Samantha Shields in Batumi, Georgia -

Batumi, capital of Georgia's tiny autonomous Black Sea region of Adjara, is hoping to capitalize on its position as President Mikheil Saakashvili's pet project by trying to reclaim its 19th century glory days and become an important commercial and tourism hub within the next 10 years.

Adjara became Saakashvili's biggest domestic diplomatic success after a tense 2004 stand-off between Georgian forces and separatist strongman Aslan Abashidze was peacefully solved without seeing the region secede. It stands in marked contrast to Abkhazia and South Ossetia, the breakaway regions that were lost in August 2008's disastrous war with Russia. Since then, Saakashvili has championed Adjara as a potential economic powerhouse to show how an autonomous region can thrive within Georgia.

Adjara, now run by Saakashvili ally Levan Varshalomidze, has a population of just 140,000. But a deepwater oil port that was one of the world's busiest up until the Soviet period, a border with Turkey, and the tourism potential of its sultry capital city and lush coastline should see that figure rise to half a million by 2020, Deputy Economy Minister Grigol Tsamalashvili tells bne in an interview. "There has been talk that we have the potential to be a new Singapore or Monte Carlo, but we just want to create a new destination for tourism and business meetings. We want to be the new place to visit," he says.

Foreign direct investment (FDI) in Adjara is expected to reach $158m this year, Tsamalashvili says, up from $140m in 2009 and $50m in 2004 when the terms of its current autonomy were defined. Total investments including state contributions came to $242m in 2009.

Turkish tourists

About half of Adjara's FDI is going into tourism, and numbers visiting Batumi and its surrounding coastline are growing fast, according to Temur Diasamidze, head of the region's tourism board. "We're expecting 800,000 tourists this year, that's up 135% on last year, and the figure should rise to 1.7m by 2012," he says. Revenues from tourism will be GEL45.4m this year, rising to GEL53.1m in 2011 and GEL62.2m in 2012.

The forecasts are impressive, but for the moment most of Batumi feels like a building site, and accommodation options outside the city itself are basic. The parts of Old Batumi that have been restored are picturesque, and a new boulevard that will eventually run 20 kilometres to the Turkish order is well underway. A five-star Sheraton Hotel opened at the start of this summer season, and the building, designed to look like a lighthouse, now dominates the Batumi skyline. Three more international five-star hotels - a Radisson, a Kempinski and a Hyatt - will open within the next three years, as well as two less expensive options. Further ahead, there are plans to build more hotels and a marina along the coast outside Batumi.

For now, most tourists come to Adjara from Turkey, Armenia, Azerbaijan and Iran, but the goal is to cast the net wider to attract visitors from Poland, Ukraine, the Baltics, Israel and Kazakhstan. The tourism board is offering free customer service courses to anyone who is interested to try to ease out Soviet manners.

Tsamalashvili says Adjara's administration is confident that this pace of development is sustainable until the whole project is completed. "Yes, buildings are going up fast and we're growing fast, but FDI has been increasing steadily despite the world financial crisis and I have no fear of a slowdown for us," he says. "So many projects are well underway that only a force majeur could stop us."

Adjara can also depend on oil revenues. Batumi terminal ships around 7m tonnes of crude and oil products a year, with some volumes being shipped across the Caspian Sea from Central Asia in small tankers, unloaded in the Azeri port of Baku and then sent by rail to Batumi for re-export to the Mediterranean.

Saakashvili continues to lend his support to Adjara. He moved the Constitutional Court of Georgia to Batumi from Tbilisi in July 2007, and is spearheading a push to turn Batumi into Georgia's entertainment capital. Georgia's annual Jazz Festival moved to Batumi from Tbilisi in 2008, and while a plan to bring Stevie Wonder there to play a concert this July fell through, Chris de Burgh made it there in August. "In terms of public relations, the fact that President Saakashvili is here so much is of course very good for us. But he's not doing it artificially, Batumi is a relaxing place and by 2020 is going to be a really wonderful city," Tsamalashvili says.