By Eka Janashia (05/13/2015 issue of the CACI Analyst)

On May 8, Georgia’s parliament approved the reshuffled government with 87 against 38 votes. It was the third set of changes impacting the cabinet composition since the breakup of the Georgian Dream (GD) ruling coalition in the fall of 2014.

On November 5, 2014, one of the founding members – Our Georgia-Free Democrats (OGFD) party – left the coalition. The party’s leader and then Defense Minister Irakli Alasania, along with the OGFD Ministers of Foreign Affairs and Euro-Atlantic Integration, lost their posts instigating subsequent changes in the lineup of the cabinet (see the 11/11/2014 issue of the CACI Analyst).

Shortly thereafter, another regrouping affecting senior and mid-level government officials as well as the GD leadership, took place allegedly due to former Prime Minister and oligarch Bidzina Ivanishvili’s loss of confidence in his protégé PM Irakli Gharibashvili. The PM’s trustees – the Minister of Interior, GD’s Executive Secretary, the heads of the Special State Protection and State Security Services, and the Deputy Minister of Regional Development and Infrastructure (MRDI) were replaced by Ivanishvili’s cadres. On April 21, the Minister of Regional Development and Infrastructure, Davit Shavliashvili, left the post reportedly for health reasons and was substituted by his Deputy Minister, Ivanishvili’s close associate Nodar Javakhishvili (see the 01/07/2015 issue of the CACI Analyst).

A week later, the Minister of Environment and Natural Resources Protection, Elguja Khokrishvili and the Minister of Sport and Youth Affairs Levan Kipiani also resigned. Republican MP Gigla Agulashvili, chairman of the Parliamentary Committee for Agriculture and Tariel Khechikashvili, co­-owner of one of Georgia’s largest auto traders Iberia Business Group, were respectively named for the ministers’ posts.

What came as a surprise was the nomination of the chairperson of the Parliamentary Committee on European Integration, Republican Tina Khidasheli as Minister of Defense. Although Khidasheli allegedly has long been at odds with Gharibashvili, she replaces the PM’s confidant Mindia Janelidze on the post.

Through these alterations, the government lost a third of its members and according to Georgia’s constitution, the new cabinet initially needs the president’s signature and then a confidence vote in parliament. The president is not entitled to block or reject ministerial nominees but on May 1, President Giorgi Margvelashvili used another constitutional lever and delayed the signing and submission of the new cabinet nomination to parliament to the end of the statutory seven-day period.

“As the commander-in-chief, I want to ask a question: how frequently should we replace Defense Ministers?” Margvelashvili said and suggested that the PM and parliament to go through the proposed composition of government members once more. As an immediate response, Gharibashvili defiantly issued decrees of the appointment of nominated ministers. On May 8, the reshuffled cabinet won a confidence vote in the parliament.

The parliament approved a renewed cabinet in late July 2014 and after less than year, the government again needs to restore its mandate through the legislative body. While that reshuffle carried a much more cosmetic character, the regrouping conducted since November 2014 is indicative of the internal contradictions that GD has undergone after OGFD’s exit.

Several factors have contributed to undermining GD. Since fall 2014, Georgia’s national currency, the Lari (GEL) has devaluated, dampening the overall social and economic climate in the country. A considerable share of the electorate has withdrawn its support for GD for this reason. The GEL crisis was coupled with two important events: OGFD’s exit from the coalition and Ivanishvili’s endeavor to introduce new confidantes in the government, allegedly due to his changing attitude towards the once favored Gharibashvili.

OGFD leader Alasania has publicly accused Ivanishvili of departing from Georgia’s pro-western course and thwarting a crucially important defense deal with France, likely as an effect of Russia’s objection to it (see the 04/15/2015 issue of the CACI Analyst).

The coalition was forced to reject Alasania’s accusations and bring to the front the Republican Party (RP), which is aside from OGFD GD’s other founding member with a pro-western reputation. RP holds six out of 87 GD mandates in parliament. Despite its small number of seats in the legislative body, the party after the recent reshuffle enjoys three ministerial portfolios – Environment, Defense and Reintegration. Moreover, Defense Minister Khidasheli is the spouse of Parliamentary Speaker Davit Usupashvili. 

