By Eka Janashia (01/07/2015 issue of the CACI Analyst)

The changes taking place in Georgia at the end of 2014 will have crucial implications for next year’s political and economic agenda. In the beginning of December, a bout of reshuffles started both in government and inside the ruling Georgian Dream coalition (GD). It was the second wave of shifts since November, when the Free Democrats, led by the former Defense Minister Irakli Alasania left the GD coalition. This time, the alterations occurred within the GD party itself and affected the senior and mid-level government officials as well as party’s political council.

The party’s executive secretary, and PM Irakli Garibashvili’s relative, Zviad Jankarashvili resigned. Until April, 2014 he was head of the General Inspection of the Ministry of Internal Affairs (MIA). Meanwhile, first Deputy Interior Minister Giorgi Zedelashvili, a distant relative of Jankarashvili and one of the most influential figures in the MIA, was detached from the ministry and moved to the post of Deputy Secretary of the State Security and Crisis Management Council.

The head of the Special State Protection Service (SSPS) – an agency responsible for the security of high-ranking officials, state facilities and buildings – Teimuraz Mgebrishvili, was replaced by Ivanishvili’s former chief bodyguard Anzor Chubinidze. Another close associate of Ivanishvili, Nodar Javakhishvili, replaced Zurab Kopadze on the post of Deputy Minister of Regional Development and Infrastructure.

The heads of the State Security Service (SSS) and the General Inspection of the MIA, Malkhaz Chikviladze and Irakli Samkurashvili, also resigned. Ivanishvili’s crony, Mirian Mchedlishvili became head of the SSS.

Nearly all opposition parties detect Ivanishvili’s hand behind the recent relocations. Rumors swirled about Ivanishvili’s growing mistrust toward Garibashvili. Allegedly, Ivanishvili appointed his trusted associates to tactically important posts in order to control the PM.

The United National Movement (UNM) accused Garibashvili’s family of bribery long before the reshuffles. At the beginning of this year, the party disclosed an apparent corruption scheme run by Garibashvili and his father-in-law, Tamaz Tamazashvili. The scheme allegedly envisaged the establishment of fake firms and companies to participate in state tenders and accumulate large amounts of money. UNM asserts that the total volume of corrupt deals amounts to US$ 8 million.

The changes in government and GD were accompanied by a drastic depreciation of the Georgian Lari (GEL) which lost around 12 percent of its value against the U.S. Dollar in mid- December. Although Garibashvili’s government insisted that the drop was mainly caused by external factors, economic analysts argue that the government’s inefficient economic policy disrupted the balance between the US$ and GEL.

According to some economic analysts, the toughened visa regulations for foreigners imposed by the government last year have damaged the overall investment climate. The volume of investments has dropped by 10 percent for two quarters in 2014 compared to the same period of 2013. Although another source of external financing – export – has recently increased, the growth rate of imports is still much higher than that of export. Meanwhile, the ongoing economic recession in Russia contributed to a drop in the volume of remittances to Georgia.

As a result, abridged US$ inflows instigated a depreciation of the GEL, especially harmful for those who get their incomes in the national currency but have taken loans in Dollars. Data from Georgia’s National Bank disclose that 60 percent of all loans and 77 percent of mortgages are dollarized, implying that a significant share of the population is affected by the Lari depreciation.

Moreover, the appreciation of USD against GEL connotes that imported goods will become more expensive for Georgians. Taking into account that import comprises 49 percent of Georgia’s GDP while imported products constitute 70 percent of Georgia’s consumer basket, the ongoing depreciation of the GEL appears to be especially troubling.

Economic concerns amplified the uncertainty triggered by the shifts taken place inside the GD party. Several analysts and politicians have discussed Ivanishvili’s changing confidence in Garibashvili, which could end with the PM’s reassignment. Many speculations have also been devoted to the question who might be the next PM and whether Ivanishvili himself may officially return to politics.

Although the expected changes will heighten the political turbulence and economic fluctuations in the country, instability seems to be growing even without further shifts in the government. GD’s pattern of ruling deprives Georgia of institutional development and instead benefits crony networks, clan clashes and personality politics.

