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Georgia. A successful transformation and a challenge to the oligarchs

Georgia is one of the most successful examples of transformation and reform within the post-Soviet space. However current events – the weakening of democratic institutions and informal ruling – threaten the achievement of modernisation as well as the country’s trajectory towards the West.

Starting after independence, following the collapse of the Soviet Union, Georgia faced a number of critical challenges. First, a civil war broke out between the supporters and opponents of the first president, Zviad Gamsakhurdia. This was followed by the bloody conflicts in Abkhazia and the South Ossetia/Tskhinvali region. As a result of these events, Georgia lost control over a part of its territory, its industry and infrastructure were destroyed, and its GDP fell by 44 per cent. Under the leadership of President Eduard Shevardnadze from 1995 to 2003, the country experienced relative stability, yet this period was characterised by corruption of the state, criminality, and the inability of the state to cope with its functions.

April 6, 2020 - Dimitri Avaliani - 20 years of the Lane Kirkland Scholarship ProgramIssue 3 2020Magazine

In 2011 Bidzina Ivanishvili appeared in Georgian politics. Before that he was completely unknown in public life. photo: Ernests Dinka, Saeimas Kanceleja (CC) www.flickr.com

Real changes only began to emerge after the 2003 Rose Revolution, which was led by pro-western leaders under the guidance of the third president, Mikheil Saakashvili. In record time, corruption was virtually eliminated. In 2003 the country was at the very bottom of Transparency International’s corruption perception index (127th place), yet by 2012 it rose to 51st place. Reforms carried out concerned many spheres, including the police, public administration, energy, and education.

Early success and war

Thanks to the economic reforms initiated by Kakha Bendukidze, the minister of economic development and former Russian entrepreneur, taxes were significantly lowered and bureaucratic barriers to business were removed. As a result, Georgia found itself as a country that was now easy to do business in. Georgia went from being ranked 100th in the World Bank Doing Business rating in 2005 to 18th in 2007. This year Georgia is ranked 7th. Nominal GDP per capita grew more than threefold between 2003 and 2008 – from 1,006 US dollars to 3,325. On average from 2004 to 2007 the annual growth rate of GDP amounted to 9.3 per cent.

Beyond economic growth, Georgia became one of the safest countries to live in, which led to growth in investment and tourism. Despite these impressive developments, unemployment remained high, reaching its peak in 2009 with 19 per cent. In 2014, Georgia signed the Association Agreement with the European Union (EU), which also involved the establishment of a Deep and Comprehensive Free Trade Area (DCFTA), and in 2017 the EU visa liberalisation for Georgian citizens entered into force. In Georgia these events are perceived as successful achievements and are on a path towards the European integration of the country.

Yet the strained Georgia-Russia relations have remained the main challenge for the country. Georgia’s orientation towards the West and its desire to integrate with the EU and NATO is unacceptable for Russia. In 2000, as a measure of putting pressure on Georgia, Vladimir Putin introduced a visa regime for citizens of Georgia and soon began to offer Russian citizenship to the citizens of the breakaway Abkhazia and South Ossetia. In 2006, the relations of the two countries entered a critical phase – Russia announced an embargo on Georgian goods and Georgia expelled Russian intelligence officers, after which Moscow closed off all types of transport routes and suspended all visa issuance. However the Georgian economy could not be undermined – economic growth in 2007 was at its highest level.

In August 2008, after a long period of tension and military disturbances around Abkhazia and South Ossetia, Georgian forces attacked the self-proclaimed South Ossetia in order, as Tbilisi claimed, to both prevent the shelling of civilians and a Russian invasion. After that Russia intervened in the conflict under the pretext of protecting its citizens and brought troops into Georgia. In the end, Moscow recognised the independence of South Ossetia and Abkhazia and placed its military bases in these regions. Georgia declared these territories occupied, which was supported by almost the entire international community.

Prior to that, in April 2008 at the NATO Summit in Bucharest, Georgia was denied a Membership Action Plan (which would lay out a blueprint for membership – editor’s note), but it was announced that Georgia would one day join the Alliance. Despite that, after more than 11 years NATO countries have not fulfilled that promise. This was one of the largest negative consequences of the Russo-Georgian war. NATO representatives often state that no third country has the right to veto the enlargement of the Alliance. But perhaps the main reason for the lack of consensus within NATO about Georgian membership is a reluctance to clash with Russia. In this way, Georgia has not received any hard guarantees of security and defence. Nevertheless, after the Russian aggression, Georgia did not change its political course and the reforms and the massive construction of infrastructure continued. The war and the international economic crisis affected the Georgian economy and its GDP fell by three per cent in 2009. However by 2010 growth returned at six per cent.

The arrival of Ivanishvili

The flipside of Georgia’s rapid transformation under the leadership of Saakashvili  were problems related to human rights (which, of course, existed under the previous government), the judicial, law enforcement, and penal systems. Practically it was a one-party state with the president at the top and without any significant influence on the opposition. On two occasions, November 7th 2007 and May 26th 2011, the government brutally dispersed opposition rallies; in the latter case, there were some victims.

International organisations and western partners repeatedly criticised Georgian authorities for the lack of independence of the judiciary and the pressure it puts on the media. In 2011, Bidzina Ivanishvili appeared in Georgian politics. Ivanishvili was a businessman and philanthropist, who earned six billion dollars in Russia during the 1990s. Before that he was completely unknown in public life. With his arrival on the scene, Ivanishvili announced that he intends to replace Saakashvili, whom he accused of being authoritarian. He argued that Saakashvili was unable to manage the economic problems of the country and blamed him for damaging relations with Russia. The figure of Ivanishvili and his vast wealth allowed him to unite the formerly weak and fragmented opposition and to create a new coalition called the Georgian Dream.

