Tag Archives: Georgia

Georgia’s Economic Policy Advocacy Coalition Marks One Year of Success

Participants at the EPAC G4G anniversary event in September 2016. Photo courtesy of the G4G facebook page.

Participants at the EPAC G4G anniversary event in September 2016.
Photo courtesy of the G4G facebook page.

The 2008 Rose Revolution, which marked Georgia’s turn down a more democratic, market-based and Western-oriented path, kicked off a process of robust reforms and aggressive moves headed by then-President Mikheil Saakashvili to tackle the endemic corruption that had long hampered the country’s economic development. The turn was affirmed in 2014 when Georgia signed the Deep and Comprehensive Free Trade Agreement (DCFTA) and Association Agreement with the European Union (EU), signaling a commitment to enact further reforms and open its markets to Europe – a step that Georgians envision as eventually leading to EU membership.

However, despite the strong anti-corruption measures enacted after 2008, concerns about the rule of law and quality of governance also arose during that period. While there was not necessarily a threat of reforms being derailed, there were legitimate questions as to how representative the process was under the then-ruling government. Those trends led (in part) to the defeat of Saakashvili’s party in parliamentary elections in 2012, followed by the defeat of the presidential candidate from his party the following year. The business community had generally been in favor of many of the changes enacted under Saakashvili—though small and medium-sized enterprises (SMEs) did not always have a seat at the table.. With the change in government came some concerns that the economic reform trajectory could be reversed.

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Russia’s Quiet Annexation of South Ossetia

frozen-conflicts-south-ossetiaCIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

Often lost among coverage of Russia’s annexation of Ukraine’s Crimea, the ongoing crisis in Eastern Ukraine, and the general deterioration of the relationship between Russia and the West, is the quiet process through which the breakaway Georgian region of South Ossetia has been merged into Russia.

After Georgia declared its independence from the Soviet Union in 1991, Russian-backed separatists in South Ossetia in turn declared their own independence from Tbilisi. Fighting lasted until 1992, when Russia brokered a ceasefire agreement and placed peacekeeping troops in the region. South Ossetia voted for absorption by Russia, with no response from Moscow, while Georgia continued not to recognize the region’s independence. As a result, the conflict was frozen, and South Ossetia became a de facto state.

The situation remained such until August 2008 when, following several months of increasing tensions, Georgia and Russia fought a five-day, full-scale war in the region. That war marked a major turning point, as Russia decided to recognize South Ossetia as an independent state. The only other countries to do so were Nicaragua, Venezuela, and the Pacific island of Nauru.

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The Impossible Independence of Abkhazia


CIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

The Russian annexation of Crimea has reignited a divisive debate in Abkhazia, another breakaway de facto state which is still formally part of Georgia. Against the backdrop of the Ukraine crisis and Russia’s attempt to assert a greater role in the countries of the former Soviet Union, some in Abkhazia are now assessing the price of the region’s dependence on Russian assistance.

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Georgia Justice Minister Outlines Reform Agenda

Georgia's Justice Minister Tea Tsulukiani is interviewed on Georgian television.

Georgia’s Justice Minister Tea Tsulukiani is interviewed on Georgian television.

In October 2012, Georgia’s parliamentary elections resulted in the unseating of the incumbent United National Movement party by the opposition coalition, Georgia Dream, with 55 percent of the vote. In the wake of the post-Saakashvili era, the newly elected government is working tirelessly to define the priorities for democratic reform, governance, and rule of law.

Speaking at the Carnegie Endowment for International Peace in Washington, DC on February 22, Georgia’s newly appointed Minister of Justice Tea Tsulukiani — previously a renowned human rights lawyer — outlined her agenda for judicial reform. Throughout her speech, transparency, accountability, and impartiality were stressed as cross-cutting themes for reform initiatives.

Three key reforms highlighted by Tsulukiani included: universal free access to laws and penal codes; inclusion of civil society and the private sector in the drafting of new legislation; and strengthening the position of the defendant before a judge in the criminal procedure code.

This attention to democratic reform of the judiciary was warmly welcomed by many, as Georgia’s judicial system is perceived as highly corrupt with little to no independence from the regime. It is nearly impossible for ordinary citizens to win a court case against the state – the acquittal rate in Georgia is a miniscule 0.01 percent. This stark statistic comes into the light when you consider the fact that there are 300 state prosecutors, yet only 33 defense investigators. What this means is that judges are provided overwhelmingly with evidence for the prosecution, rather than a balanced argument.

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Mentorship Across Borders

(Photo: The Telegraph)

(Photo: The Telegraph)

Elissa Myers is the president and CEO of Advice & Consensus. She is serving as a mentor for the Georgian Small and Medium Enterprise Association through CIPE’s Knowhow Mentorship program. 

When I was offered the opportunity to serve as a mentor to the Georgian Small and Medium Enterprises Association through CIPE’s KnowHow  program, I jumped at it.  Earlier I spent a couple of months in the Republic of Georgia, working with two other emerging associations, and fell in love with the country, its history, its culture, its people, and its potential.

