Even before Ivanishvili assumed political power, parliament voted to shift many powers from the presidency itself and, in effect, gave Georgia a parliamentary form of government instead of a strong presidential system. More than a few Georgia-watchers speculate that this change was part of a master plan by Saakashvili to call the political shots as prime minister in the manner of Russia’s Putin between presidential stints. But it was ultimately Ivanishvili who got to exercise the clout as prime minister. Moreover, a dozen close associates of President Saakashvili – including a former prime minister, past defense and interior ministers, and a former mayor of Tbilisi—were all arrested on charges of corruption.
Advent of 2003 Rose Revolution Mikhail Saakashvili Bidzina Ivanishvili
After Georgia’s voters went to the polls and rang down the curtain on their best-known political actor on the world stage, two questions are being asked increasingly in Washington and other Western capitals: “What will the new people in charge in Tbilisi be like?” and “What will Georgia do now without Mikhail ‘Misha’ Saakashvili?”
Both are fair questions. Although unemployment is still high, and investments are down because of political instability, the condition of the Georgian economy is relatively robust. And Georgia will always be important to the West because of its proximity to its antagonist (and onetime master), Russia.
Since it achieved independence more than two decades ago, the onetime Russian republic has become a mecca for business. Sporting the lowest flat tax rate in the world, Georgia has reduced its number of taxes three-fold, slashed the number of import duties from 16 to 3, and cut down tariff rates on import duties from 16 to 3. “We view import duties as an additional burden to businesses and decided to abolish them altogether in 2008,” wrote Zurab Nogaideli, President Saakashvili’s Prime Minister, in a 2006 newspaper advertisement addressed to the world “business and investment community.”
Foreign investment also meant that the country sold strategic assets to foreigners, including mining, water, electricity, ports and airports and land, in a country that is highly dependent on agriculture. In terms of world politics, Georgia’s relationship with the United States has been strong. Cheered by throngs of 100,000 when he arrived in Tbilisi in 2005, then-U.S. President George W. Bush called Georgia “a beacon of democracy.” In 2009, on the first anniversary of the Russia invasion of Georgia and Moscow’s recognition of and subsequent military presence in the provinces of South Ossetia and Abkhazia, Vice President Joe Biden brought the parliament to its feet in Tbilisi when he declared: “We call upon Russia to withdraw all of its forces from your terrain.”
As the site of oil and gas pipelines that ship sources of energy to Europe, Georgia is what a former prime minister called “a cultural bridge” for eastern suppliers and western consumers.
“We can talk to both sides and we are the only [party] not involved,” as either a potential gas supplier or buyer,” then-Prime Minister Nika Gilauri told theFinancial Times in 2012. He added, Tbilisi “has good relations with both the west and with the oil-rich former Soviet states, notably neighboring Azerbaijan and Turkmenistan, potential sources of Nabucco [the pipeline from eastern Turkey to Europe] gas.”
Given the importance of this Caucasus state dealing with energy, markets, and relations between Russia, the U.S., and the European Union, it was not surprising to see so much attention focused on Georgia’s October 27 presidential election. And it is not so surprising to find leaders in other world capitals questioning how things will be different in Tbilisi with the Georgian politician they know best out of power and the political shots now being called by a billionaire often characterized in press reports as “enigmatic.”
Changing of the Guard
In a landslide vote, the presidential candidate favored by lame duck president Saakashvili — who burst onto the international scene after leading the Rose Revolution of 2003 — was beaten soundly by university rector Giorgi Margvelashvili, candidate of the two-year-old opposition Georgian Dream Party.
A political newcomer usually described as “low-key,” the 43-year-old Margvelashvili rolled up nearly two-thirds of the vote in a twenty-three-candidate race. To the observer outside Georgia, it is nothing short of stunning that such an obscure figure from such a new party could demolish the nominee of the United National Movement Party run by Saakashvili, the face of modern Georgia for much of the outside world.
A Columbia Law School graduate who spoke fluent English, the young (36 at the time) Saakashvili captured the world’s imagination in 2003 by leading the Rose Revolution that toppled the corrupt regime of Georgian President (and onetime Soviet Foreign Minister) Eduard Shevardnadze. The new president quickly began a regimen of liberal economic reform and fighting corruption.
Like Hungary’s Premier Imre Nagy in 1956 and Czechoslovakia’s reform Communist Party First Secretary Alexander Dubcek in 1968, when Russian tanks rolled into their countries, Saakashvili had the world’s eyes riveted upon him in 2008, when Russian President Vladimir Putin ordered tanks into Georgia to secure independence for the breakaway territories of South Ossetia and Abkhazia.
“We are all Georgians now,” declared Sen. John McCain (R.-Ariz.) at the time, as he tried to rally U.S. congressional support for the embattled president of Georgia. The Bush administration weighed in behind Saakashvili in his fight to preserve what he called “Georgia’s territorial integrity” and then-French President Nicolas Sarkozy brokered a negotiated end to the fighting.
But with the overwhelming force of the Russian military, insurgents in South Ossetia and Abkhazia beat back the Georgian army in four days. More than 1,000 people died and 38,000 ethnic Georgians fled their homes in South Ossetia and never returned. Their claims of being independent states notwithstanding, both South Ossetia and Abkhazia depend heavily on Russia for security and financial aid. Russia, in turn, has made out quite well from the 2008 Georgian war; its navy has access to Abkhazia’s coastline and Russians have cemented their de-facto control over the area south of Sochi, host of the 2014 Winter Olympics.