The videos of violence against prisoners, released a few days before the 2012 parliamentary elections, had an additional effect on voters. Saakashvili’s party, which governed for nine years, lost the elections. For the first time since independence, a transfer of power occurred peacefully, through the democratic process, without revolution or mass protest. It seemed like a significant achievement. And it would have been if the new authorities solved a number of key areas such as the independence of the judiciary, the strengthening the multiparty system, and having a free media. Yet Ivanishvili chose a different path. Since the first  days after assuming power, the authorities began to use the prosecutor’s office and initiated investigations against political opponents. Over the seven years that Ivanishvili was in power – he formally resigned as prime minister in 2013 but managed from the shadows with the help of loyal colleagues – his main pursuit boiled down to the gradual control of all kinds of government institutions, from local governments to the courts.

Regarding the media space, the situation is deteriorating. As a result of many years of litigation, it became possible to change the leadership of the independent TV channel, Rustavi-2, which passed into the hands of a pro-government businessman. A money laundering investigation was launched against the founders of another independent channel, called Pirveli. During the governance of the Georgian Dream there has been a dramatic rise in crime (57 per cent from 2017 to 2018) and slow economic growth (4.8 per cent in 2018) compared to the Saakashvili period. According to official data, one-fifth of the population lived in absolute poverty in 2018. The national currency, the lari, has also depreciated from 1.8 to 2.9 to the US dollar. Corruption scandals and nepotism in government agencies have become commonplace. The biggest problem of the system, created by Ivanishvili, was that members of the governments and parliament are selected according to the principle of personal loyalty. These are often people from his personal staff (e.g. security guards, lawyers, doctors, etc.) who are not accountable to the people, but to the oligarch.

The Russian factor

One of Ivanishvili’s promises was to improve relations with Moscow, but not to the detriment of integration with the EU and NATO. Ivanishvili succeeded in reinstating the export of wine and agricultural products and reopening regular transport routes with Russia. In turn, Tbilisi and Ivanishvili personally softened the rhetoric. Nonetheless, the improvement of economic relations was not followed by a political understanding. Russia continues to insist that Abkhazia and South Ossetia are independent states. Ivanishvili’s governance coincided with the so-called borderisation issue, which refers to the construction of barriers on the “state border of South Ossetia” by Russian forces. As a result people living in those areas are left without access to their land, water and churches and some are even deprived of their homes. The ongoing talks between the two sides in Geneva have led to no tangible result. At the same time, pro-Russian organisations that oppose integration with NATO and the EU are gaining traction in Georgia. The participation of Russian delegations in various events in Georgia has become more frequent, one of which has led to a new political crisis last year.

On June 20th 2019 a meeting of the Interparliamentary Assembly on Orthodoxy took place in the parliament building in Tbilisi (the organisation was little known to anyone in Georgia at that time). Sergei Gavrilov, a member of the Russian Duma who was presiding over the General Assembly, addressed the gathered audience while sitting in the chair of the speaker of the Georgian parliament. At first, this provoked a protest by the parliamentary opposition, and later followed spontaneous demonstrations in front of the parliament. By evening the demonstrations grew into clashes. As a result more than 200 people were injured and several protestors lost their eyes, and due to the crisis, the speaker of Georgia’s parliament resigned. Nonetheless the protests continued.

In response, Ivanishvili agreed to fulfil one of the main demands of the protestors, which was to hold parliamentary elections on a proportional basis. The opposition and civic activists insisted on electoral reform, because the current system, which is half-proportional and half-majoritarian, gives a significant advantage to the ruling party. For example, the Georgian Dream received 48 per cent of votes in 2016, but with the help of majority districts it obtained the constitutional majority. On November 14th 2019 the parliament voted against this electoral reform. In this way, the party broke its own promise and provoked a new wave of political protests. Again, dozens of activists were arrested.

Georgia at the crossroads

During the protests, some members left the ruling party. Practically the whole oppositional political spectrum, including influential non-governmental organisations, rallied around the demand for a proportion-based system. Dissatisfaction with the course of judicial reforms and the refusal to reform the electoral system is already openly expressed by representatives of Georgia’s partner countries and the OSCE. Nevertheless, Ivanishvili has no plans to retreat. Talks about a possible compromise, which began with the mediation of western diplomats, have yielded no results. According to recent polls by the National Democratic Institute, only 20 per cent of voters support the ruling party.

The situation in Georgia appears rather unstable as the public and political class have a strong will for change. On the other hand, they are confronted by an oligarch with a great deal of financial and administrative resources who has no reservations about using more authoritarian means in order to retain power. A sizable part of the Georgian society supports integration into the EU and NATO (82 and 74 per cent respectively, according to the last NDI polls). However Georgian pro-western orientation depends not only on a declared political vector, but on the preservation and development of democratic institutions. Ivanishvili’s attempts to retain power and the readiness of the authorities to use illegal methods to do so, place these achievements under threat, which may consequently alter Georgia’s western path.

Translated by Margarita Novikova

Dimitri Avaliani is an editor of JAMnews, an independent online publication focusing on South Caucasus countries. He participated in the Lane Kirkland Scholarship Program in 2015–2016.

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