The US government has announced multi-million-dollar loans to four Georgian businesses as a part of its "clear and unequivocal signal" of support for Georgia’s reconstruction. Among the loans is a potential US$30 million credit to a real estate development firm that plans to build a Hyatt Hotel in Tbilisi.

The loans, part of Washington’s US$1-billion aid package to help Georgia recover after its disastrous, five-day war with Russia, were facilitated by the Overseas Private Investment Corporation (OPIC), a US government agency.

During a 27 October speech to potential American investors in Tbilisi, then-prime minister Lado Gurgenidze stressed that Georgia is counting on funds from the OPIC and other foreign donors to help spur Georgia’s economic recovery. In particular, he highlighted the need to support the banking industry so it can continue lending to private companies and individuals.

"We just need them to get back to business and keep lending. ... As soon as we achieve that, with the help of OPIC, EBRD [the European Bank for Reconstruction and Development] and others, I think everything is going to be hunky-dory," Gurgenidze said, referring to the banking sector. (Before his appointment as prime minister in November 2007, Gurgenidze served as chairman of the Supervisory Board of the Bank of Georgia, the country’s largest private bank).

"We are open for business as usual," Gugenidze added.

According to US Deputy Secretary of Commerce John Sullivan, the loans offer fresh proof that the US government is optimistic about Georgia’s economic prospects. "I think it is a real vote of confidence [in Georgia], following other votes of confidence like the donors’ conference last week [in Brussels] where there was a commitment of US$4.5 billion to Georgia," Sullivan said in an interview.

Two banks, two real estate developers - including a proposed luxury Hyatt Hotel project - and one investment group are set to receive a total of US$176.3 million out of the US government’s pledged US$1 billion in aid money.

The loans were designed to "send a clear, unequivocal signal about the confidence we [the US government] have in the future of this country," OPIC Chief Executive Officer and President Robert Mosbacher told EurasiaNet.

Mosbacher, who visited Georgia in August as part of a high-level US economic assessment team to evaluate the country’s post-war needs, said that the government has emphasized the need to support the financial sector, as well as construction and tourism, since they had been the "most catalytic for this economy." In 2006, the latest year for which figures are available, the tourism sector grew by 12 percent, according to a study by the American Georgian Business Council.

Some confusion exists about why loans to private companies are included in a US financial aid recovery package for the Georgian government.

Mosbacher stated that the US$176.3 million collectively constitutes a loan that must be repaid. The OPIC loans money for international projects - normally with some American financing involved - at market rates, based on the rate of US Treasury bills over the term of the loan "plus a premium," he elaborated. The rate and term have not yet been specified.

Mosbacher stressed that the loans are an integral part of the US financial aid package, which he described as not just "free cash."

"It is a mix of grants, and loans and loan guarantees and that is the way it was described when it was announced and that is what it is," Mosbacher said.

Little detailed information about the make-up of the US$1-billion aid package has been publicly disclosed since it was announced in September. The OPIC contracts are the only credit aspect of the financial package, according to one US official, who spoke to EurasiaNet on condition of anonymity.

Other proposed recipients include the Georgian government - US$250 million in "budgetary support" - and the Millennium Challenge Corporation, an American development agency operating in Georgia.

Mosbacher maintained that financing a luxury hotel is a natural fit within the recovery aid package because it targets economic growth.

The Hyatt Hotel project, overseen by Loyal Estate, LLC is slated to receive a loan of up to US$30 million from the investment corporation. Other recipients include the Bank of Georgia, TBC Bank, SB Iberia, a development company that is running a housing project with the Bank of Georgia, and GMT Group, which owns Tbilisi’s two Marriot hotels, and a dairy production company.

"While you are making sure you are taking care of internally displaced people, and trying to help people get back into housing and get through the winter, you also want to make sure that the economy continues to grow and the role of Georgia as a major transition economy player continues," Mosbacher said.

Sullivan and Mosbacher were in Tbilisi as part of a US trade mission to Georgia. According to the organizers, nineteen American companies sent representatives; one US$170 million deal concerning Georgia’s hydropower sector was signed during the trip.

According to US Deputy Commerce Secretary Sullivan, such a deal is proof that American support is not just limited to the government. "[I]t is not just the Bush administration or the US government that is doing this," he said. "I don’t think they [US companies] would waste their time and energy if they didn’t think there were reasons for them to be here and good commercial opportunities for them to explore."