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THE MAIN TRENDS IN GEORGIAN POLITICS AND ECONOMY IN SEPTEMBER-NOVEMBER, 2013
http://www.noravank.am/eng/articles/detail.php?ELEMENT_ID=12469
23.12.2013
Sergei Sargsyan
Deputy Head, Centre for the Political Studies, Noravank Foundation
The autumn of 2013 was politically eventful in Georgia. Among other
events, the presidential elections are worth mentioning, with Prime
Minister Ivanishvili leaving the official politics, as he announce
beforehand, and Georgia initialing the EU Association Agreement during
the Vilnius summit.
Prime Minister Ivanishvili's appointee Giorgi Margvelashvili won a
clear first-round majority in the presidential elections of October 27,
2013, thus ending the duality of power in the country and establishing
a new political landscape in Georgia, but at the same time leaving
a lot of unanswered questions.
It can be safely stated that Ivanishvili won both this poll and the
parliament elections last year. Therefore, the question remains,
what is going to happen after his departure from power?
Both parliamentary and presidential elections took place under a slogan
'against Saakashvili'. Consequently, motley indeed political forces
rallied around Ivanishvili, whereas M. Saakashvili moved to none less
than hardcore opposition, as a result of which the United National
Movement (UNM) party led by him is currently more homogeneous than
the new government.
UNM, and Saakashvili in particular, among other things are unified
by a lust for revenge, and therefore all actions of the current
government will be under a focused and biased scrutiny by a strong
opposition. Only the forthcoming municipal elections in June 2014
will give a clearer idea about organizational capabilities of the new
government in its current configuration and about future viability
of the United National Movement.
In regard to the foreign policy, Margvelashvili is a more acceptable
figure for everybody - the USA, EU and Russia. Nevertheless,
the process of planning the relations with blatantly anti-Russian
Saakashvili was by all means simpler for Moscow, including in the
period before August 8, 2008.
However, G. Margvelashvili is significantly less powerful than
his predecessor. Virtually right after winning the majority in the
parliament, the Georgian Dream started introducing amendments in
the Constitution of Georgia; first, to balance the power between the
president, parliament and prime minister, and second, to neutralize the
amendments that Saakashvili made to "customize" the constitution for
his own needs. He hoped to take over the post of prime minister after
leaving the president's office, and according to the Constitution
adopted by the Georgian parliament on October 15, 2010, the real
power in the country was supposed to be concentrated in the hands
of the executive. Yet now, despite a considerable boost to the role
of the prime minister, the parliament retains leverages for control
over the executive power.
As far as B. Ivanishvili is concerned, he kept his promise to resign
after presidential elections, which were won by his candidate.
Formally he also left the politics altogether, and declared that
will focus his efforts on the Co-Investment Fund worth $6 billion,
which is greater than Georgia's state budget and the presentation of
which took place on September 30 in Tbilisi.
It is intended that the Fund will attract additional investments and
subsidize projects in energy, agriculture, industry, transport and
tourism. The best business ideas will receive 25-75% financing from
the Fund.
The contributors to the Co-Investment Fund are private UAE companies
Dhabi Group and RAK Investment Authority (at a time they actively
cooperated with the former government of Georgia), State Oil Fund of
the Republic of Azerbaijan, Batumi Industrial Holdings (subsidiary of
the Kazakhstani company KazTransOil), a Turkish conglomerate Calık
Holding A.S, as well as Bidzina Ivanishvili himself, family of the
late a Georgian businessman Badri Patarkatsishvili, and Kazakhstani
entrepreneur Alexander Mashkevitch (currently living in Israel)1. B.
Ivanshvili's contribution to the Fund is $1 billion, i.e. about 15%
of the total capital.
According to the business plan, the Fund will operate for nine years,
after which the investors will get back their shares of proceeds and
assets2. In addition, B. Ivanishvili plans to establish a venture
fund to support innovation projects.
