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Saakashvili's campaign against corruption
By Molly Corso for PINR (22/12/04)
ISN, Switzerland
Dec 22 2004
Once the Georgian government starts interfering with the status quo
of people's daily lives, President Saakashvili's popularity might
drop and the public could quickly lose taste for strong reforms.
Corruption has plagued Georgia - as well as its neighbors Armenia and
Azerbaijan - for generations. While it was a problem even during the
Soviet regime, ever since the former republics gained their
independence in the early 1990s, the degree of corruption has
crippled economic development and stifled attempts at reform. The new
government in Georgia, which won power on a reformist platform, is
widely viewed in the country as Georgia's last chance to defeat the
spread of corruption and create a stable economy and law-abiding
society. Before the peaceful revolution of November 2003, Georgian
President Eduard Shevardnadze had been unsuccessful in curbing the
rapid growth of corruption throughout Georgian society and the
political process. Corruption in Georgia under the leadership of
Shevardnadze was so widespread it affected life on nearly every
level. Despite very strong laws against corruption, little was done
to enforce them. Blatant vote rigging and fraud led to his
government's demise last fall, shortly replaced by younger
politicians on a reform platform. Even as Georgians rejoiced Mikhail
Saakashvili's victory, activists stated that the new government would
have to prove it was better at fighting corruption than the former
president, otherwise Saakashvili would share his fate. Corruption
among the Georgian authorities is so widespread that it consistently
affects foreign investments. Investors originally saw Georgia as a
land of opportunity as the country is strategically located between
Europe and Asia. Plans for new oil and gas pipelines created an
economic boom for Azerbaijan in the early 1990s and observers fully
expected Georgia to receive part of that wealth. But corrupt
officials, coupled with unclear laws and tax policies, continue to
frustrate investors. The foreign investment community was further
antagonized by high-level kidnappings and threats for ransom and
bribes. The American electricity provider, AES, which took over
electricity distribution in Georgia in the late 1990s, was repeatedly
taken to court and threatened. In August of 2002, the company's CFO,
Nika Lominadze, was murdered. Other high profile cases include the
kidnapping of the Welsh banker Peter Shaw in July 2002. Although no
ransom was reportedly paid, Shaw escaped his captors after four
months of imprisonment. While the Georgian government ascertained
Shaw escaped due to a special military operation, speculation
continued after Shaw's release that members of the government were
involved in the kidnapping business.
A turn of the tide
While the 2003 parliament election might have started like business
as usual, protestors and politicians quickly assembled in front of
the parliament to protest the voting results. After weeks of
protests, Shevardnadze resigned on 23 November. Mikhail Saakashvili,
a former justice minister in Shevardnadze's government from
2000-2001, was voted into office 4 January 2004 with 96 per cent of
the vote. Originally seen as Shevardnadze's groomed pupil,
Saakashvili left his position as the justice minister, citing that he
believed it was "immoral" to remain a part of the corrupt government.
He became one of the loudest voices of the opposition in the years
leading up to his election, and one of the country's most popular
politicians. He was a visible face during the protests and led the
charge into parliament the day before Shevardnadze resigned.
