TBILISI, Georgia: Georgia's recent war with Russia caused about U.S. 1 billion in damage but did not fundamentally undermine Georgia's economy, the prime minister said Wednesday.

Georgia's entire national budget for last year was around U.S. 3 billion, and Georgia is hoping for substantial economic aid from the West to help it recover.

Prime Minister Lado Gurgenidze said the U.S. 1 billion was a rough estimate based on early assessments of the fighting's consequences. Buildings were bombed, a bridge on a strategically key rail line was blown up and officials say the Black Sea port of Poti was extensively damaged by Russian forces.

"The Georgian economy has continued functioning more or less as normal, the financial system kept functioning, the exchange rate has held up, the consumers have kept consuming," Gurgenidze said. "I can only logically conclude that investors will keep investing despite the severe shock we have sustained."

Georgia's economy has boomed in recent years, recording annual GDP growth of 10 12 percent in 2006 and 2007.

Gurgenidze spoke at a joint news conference with Reuben Jeffrey, the U. S. Undersecretary of State for economic affairs, who is leading a delegation examining Georgia's postwar economic recovery needs.

Jeffrey said the U. S. Assessment is focusing on humanitarian assistance for the tens of thousands of refugees who fled the fighting and on the need to rebuild infrastructure damaged or destroyed in the fighting.

"We talked a lot about ways we can be supportive as the government and the people of Georgia get the county back on trajectory of solid sustained economic growth and prosperity," Jeffrey said.

U. S. aid to Georgia is a sensitive issue in U. S. relations with Russia, which have deteriorated significantly since the fighting began.

Russia blames Georgia for starting the war and officials say foreign aid to President Mikhail Saakashvili's government essentially rewards aggression. Russian officials are also angry over U. S. military aid to Georgia, which is seeking to join NATO. The United States and Georgia held joint military exercises in Georgia in July. 

Source : AP