Thus, on the one hand, he retains strong leverage to govern the
country, helping the president to play the role of an arbitrator
in complicated inter-party and inter-group relations within the
governing elite and in its dealings with the opposition. On the other
hand, any economic advancement in Georgia will be attributed to the
investment-attracting activities of his Fund, whereas responsibility
for any failure will most likely be laid on the executive power,
especially its economic branch, for not being able to properly manage
the attracted finances.
Such scheme of Ivanishvili's relationship with the government can be
very effective, desirable and prolonged. The "Ivanishvili factor"
would become a decisive one for Georgian economy and politics, at
least in the medium term, especially against the backdrop of support
from the EU, as the readiness of establishing a free trade area with
the EU was once again demonstrated by initialing the Association
Agreement at the Vilnius summit of the Eastern Partnership.
Hopes of Tbilisi for increased financial inflows from the EU seem
to be coming true, as Armenia, Azerbaijan and - at least for now -
also Ukraine, effectively signaled withdrawal from the process
of establishing a free trade area. This will allow Brussels to
redistribute the funds intended for all five participants of the
Eastern Partnership (already without Belarus) to Georgia and Moldova,
however small these funds are.
Georgia consistently expressed interest in the Deep and Comprehensive
Free Trade Agreement (DCFTA) and often grossly overstated its
importance in strengthening political relations with the EU. For
instance, in summer of 2011 the parliament vice speaker Giorgi
Baramidze stated that establishment of a free trade area implies
not only attraction of even more investments in Georgian economy,
but also will effectively mean a full integration with the EU3.
After the August 2008 war, and especially Moscow's recognition of
Abkhazian and South Ossetian independences, Georgia cut down to minimum
its political and to a large extent also economic ties with Russia,
as well as withdrew from CIS.
With an increasing dependence of the country's state budget on volumes
of cargo transit through its territory, physical and financial
penetration of Turkish and Azerbaijani business interests in the
economy, and given the large share of Azerbaijani population in the
southeastern part of the country (Kvemo-Kartli), Tbilisi was left
with almost no room for external policy maneuvering and choice of
vectors for foreign policy and economy, other than the EU.
Also, in the period between 1992 and 2007 Georgia received an
equivalent of Euro 530.8 million for implementation of various
programs. In 2008 Brussels allocated Euro 500 million for overcoming
the effects of the August war4. On April 15, 2010 the EU earmarked
additional Euro 180 million for the period of 2011-2013 to support
development of democracy, rule of law, good governance, regional
and sustainable economic and social development, poverty reduction,
and support for peaceful settlement of conflicts5.
Consequently, among the South Caucasus countries Georgia rose to the
top in terms of the pace of concluding and implementing bilateral
agreements with the EU.
Nonetheless, because the Georgian leadership sees no alternatives
to the integration in Western structures, this increases the
effectiveness of influencing Georgian policies through principles of
"conditionality"6 ("more for more"): "the more reforms, the more
money", with additional funds allocated, but under a closer scrutiny.
Some assessments made at the beginning of the Association Agreement
and DCFTA preparation process suggest that free trade area will
enable Georgia to increase its GDP by 6.5%; during the first five
years the total exports may grow by 13.5%, including products of
textile industry by 55%; chemical industry - 19%; metal industry -
by 30%; woodworking and timber - 21%; and agriculture - 4%.7
However, there are also some less optimistic scenarios for economic
development of Georgia, including those anticipating deep political
and economic crisis in the second half of 2014.
In a very near future it would become evident how realistic Georgia's
expectations were. The Georgian experience, both positive and
negative, in signing and implementation of Association Agreement
would be interesting for all other participant countries of the
Eastern Partnership initiative, which although is no longer high in
the priority list of the EU8 at least for the first half of 2014,
but still continues to be implemented.