Through the move, GD hopes to appease Georgia’s western partners and simultaneously mollify the electorate supporting Georgia’s Euro-Atlantic integration. Ivanishvili’s need to retrench Gharibashvili’s clout has in fact provided RP with an opportunity to increase its sway in the government. Given RP’s partnership and ideological closeness with OGFD, it has previously been speculated that the two parties could unite in opposition. In this scenario, RP and OGFD would form a new coalition at the detriment of GD but at this stage, RP’s leaders have chosen a different course of action. 

The recent government reshuffle is part of a continuous internal redistribution of power within the ruling coalition, rather than an attempt to empower the executive team to deal with the collapsing economy. 

Published in Field Reports
Wednesday, 29 April 2015 00:00

Islamic State Reaches Out to Georgia

By Eka Janashia (04/29/2015 issue of the CACI Analyst)

In April 2015, youths from the Pankisi gorge a territory in Georgia’s north-east adjoining Russia, left for Syria as a result of the recruitment by the terrorist group calling itself the Islamic State (ISIS) of Georgian citizens.

Pankisi’s rugged terrain is mostly populated by the descendants of ethnic Chechens settled there in the 18th, and later in the 20th, centuries during the Russia-Chechnya wars, and are referred to as Kists. They compose 75 percent of the 11,000 people settled in the valley.

Despite their considerable cultural confluence with Georgians, Kists largely maintain a Muslim confession, having practiced Sufi Islam traditions for centuries. Yet more recently, radical Salafi Islam, also termed Wahhabism, has become increasingly popularity and attracted a growing number of followers among the young generation, gradually supplanting Sufi clout in the gorge.

Religious radicalization in the gorge seems to present a looming menace for the economically weak and insecure Georgia. The exact number of Kists fighting for ISIS is unknown, but could according to some estimates amount to around 100 warriors. Some Kist fighters appear to have been successful in combat operations and achieved leading military positions in the ISIS army. For example, Georgian citizen Umar Al-Shishani, whose real name is Tarkhan Batirashvili, is an ISIS military emir in Syria from Pankisi, and was added to the U.S. list of Specially Designated Global Terrorists in 2014.

On April 2, 16-year-old Muslim Kushtanashvili and 18-year-old Ramzan Bagakashvili left their native Pankisi without their parents’ permission. Bagakashvili’s mother was told by the Ministry of Internal Affairs (MIA) that her son had taken a flight from Tbilisi airport to Turkey. Bagakashvili verified this information via a message he sent to his family.

Kushtanashvili’s grandmother reported that before his disappearance, the teen had been attending a Wahhabi mosque despite his father’s objection. Although Georgia and Turkey exercise passport-free border-crossing rules, it is unclear how the underage Kushtanashvili was allowed to cross the border without his parents’ consent. Interior Minister Vakhtang Gomelauri pledged to investigate the case and punish the responsible.

Meanwhile, Kushtanashvili and Bagakashvili sent a photo to their families, apparently taken in Syria, where the teens are sitting behind an ISIS flag, dressed in military fatigues and holding machine guns.

On April 20, the 19-year-old Pankisi resident George Borchashvili reported that unknown Chechens had threatened him with decapitation unless he went to Syria. Borchashvili applied to the police for help.

Local Kists claim that a specific group of radical Muslim recruiters is targeting young civilians in Pankisi for recruitment to IS combat, most likely in Syria, and call on the government to tighten border control.

Aside from the Pankisi gorge, cases of recruitment have been reported in the Kvemo Kartli (Borchali) region, bordering Azerbaijan and Armenia, and the Autonomous Republic of Adjara, bordering Turkey. Although Muslims compose around 10 percent of Georgia’s population, some Adjarian villages have a Muslim population of over 90 percent. Because these villages are situated along state borders, radicalization can have dire implications for national security.