Meanwhile, if economic predicaments are not dealt with timely and efficiently by pursuing a more liberal economic policy, the country may face both political and economic crises. Alarmingly, these problems could derail Georgia’s Euro-Atlantic course and seriously slow the country’s democratic development.

In 2015, the Georgian government will have to address the most critical issues to maintain social stability. Thus, this year may present the true litmus test for GD and its ability to preserve its status as Georgia’s dominant political force. 

Published in Field Reports

By Eka Janashia (12/10/2014 issue of the CACI Analyst)

On November 30, the parliament of Georgia overruled President Giorgi Margvelashvili’s veto and adopted the government-backed law on surveillance and eavesdropping, maintaining direct access for the Ministry of Internal Affairs’ (MIA) to telecom operators’ networks.

Meanwhile, Margvelashvili’s alternative bill – prohibiting interception of communications by the law enforcement agencies without court authorization, and the Republican Party’s (RP) separate, competing bill – intended to sever the MIA’s direct access to telecommunication operators’ networks – were voted down by the parliament.

In 2010, the previous parliament adopted a legislative amendment empowering the MIA to install “black box” spy devices in telecommunication companies’ networks. Opposition parties and watchdog groups strongly criticized the move and accused the then-ruling United National Movement (UNM) party of establishing illegal surveillance practices in Georgia to strengthen its grip on power.

However, in May 2014, the disclosure of wiretapped phone conversations of incumbent and former high officials, including parliament speaker Davit Usupashvili and then-defense minister Irakli Alasania, prompted allegations that the ruling GD coalition had continued illicit eavesdropping after assuming leadership.

The enduring question whether security agencies should keep direct, unfettered access to telecom operators’ networks – “key” as it has been labeled informally – has inflamed debates among politicians, lawyers and lawmakers even within the GD coalition.

The government-backed bill prepared by the chairwoman of the parliamentary human rights committee MP Eka Beselia, her deputy MP Gedevan Popkhadze, and the chairman of the defense and security committee MP Irakli Sesiashvili, supported the MIA’s sustained access to telecom operators’ networks whereas RP – one of the GD coalition’s founders, insisted that the MIA should be deprived of this capability. This position was shared by a few other GD MPs, the Free Democrats (FD), which recently left the coalition, and UNM.

Advocates of the government-sponsored bill asserted that the MIA, incorporating intelligence and security agencies, should maintain a “key” to deal with growing “security challenges” efficiently. To avoid unlimited access, however, the bill’s sponsors suggested a “two-key system,” where one should be kept in the MIA and the other at the Personal Data Protection Inspector’s Office (PDPIO). In spite of having direct access to telecom operators’ servers, the MIA will not be able to start interception and monitoring of communications without the permission of the PDPIO’s, which will in turn be equipped with relevant technical capabilities.

Opponents argued that a more precise reading of the law, involving numerous technical terms about a lawful interception management system, enables the MIA to bypass PDPIO and thus fails to provide a genuinely balanced system. The law grants PDPIO the right to issue technical permission for the security agencies to launch lawful interception of communications, meaning that the PDPIO’s competence goes beyond a monitoring function and makes it part of the process. Holding the “key,” PDPIO is able to execute actions rather than simply observing them, while its major function is to oversee that surveillance is pursued in compliance with court warrants, as put by one opponent of the law, Free Democrat Shalva Shavgulidze.

On November 27, the parliament voted down a separate, competing bill introduced by RP. It envisaged the transmission of a “key” to the Georgian National Communication Commission and depriving the MIA of its direct access. RP leader Usupashvili said that the examples of some European countries, presented by the supporters of government’s bill, where the interior ministries have direct access to telecom operators’ networks, were irrelevant as the structure of those agencies are completely different from Georgia’s MIA, which incorporates not only police forces, but also security and intelligence agencies.

Earlier this year, the civil society organizations (CSO) engaged in the parliament’s working group – including the Georgian Young Lawyers’ Association and Transparency International Georgia – presented a “two key” model. Like RP, CSO also supported depriving the MIA of access to telecom operators and instead suggested to grant “keys” both to the telecom operators themselves and the judiciary. In this model, the judiciary would issue a warrant for surveillance upon the request of the security agencies and would in the event of approval technically allow interception to begin.