1Ð~\еÑ~GÑ~Bе Ð~\иÑ...аиÐ"а СаакаÑ~HвиÐ"и
поÑ~AÑ~BавиÐ"и жиÑ~@нÑ~CÑ~N Ñ~BоÑ~GкÑ~C. "Georgian
Times", Ð"Ñ~@Ñ~CзиÑ~O, 4 окÑ~BÑ~OбÑ~@Ñ~O 2013г.,
http://www.geotimes.ge/index.php?m=home&newsid=28767&lang=rus.
2 Ibid.
3 Ð~UвÑ~@окомиÑ~AÑ~AаÑ~@ о
демокÑ~@аÑ~BиÑ~GеÑ~AкиÑ... Ñ~@еÑ~DоÑ~@маÑ... в
Ð"Ñ~@Ñ~Cзии. 23 иÑ~NÐ"Ñ~O 2011г.,
http://kavkaz-news.info/portal/cnid_178851/alias__Caucasus-Info/lang__en/tabid__2434/default.aspx.
23иÑ~NÐ"Ñ~O 2011г.
4 Georgia and the European Union: perspectives for
2011. Alexander Russetsky, Ð~^lga Dorokhina. Dec. 16,
2010,http://www.easternpartnership.org/publication/politics/2010-12-16/georgia-and-european-union-perspectives.
5 http://www.enpi-info.eu/files/publications/Georgia NIP 2010.pdf.
6 Jos Boonstra, Natalia Shapovalova, 'The EU's
Eastern Partnership: One year backwards', FRIDE,
17.05.2010,http://www.fride.org/publication/764/the-eu'-s-eastern-partnership:-one-year-backwards.
7Prospects of Deep and Comprehensive Free Trade Agreement between
Georgia and the EU, Amb. Konstantin Zaldastanishvili, February 8,
2011,http://www.easternpartnership.org/community/debate/prospects-deep-and-comprehensive-fr.
8 Ð~_Ñ~@огÑ~@амма Â"Ð'оÑ~AÑ~BоÑ~Gное
паÑ~@Ñ~BнеÑ~@Ñ~AÑ~BвоÂ" боÐ"ее не Ñ~OвÐ"Ñ~OеÑ~BÑ~AÑ~O
пÑ~@иоÑ~@иÑ~BеÑ~Bом Ð~UвÑ~@оÑ~AоÑ~Nза,
http://moldnews.md/rus/news/64408, 5 декабÑ~@Ñ~O 2013г.
"Globus" analytical journal, #12, 2013
Return ________________________________ Another materials of author
INTEGRATION ASPIRATIONS OF ARMENIA AND SOME ISSUES OF THE MILITARY AND
POLITICAL SECURITY OF THE REP. OF ARMENIA AND NKR[12.09.2013] TURKEY:
THROES OF SECULARISM[31.07.2013] INTEGRATION PROSPECTS OF POST-SOVIET
STATES ON THE EXAMPLE OF KIRGIZIA AND UKRAINE (EXPECTATIONS AND
CONCERNS)[03.06.2013] INTENSIFICATION OF RUSSIA-TURKEY INDIRECT
MILITARY AND POLITICAL CONFRONTATION[25.02.2013] GEORGIA: AN
ATTEMPT TO MANEUVER IN A NARROW GAUGE[14.01.2013] SOME ASPECTS
OF THE DEVELOPMENT OF MILITARY AND POLITICAL SITUATION ROUND THE
NAGORNO-KARABAKH CONFLICT [02.08.2012] "IT IS NECESSARY TO RAISE
ENERGY EFFICIENCY", - says the deputy head of the Center for Political
Studies of "Noravank" Foundation Sergei SARGSYAN in his interview
to "Golos Armenii"[26.07.2012] TRANS-CASPIAN GAS PIPELINE: GOALS,
PROBLEMS AND RISKS [25.06.2012] TURKEY IN THE US MISSILE DEFENCE
SYSTEM: PRIMARY ASSESSMENT AND POSSIBLE PROSPECTS[13.10.2011] ARMENIA
AT THE INTERSECTION OF THE INTERESTS OF THE MILITARY AND POLITICAL
BLOCKS[05.09.2011]
From: Emil Lazarian | Ararat NewsPress
http://www.noravank.am/eng/articles/detail.php?ELEMENT_ID=12469
23.12.2013
Sergei Sargsyan
Deputy Head, Centre for the Political Studies, Noravank Foundation
The autumn of 2013 was politically eventful in Georgia. Among other
events, the presidential elections are worth mentioning, with Prime
Minister Ivanishvili leaving the official politics, as he announce
beforehand, and Georgia initialing the EU Association Agreement during
the Vilnius summit.