The ISIS presence in Pankisi is critical in this perspective. The valley edges Russia’s restless North Caucasus, which has made it an easy target and alternative route for Chechen rebels. While Pankisi is unlikely to become a central node of ISIS’ Caucasus network, Russia has historically displayed it as a “hotbed” of Islamist militants. In the early 2000s, Moscow dubbed Pankisi a shelter for Al-Qaeda and has since vigorously sought to place the valley in the media spotlight, diverting attention from North Caucasus where radical Islam has made a much larger imprint. Such accusations potentially provide the Kremlin with another justification for military interference in Georgia’s territory. Whereas this threat is specific for Georgia, ISIS activities on Georgian territory also implies general risks that are familiar to other countries experiencing similar recruitment.

In an attempt to address these risks in January 2015, the Georgian government initiated a package of legislative amendments criminalizing the participation of Georgian citizens in illegal armed formations abroad, their travel overseas for the purpose of terrorism, as well as the promotion of such activities. The bill has yet to be approved by the parliament, and even after it enters into force, it will be difficult to detect militants covertly engaged in terrorist combat operations abroad.

The move is an important measure, but remains a minor step towards addressing the growing threat of radicalization.

The government seems incapable of either strengthening control in villages targeted by ISIS or articulate an integration policy for the Muslim population compactly settled in remote areas. While economic development in border regions should be an urgent question, the problem must also be addressed at a deeper, societal level. The failure of developed European countries to prevent the departure of youth to Syria suggests that the most important reason for the radicalization of local Muslims is their alienation from the rest of society. Without addressing this question, Tbilisi will hardly be able to prevent radicalization and recruitment among Georgia’s Muslims.

In addition, some analysts point out Georgia’s need to pursue strategic dialogue with partner countries to share their experience in fighting IS and to make the country’s participation in the anti-IS coalition more visible. 

Published in Field Reports

By Eka Janashia (04/15/2015 issue of the CACI Analyst)

On April 3, former Defense Minister Irakli Alasania claimed that Georgia’s government thwarted a crucially important defense deal with France likely due to Russia’s objection to Georgia’s enhanced defensive capabilities.

According to Alasania, French President François Hollande agreed during his visit to Tbilisi last year to sell air defense capabilities to Georgia. The move marked the end of an arms embargo informally imposed against Georgia after the 2008 August war as western partners hesitated to sell defensive weapons to the country.

The government worked out subsequent proposals and tasked Alasania with striking an initial deal – a non-binding memorandum of understanding (MoU) – with the French side. He arrived in Paris in late October, but was just before the signing of the document deprived of his mandate to do so. Alasania asserts that Billionaire Bidzina Ivanishvili decided to prevent the deal under pressure from the Kremlin.

The MoU envisaged the conclusion of a final agreement at the end of March, which would aim to reinforce Georgia’s air defense system and shield the country from attacks of fighter aircraft and even short and medium-range ballistic missiles. The deal also foresaw specific training to familiarize the Georgian servicemen with the system. Importantly, the deal would be paid for through a long-term loan, which would not have been painfully reflected in the state budged, the former minister said.

As Alasania refused to comply with the “illegal instruction,” of the “informal ruler [Ivanishvili],” the ministry’s general staff officials were arrested to raise the pressure on him. Nevertheless, Alasania signed the document in order not to lose the chance that “opened up for Georgia after many years of embargo.”

Shortly thereafter, he was sacked from the post of Defense Minister and his Our Georgia-Free Democrats (OGFD) party left the Georgian Dream (GD) ruling coalition. Yet Alasania has not disclosed the MoU-related sensitive details until now (see the 11/11/2014 issue of the CACI Analyst).

The government made efforts to reject Alasania’s allegations. On the same day, PM Irakli Gharibashvili indicted him for exposing state secrets and the Ministry of Defense released an interview with the French ambassador saying that discussions on military cooperation between Georgia and France military, which started last year, were still underway.

