When we first came to power, the first thing we said was that we would make Georgia a proper state and put an end to Georgia's disintegration. At the time this promise led to heated debate and many people said that we were too aggressive.

We remember well that in March last year several thousand armed men closed the road [to Batumi]. At the time many people around the world said that we should retreat, that we should stop what we were doing and that we should give up trying to resolve the problem of Ajaria.

I remember well the picture they were painting. Former President Zviad Gamsakhurdia and his government lost control of the Tskhinvali region, South Ossetia. Then Eduard Shevardnadze came and he lost control of Abkhazia. Now Saakashvili and his government have arrived and they will lose control of Ajaria.

I remember what kind of articles were being published, accusing us of being aggressive. It was not just articles. A whole range of senior politicians warned me, they called me to tell me that we should retreat.

Today we are holding this conference in the capital of Ajaria, Batumi, where there is no longer a trace of the confrontation one year ago. We are holding this conference here because we did not give in, we managed to unite. Any person in the street can tell you what has changed in Ajaria.

There used to be a leader here who closed the streets of the town just so that his son could race around in his Lamborghini. He closed off the main boulevard so that his grandchild could drive around in a go-kart. There were people here who believed that they owned everything. For 12 years only 2 km of roads were built.

Not only were people entering Ajaria searched and humiliated by customs officers, but any person could be arrested at any time. Their rights were violated and so on.

In this past year we have undone 14 years of neglect. In this past year we have managed to build more than 90 km of roads and it will be more than 100 soon. All the villages of the mountain region of Ajaria are now linked to Batumi by road. In Batumi roads are being built, a motorway will be built and completed in the autumn. This year, with the Germans [name of company indistinct], we will begin to completely renovate the water pipe and sewage system in Batumi. For the first time in many hundreds of years Batumi will have a water system. Tourist infrastructure is being restored. There are lots of other things.

For example, this year in Batumi every school is being renovated and will have full access to the Internet by 1 September this year. They will have computer equipment, every school in Ajaria. The process in Batumi is well under way.

The customs checkpoint, which was a place of humiliation for every Georgian, last year opened a green channel and not one person should wait for more than two minutes. Many of you have experienced this. Turkey has taken longer to introduce this but we have signed an agreement with Prime Minister Erdogan and from this summer there will also be a green channel on the Turkish side and this will be a very easy border to cross.

What has happened in Ajaria is the result of our courage and unity and will happen on a greater scale throughout the autonomous republic. I am certain that if this had not happened in Ajaria we would not have reached the agreement on the withdrawal of Russian bases from Georgian territory. The withdrawal process has already begun. This is a very important stage in the consolidation of the Georgian state.

However, the Georgian state has already begun functioning. I would like to remind you that our budget has increased five-fold this year and the Ajarian budget has doubled in a very short time since the problem was resolved last year. We have managed to reform the main state structures, but of course problems remain. I want to resolve these problems step by step.

The two main problems remaining are the Tskhinvali region, the former Autonomous Region of South Ossetia, and Abkhazia. Of these two problems, Tskhinvali is much more straightforward for a whole range of reasons. On the one hand, we understand that this is a very small territory. Those nationalists in Russia who say that South Ossetia should become part of Russia do not know geography. Incorporating South Ossetia is impossible because they would have to conquer Georgia.

The Autonomous Region of South Ossetia included a large part of Imereti, it begins near Tbilisi, on the Kaspi-Tbilisi road, where the villages of Orchosani and Tsinagari are situated. Many Georgians do not know that when the road enters Tbilisi, the former Autonomous Region of South Ossetia begins just a few metres from the road.

If they want to incorporate South Ossetia then they will have to take the main centre of Georgia. They will have to conquer Georgia. Not even those who have the wildest fantasies would consider this. They just look at the map and do not realize that taking this territory would mean they would have to occupy Georgia. The majority of the international community does not know this.

The territory does not exist independently. It is like a chess board. There is not a single settlement in the former South Ossetia, apart from one or two villages next to the Roki tunnel, which - I am not calling them ethnic Georgian villages because there are Ossetians and others there - does not recognize the central Georgian government. That is one thing.

