Georgian politics

Shadows Vanish at Noon


The headlines proclaimed “VANO MERABISHVILI NAMED NEW PRIME MINISTER OF GEORGIA,” but the full story reads like the Russian potboiler SHADOWS VANISH AT NOON. Sometimes it is difficult to escape the impression that existing Georgian political reality is following the script of some novel or movie of the Soviet-stagnation genre. In the midst of an active election campaign, the Georgian government has been reshuffled and one of its most influential cabinet members has taken up a new position commensurate with his considerable influence.

Vano Merabishvili is the closest political ally of Georgian President Mikheil Saakashvili appointed to the post of Prime Minister since the death of Zurab Zhvania in 2005. Recent changes in the Georgian Constitution will increase the role of the Prime Minister anyway, but in this particular case the alignment of political reality with constitutional requirements has been given a head start.

It is impossible to predict with any degree of certainty how events will unfold after 2013, when the presidential tenure of Mikheil Saakashvili comes to its end and the constitutional reforms usher in a new parliamentary system of government. In Georgia, it often seems that much more happens here in a single year than happens in other countries over the course of a decade. One thing that can be said for sure is that the “Putin” scenario has lost its credibility.

Even though the Merabishvili premiership has seriously undermined that once-popular theory that Saakashvili intends to cling to power in Georgia in the same way President/Prime Minister/President-Again Vladimir Putin has in Russia, conspiracy-minded Cassandras have been amazingly resilient in trumpeting yet another apocalypse – they now ominously declare that the appointment of the former Interior Minister as Prime Minister portends the transformation of Georgia into a police state. Here, they perform their key function impeccably well, scripting yet another political melodrama with what Winston Churchill once described as the ability to foretell what will happen in the future and then explain later why it didn’t happen.

Putting aside prophesy, it will be interesting to see what that promotion of the Interior Minister actually heralds. Vano Merabishvili is most closely associated with the successful police reform, but his career did not start with that. Born in Southern Georgia and representing the Catholic minority, he first attracted public attention in the late 1980s among the ranks of activists of the national movement. He went on to set up his own non-governmental organization with the mission of protecting land ownership rights of peasants and newly emerging entrepreneurs.

One could say that his entry into politics was almost accidental. In the 1999 parliamentary elections, Merabishvili was the last among those candidates elected to the Parliament from the list of the Citizens’ Union political party. Soon thereafter, he became chairman of the parliamentary committee on economic policy.

Vano Merabishvili distinguished himself as the first Member of Parliament from the Citizens’ Union to tell Western media that President Eduard Shevardnadze had no political will to fight corruption. Speaking candidly in a 2001 interview, the young parliamentarian told the Washington Post that it was impossible to do serious business in Georgia if you were not a relative of the president.

In 2003, Merabishvili was the general secretary of the National Movement political party and one of the organizers of the Rose Revolution. He is leading the National Movement election campaign now as well. The current election cycle would be critical even without Bidzina Ivanishvili throwing a sizeable portion of his six-billion dollar fortune into the political arena. With Saakashvili nearing completion of his second term and the amended Constitution ready to shift the center of gravity toward the Parliament, the stakes could not be higher.

When Ivanishvili emerged on the Georgian political scene last October, many hoped that a strong political opponent of the ruling party and a competitive election campaign would produce a healthier political environment. Instead, Georgia is facing an increasing threat

that this fight for power will degenerate into reckless socialist rivalry.

The new government program – “More Benefit to the People” – is not likely to dispel those fears, especially with such initiatives as the distribution of thousand-lari vouchers to the population. Although no official figures have been published, it can fairly be estimated on the basis of the most recent census that the government will have to spend GEL 1.4-billion over the next four years just to pay for those vouchers.