However, it remains a fact that the final agreement, allegedly envisaged in the MoU, was not signed at the end of March, 2015. OGFD requests the formation of an ad hoc parliamentary commission with access to classified information to cast light on the issue and confirm or deny the assertions that Alasania made on April 3.

It seems that Alasania has been awaiting the government’s failure to meet the deadline to raise the matter. However, there could be another reason why he raised the criticism at this time.

On April 1, the U.S. NGO International Republican Institute (IRI) published the results of public opinion research conducted throughout Georgia on February 3-28, 2015. The survey mapped the foreign and domestic policy preferences as well as the ratings of political parties and their leaders. 

A clear trend unveiled by the polls is the waning popularity of GD. In local elections held in June 2014, the coalition garnered just over 50 percent of the votes, while according to IRI research, the likely number of GD voters has dropped to 36 percent. It is followed by United National Movement (UNM) with 14 percent, OGFD with 10 percent, Labor Party with 6 percent, Alliance of Patriots of Georgia and Democratic Movement–United Georgia with 5 percent each. Alasania’s favorability rating is 57 percent, with a disapproval rating at 34 percent, while the corresponding figures for PM Gharibashvili are 56/39 percent respectively. Alasania is the most favored candidate among the opposition leaders.

In terms of foreign policy priorities, the poll showed that Georgians strongly support their country’s integration with Euro-Atlantic structures. 85 percent of the respondents favor Georgia’s membership in the EU and 78 percent support its accession to NATO. 76 percent of Georgians deem the Russian Federation as a threat to the country while 88 percent think Russian aggression toward Georgia is ongoing or likely to resume.

Another striking trend disclosed by the survey is the apathy and skepticism that has been growing among the population since 2014. People are less optimistic about the future than a year ago. 55 percent of the respondents think Georgia is on the wrong track, and only 25 percent approve the country’s current trajectory.

Although GD, as well as some experts and politicians, expressed skepticism regarding the polls, it might be a mistake to ignore the overall context that the survey has outlined. What is a warning for the ruling coalition might be an opportunity for the opposition parties. Talking about the air defense affair, while most Georgians fear continued Russian aggression, is beneficial to Alasania and OGFD. This shift in opinion is also reflected in the declining support for GD and the growing popularity of Alasania. 

Published in Field Reports

By Eka Janashia (04/01/2015 issue of the CACI Analyst)

The struggle for power between the Georgian Dream (GD) ruling coalition and opposition parties, as well as within GD itself, is gradually gaining impetus at all levels of governance against the background of a slowing economy and corruption cases.   

At the end of 2014, the coalition underwent serious changes affecting senior and mid-level government officials, as well as the cadre of the party’s leadership. The alterations were allegedly due to Georgia’s “Grey Cardinal” Bidzina Ivanishvili’s loss of confidence in his protégé PM Irakli Gharibashvili, and an ensuing attempt to replace the PM’s trustees with those of Ivanishvili at tactically important positions, including the GD’s Executive Secretary, the Minister of Internal Affairs, the heads of the Special State Protection and State Security Services, and the Deputy Minister of Regional Development and Infrastructure. The latter post was taken by the billionaires’ close associate and former head of his Cartu Bank, Nodar Javakhishvili.

Javakhishvili recently confronted his boss, Minister David Shavliashvili, over the failure to deal with disorders in road tenders and financial fraud schemes. While opposition parties have frequently pointed out the corruptive involvement of Gharibashvili’s cronies in state tenders, the indictment aired by the deputy minister cast the case in a different light and could be perceived as another attack on the PM.

This trend is coupled with GD’s loss of majority in a regional legislative body – the Supreme Council (SC) of Adjara Autonomous Republic. Since the October 2012 parliamentary elections, GD has held 13 seats versus the opposition United National Movement’s (UNM) 8 in the 21-member SC. In November 2014, the GD lost two seats in the SC after the Free Democrats’ (FD) departure from the coalition, leaving GD with 11 seats – still sufficient to override the oppositions’ votes. However, in February, the chairperson of the SC’s human rights committee, Medea Vasadze, quit and deprived the coalition of a clear majority.

