kakha Bendukidze

Famous Reformist Kakha Bendukidze Dies at 58


Famous reformist, founder of the Knowledge Fund, Chairman of the Supervisory Boards at the Free University and the Agrarian University, former Minister of Economy, Kakha Bendukidze died in London at 58 on 13 November. He had undergone a heart surgery in London, and presumably, he died as a result of heart failure.

Shortly after returning from Russia, a well-known entrepreneur Kakha Bendukidze was appointed as Minister of Economy by former President Mikheil Saakashvili and the late Prime Minister Zurab Jvania in 2004. For the following four years and eight months, he led the economic reforms which along with other transformations in other spheres, became Georgia one of the symbols of new Georgia.

During this period, 70 reforms were carried out simultaneously in Georgia. No other country has carried out so many reforms simultaneously at such a short period of time. For this reason, the World Bank recognized Georgia as the world’s number one reformer country.

Even the government’s most radical opponents are forced to admit that the slogan - Georgia, without any corruption, transformed from a Rose Revolution slogan into a daily reality. Bendukidze's liberal reforms, together with the reformed police, played a key role in the fight against old oligarchic plutocracy and the associated organized crime.

In order to prevent the corruption hydra from growing new heads after the old ones being cut off, it was necessary to make the environment that fed it, healthier. Law enforcement measures were necessary, but insufficient precondition to achieve this goal.

To diminish the risks of corruption, it became crucial to decrease the amount of times the business and government crossed paths. This, obviously, demanded radical reduction of governments apparatus, and decrease of the power and material resources in the hands of the remaining officials.

This required the liberation, regulation, privatization and de-bureucratization of the economy. In the economy – it was necessary to weaken the role of the government and widen the individual freedom.

Although the new government had lots of energy and numerous good ideas, they had completely different dispositions, very often, they opposed each other, and sometimes were absolutely counterproductive. A stillborn initiative to impose a luxury tax is enough to illustrate the general mood of the period.

With this initiative the “expropriation of expropriators” was supposed to take place and “social justice” was supposed to be restored. The government was planning to win loyalty of people. At the same time, the treasury emptied by the former nomenclature was going to be filled and used for the people’s well being.

Georgia and its government was facing a philosophical choice. They had to decide how they planned to overcome poverty and unemployment – through the state or through the market, who was supposed to be the moving power of the country’s modernization– a public official or a private entrepreneur.

By appointing Bendukidze, the government made a clear choice. This choice gave the country a yearly 9.3% economic growth in 2004-2007 and almost four times more foreign investments. Despite separate compromises and mistakes, the government managed to decrease the taxes fourfold, the number of licenses by 90% and liberalize the labour market. The reforms, obviously, came at a price, which most distinctively showed on 7 November 2007. However, these liberal steps were what lead to the formation of the previously almost non-existent middle class. In the form of the latter, the irreversibility of the reforms gained social support. Together with the population of the regions of Georgia, the middle class gives order for maintaining the political course and succession.


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