Source: Wikimedia Commons
Saakashivili has not been so fortunate. After years of rapid economic growth, recession hit Georgia hard in 2012 and it took a $1.5 billion IMF loan to come to the rescue. There has also been a growing body of opinion, particularly in Europe, that the 2008 war with Russia could have been avoided and the confrontation with Russia over the two provinces was actually provoked by Saakashvili himself.
During an interview with this reporter in August 2009, Nino Burjanadze, former Speaker of the Georgian parliament (who finished third in this presidential election) and a onetime Saakashvili ally turned enemy, said the negative legacy of the four-day war in 2008 outweigh anything Saakashivili was trying to achieve. As she put it, “We’ve lost more than 20% of our country’s territory. We’ve lost the possibility of joining NATO and joining the European Union is just an illusion now. The world economic crisis has caused unemployment and the loss of our territory a year ago has made it worse.”
In 2012, with Saakashvili’s once-noble image severely tarnished and Georgia’s economy on the ebb, parliamentary elections focused almost exclusively on the president. The newly-minted Georgian Dream Party—a coalition formed from six smaller parties – routed the president’s party and Georgian Dream’s founder, billionaire Bidzina Ivanishvili, became prime minister.
Even before Ivanishvili assumed political power, parliament voted to shift many powers from the presidency itself and, in effect, gave Georgia a parliamentary form of government instead of a strong presidential system. More than a few Georgia-watchers speculate that this change was part of a master plan by Saakashvili to call the political shots as prime minister in the manner of Russia’s Putin between presidential stints. But it was ultimately Ivanishvili who got to exercise the clout as prime minister.
Moreover, a dozen close associates of President Saakashvilli – including a former prime minister, past defense and interior ministers, and a former mayor of Tbilisi—were all arrested on charges of corruption.
The “coup de grace” against Saakashvili was achieved by Ivanishvili with the resounding election of his hand-picked candidate as the new president. In a surprise move he had announced before the election, the 57-year-old businessman-politician vowed he would step down as prime minister and name his own successor. When he did so, his choice was 31-year-old Paris-educated protégé and Interior Minister Irakli Garibashvili, who had previously worked for Ivanishvili for ten years. With his ally Margelashvili soon to be inaugurated as president, and protégé Garibashvili now prime minister, Citizen Ivanishvili – who is expected to set up a new NGO (non-governmental organization) to monitor public policy – will have tremendous influence on what the new government does while holding no elective or appointive office himself.
Recognizing that, many Georgia-watchers in the West started to have concerns.
“Steve Forbes” or “Ernst Stavro Blofeld?”
To admirers of Bidzina Ivanishvili, he is a Georgian version of American multi-millionaire and publisher Steve Forbes. Like Forbes, his passion is free market economics and he spent much of his adult life in private business before entering politics in his 50’s.
But to detractors, Ivanishvili is a true-to-life version of Ernst Stavro Blofeld, the mysterious multi-millionaire crime lord in Ian Fleming’s James Bond novel, who exerts evil influence through wealth and his role as boss of the international crime syndicate “SPECTRE.”
The brief period in which Ivanishvili lived in Russia and went from middle-class entrepreneur to someone with a net worth of $6.4 billion (Forbes Magazine called him the 153rd richest man in the world) is usually cited as the genesis of his “mystery man” and perhaps nefarious image.
After earning a Ph.D. in economics at the Moscow State University of Railway Engineering, Ivanishvili formed a partnership selling computers and later importing push-button telephones into Russia.
Recalling how the lion’s share of Ivanishvili’s fortune was made in metals and banking, Forbes Magazine noted, “he bought firms not needed by anybody for tens of millions of dollars and sold them for tens of billions of dollars. The Georgian also became wealthy investing in Russian drugstores, hotels, and housing development. Most recently, he announced he is investing $1 billion of his own fortune in a private equity fund in Georgia.
Because he made his fortune while living in Russia (where he was called by his first name, Boris) and in a very short time, Ivanishvili was long accused by Saakashvili and other enemies of being a secret ally of Putin. The prime minister heatedly denies this, insisting he will pursue better relations with Moscow but that he also wants to see Georgia join NATO and the EU, goals that Russia has long said is unacceptable. The Vilnius summit taking place in a couple of weeks will be key to this. In an interview with France24’s Douglas Herbert last month, Georgian Defense Minister Irakli Alasania spoke of how Georgia may try to achieve better relations with Russia.
Any discussion of what is next for Georgia usually gets back to the clash over South Ossetia and Abkhazia and what will be the future relationship between Tbilisi and Moscow.
The late Ronald D. Asmus of the Transatlantic Center of the German Marshall Fund of the U.S. and author of a much-praised book on the Georgian War, A Little War that Shook the World, believed that Moscow must return to the principles of the Charter of Paris of 1990. Signers of the Charter, which included Russia, pledged respect for human rights and democratic governance.
“One can favor or oppose eventual Georgian membership of NATO, but we should agree that resetting relations with Moscow must include its return to the principles of the Charter of Paris,” wrote Asmus, “[But] Tbilisi must cease focusing on its conflict with Russia, set aside the future status of Abkhazia and South Ossetia for the time being and regain its passion for democracy and reform at home. It is the only way to regain the political and moral high ground, attract foreign capital, convince the West to embrace it more firmly and keep open the hope of one day convincing the Abkhaz and South Ossetians to come back peacefully to a unified Georgia.”
That may well be the most telling test of the new leadership in Georgia, as it moves past the era of Saakashvili.