Secondly, it is very rare for an ethnic territory to be so intertwined with the state it is in. Ossetian society, Tskhinvali's Ossetian society, can clearly be said to be socially part of Georgian society, and those have met them know this. They mainly watch Georgian television, the majority of them speak Georgian without an accent. They come to Tbilisi and see it as their centre. These people, the Ossetians, have been in Georgia for many centuries. They are an indivisible part of Georgia's history. We are talking about millennia, we can talk about the many marriages between Georgians and Ossetians and that began with the Georgian kings.

The Ossetian population was always an integral part of Georgia's social, economic, cultural and ethnic structure. There are probably few people in the world who are so close.

I personally, and this is the experience of my generation, grew up with the idea that Ossetians are one part of the Georgian nation. Of course, we understand that they have their own identity and culture, they have their own history, which need to be respected.

Therefore, the conflict that was provoked by ultra-nationalists and, in reality, anti-state elements at the beginning of the 1990s, which was provoked, let's say it openly, by the then government - which did not have real power and so it would not be right to blame it alone - especially as a result of its rhetoric, was very difficult to provoke. At the beginning of the 1990s everything was simply in such chaos that even conflicts that were so difficult to provoke were instigated.

We understand that there are aspects of this conflict which are comparatively easy to resolve. On the other hand, the more time passes the more difficult it will become to settle this conflict. A generation of local people has already grown up thinking that no other way of life is possible. There are people who have been growing up while living for 12 or 13 years in what is almost a military camp. They can leave the camp, to come to Tbilisi for treatment or to meet their friends, for example, but at night they return to the camp and sleep as before.

In reality this territory has turned into a military camp, where they are continually preparing for something to happen - a clash, a confrontation. This is happening in the very heart of our country.

Unfortunately, when we began the consolidation of our state last year, the situation began to deteriorate for very simple reasons.

In Russia, food produced in South Ossetia is not considered contraband. What entered Georgia from former Soviet territory was also not considered contraband. Of course, South Ossetia produces almost nothing, but for Russia this is a comparatively minor problem because the state is larger. However, everything that entered Georgia came from there and came illegally without passing through customs. This created a catastrophic situation for a country whose economy does not have oil or another source of income. We collect taxes and if we don't receive them the country does not function.

Last year we decided that we would set up police posts, because we cannot control the Roki tunnel, on every road which comes from there so we could stop contraband coming in. When we set up the police posts the head of the peacekeeping forces said he would remove them by force. Our response was to increase our forces there and a confrontation took place and the situation escalated. That was followed by the blockade of villages which recognize the authority of the Georgian government and where the majority of the people are ethnic Georgians. Therefore we were forced to defend the bypass road and that road and its defenders were attacked.

We decided to withdraw our armed contingent, not, I stress, because we could not bring things to close last year over the whole territory, but because I felt this would be wrong, that any kind of bloodshed would lead to far worse consequences than the major supply problems faced by these villages and, generally, the development of our country.

However, the problem remains. Last year a group of saboteurs, blew up an electricity transmission line and for several weeks Georgia's electricity supplies were halved. There were other plans which our services are aware of, including other attacks on communications. There were other plans which were carried out. There is a direct link between groups operating there and the terrorist act in Gori, when a grenade exploded in the centre of town outside the police building. We know of other incidents that were planned and are being planned from that territory, and some which have been carried out. Our organizations will soon make an announcement about this.

Apart from that, in recent weeks we have had four people kidnapped, a mine exploded and there have been other unfortunate incidents in the region. This situation cannot continue.

The other issue is what steps our partner Russia is taking. You know that the de-facto authorities of South Ossetia are not demanding independence. They understand that this territory will have to be either part of Georgia or Russia. They are saying that they will soon be part of Russia. I must say that, unfortunately, the Russian authorities have not yet made a single statement unambiguously rejecting this. Moreover, all the moves that are being made are at best ambiguous and at worst suggest that this may indeed happen one day.

The de-facto defence minister of South Ossetia is an active Russian military officer who was brought there from Siberia. The security minister was the acting head of the security service in the Bashkir autonomy. They have even gone further now and appointed Mr [Yuriy] Morozov, who was born in Bashkortostan and lived in Kursk, as [South Ossetian] prime minister. The biographical details that have been released make special mention of the fact that he is a friend of Prime Minister [Mikhail] Fradkov. I do not know what it means and how exactly this relates to the job.