Prime Minister Ivanishvili's appointee Giorgi Margvelashvili won a
clear first-round majority in the presidential elections of October 27,
2013, thus ending the duality of power in the country and establishing
a new political landscape in Georgia, but at the same time leaving
a lot of unanswered questions.
It can be safely stated that Ivanishvili won both this poll and the
parliament elections last year. Therefore, the question remains,
what is going to happen after his departure from power?
Both parliamentary and presidential elections took place under a slogan
'against Saakashvili'. Consequently, motley indeed political forces
rallied around Ivanishvili, whereas M. Saakashvili moved to none less
than hardcore opposition, as a result of which the United National
Movement (UNM) party led by him is currently more homogeneous than
the new government.
UNM, and Saakashvili in particular, among other things are unified
by a lust for revenge, and therefore all actions of the current
government will be under a focused and biased scrutiny by a strong
opposition. Only the forthcoming municipal elections in June 2014
will give a clearer idea about organizational capabilities of the new
government in its current configuration and about future viability
of the United National Movement.
In regard to the foreign policy, Margvelashvili is a more acceptable
figure for everybody - the USA, EU and Russia. Nevertheless,
the process of planning the relations with blatantly anti-Russian
Saakashvili was by all means simpler for Moscow, including in the
period before August 8, 2008.
However, G. Margvelashvili is significantly less powerful than
his predecessor. Virtually right after winning the majority in the
parliament, the Georgian Dream started introducing amendments in
the Constitution of Georgia; first, to balance the power between the
president, parliament and prime minister, and second, to neutralize the
amendments that Saakashvili made to "customize" the constitution for
his own needs. He hoped to take over the post of prime minister after
leaving the president's office, and according to the Constitution
adopted by the Georgian parliament on October 15, 2010, the real
power in the country was supposed to be concentrated in the hands
of the executive. Yet now, despite a considerable boost to the role
of the prime minister, the parliament retains leverages for control
over the executive power.
As far as B. Ivanishvili is concerned, he kept his promise to resign
after presidential elections, which were won by his candidate.
Formally he also left the politics altogether, and declared that
will focus his efforts on the Co-Investment Fund worth $6 billion,
which is greater than Georgia's state budget and the presentation of
which took place on September 30 in Tbilisi.
It is intended that the Fund will attract additional investments and
subsidize projects in energy, agriculture, industry, transport and
tourism. The best business ideas will receive 25-75% financing from
the Fund.
The contributors to the Co-Investment Fund are private UAE companies
Dhabi Group and RAK Investment Authority (at a time they actively
cooperated with the former government of Georgia), State Oil Fund of
the Republic of Azerbaijan, Batumi Industrial Holdings (subsidiary of
the Kazakhstani company KazTransOil), a Turkish conglomerate Calık
Holding A.S, as well as Bidzina Ivanishvili himself, family of the
late a Georgian businessman Badri Patarkatsishvili, and Kazakhstani
entrepreneur Alexander Mashkevitch (currently living in Israel)1. B.
Ivanshvili's contribution to the Fund is $1 billion, i.e. about 15%
of the total capital.
According to the business plan, the Fund will operate for nine years,
after which the investors will get back their shares of proceeds and
assets2. In addition, B. Ivanishvili plans to establish a venture
fund to support innovation projects.