PM Irakli Gharibashvili slammed the CSO’s initiative, saying that the owners of all the three largest mobile phone operator companies in Georgia are foreigners and the country “cannot rely on foreign companies when it comes to state security and citizens’ security.”

Initially, the “two key” proposal was aired in late September at a conference in Tbilisi attended by European experts on personal data protection invited by the Council of Europe (CoE). One of the experts, Joseph Cannataci, said the idea of a “two key” system is that holder institutions will gain separate access to communication operator’s networks, implying that the MIA cannot get admission alone but will need confirmation from the second holder institution.

While the government insists that the law on surveillance and eavesdropping is intended to reflect this cornerstone principle, the shortfalls of the law suggest something deferent. In this respect, GD seems willing to continue the UNM’s tendency to enhance the MIA’s unfettered power instead of subjecting it to institutional checks and democratic oversight. The Georgian watchdog groups pledged to protest the law through streets demonstrations and by appealing against the Georgian state in the Constitutional Court. 

Published in Field Reports

By Valeriy Dzutsev (11/26/2014 issue of the CACI Analyst)

On November 24, the Russian government signed an agreement with Abkhazia that will further diminish the already limited sovereignty of this territory in exchange for Russian investments and social benefits for the population. The South Ossetian government has signaled that Russia is preparing a similar agreement with this Georgian breakaway territory. Some South Ossetians, however, have unexpectedly spoken out in favor of retaining the republic’s sovereignty. As Russia lays the groundwork for the annexation of Abkhazia and South Ossetia, it encounters surprising opposition from the tiny republics that have become accustomed to a certain degree of independence from Moscow. Tighter control of Abkhazia and South Ossetia will increase the security risks for Georgia.

abkhazia

Published in Analytical Articles

By Eka Janashia (11/26/2014 issue of the CACI Analyst)

In mid-November, Georgia’s PM Irakli Gharibashvili visited Brussels to discuss the country’s progress on Euro-Atlantic integration, after former Defense Minister Irakli Alasania’s publicly expressed doubts regarding the irreversibility of Georgia’s Euro-Atlantic path. The EU praised Georgia’s progress in implementing the Association Agreement (AA) but also aired warning signals about “political retribution, confrontation and polarization.”

On November 17, the Georgian delegation led by PM Gharibashvili along with European colleagues, the EU’s foreign policy chief Federica Mogherini and EU Commissioner for European Neighborhood Policy Johannes Hahn, attended the first EU-Georgia Association Council (AC), the highest body in charge of supervising AA implementation.

The Council confirmed the European Commission’s October 29 report, stating that Georgia had successfully dealt with the first-phase requirements of the Visa Liberalization Action Plan (VLAP) envisaging a set of benchmarks for the EU short-term visa free regime.

VLAP involves a wide range of issues such as anti- corruption and organized crime policies, protection of human and minority rights, border management, document security, money-laundering, migration, mobility, asylum and anti-discrimination polices.

Since the European Commission’s first progress report on VLAP, issued in November 2013, Georgia has approved a new law on status of aliens and stateless persons as well as an anti-discrimination law and made extensive legislative amendments including legislation on protection of personal data.

The first phase of VLAP has applied to the overall policy framework reflected in the adoption of relevant legislation and the next phase will focus on effective and sustainable enactment of defined measures and adopted laws.

The AC also reviewed the implementation of the Deep and Comprehensive Free Trade Agreement (DCFTA), a substantial component of the AA. Hahn said the DCFTA preparations are going “smoothly” and “Georgia continues to be in the forefront of the Eastern Partnership.”

To maintain the country’s efforts, the EU will allocate EUR 410 million in the period 2014-2017, enabling Georgia to continue adapting to the AA demands. The foreign affairs committee of the European Parliament issued recommendations for the European Parliament to ratify the AA with Georgia in December.