The same is happening in Abkhazia. Russian passports have been distributed in Abkhazia and Tskhinvali. I do not understand why the world keeps silent about it. We are talking here not only about Georgia and its territory but also about Russian democracy and the future of Russia. We are talking here about a plan of action that cannot be in the interests of the Russian state, Georgia, Europe or the rest of the civilized world. That is why a solution needs to be found. We started looking for a solution from day one.

In general, our rhetoric from day one has been that Georgia belongs to every person who lives here. This is their country. If you arrived here by car, you may have seen large billboards by the roadside depicting ethnic Azeris, Armenians, Abkhaz, Ossetians, Russians and other groups in their national costumes and a caption saying that Georgia is everyone's motherland. These billboards have been made by the Georgian government. They are our message to our nation, our people, to everyone, irrespective of their ethnic background. Everyone citizen of Georgia not only has equal rights, but we must take active steps to help these minorities become involved in Georgian socio-political life and public life.

This year we are opening a school of administration named after Zurab Zhvania where 100 Armenians, 100 Azeris and, we hope, also Ossetians will study. These are six-month courses involving the teaching of the [Georgian] language and administrative skills. These people will then be appointed to jobs in the administrative apparatus according to their skills - it could be the customs service, tax service, prosecutor's office, police, local government and so on. In short, we are embarking on a path of positive discrimination, aggressively pursuing their integration into the state apparatus and not waiting for them to learn the language themselves and build their own careers.

At the same time, we have an intensive state programme for the study of Georgian for ethnic minorities in the regions, but we understand that the study of Georgian alone is of course not enough if we do not show people how they will benefit, what opportunities it will give them. You know that in [Samtskhe-]Javakheti region we will have certain problems after the Russian military base is withdrawn because the base is the only working industry in the region and is supplied from the local area. We are talking about 3,000 Russian soldiers, more or less. We decided one week ago, with the defence minister, that the Georgian army, which is 20,000 strong including technical personnel, should be supplied exclusively with agricultural produce from Javakheti, that is mostly from Akhalkalaki, Ninotsminda, part of Aspindza and part of Tsalka [Districts]. We have already begun putting this into action.

At the moment they are not producing enough to provide for the Georgian army. For example, the are enough potatoes but not enough milk or dairy products. Therefore, they should increase production and the programme for purchasing it has already been decided. Of course this is artificial, of course it is possible that Brazilian meat is cheaper than meat from Ninotsminda, although the difference is small. Of course, other regions may need the same kind of thing but this area of Georgia was especially deprived of contact with the central government.

For the first time this year roads are being built there. For the first time facades are being painted, although this is happening in Batumi and many other places in Georgia. For the first time we are building schools - I laid the foundation stone for one school. My wife is the patron of one school and many others will be built without patrons.

Roads in the centre of Akhalkalaki are now being repaired, we are taking other measures. Youth camps have been set up and 1,600 people from Akhalkalaki and Ninotsminda are attending these patriotic youth camps. They are very happy and satisfied.

We have begun building a sports complex in Akhalkalaki and Ninotsminda and they will be completed next year. The youth department has other programmes. We have other measures in place at the same time.

In exactly the same way we are focusing on the development of regions inhabited by [ethnic] Azeris. They were more integrated with Georgia's central regions and capital and we will, of course, facilitate further integration. They do, of course, have their own difficulties and problems.

In a word, see what a contrast this is with the former government. The former government used ethnicity as a political weapon. For example, in Georgia there were always accusations that some member of the opposition had a relative who was not an ethnic Georgian. People said publicly on television that the president could only be an ethnic Georgian, it could only be ruled by ethnic Georgians.

This is hangover from the Soviet nomenclature. For the Soviet nomenclature, ethnic origin was a point of refuge. That is how they got their privileges.

Georgia's former government believed that they should divide their citizens along ethnic, religious or linguistic lines, but we are a government with a completely new viewpoint.

I believe that Georgia can be a successful country if we manage to integrate every nationality.

This year, in percentage terms, there are three times as many representatives of ethnic minorities in Georgia's armed forces compared to last year. Many representatives of ethnic minorities have volunteered for contract service in the army. It was Armenians and Azeris who appeared first at the reserve camps, completely of their own free will.