Thus, on the one hand, he retains strong leverage to govern the
country, helping the president to play the role of an arbitrator
in complicated inter-party and inter-group relations within the
governing elite and in its dealings with the opposition. On the other
hand, any economic advancement in Georgia will be attributed to the
investment-attracting activities of his Fund, whereas responsibility
for any failure will most likely be laid on the executive power,
especially its economic branch, for not being able to properly manage
the attracted finances.
Such scheme of Ivanishvili's relationship with the government can be
very effective, desirable and prolonged. The "Ivanishvili factor"
would become a decisive one for Georgian economy and politics, at
least in the medium term, especially against the backdrop of support
from the EU, as the readiness of establishing a free trade area with
the EU was once again demonstrated by initialing the Association
Agreement at the Vilnius summit of the Eastern Partnership.
Hopes of Tbilisi for increased financial inflows from the EU seem
to be coming true, as Armenia, Azerbaijan and - at least for now -
also Ukraine, effectively signaled withdrawal from the process
of establishing a free trade area. This will allow Brussels to
redistribute the funds intended for all five participants of the
Eastern Partnership (already without Belarus) to Georgia and Moldova,
however small these funds are.
Georgia consistently expressed interest in the Deep and Comprehensive
Free Trade Agreement (DCFTA) and often grossly overstated its
importance in strengthening political relations with the EU. For
instance, in summer of 2011 the parliament vice speaker Giorgi
Baramidze stated that establishment of a free trade area implies
not only attraction of even more investments in Georgian economy,
but also will effectively mean a full integration with the EU3.
After the August 2008 war, and especially Moscow's recognition of
Abkhazian and South Ossetian independences, Georgia cut down to minimum
its political and to a large extent also economic ties with Russia,
as well as withdrew from CIS.
With an increasing dependence of the country's state budget on volumes
of cargo transit through its territory, physical and financial
penetration of Turkish and Azerbaijani business interests in the
economy, and given the large share of Azerbaijani population in the
southeastern part of the country (Kvemo-Kartli), Tbilisi was left
with almost no room for external policy maneuvering and choice of
vectors for foreign policy and economy, other than the EU.
Also, in the period between 1992 and 2007 Georgia received an
equivalent of Euro 530.8 million for implementation of various
programs. In 2008 Brussels allocated Euro 500 million for overcoming
the effects of the August war4. On April 15, 2010 the EU earmarked
additional Euro 180 million for the period of 2011-2013 to support
development of democracy, rule of law, good governance, regional
and sustainable economic and social development, poverty reduction,
and support for peaceful settlement of conflicts5.
Consequently, among the South Caucasus countries Georgia rose to the
top in terms of the pace of concluding and implementing bilateral
agreements with the EU.
Nonetheless, because the Georgian leadership sees no alternatives
to the integration in Western structures, this increases the
effectiveness of influencing Georgian policies through principles of
"conditionality"6 ("more for more"): "the more reforms, the more
money", with additional funds allocated, but under a closer scrutiny.
Some assessments made at the beginning of the Association Agreement
and DCFTA preparation process suggest that free trade area will
enable Georgia to increase its GDP by 6.5%; during the first five
years the total exports may grow by 13.5%, including products of
textile industry by 55%; chemical industry - 19%; metal industry -
by 30%; woodworking and timber - 21%; and agriculture - 4%.7
However, there are also some less optimistic scenarios for economic
development of Georgia, including those anticipating deep political
and economic crisis in the second half of 2014.
In a very near future it would become evident how realistic Georgia's
expectations were. The Georgian experience, both positive and
negative, in signing and implementation of Association Agreement
would be interesting for all other participant countries of the
Eastern Partnership initiative, which although is no longer high in
the priority list of the EU8 at least for the first half of 2014,
but still continues to be implemented.
1Ð~\еÑ~GÑ~Bе Ð~\иÑ...аиÐ"а СаакаÑ~HвиÐ"и
поÑ~AÑ~BавиÐ"и жиÑ~@нÑ~CÑ~N Ñ~BоÑ~GкÑ~C. "Georgian
Times", Ð"Ñ~@Ñ~CзиÑ~O, 4 окÑ~BÑ~OбÑ~@Ñ~O 2013г.,
http://www.geotimes.ge/index.php?m=home&newsid=28767&lang=rus.