Despite the number of reforms that have measurably improved the environment for doing business in Georgia, there has not been any breakthrough yet in combating unemployment. After the Rose Revolution, the country saw a near trebling of the Gross Domestic Product (GDP). Economic growth did not create new jobs. Today, the country’s official unemployment rate stands at fifteen percent. While it is true that rate peaked during the global economic crisis and has been steadily decreasing for the past two years, it is still appreciably higher than the corresponding indicator of eleven percent in 2003.

Confronted with that record and intensifying election competition, the government has not been able to sidestep the employment issue. To underscore the priority accorded that problem, the government has even established a post for a minister without portfolio – a new state employment minister. Skeptics doubt more bureaucracy will do anything to improve the situation. If anything, this move may has given one segment of the electorate a little more hope of combating unemployment, but it also has given another segment a lot more to complain about, namely populism.

The new Prime Minister contends that the GDP will rise and enable the ruling party to increase the state budget to GEL 38-40 billion over the next four years. Half of that anticipated amount is earmarked for pensions, health insurance, social assistance and support to agriculture and education.

Not surprisingly, those priorities of the government’s “More Benefit to the People” program mirror the very priorities identified by citizens in public opinion polls. According to the most recent survey findings of the National Democratic Institute (NDI), citizens most

want to see in the next few months reforms in the health care, agriculture and pension sectors, in addition to the creation of new jobs.

Analyzing Georgia’s prospects for economic growth provides a general sense of how realistic the promises of the new Prime Minister really are:

Assuming that Georgia’s nominal GDP grows for the next four years at the same rate (twelve percent on average) it has grown from the Rose Revolution to the present, GDP will exceed GEL 47 billion by 2016.

Under the new government program, the retirement pension will equal one-hundred U.S. dollars per pensioner beginning in 2013. The 2012 state budget currently allocates GEL 72 million or 3.97% of GDP for pensions. The new plan envisages increasing the annual pension expenditure to GEL 1.5 billion, which will comprise 3.16% of GDP.

On top of that, every pensioner will receive a health insurance package. The government intends to spend GEL 750 million annually for health insurance, which will account for 1.58% of GDP by 2016. By comparison, the state budget this year allocates GEL 168 million – 0.62% of GDP – for that purpose.

The new government program further envisages broadening social assistance with GEL 750 million –1.58% of GDP – to be spent in this direction by 2016. The social assistance allocation in the current budget is GEL 274 million or 1.02% of GDP.

In addition, the government expects to spend one-billion lari annually on support to education and agriculture. By 2016, that will add up to 2.1% of GDP. At present, the amount allocated for education is GEL 616 million or 2.28% of GDP and the agriculture expenditure totals GEL 580 million or 2.15% of GDP.

All of this assumes that the Prime Minister’s 2016 budget projection of GEL 38-40 billion is on the mark. But that mark may not be so easy to reach. The post-revolutionary economic revival did not suddenly appear out of thin air. It resulted from a well-formulated economic policy under which radical reforms were implemented simultaneously in no fewer than seventy spheres.

Remnants of the ideology that produced those successful transformations are still echoed in the rhetoric of the ruling party. With the

passage of time, however, the gap between word and deed is ever widening.

If the ruling party fails to win the elections, it obviously will be unable to implement any of its promised initiatives. On the other hand, even if the ruling party wins, its initiatives will not materialize without accelerated economic growth.

That means that a whole set of painful reforms must be implemented in order for the economy to grow at a rate that would allow the government to collect the amount of revenues required to increase budget expenditures for its populist initiatives. Without painful reforms, the government will either have to refuse to deliver on its promises or to fund them by increasing foreign debt, the national

deficit and taxes. That, in turn, would have a decidedly adverse effect on the country’s economic health.

The ruling party is finding it more and more difficult to strike the right balance between its short-term goal of political survival and the country’s long-term development interests. Reconciling those conflicting objectives requires skillful acrobatics. Until now, the National Movement has been more successful than not in performing difficult political maneuvers. With the risks constantly increasing, its margin of error is rapidly diminishing.


