for the internal stability of Russia.

To summarize these basic reasons Russia needs Georgia to declare neutrality, not join any political or economic bloc, other than those dominated by Russia, refuse to build gas and oil pipelines on its soil, other than those initiated by Russia. It is in Russia’s best interests to have weak, unstable and failed Georgia as a southern neighbor. In essence this was the situation in Georgia from 1992 to 2003 (during Shevardnadze times).

Prewar Situation

The situation in the world was quite interesting before the conflict. Key players of EU (Germany, France and Italy) except UK had quite warm relations with Russia. First of all Russia is a large supplier of oil and gas to EU and second a large market with 150 million consumers. Western leaders were interested in integrating Russia into world economic system like it happened with Germany after WWII. However how Russia perceived the situation was diametrically different. The ultimate aim of Putin regime was to restore ”past glory of Russian empire” and warm relations with the west were merely part of preparatory measures for it. Russian authorities were sure that they ”bought out” key western leaders offering their countries and them personally wide range of benefits. Former German chancellor Gerhard Schroder got ”warm place” at Gazprom (Russian State-owned gas monopoly). Italian officials also benefited from “Russian friendship”. These single cases gave Russian authorities belief that they have western politicians ”in their pocket like nickels and dimes”. In addition, rising oil and gas prices gave them impression that old strength and power came back and and Russia is a country that can dictate it’s will to the world.

In the prewar period Russia received full set of wrong signals from the west that eventually resulted in the invasion in the sovereign state and occupation of its lands. First of all west made little or no reactions on several Russian provocations in Georgia, such as shooting administrative buildings from helicopters in Upper Abkhazia, dropping anti-radar missle in village Tsitelubani and also ignoring frequent shooting of Georgian villages in South Ossetia. By these Russia obviously tested western reaction that turned out to be minimal for that moment.

Second important signal was refusal to grant Georgia and Ukraine NATO Membership Action Plan (MAP) in April 2008 at Bucharest summit. Germany and France under the influence of Russia blocked the decision at the summit. At that point Russian authorities derived 2 main conclusions: first of all that they have power to influence decisions of NATO and the second that western leaders were ready to “sacrifice” Georgia and Ukraine and therefore all surrounding states to Russia in exchange for stable gas steam to European households.

The third signal was visit of German minister for external affairs Walter Steinmeier to Georgia. An official reason for his arrival was facilitating negotiations between Georgian, Abkhazian and South Ossetian sides. He met Georgian authorities, Abkhazian and Ossetian separatist leaders and finally Russian minister for external affairs Mr. Lavrov. After these meetings Georgian side made a statement that they were supporting the plan with few amendments. Abkhaz and Ossetian separatist leaders unconditionally rejected this plan and so did Russian authorities.

The conclusion that Mr. Steinmeier made was that the positions of conflicting parties are so distant that a great deal of efforts are needed to made them closer. In fact what EU through Germany and Mr. Steinmeier did was that they just showed that they “fulfilled their duties”. European leaders demonstrated that “although they are eager to resolve these conflicts and they make actual step towards this, they are unable to help since conflicting sides have very different undertanding of the issue”. In fact this was one more reason for Russia to think that west abandons these states and Russia is allowed to “act”.

The wrong signalling game ended dramatically for Georgia. The war resulted in ethnic cleasing and massive killings of ethnic Georgian population, tens of thousands of citizens lost their homes and villages in so-called South Ossetia that were populated by ethnic Georgian population was removed from the face of earth.

Amendments include separating National Bank’s monetary and supervisory functions. Two new independent entities will be established: Financial Supervisory Agency (FSA) and Financial Monitoring Service (FMS). FSA will be responsible for supervising entire financial sector, while FMS will focus on prevention of money laundering transactions.

National Bank of Georgia (NBG) will focus on price stability and prevention of inflation. NBG will be assigned sole function to sustain 1-digit inflation rate.

Amendments involve enhancing competitiveness of capital markets, allowing the functioning of more than one stock exchange. Licensing procedures were simplified and emission became easier.

According to the amendments during next 5 years personal income tax will be declining steadily from 25% to 15%. Income tax on dividends and interest will also be declining proportionally.

The offering of the US Dollar-denominated Eurobonds in the principal amount of US$500 million and with a five year maturity was three times oversubscribed. The Eurobonds were issued at 100% and offer a yield of 7.5%. The offering was made to institutional investors outside of the United States.

Commenting on the success of the debut Eurobond offering, Lado Gurgenidze, Prime Minister of Georgia, said: “We are immensely pleased that the offering of Georgia’s sovereign bonds received such a significant level of interest from a broad range of investors across Europe. This demonstration of confidence in and support of the fiscal, monetary and economic reforms implemented in Georgia over the past several years is extremely rewarding”.

The joint lead managers for the deal were JPMorgan and UBS Investment Bank.

DBU focuses on deposits dominated in Singapore Dollar, making loans in the same currency. ACU is the department of a bank that conducts its operations on Asian Dollar Market according to the rules set by Monetary Authority of Singapore (Singaporean Central Bank). Also ACU enjoys broad set of incentives such as abscense of minimum reserve requirements and fit-and-proper requirements.

During 80s ACU assets rose at a rate of 22% annually. However during 90s growth rate declined to 3.7%. In 1993 ACU assets constituted to 66.2% of total banking assets of Singapore. ACU growth rates were much higher than those of DBU in 1970s ACU assets were only 28% of that of DBUs, but by 1987 596%, however it declined to 239% in 2001.

However there is certain business activity that is truly free in Georgia. Paradoxically this is taxi service that became a “booming” business recently. Due to it’s low per kilometer cost and large supply taxi became primary mean of transportation for many people.

To become a taxi driver one does not need any license, permission or even registration. All that is needed is a car and driving license. Virtually anyone can run taxi business and earn income. This makes price manipulations almost impossible.

It is noteworthy that income from this operation is not taxed, since it is not recorded anywhere. Generally in most of the cases taxi payments are agreed between taxi driver and a client on bargaining basis and taxes are not payed even nominally.

Agreement on building railway that will connect three neighboring countries was signed in February 2007. Mission of the project is connecting Transeuropean and Transasian corridors through constructing new railway route. Project involves construction of 105 long new railway line, out of which 29 kilometers pass on Georgian soil and the rest on Turkish side. The project also includes rehabilitation of Akhalkalaki-Tbilisi and Tbilisi-Baku railway lines. Construction of Georgian part of the railway started in November 2007. Completion of the project is planned by 2010.

Turkey plans to finance its share of works by own sources, but for the completion of works of the Georgian side Azerbaijan provided Georgia with the loan of 220 million US Dollars with the annual 1% interest rate.