Saakashvili started out his presidency with strong words. "We need to
introduce in the parliament very drastic anti-corruption legislation
that would give vast powers to a new elite, small, honest
investigative unit that would really tackle high-level corruption,"
he said in January 2004. During his inauguration speech, he pressed,
"We must root out corruption. As far as I am concerned, every corrupt
official is a traitor who betrays the national interest." Many hoped
the difference would be Saakashvili's young age, 36, and the Western
influence brought through his education in the US. With a high
popularity rating - and no real opposition - Saakashvili was free to
implement any reforms or laws he felt fit. Many supporters were
alarmed when one of his first acts, in addition to the high profile
arrests of infamous businessmen like Gia Jokhtaberidze,
Shevardnadze's son-in-law, included constitutional amendments to
consolidate his power. While the overall response to reforms from the
business sector has been positive, Badri Patarkatsishvili, who is the
president of the Georgian Federation of Businessmen, has repeatedly
stated that businessmen in Georgia should feel secure and know that
their rights will be honored. In an interview with the BBC in January
2003, Saakashvili stated that one of his top priorities for Georgia
was creating a stable and safe climate for investors. As early as
February, the new government was warned by the Visiting Council of
Europe Secretary-General Walter Schwimmer that the country's fight
against corruption should not abuse the law. Critics of the new
government also began citing media intimidation and accusing the
government of arresting political enemies without adhering to the due
process required by law. Although criticism of the new government
continued, culminating in an open letter to the president by
prominent civil leaders in Georgia, the new president has not backed
down from his system of arrests and has not made any open efforts to
compromise with the growing opposition. The open letter, published
widely in Georgia, spoke of a growing concern that Saakashvili was
actively squashing public debate with nationalist rhetoric, as well
as failing to come to terms with his power in a "post-revolution"
society. Nevertheless, during his first year in office, Saakashvili
has made progress encouraging foreign investment in his country.
Georgia was included in the EU's New Neighborhood Initiative and
received one billion dollars in pledges to help finance reforms.
Neighboring states concerned over the Georgian example
Neighboring countries throughout the Caucasus and Central Asia are
threatened by Saakashvili's November rise to power and his rhetoric
against corruption. A 25 November 2003 emergency meeting of foreign
ministers from the Commonwealth of Independent States in Kiev
highlighted the fear of neighboring governments that Georgia's new
crusader against corruption would also adversely affect the status
quo in their countries. In both Armenia and Azerbaijan, opposition
parties celebrated the resignation of Shevardnadze. Although both
Azeri President Ilham Aliev and Armenian President Robert Kocharian
were not openly supportive of Saakashvili in November, the overriding
element in their relationship revolves around commerce and trade.
Both presidents have conducted high profile trips to Georgia in the
past year, and Saakashvili has warmly welcomed them both as
"brothers". Georgian election observers, however, were not welcome in
Ukraine. Despite the chilly official reception, Georgians traveled to
Kiev and participated in the protests following the November run-off
election. The Georgian Foreign Ministry issued statements on November
28 supporting the call for a Ukrainian revote. Georgian Prime
Minister Zurab Zhvania also supported the protestors, wishing Ukraine
a "victory of justice and democracy". Georgia's relationship with
Russia was strained during Shevardnadze's presidency. Despite a
positive beginning, that relationship has rapidly deteriorated under
Saakashvili. During the protests calling for Shevardnadze's
resignation, it was widely feared in the country that Russia would
strongly back Shevardnadze. However, after some initial support, then
Russian Foreign Minister Ivan Ivanov flew to Tbilisi on 22 November
to help ease tensions, and he has been given credit for helping the
country avoid violence. Warm relations between the countries
continued through the summer, highlighted when a large group of
potential Russian investors came to Tbilisi in May to discuss joint
business projects between the countries. During the convention,
Russian businessmen repeatedly emphasized the need for a stable, safe
investment climate and tax reforms. Talk of business investment was
overshadowed by the growing violence in South Ossetia, however, and
Russian involvement in Abkhazia. Currently, the administration in
Georgia is dealing with Moscow's accusations of anti-Russian
militants hiding in the country, near the border between Chechnya and
Georgia, and the likelihood that Organization for Security and
Cooperation in Europe (OSCE) border patrols will not continue after
the mandate expires later this month. Furthermore, an ongoing point
of contention between the two governments is the existence of two
Russian army bases that still exist within Georgian territory. The
Russians use the bases to potentially influence Georgian affairs,
explaining why Tbilisi wants them removed. No real progress has been
made on this issue. Georgia's relationship with the US has improved
under Saakashvili. Although accusations of heavy-handed policies have
grown against the current administration, the US has been a steadfast
supporter of Saakashvili and his reforms. In light of the current
reforms taking place in the military, the US government has pledged
over US$15 million to help modernize the Georgian army and
Saakashvili has already sent over 150 soldiers to Iraq. Georgian
soldiers are involved in peacekeeping missions in Afghanistan as
well, and Saakashvili has promised that over Georgian 800 soldiers
will eventually be dispatched. While Western powers initially faced a
quandary supporting the overthrow of an elected president, once the
degree of civil outrage toward the election became obvious, the US
issued a strong rebuke against Shevardnadze and his handling of the
election.