Despite the successful completion of the first phase of VLAP application, paving the way for the second one, EU representatives noted their concerns regarding the firing of Defense Minister Alasania and the resignations of Georgia’s Ministers of Foreign Affairs and European and Euro-Atlantic Integration. Mogherini talked about the need for an improved political climate and “space for opposition and cross party dialogue.” She accentuated the necessity of continuing judiciary reform and avoid “any form of instrumentalization of the prosecution for political purposes.”

PM Gharibashvili pledged to substantiate Georgia’s further steps to meet all second phase criteria of the VLAP by the next Eastern Partnership summit in Riga 2015, where Tbilisi hopes to get the EU’s approval for a visa-free regime with Georgia.

After the AC’s inaugural session, Gharibashvili discussed with NATO Secretary General Jens Stoltenberg the implementation of the “substantive package” granted to Georgia at the Wales summit in September.

Stoltenberg stated that the establishment of a NATO-Georgia Training Center and the deployment of trainers to strengthen the country’s defense capabilities are the essential components of the package. Their implementation should start at the NATO defense ministerial meeting in February, 2015. Stoltenberg also said he has “no reason to doubt” Georgia’s NATO integration commitment.

PM Gharibashvili’s visit to Brussels also aimed to disperse the allegations voiced by former Defense Minister Alasania that Georgia’s Euro-Atlantic integration is under threat. Many officials and analysts in Brussels and Washington assessed the PM’s decision to sack Alasania as an attack on Georgia’s strategic direction.

Gharibashvili thus had to convince Georgia’s foreign partners that the incumbent government remains firmly on its chosen course. He presented the newly appointed Foreign Minister Tamar Beruchashvili, State Minister for European and Euro-Atlantic Integration Davit Bakradze, Defense Minister Mindia Janelidze to European colleagues and expressed their readiness to make Georgia a “success story in the region” by galvanizing the process of European integration.

Gharibashvili also made tough statements about Russia’s destructive policy. He condemned Moscow’s “attempt to annex” Abkhazia and South Ossetia and expressed hopes that “Georgia’s occupied territories will remain on the radar screen of the Alliance.” Moreover, Gharibashvili dubbed the Kremlin’s steps in Ukraine as a continuation of the Russia-Georgia war in August 2008. Such hardline language is new for the PM who has otherwise subscribed to the soft and cautious policy towards Moscow endorsed by his predecessor Bidzina Ivanishvili.

Alasania’s dismissal from government compelled Gharibashvili to reassure counterparts in the EU and NATO that there is no drift in Georgia’s strategic direction. To restore the confidence among Georgia’s Western partners, he is also portraying the criminal cases against former Ministry of Defense officials as exclusively based on corruption charges, in an effort to disperse perceptions of political retribution. 

Published in Field Reports
Tuesday, 11 November 2014 12:00

Georgia's Ruling Coalition Disintegrates

By Eka Janashia (11/11/2014 issue of the CACI Analyst)

On November 5, the Our Georgia-Free Democrats (OGFD) party, led by Former Defense Minister Irakli Alasania, quit the ruling coalition Georgian Dream (GD). The departure of one of the founding members of the coalition was the culmination of a political crisis that had been ongoing for a week.

In the end of October, the prosecutor’s office arrested the former head of the Ministry of Defense (MoD) procurements department and two incumbent officials from the same department, along with the head and an official of the communications and IT department of the general staff of the armed forces, on charges of misspending GEL 4.1 million through a state-secret tender that allegedly was a sham.

Another set of charges came in early November when the Prosecutor’s office blamed three army medical officials and three employees of a state-owned food provider company for negligence resulting in foodborne illnesses of hundreds of servicemen last year.

As the charges were raised, Defense Minister Alasania was on a foreign trip, holding high-level meetings with French and German counterparts while the Chief of the General Staff of the Georgian Armed Forces, Maj. Gen. Vakhtang Kapanadze was paying a three-day visit to Estonia.

Upon his return, Alasania states his full support for the detained officials and termed the Prosecutor’s move a politically motivated attack on Georgia’s Euro-Atlantic course. The arrests took place while the Defense Minister was making efforts to strike a very important deal enhancing Georgia’s defense capacities, he said. Several hours after this statement, PM Irakli Gharibashvili sacked Alasania and his deputies from their posts in the Defense Ministry.