By the way, on the subject of reservists, yesterday I met the children of refugees from Abkhazia and Tskhinvali and heard the story of the commander of a reserve battalion, Vano Kochkiani. This is the 10th reserve battalion.

Kochkiani is from Abkhazia and was forced to leave behind his property. He then arrived in Kareli and he was given a house which Ossetians had left in 1992. He repaired it and built a few things.

Last year we announced a programme for the return of ethnic Ossetians who had left in 1991 and 1992. Mr. Goga Khaindrava, [state minister for conflict settlement] and Zinaida Bestaeva [state minister for civil integration] found houses for several dozen families and we are prepared to house many thousands.

Anyway, an Ossetian family joined the programme and asked to return to Vano Kochkiani's house. Today this man serves in the Defence Ministry's Gori unit and without a word he gave the house he repaired and where he had been living for so long to the Ossetians. First he lost his home by force, then he lost his house because of humanity and love. I learnt of this by chance yesterday. He has neither a home nor a family so I issued a special order to help him as much as possible. There may be other such stories which I am not aware of, in fact I am sure there are.

I am saying all this because we have completely changed our approach. For example, using the name South Ossetia was an absolute political taboo in Georgia. It was considered that anyone who used this name committed political suicide. There are, however, examples of different names being used. For instance, Austrians call South Tyrol Suedtirol, while Italians call it Alto Adige. This may be legalized in the future, but I personally have no difficulty using the name South Ossetia. The view in Georgian political circles was that even discussing the possibility of granting South Ossetia autonomous status amounted to political hara-kiri.

We presented this plan last year. In January this year it was well articulated by me in the Council of Europe. I must also say that it was immediately posted on the Internet. We published everything in the Ossetian language, so complaints that we start with international forums are not valid. We have been forced to discuss it here because there is no dialogue. I can tell you honestly that, despite my great respect for you, I would be much more pleased to discuss all this directly with representatives of the local population than with foreign ambassadors or even foreign visitors. To discuss this theme, meeting you would not be a priority for me, considering that we need direct dialogue. We are here just because there is no dialogue.

However, last year at the UN we presented a multi-stage plan for confidence building and the subsequent implementation of various other measures. In it, we said that the final settlement of the problem will take many years. Some of our Russian partners and the local de-facto group said that they were very pleased with the part of President Saakashvili's plan in which he says that we should not hurry and that it will take many years to do it. Naturally, this cannot be considered an appropriate response.

I presented the plan in Strasbourg later, in January. We have received no appropriate response to it at all. This plan is effectively a wish list that includes everything local Ossetians have ever dreamed of and demanded. On our way here we remembered that when he was president, Lyudvig Chibirov [South Ossetian leader in the 1990s] would have accepted far less from Shevardnadze, but unfortunately Shevardnadze refused in engage in dialogue. There were many reasons for that, including his weakness and indecision, which was part of his character. We are all familiar with it because we all lived in that time.

When we started talking, the Ossetians said that it was all right to talk, but perhaps they should first get compensation for everything they had suffered in recent years. We put in writing that we are ready for restitution, and a restitution bill is now in the Georgian parliament. They said that it would be good if we acknowledged what happened. Not only have we unilaterally acknowledged everything I personally think happened there, but we have also invited them to form a truth commission and conduct joint investigations. Unfortunately, they have not agreed to that. They said that they wanted local self-government. We have made sure that our plan provides for full self-government. Some of the Ossetians living there have asked what will happen to their contacts with Russia. We are ready to discuss special simplified rules for border crossing.

At the last meeting [South Ossetian separatist president Eduard] Kokoiti raised very timidly the possibility of some kind of free economic zone being set up. We are ready to discuss some kind of economic zone and local tax breaks.

There was talk - in fact they have not requested it, but we are ready to give less than 1 per cent of Georgia's population disproportionate representation - it may be disproportionate statistically but is proportionate to the situation that has taken shape - in Georgia's central government. I am talking here about quotas in the Georgian parliament and about possible talks on the government of that territory being legally allocated places in the Georgian government.

There are many other issues we are ready to discuss, such as the return of refugees and special cultural autonomy with full guarantees for the Ossetian language. They were talking about protection of the Ossetian language and culture as well as the future of their Russian pensions. We gave them a guarantee that all the pensions and social guarantees would be kept at least at the same level as in Russia. We have the financial resources to do it. We also talk there [in the peace plan] about education, Ossetian schools and so on.