Rhetoric and reason
President Saakashvili has had some success fighting corruption
through tax reform and large scale arrests that include politicians
from the former regime and powerful businessmen. His peaceful
acquisition of the semi-autonomous Adjarian republic has given the
central government a great opportunity to reform invasive corruption
throughout the republic, especially in tax collection. The new tax
code, scheduled to begin February 2005, should help the government
receive lost revenue as well as prove to potential investors that the
new regime is serious about reform. Criticism of Saakashvili's
policies is not unfounded. By refusing to follow due process, his
program of arrests could backfire by turning the accused into victims
in the eyes of the public. To date, the arrests have largely been
centered on high profile politicians and business leaders. In order
to fully eradicate corruption, citizens and low-level civil servants
involved in bribery and the black market will also need to be
arrested. Once the government starts interfering with the status quo
of people's daily lives, Saakashvili's popularity might drop and the
public could quickly lose taste for strong reforms. While he has
hired supporters of democracy into his government, he has distanced
himself from civil leaders outside of his government. Prominent civil
leaders in Georgia are giving Saakashvili some leeway as he gains
experience in office. However, his success will depend on his ability
to compromise heady rhetoric with reasonable public policy to lead
his country through difficult and painful reforms.
This article originally appeared in Power and Interest News
Report, PINR, at (www.pinr.com). All comments should be directed
to [email protected].
By Molly Corso for PINR (22/12/04)
ISN, Switzerland
Dec 22 2004
Once the Georgian government starts interfering with the status quo
of people's daily lives, President Saakashvili's popularity might
drop and the public could quickly lose taste for strong reforms.
Corruption has plagued Georgia - as well as its neighbors Armenia and
Azerbaijan - for generations. While it was a problem even during the
Soviet regime, ever since the former republics gained their
independence in the early 1990s, the degree of corruption has
crippled economic development and stifled attempts at reform. The new
government in Georgia, which won power on a reformist platform, is
widely viewed in the country as Georgia's last chance to defeat the
spread of corruption and create a stable economy and law-abiding
society. Before the peaceful revolution of November 2003, Georgian
President Eduard Shevardnadze had been unsuccessful in curbing the
rapid growth of corruption throughout Georgian society and the
political process. Corruption in Georgia under the leadership of
Shevardnadze was so widespread it affected life on nearly every
level. Despite very strong laws against corruption, little was done
to enforce them. Blatant vote rigging and fraud led to his
government's demise last fall, shortly replaced by younger
politicians on a reform platform. Even as Georgians rejoiced Mikhail
Saakashvili's victory, activists stated that the new government would
have to prove it was better at fighting corruption than the former
president, otherwise Saakashvili would share his fate. Corruption
among the Georgian authorities is so widespread that it consistently
affects foreign investments. Investors originally saw Georgia as a
land of opportunity as the country is strategically located between
Europe and Asia. Plans for new oil and gas pipelines created an
economic boom for Azerbaijan in the early 1990s and observers fully
expected Georgia to receive part of that wealth. But corrupt
officials, coupled with unclear laws and tax policies, continue to
frustrate investors. The foreign investment community was further
antagonized by high-level kidnappings and threats for ransom and
bribes. The American electricity provider, AES, which took over
electricity distribution in Georgia in the late 1990s, was repeatedly
taken to court and threatened. In August of 2002, the company's CFO,
Nika Lominadze, was murdered. Other high profile cases include the
kidnapping of the Welsh banker Peter Shaw in July 2002. Although no
ransom was reportedly paid, Shaw escaped his captors after four
months of imprisonment. While the Georgian government ascertained
Shaw escaped due to a special military operation, speculation
continued after Shaw's release that members of the government were
involved in the kidnapping business.