2 Ibid.
3 Ð~UвÑ~@окомиÑ~AÑ~AаÑ~@ о
демокÑ~@аÑ~BиÑ~GеÑ~AкиÑ... Ñ~@еÑ~DоÑ~@маÑ... в
Ð"Ñ~@Ñ~Cзии. 23 иÑ~NÐ"Ñ~O 2011г.,
http://kavkaz-news.info/portal/cnid_178851/alias__Caucasus-Info/lang__en/tabid__2434/default.aspx.
23иÑ~NÐ"Ñ~O 2011г.
4 Georgia and the European Union: perspectives for
2011. Alexander Russetsky, Ð~^lga Dorokhina. Dec. 16,
2010,http://www.easternpartnership.org/publication/politics/2010-12-16/georgia-and-european-union-perspectives.
5 http://www.enpi-info.eu/files/publications/Georgia NIP 2010.pdf.
6 Jos Boonstra, Natalia Shapovalova, 'The EU's
Eastern Partnership: One year backwards', FRIDE,
17.05.2010,http://www.fride.org/publication/764/the-eu'-s-eastern-partnership:-one-year-backwards.
7Prospects of Deep and Comprehensive Free Trade Agreement between
Georgia and the EU, Amb. Konstantin Zaldastanishvili, February 8,
2011,http://www.easternpartnership.org/community/debate/prospects-deep-and-comprehensive-fr.
8 Ð~_Ñ~@огÑ~@амма Â"Ð'оÑ~AÑ~BоÑ~Gное
паÑ~@Ñ~BнеÑ~@Ñ~AÑ~BвоÂ" боÐ"ее не Ñ~OвÐ"Ñ~OеÑ~BÑ~AÑ~O
пÑ~@иоÑ~@иÑ~BеÑ~Bом Ð~UвÑ~@оÑ~AоÑ~Nза,
http://moldnews.md/rus/news/64408, 5 декабÑ~@Ñ~O 2013г.
"Globus" analytical journal, #12, 2013
Return ________________________________ Another materials of author
INTEGRATION ASPIRATIONS OF ARMENIA AND SOME ISSUES OF THE MILITARY AND
POLITICAL SECURITY OF THE REP. OF ARMENIA AND NKR[12.09.2013] TURKEY:
THROES OF SECULARISM[31.07.2013] INTEGRATION PROSPECTS OF POST-SOVIET
STATES ON THE EXAMPLE OF KIRGIZIA AND UKRAINE (EXPECTATIONS AND
CONCERNS)[03.06.2013] INTENSIFICATION OF RUSSIA-TURKEY INDIRECT
MILITARY AND POLITICAL CONFRONTATION[25.02.2013] GEORGIA: AN
ATTEMPT TO MANEUVER IN A NARROW GAUGE[14.01.2013] SOME ASPECTS
OF THE DEVELOPMENT OF MILITARY AND POLITICAL SITUATION ROUND THE
NAGORNO-KARABAKH CONFLICT [02.08.2012] "IT IS NECESSARY TO RAISE
ENERGY EFFICIENCY", - says the deputy head of the Center for Political
Studies of "Noravank" Foundation Sergei SARGSYAN in his interview
to "Golos Armenii"[26.07.2012] TRANS-CASPIAN GAS PIPELINE: GOALS,
PROBLEMS AND RISKS [25.06.2012] TURKEY IN THE US MISSILE DEFENCE
SYSTEM: PRIMARY ASSESSMENT AND POSSIBLE PROSPECTS[13.10.2011] ARMENIA
AT THE INTERSECTION OF THE INTERESTS OF THE MILITARY AND POLITICAL
BLOCKS[05.09.2011]
From: Emil Lazarian | Ararat NewsPress