Old “New” Ministers in WikiLeaks

Newly appointed Prime Minister Vano Merabishvili’s former position as Minister of Internal Affairs has been filled by Bacho Akhalaia, who moved over from the post of Defense Minister. The performances of both Vano Merabishvili and Bacho Akhalaia in those former official capacities were assessed several years ago in classified U.S. diplomatic cables made public last year by the WikiLeaks Website. Bacho Akhalaia’s name appeared frequently in those cables because of close cooperation between the United States and Georgia in the defense sphere. Several of the leaked communiques mentioned Vano Merabishvili as well. Other newly appointed ministers in the latest Georgian government reshuffling – Dimitri Shashkin, who has taken up Bacho Akhalaia’s former position as Defense Minister; Khatia Dekanoidze, who has assumed Shashkin’s vacated post of Education Minister; Dali Khomeriki, the new Minister of Refugees and Resettlement – are not mentioned at all in any of those diplomatic cables.

The classified cables revealed that U.S. Administration officials were initially skeptical about Bacho Akhalai’s appointment as Defense Minister back in 2009. Later, they changed their opinion and commended him for efficiency and cooperation.

In a confidential dispatch to Washington in August 2009, Deputy Assistant Secretary of State Tina Kaidanow expressed her concern about the appointment of Akhalaia, emphasizing his “bad human rights reputation.” That cable reported: “Kaidanow urged President Saakashvili to understand how this appointment had impacted on Georgia’s international reputation, and emphasized the importance of avoiding such actions in future.” Saakashvili was reported to have defended the appointment by pointing out that Akhalaia as head of the penitentiary system had succeeded in tackling the mafia while the predecessor Defense Minister had failed to make any real progress on reform.

In September 2009, then U.S. Ambassador to Georgia John Tefft sent a dispatch to Washington that Akhalaia wanted to make a positive first impression on NATO diplomats because the new Defense Minister was aware that most of them were skeptical about his appointment.

In October 2009, the U.S. Embassy in Tbilisi cabled Alexander Vershbow, then U.S. Assistant Secretary of Defense, that Akhalaia had turned out to be a very active Defense Minister who was especially receptive to advice from U.S. defense advisers and military attaches: “Even those within the Defense Ministry previously skeptical of Akhalaia admit that he is unafraid to make decisions and does so after close consultations with subject matter experts within the [Ministry of Defense]. In addition, Akhalaia has been the most active Defense Minister in terms of seeking advice from the U.S. Defense Adviser Team, ODC [U.S. Office of Defense Cooperation] Chief, and DATT [U.S. Defense Attaché], then following through with it.” That cable went on to report the U.S. Embassy view that “personnel changes [Akhalaia] has made within the Joint Staff largely address weak areas.” The same cable further noted that Akhalaia was less demanding with the United States than other Georgian officials were about procuring arms.

Vano Merabishvili was mentioned several times in confidential dispatches from the U.S. Embassy in Tbilisi. U.S. Embassy diplomats actively sought out Merabishvili to talk with him about territorial conflicts. In the estimation of Ambassador Tefft, Merabishvili was one of most important figures in the area of conflict settlement even though his influence was limited to security issues while Saakashvili set diplomatic strategy.

In a conversation with Ambassador Tefft recounted in one of the leaked cables, Merabishvili described then de-facto president of Abkhazia Sergei Bagapsh as a Soviet-style ruler. Merabishvili was reported as saying that Bagapsh never took a step without first reaching agreement with Moscow. Ambassador Tefft agreed with Merabishvili’s position and voiced his own skepticism about “efforts” of the West to talk with Bagapsh.

Despite Russia’s activity in Abkhazia and South Ossetia, Vano Merabishvili was said to have ruled out Russia’s active military involvement in the conflicts and the recognition of independence of Abkhazia and South Ossetia. In a May 2007 dispatch, Ambassador Tefft wrote that Merabishvili had told him that Georgia in the coming year would focus on trying to improve relations with Russia.

This article first appeared in Tabula Georgian Issue # 108, published 9 July 2012.



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