A turn of the tide
While the 2003 parliament election might have started like business
as usual, protestors and politicians quickly assembled in front of
the parliament to protest the voting results. After weeks of
protests, Shevardnadze resigned on 23 November. Mikhail Saakashvili,
a former justice minister in Shevardnadze's government from
2000-2001, was voted into office 4 January 2004 with 96 per cent of
the vote. Originally seen as Shevardnadze's groomed pupil,
Saakashvili left his position as the justice minister, citing that he
believed it was "immoral" to remain a part of the corrupt government.
He became one of the loudest voices of the opposition in the years
leading up to his election, and one of the country's most popular
politicians. He was a visible face during the protests and led the
charge into parliament the day before Shevardnadze resigned.
Saakashvili started out his presidency with strong words. "We need to
introduce in the parliament very drastic anti-corruption legislation
that would give vast powers to a new elite, small, honest
investigative unit that would really tackle high-level corruption,"
he said in January 2004. During his inauguration speech, he pressed,
"We must root out corruption. As far as I am concerned, every corrupt
official is a traitor who betrays the national interest." Many hoped
the difference would be Saakashvili's young age, 36, and the Western
influence brought through his education in the US. With a high
popularity rating - and no real opposition - Saakashvili was free to
implement any reforms or laws he felt fit. Many supporters were
alarmed when one of his first acts, in addition to the high profile
arrests of infamous businessmen like Gia Jokhtaberidze,
Shevardnadze's son-in-law, included constitutional amendments to
consolidate his power. While the overall response to reforms from the
business sector has been positive, Badri Patarkatsishvili, who is the
president of the Georgian Federation of Businessmen, has repeatedly
stated that businessmen in Georgia should feel secure and know that
their rights will be honored. In an interview with the BBC in January
2003, Saakashvili stated that one of his top priorities for Georgia
was creating a stable and safe climate for investors. As early as
February, the new government was warned by the Visiting Council of
Europe Secretary-General Walter Schwimmer that the country's fight
against corruption should not abuse the law. Critics of the new
government also began citing media intimidation and accusing the
government of arresting political enemies without adhering to the due
process required by law. Although criticism of the new government
continued, culminating in an open letter to the president by
prominent civil leaders in Georgia, the new president has not backed
down from his system of arrests and has not made any open efforts to
compromise with the growing opposition. The open letter, published
widely in Georgia, spoke of a growing concern that Saakashvili was
actively squashing public debate with nationalist rhetoric, as well
as failing to come to terms with his power in a "post-revolution"
society. Nevertheless, during his first year in office, Saakashvili
has made progress encouraging foreign investment in his country.
Georgia was included in the EU's New Neighborhood Initiative and
received one billion dollars in pledges to help finance reforms.
Neighboring states concerned over the Georgian example
Neighboring countries throughout the Caucasus and Central Asia are
threatened by Saakashvili's November rise to power and his rhetoric
against corruption. A 25 November 2003 emergency meeting of foreign
ministers from the Commonwealth of Independent States in Kiev
highlighted the fear of neighboring governments that Georgia's new
crusader against corruption would also adversely affect the status
quo in their countries. In both Armenia and Azerbaijan, opposition
parties celebrated the resignation of Shevardnadze. Although both
Azeri President Ilham Aliev and Armenian President Robert Kocharian
were not openly supportive of Saakashvili in November, the overriding
element in their relationship revolves around commerce and trade.