Now, we also propose additional initiatives to rebuild mutual trust. I am ready for us to take unilateral steps. I am ready for [South Ossetia's] autonomous status to be enshrined in the Georgian constitution. At present the Georgian constitution makes no mention of this territory.

We are ready to give the Ossetian side a 15-minute regular slot on the Georgian public television and radio channels to express their views on political processes, so that the whole of Georgia can see this. We are ready to set up a regional public broadcaster that will be led by a board selected by both sides.

We are ready to take many other steps. We are ready immediately to start repayment of the pension debt that has accumulated since 1991 and to include this sum in the forecast budget for 2006-2009. We are ready to set up joint youth camps. We are ready for 50 students to enrol at the Zhvania state administration school later this month and for a further 50 students to start studies at other higher education institutions in Georgia later this year - all at state expense.

We are also ready finally to adopt the restitution law and start receiving compensation.

We want to resume dialogue without delay. I would also like to say a few words about [Abkhazia], although it is not the subject of the conference. We are saying that we are ready to consider the status of Abkhazia and the status of the Tskhinvali region, the former Autonomous Region of South Ossetia, together with the Venice Commission and take into account the conclusions by the Venice Commission. We are ready to work on these issues at any international forum and in any international format.

Now, we ought to understand, in relation to Abkhazia, that we will not be able to preserve this situation artificially. There is smuggling and there is crime. [Border guards] seized a ship with a Turkish crew a few days ago. The ship, carrying illegal cargo to Abkhazia, was impounded while its crew were arrested. A very large fine has been imposed. They will either pay the fine or lose the ship. This is a natural process and we have been informing our very good and very important partner, Turkey. We have full understanding on this issue.

However, among the other types of cargo, there was also food. We are ready to hand the food to the Abkhaz as a humanitarian gesture on our part because this is important for the people. We understand the scale of poverty there and food shortages.

However, everyone must realize that the Georgian authorities are prepared to go as far as possible, provided that several postulates are ensured. We will not allow Georgia's division. It is unacceptable for us for a part of Georgia to legalize its independent status and obtain full independence. We will do all in our power to resist this and this will never happen as long as Georgia exists and as long as it has leadership. Let no-one entertain any illusion about this. Any discussion about a part of our territory obtaining independence are unacceptable apriori and we do not intend to talk about it. This is not an open issue. It has been decided and closed. This is one thing.

Second, within the state boundaries we are ready for it to be the state for all territorial entities comprising it. Not only are we ready to [grant] maximum autonomy, we are also ready to share power as much as possible for this country's autonomies to be able to play a full part in the country's central government and have equal and very important rights in governing the entire country. This is the second fundamental principle. We are speaking not only about autonomy, but also about sharing power at the level of central government. This is the second important postulate. We are also ready to give all kinds of existing legitimate international guarantees to these groups living in Georgia that we will protect their identity and distinctiveness.

However, everyone must realize that no matter how patient we are, no matter how well we understand that this takes time, no matter how open for dialogue we are - and we are extremely flexible and open and today Georgia has a leadership with a mandate to take very bold steps to resolve these issues. Rarely does a democratic country - Georgia is a democracy - have a government with the kind of mandate the Georgian government has to take bold steps and to achieve exceptional solutions. I hope the Russian Federation, our partners, understand this and they too are ready to take decisions that may not appeal to every member of society. We are ready to do this. Dialogue with Russia on these issues is very important for us. We understand Russia's role and it is very important for us to find common ground as we did on the issue of military bases. We have an absolutely sincere desire to resolve all disputable issues with Russia. Two disputable issues remain on the agenda. There are called South Ossetia and Abkhazia.

However, freezing the current situation, the status quo is unacceptable for us. This is impossible. The term frozen conflicts is absurd. It is nonsense. At the time when there is a Georgian state, when we are preventing smuggling, when we are fighting crime, when we have taken so many steps. Until we were like many other failed states in the world the acuteness of these problems was not so apparent.

The first thing we did when we came to power was to disarm the so-called partisans. In truth they often were criminals acting in Samegrelo as well as Abkhazia, and many of them have been brought to justice. They troubled everyone in the same way. They broke the law. What was the response of our Russian and Abkhaz partners? There was no response at all. We did it, but they thought it was nothing. It was a very difficult endeavour. We put an end to all sorts of criminal activity wherever we had access around Tskhinvali and established the rule of law in many places where we had access.