Strategically located between Asia and Europe, with Turkey, Armenia, and Azerbaijan to the south, the Caucasus Mountains to the north, and with glorious port towns bordering on the Black Sea to the west, Georgia represents an important opportunity for international investment.  It’s a country poised to blossom as an important market partner, but to do so a stronger internal business community is needed. Under the leadership of Kakha Kokhreidze, President CEO of the GSMEA, that community is gaining strength.

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Georgia’s Troubled Reforms

In Larry Diamond’s recently published book The Spirit of Democracy, the author cautions against the temptation of accepting “thin democracy” – defined by a system that chooses its leaders through popular vote – as the standard for determining what constitutes a free society. Recent developments in Georgia have lent strong credence to Diamond’s argument. An article appearing in the Washington Post describes the democratic setbacks the small Caucasus republic has experienced since the 2003 Rose Revolution swept the Western-educated reformist Mikheil Saakashvili to the presidency. This development was greeted with much fanfare by western democracies, as Georgia joined the growing group of former Soviet republics to make a clear break with communist-era leadership.

Unfortunately, those who hoped Georgia would serve as a shining example of liberalism in a largely undemocratic region have been repeatedly disappointed by Saakashvili’s reluctance to lay aside the tools of Georgia’s authoritarian past. When opposition to the president’s policies began to mount, Saakashvili resorted to all-too-familiar tactics. First, the government responded to widespread, mostly peaceful protests by deploying riot police armed with truncheons and water cannons, followed by a declaration of a state of emergency. Next, Saakashvili called snap presidential elections just a few months after the week-long state of emergency had stripped opponents of the right to demonstrate or appear on television, leaving them ill-equipped to mount an effective campaign against him. The government has also been accused of applying pressure to silence or shut down media outlets critical of the president.

As the article notes, many Western governments, were quick to throw in with the new government and cut support for vital advocacy efforts. Many Georgian activists followed suit and joined the new government, leaving fewer dedicated to ensuring that the government implemented its democratic rhetoric. Georgian democrats have admitted that they were too quick to put their trust in the government’s reform agenda, and were too hesitant to criticize inaction on important issues such as corruption. This dearth in pro-democracy advocacy resulted in weak institutionalization of reforms, which in turn allowed Saakashvili to resort to authoritarian tactics when it became convenient.

In order to develop a democratic society in which vital components such as the rule of law and freedom of expression exist and are respected, private citizens must participate. In other formerly authoritarian countries making the transition to democracy – such as Serbia – civil society organizations have played a key role in demanding that the government develop institutions to protect basic rights, and in monitoring whether these institutions are functioning as they should. Such organizations exist in Georgia, and many have admirably persisted in calling for a return to the democratic process. It is vital that CIPE and other organizations that support the development of strong democracies continue to support civil society not only where free societies have yet to emerge, but also where they are in their formative stages. If the price of freedom, as is often stated, is eternal vigilance, then it is a price that all proponents of democracy must share.

Tourism: Another Casualty of the Georgian Conflict?

As Georgia and Russia move from the battlefield to the negotiating table, there is hope that Georgians soon may be able to put the messy incident behind them and get on with their daily lives. However, a study conducted by the Association of Young Economists of Georgia (AYEG) points to a particular issue that may hinder Georgia’s return to normalcy – the war’s effect on the country’s tourism industry.

The study, which AYEG conducted as part of a CIPE-supported project, focused on the conflict’s impact on the Georgian business environment. AYEG asked representatives of 1,000 businesses of all sizes what effect the conflict had on their ability to conduct business and on their plans for the future.

Among the key findings of the study was that that, while most industries reported decreased demand and trouble securing loans, the tourism sector was particularly hard-hit. Of tourism-related businesses surveyed, 45% reported a decrease in sales of 81-100%, compared with 10% of manufacturers and 15% of service providers. Respondents from the tourism industry were also relatively pessimistic about their ability to recover quickly. Only 5% of tourism-related businesses believed that the recovery period could take fewer than three months, while 21% of manufacturers and 15% of service providers believed the recovery could be accomplished in that time frame.

While tourism is not among Georgia’s top industries, it has grown rapidly in recent years and thus represents an important factor in the country’s overall development. According to UN data, tourism in Georgia grew from $97 million to $313 million from 2000-2006. Fallout from the conflict with Russia has the potential to reverse this trend.

This article in Transitions Online details the harsh impact the conflict had on Georgia’s resort operators. On August 7, the day the conflict began, the port city of Ajara hosted 34,000 vacationers, most of who understandably fled. Instead of travelers with fat wallets, guesthouse owners found themselves hosting Georgian civilians displaced by war. In all, Ajara’s tourist industry suffered losses of around 6 million lari (more than $4 million), which equals its total revenue from 2007. Georgia must now find a way to reestablish its image as a welcoming destination of unique culture and beautiful landscapes, rather than a land racked by violence and separatism.