Both presidents have conducted high profile trips to Georgia in the
past year, and Saakashvili has warmly welcomed them both as
"brothers". Georgian election observers, however, were not welcome in
Ukraine. Despite the chilly official reception, Georgians traveled to
Kiev and participated in the protests following the November run-off
election. The Georgian Foreign Ministry issued statements on November
28 supporting the call for a Ukrainian revote. Georgian Prime
Minister Zurab Zhvania also supported the protestors, wishing Ukraine
a "victory of justice and democracy". Georgia's relationship with
Russia was strained during Shevardnadze's presidency. Despite a
positive beginning, that relationship has rapidly deteriorated under
Saakashvili. During the protests calling for Shevardnadze's
resignation, it was widely feared in the country that Russia would
strongly back Shevardnadze. However, after some initial support, then
Russian Foreign Minister Ivan Ivanov flew to Tbilisi on 22 November
to help ease tensions, and he has been given credit for helping the
country avoid violence. Warm relations between the countries
continued through the summer, highlighted when a large group of
potential Russian investors came to Tbilisi in May to discuss joint
business projects between the countries. During the convention,
Russian businessmen repeatedly emphasized the need for a stable, safe
investment climate and tax reforms. Talk of business investment was
overshadowed by the growing violence in South Ossetia, however, and
Russian involvement in Abkhazia. Currently, the administration in
Georgia is dealing with Moscow's accusations of anti-Russian
militants hiding in the country, near the border between Chechnya and
Georgia, and the likelihood that Organization for Security and
Cooperation in Europe (OSCE) border patrols will not continue after
the mandate expires later this month. Furthermore, an ongoing point
of contention between the two governments is the existence of two
Russian army bases that still exist within Georgian territory. The
Russians use the bases to potentially influence Georgian affairs,
explaining why Tbilisi wants them removed. No real progress has been
made on this issue. Georgia's relationship with the US has improved
under Saakashvili. Although accusations of heavy-handed policies have
grown against the current administration, the US has been a steadfast
supporter of Saakashvili and his reforms. In light of the current
reforms taking place in the military, the US government has pledged
over US$15 million to help modernize the Georgian army and
Saakashvili has already sent over 150 soldiers to Iraq. Georgian
soldiers are involved in peacekeeping missions in Afghanistan as
well, and Saakashvili has promised that over Georgian 800 soldiers
will eventually be dispatched. While Western powers initially faced a
quandary supporting the overthrow of an elected president, once the
degree of civil outrage toward the election became obvious, the US
issued a strong rebuke against Shevardnadze and his handling of the
election.
Rhetoric and reason
President Saakashvili has had some success fighting corruption
through tax reform and large scale arrests that include politicians
from the former regime and powerful businessmen. His peaceful
acquisition of the semi-autonomous Adjarian republic has given the
central government a great opportunity to reform invasive corruption
throughout the republic, especially in tax collection. The new tax
code, scheduled to begin February 2005, should help the government
receive lost revenue as well as prove to potential investors that the
new regime is serious about reform. Criticism of Saakashvili's
policies is not unfounded. By refusing to follow due process, his
program of arrests could backfire by turning the accused into victims
in the eyes of the public. To date, the arrests have largely been
centered on high profile politicians and business leaders. In order
to fully eradicate corruption, citizens and low-level civil servants
involved in bribery and the black market will also need to be
arrested. Once the government starts interfering with the status quo
of people's daily lives, Saakashvili's popularity might drop and the
public could quickly lose taste for strong reforms. While he has
hired supporters of democracy into his government, he has distanced
himself from civil leaders outside of his government. Prominent civil
leaders in Georgia are giving Saakashvili some leeway as he gains
experience in office. However, his success will depend on his ability
to compromise heady rhetoric with reasonable public policy to lead
his country through difficult and painful reforms.
This article originally appeared in Power and Interest News
Report, PINR, at (www.pinr.com). All comments should be directed
to [email protected].