These issues are difficult to resolve. We have always been ready to take these sorts of steps. However, ignoring these issues will no longer be possible and I do not want the world community to turn a blind eye to a problem which is not a problem of Georgia alone. It is a problem of democracy and security for Europe and the world as a whole. It is also a problem of the future of Russia's democracy and Russia itself, and we all should realize that very many things in Russia's future development and Russia's place in the world community depend on how these issues are resolved.

I began my career in the beginning of the 1990s as a national minority rights specialists. In my fifth year at Kiev University I wrote a thesis about national minority rights. In particular, my thesis was about the problem of South Ossetia and the problem of Abkhazia. I was writing this [thesis] at the Norwegian Human Rights Institute. The chair of the UN sub-commission on human rights, who now chairs the Council of Europe's respective commission, was my supervisor. For me the issues of human rights and national minority rights are the issues of belief and principle. This is what I started my career with and what I want to be the main achievement in my career.

At the same time, I am the president of Georgia and I have a constitutional duty to my constituents to ensure security, stability and development in the country. Therefore, there will be no stopping. We want your help to get these issues off the ground and to accelerate them. Right now they are completely frozen. The prime minister's meetings with leaders of the de-facto authorities must resume without delay. The OSCE's actions in this zone must intensity without delay. And we all should find a solution together. We should find a solution. A solution exists. It can be achieved realistically.

We are in the capital of Ajaria. One and a half years ago this sort of rapid reintegration of Ajaria was believed to be absolutely impossible. The Georgian revolution, Georgian events that took place in Ajaria were a demonstration of the art of the impossible. Politics is the art of the possible. It was a demonstration of the art of the impossible.

We ought to realize that Georgia has authorities who like to act using not tanks, or missiles or helicopters, but roses and flags. The day before my election [4 January 2004 presidential election] I went to Tskhinvali without any bodyguards. I got out of the car in the town centre and people greeted me as they would have done in any other Georgian town. They hugged and kissed me and shook hands with me. In ten minutes' time a lot of police turned up there. At that time the Georgian police wore exactly the same uniforms as the Soviet police and I thought that they were my guards that followed me everywhere at that time. [I thought] the bodyguards had caught up with me as they always do. I run away and they catch up with me; I escape again and they find me again. It turned out, however, that they were [Ossetian police].

Everyone was speaking Georgian to me. Initially I spoke Russian and they spoke Georgian. However, I have also made several attempts to speak Ossetian, as well as Abkhaz. I will do my best to learn these languages.

Nevertheless, this man came up to me and said in Russian: [continues in Russian] You are violating the sovereignty of the independent South Ossetia. Please immediately leave [South Ossetian] territory.

There was a lot of anxiety. A special purpose unit was called in. Then I left there because I was going to a school in another village, Tamarasheni, anyway, and I went through there.

Therefore, I like and I want people to greet me in the same fashion when I arrive in Tskhinvali next time. I know many Ossetians who keep the Georgian flag, along with their Ossetian flag, which we have put on the cover of [word indistinct] which has distributed.

Roses as well as other flowers in Tskhinvali are beautiful. We want everything to be done in a pretty way, with roses and flowers. But we want things done. We want tolerate just sitting and waiting for something to happen by itself, for something to be resolved by itself. Nothing is resolved by itself and nothing is done by itself.

We want your help in resolving these issues. You have partners capable of civilized, sober, measured and patient action. You have partners who know the standards of civilized and democratic action and who have implemented them. You have partners who love their motherland and love every citizen of their motherland irrespective of their ethnic background, past and political views.

Now you will be presented with the action plan. We have asked Alana [Gagloeva, Saakashvili's spokesperson] to present to you our action plan during the break. I want to thank you very much for taking part in today's event.

I know that there are better known tourist destinations where one may go in July. However, I am sure that those who arrived in Ajaria yesterday, or the day before, do not regret being here. I think it was a pleasant surprise for those who have not been here before.

Thank you very much for your attention.

This translation is published with permission from BBC Monitoring, Reading, UK

Communications Office
of the President of Georgia