In response, the Minister of Foreign Affairs Maia Panjikidze – Alasania’s sister in law and his close associate, and the State Minister for European and Euro-Atlantic integration Alexi Petriashvili, resigned. Four deputy foreign ministers, Davit Zalkaniani, Davit Jalagania, Tamar Beruchashvili, and Levan Gurgenidze also declared their intention to leave the cabinet, lamenting that Georgia’s Euro-Atlantic path is in danger. The decision of the Minister of Justice, Tea Tsulukiani – a member of OGFD – was critical in stifling the ensuing political crisis. After she declared that there was no reason to doubt the government’s pro-European stance and opted to retain her post, all deputy foreign ministers except Zalkaliani made a U-turn and kept their posts.

On November 5, at the Georgian Dream (GD) coalition’s council meeting, which was also attended by ex-PM Bidzina Ivanishvili, OGFD announced its departure from the coalition. The step induced Gharibashvili to dub Alasania an “adventurer” and a “stupid and ambitious” politician and accused OGFD of being in a covert alliance with the United National Movement (UNM). Although Alasania initially did not rule out cooperation with any pro-European political force, including the UNM, after the PM’s accusations, he later denied such a perspective.

The U.S. Department of State expressed “concern” over the dismissal of Alasania and his deputy ministers as well as the subsequent resignations of the State Minister for European and Euro-Atlantic Integration and Foreign Minister. It announced its appreciation for Alasania’s work and called on the Georgian government to avoid perceptions of selective justice. 

Meanwhile, Alasania, who has resumed chairmanship of the OGFD party, stated at the party congress that OGFD, along with the Georgian people, would celebrate victory in the next parliamentary polls, planned for 2016. He also emphasized that the state “should be based on fair laws and not on the will of one man.” This statement echoed President Giorgi Margvelashvili’s earlier remarks. Commenting on the dismissal of the country’s top three ministers, the president stated that “the country should be ruled by strong institutions and not from behind the scenes.”

Margvelashvili could be among those who will gain from the change in political realities. Being exiled from the coalition, Margvelashvili and OGFD could find common ground for cooperation. The collapse of GD also creates a more favorable situation for the UNM, although the political environment will become more competitive as yet another pro-western party will bid for largely the same segment of the electorate.

In addition, OGFD’s move strengthened the Republican Party’s (RP) positions within the coalition. Before the cabinet reshuffle, RP leaders accentuated the need for GD’s “de-personalization” and “institutionalization,” a position echoed by Margvelashvili’s and OGFD’s recent remarks. In fact, the Speaker of Parliament, RP leader Davit Usupashvili, asserted at the OGFD congress that RP and OGFD will remain partners. It seems that RP can now choose to leave GD at the moment that best suits its interests.

The dismissal of pro-Western ministers could be costly for the ruling coalition. Firstly, it damaged the prestige of GD and exposed its internal fragility. Secondly, it encouraged fluxes in parliament. MPs Tamaz Japaride, Gela Samkharauli and Gedevan Popkhadze quit OGFD and joined GD, while GD deputy chairman of the legal affairs committee, MP Shalva Shavgulidze lined up with OGFD. The reposition left the ruling coalition with exactly 75 seats in the 150-member parliament, one deputy less than needed for a simple parliamentary majority. To avoid failure, GD has absorbed 12 independent deputies who have informally cooperated with GD since 2012. Thus, the coalition will likely attain 87 voices.  Nevertheless, three pro-western political forces – OGFD, RP, and UNM, plus president Margvelashvili, now aspire to circumscribe Ivanishvili’s grip on power.

On the other hand, it is unclear what levers Ivanishvili will be able to deploy against the OGDF and RP leaders. In his first public comments about the recent developments, Ivanishvili unveiled secret details of the criminal cases against the MoD officials in an attempt to downplay the political dimension of the charges. Thus, the anticipated pressure on opposition leaders and their ability to resist will determine the distribution of political forces in Georgia prior to the 2016 parliamentary elections. 

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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