Moreover, on February 20, two GD members supported the UNM’s initiative to sack the SC’s vice speaker Davit Batsikadze and the chairperson of its financial and economic committee Alexandre Chitishvili, both GD members.

The proponents of the initiative accused the officials of failure to carry out their duties. In turn, GD accused UNM of “revanchism” and termed the support from its own members for the proposal a “traitorous action.” PM Gharibashvili said the two SC members had been covertly cooperating with UNM and the move would be rebounded “very strictly.”

While GD has failed to keep a steady majority in Adjara, it has locally become involved in scandalous corruption cases. In February, the head of Tbilisi City Hall’s supervision service, Jokia Bodokia, was detained on bribery charges. According to the Prosecutor’s Office, Bodokia received a US$ 50,000 bribe from a construction company in exchange for a hotel construction permit in Tbilisi. The opposition asserted that vice Mayor Alexander Margishvili and even Tbilisi Mayor Davit Narmania were involved in the deal.

Prosecutors claimed that an employee of the mayoral office, Mikheil Kviria, also accepted a US$ 10,000 bribe from Indian and Iraqi citizens in return for a land purchase permit near Tbilisi. Meanwhile, Margishvili resigned without any explanation, and in March, the administrative head of the mayoral office, Reno Chakhava, and his deputy Mariam Shelegia also quit their posts.

Narmania abruptly announced the establishment of the Tbilisi Entrepreneurship Support Center (ESC) and appointed Margishvili head of the agency, which will be tasked with fostering investor activities and developing entrepreneurial skills.

Transparency International Georgia (TIG) slammed the initiative, arguing that a number of other structures with the same tasks and functions are already operating across the country. Also, the two million GEL envisaged for the agency’s budget exceeds the funding for the Business Ombudsman’s office by a factor of four and is at odds with the “tighten belts” policy announced by the government. According to TIG, Margishvili’s appointment raises doubts as his reasons for resigning from the post of vice-mayor remain unclear.

These episodes add to the coalition’s trouble in strengthening its political power attain credibility for its policies. One of the most apparent reasons is Ivanishvili’s rule behind the scenes, coupled with his changing attitudes towards previously favored persons. Ivanishvili’s criticism against President Giorgi Margvelashvili, PM Gharibashvili, and Mayor Narmania, indicates that he is no longer satisfied with their performance. His endeavor to introduce new trustees in the government ramps up the competition for influence, thus enlarging rifts within the coalition and creating space for inefficiency and corruption. GD’s retreat in a major regional legislative body and the murky business in Tbilisi City Hall might reflect GD’s incapacity to coordinate its heterogeneous coalition to cope with Georgia’s political and economic situation.

Finally, GD’s partition gives the opposition forces a new window of opportunity, which the UNM has already started to exploit. At the March 21 demonstration, the party’s leaders declared permanent protest rallies in order to achieve the government’s resignation and possibly even early parliamentary elections. Although the party does not enjoy much popular support, it seems determined to fight for regaining public trust.  

Published in Field Reports
Wednesday, 18 March 2015 12:18

Georgia Faces Economic Crisis

By Eka Janashia (03/18/2015 issue of the CACI Analyst)

Georgia’s national currency, GEL (Lari) has lost 29 percent of its value against the US$ since November last year and, after a brief recovery, has continued depreciation until present. On February 24, the GEL saw its largest drop reflected in a single-day 3 percent fall. The Government pledged to present a “currency stabilization plan” for March 5 but failed to match the vow.

The implications of Georgia’s currency devaluation have become a major provenance for political speculation, public discontent, and concerns among domestic and foreign businesses.

Until the end of February, the government’s economic team kept calm regarding the depreciation of the GEL, largely echoing former Prime Minister Bidzina Ivanishvili’s assertion that he was completely satisfied with the work of the government and the National Bank of Georgia (NBG), instead linking the currency devaluation to external factors. “Nothing special is happening, the Lari is doing very well,” he claimed in January.

