Georgians defiant as Russian sanctions bite

TBILISI, Oct 3 (Reuters) Georgians today sought to put a brave face on Russia's economic sanctions, imposed after a spying row that has chilled relations between the two ex-Soviet neighbours to the lowest level in a decade.

Moscow has cut all transport and postal links and its parliament is debating a measure to stop Georgians in Russia from sending money back home -- a painful step for a nation where a sixth of national income comes from Russia.

''Half of Georgia lives on these wire transfers from Russia,'' sighed Maya Akobia, the head of a small Tbilisi branch of the private Bank of Georgia.

The branch handles some 25,000 dollars in wire transfers on average a day from Russia, the source of most remittances, she said.

''People are very scared. People are asking about what will happen,'' Akobia said.

The Caucasus nation of five million, whose economy shrank by more than two thirds in the 1990s along with the loss of control over pro-Moscow Abkhazia and South Ossetia regions in bloody wars, still treasures its penchant for good food and wine.

But the famed 'supra' feasts to honour guests, with songs and dances lasting through the night, may now become rare amid the current crisis triggered by last week's arrest of four Russian soldiers in Tbilisi on spying charges.

Figures on how much Georgians in Russia send back to their homeland are contradictory.

Russian estimates put the figure at as much as 1 billion dollars, while Georgian officials say it is closer to 300 million dollars.

Russian lawmakers said it makes up a big chunk of Georgia's economy which is expected to grow to 7.8 billion dollars this year.

PROUD, POOR BUT UNDAUNTED Georgian officials say the country lived through worse.

''In the present context, these are just bites but they are not deadly bites and we will survive,'' Economic Development Minister Irakly Chogovadze told Reuters.

''The population will suffer but the most important thing is that centuries old ties (with Russia) will suffer and that is very very bad.'' After a war of words between Russian President Vladimir Putin and Georgian President Mikhail Saakashvili, who seeks NATO and European Union membership, Tbilisi newspapers said a new chill had fallen on relations.

''A new cold war between Tbilisi and Moscow,'' Resonansi (Resonance) daily said in a front page headline.

Georgians, enjoying a warm and sunny day in Tbilisi's leafy streets, said the sanctions would pinch but expressed support for Saakashvili ahead of local elections planned for October 5.

''Georgia is an independent country and I think the Georgian government in this situation acted properly,'' said Magda Papiashvili, who was walking on the capital's main street.

''(But) it will be very tough for the people. It is usually the simple people who suffer in such situations.'' Apart from their common Christian Orthodox faith, Russia and Georgia often shared their glorious -- and tragic -- history, when offspring of Russian and Georgian rulers struck marriages to cement Moscow's protectorate over its southern neighbour.

Georgia's verdant hills inspired many Russian poets, and the names of Georgian-born commander Pyotr Bagration who died in Russia fighting invading French Emperor Napoleon in 1812, and of Soviet dictator Josef Stalin alike, are known to most Russians.

REUTERS SP KN2137