However, in response to public concerns after the GEL lost 3 percent of its value in a single day on February 24, Ivanishvili blamed the head of NBG Giorgi Kadagidze for idleness. “Kadagidze, who was appointed by the United National Movement [in 2009], led us to the crisis of the national currency with his inaction and wrong decisions” since under the constitution, the president of NBG is responsible for preventing undesirable developments, Ivanishvili said. After this statement, some ministers and the GD ruling coalition representatives also began disparaging the NBG’s work.

Kadagidze refused to engage in political debates but in response termed the GD attacks a “deliberate slanderous campaign against NBG” and reminded the public about the chronology of the events.

In 2013, Kadagidze warned the government that the projected 6 percent growth was overoptimistic and suggested a downward revision. Indeed, economic growth that year amounted to only 3.1 percent, half of what the government intended to achieve.

Kadagidze insisted that he also advised the government to avoid uneven spending from the state budget as it would increase pressure on the currency’s exchange rate, which in late 2013 resulted in an NBG intervention by selling several hundred million US$ at the exchange market, resulting in a decline of the country’s foreign reserves from US$ 3.1 billion in October, 2013, to US$ 2.82 billion by the end of 2013.

At that time, the intervention was justified as a one-time measure, whereas the current GEL depreciation is caused by the economy’s overall failure as foreign currency inflows have plunged since 2013, Kadagidze claimed.

Georgian exports fell by 30 percent and remittances by 23 percent year on year in January. In addition, the number of tourists shrunk by 7.8 percent in January-February compared to the same period last year. In effect, the account deficit reached 9.5 percent of GDP in 2014. Kadagidze argues that filling the deficit with foreign currency reserves is “counterproductive and fruitless.”

In cooperation with the Government and the NBG, the Analytic Mission of the International Monetary Fund (IMF) studied Georgia’s macroeconomic indicators in light of the recent economic hardship. A concluding statement lists a set of external factors such as the ongoing crisis in Ukraine; the growing recession in Russia; and currency devaluations in trading partner countries as reasons for Georgia’s slowing economy. Economic growth for this year could reach only 2 percent, instead of the previously estimated 5 percent, and even this projection is under the risk, the mission said.

As a countermeasure, the IMF suggested restrictions in administrative spending and increases of specific taxes in order to eschew a further upsurge of the budget deficit. At the same time, the IMF fully supported NBG’s policy of limited intervention in the foreign exchange market, arguing that its primary task is to maintain price stability in the country and while fulfilling this mission the independence of NBG “should be preserved and respected.”

In the wake of this statement, the Georgian government vowed to reduce administrative costs and pursue a so called “tighten belts” policy. Moreover, it declared its intention to ramp up the privatization process with an aim to raise US$ 300-350 million within the next two-three months.

To this end, the government plans to sell state assets – the historical buildings of the Economy Ministry and NBG in downtown Tbilisi, government residences in Adjara and near the capital city, and shares in thermal power plants and the National Lottery Company.

Nevertheless, some economic experts and opposition political parties argue that one-time investments cannot recover the ailing economy. The former president of NBG, Roman Gotsiridze, argues that enlarged social expenses, agricultural loans, and healthcare projects make the state budget inflexible. The budget expenditure should be reduced by at least GEL 300 million, otherwise the national currency will continue to depreciate and prices will rise, which will completely destroy the country’s economy.

The United National Movement (UNM) and Free Democrats, two parliamentary opposition parties, blamed the government for lacking a clear vision how to get the country out of the crisis. UNM plans to organize a protest rally in Tbilisi on March 21 to demand the government’s resignation.

It is obvious that, after GD came into power, the country’s economic policy has been less resilient to external shocks and the government has been unable to elaborate timely and cogent policies to mitigate the adversary external impact on the economy. The government’s poor economic performance encourages protest actions from opposition parties though the anticipated political turbulence could well be exploited also by radical pro-Russian parties. 

Published in Field Reports

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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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