By Eka Janashia (08/07/2015 issue of the CACI Analyst)
On June 27, Georgia’s parliament passed, in the first reading, a bill that deprives the National Bank of Georgia (NBG) of its supervisory function of financial institutions, assigning these tasks to an independent agency.
The proposal, initiated by the Georgian Dream (GD) ruling coalition a month earlier, has faced a spate of sharp criticism not only from the political opposition but also from influential international financial institutions, civil society and the business sector. President Giorgi Margvelashvili pledged to veto the bill in case it was endorsed.
According to the amendments, a new body – the Financial Supervisory Agency (FSA) – will monitor and conduct oversight of Georgia’s banking sector and financial institutions, a function currently carried out by NBG. A seven-member board, including a representative and the president of NBG, as well as five government nominees, will run FSA after the parliamentary confirmation. The board members, in turn, will name the head of the agency, which should also be approved by the parliament.
The critics of the bill discern political motives behind the proposal, arguing that it is designed to undermine the position of NBG’s President Giorgi Kadagidze, who is affiliated with the formerly ruling United National Movement (UNM) party.
The legislation’s timing coincides with an escalating confrontation between senior GD politicians and Kadagidze. The initial attacks against Kadagidze took place in February last year, when the depreciation of Georgia’s national currency reached a dramatic level. Former Prime Minister Bidzina Ivanishvili lashed out at the NBG president, blaming him for inaction to prevent the currency crisis by using the national reserves (See 03/18/2015 issue of the CACI Analyst). Since then, Kadagidze, whose term in office will expire in February 2016, has become a frequent target of attacks from GD politicians.
Opponents of the bill also question the financial advisability of moving banking supervision from the NBG, arguing that there is no economic and financial rationale justifying the damage implied by the planned changes.
Reputable financial institutions, including the International Monetary Fund, World Bank, European Bank for Reconstruction and Development and Asian Development Bank have warned PM Irakli Gharibashvili and Parliament Speaker Davit Usupashvili that splitting the NBG’s functions will weaken “the independence and quality of banking supervision in Georgia” and challenge both stability in the banking sector and the sustainability of economic growth. In particular, they warn against empowering the parliament to appoint FSA Board members, which will undermine the principle of checks and balances practiced in the current appointment procedures for the NBG Board. Such a shift risks leading to a politicization of banking supervision, damaging its independence and autonomy, the institutions assert.
By contrast, GD argues that the amendments will grant “more independence” to the banking sector. A co-sponsor of the bill, GD MP Tamaz Mechiauri, who chairs the parliamentary committee for finances, explained that the proposal will lead to the de-politicization of NBG’s currently politicized board, which “do not reflect at all the interests of those forces, which are currently in power.”
Against the background of such statements, UNM insists that bill was initiated and backed by Ivanishvili, who aspires to obtain a “key” to the banking sector – the only sector that is not under his control.
The president’s office rejected the bill for its lack of professionalism and also lamented that the way it was elaborated contradicts Georgia’s commitments under the Association Agreement with the EU. According to the 2014-2016 Association Agenda, Georgia is obliged to boost the NBG’s independence by revising its legislation according to EU best practices and with the support of experts including from the European Central Bank. In fact, neither NBG, nor local or foreign experts, or representatives of Georgia’s business community, were invited to participate in the preparation process of the draft bill. Moreover, the sponsors of the bill failed to provide the political, financial and economic rationale justifying the prospective reduction of NBG’s functions and the need for creating a new agency.
If the bill is approved, GD will obtain real levers on the FSA Board, which will increase the perception of political motives behind the new amendments.
The president’s pledge to veto the bill will be largely symbolic since GD is well positioned to override it. The coalition holds 86 seats in parliament – 10 more than it needs to overturn a presidential veto.
Given the overall economic context – decreasing exports and investment as well as a slowdown of economic growth in Georgia, the endorsement of the bill will even further fuel speculations on the government’s agenda vis-à-vis NBG, and will complicate Georgia’s relations with financial donor organizations.
By Mina Muradova (08/07/2015 issue of the CACI Analyst)
After 17 days of competition, the first European Games have ended in Baku. Yet the crackdown on dissenting voices continues in Azerbaijan. The country will be remembered not only for its capable hosting of a major sporting event, but also for its silencing of critical voices in connection with the event.
Azerbaijan’s government hailed the games as a triumph and is now considering bidding for the Olympics. “The first European Games will go down in sporting history,” the Minister of Youth and Sport Azad Rahimov said in a statement on July 3. “I’m very proud of what has been achieved in Baku and the positive feedback we have been getting … It has been a success for Azerbaijan and will be a launch pad for future sporting events we will host. The coverage ... and the positive messages we have sent have really highlighted Azerbaijan on the world and European map.”
Next year, Azerbaijan will host the 42nd Chess Olympiad and a Formula One race through the streets of Baku. It will also stage the Islamic Solidarity Games in 2017 and soccer matches in the Euro 2020 competition.
According to Rahimov, “There is a new culture growing, this is very important, of supporting the development of sport … Every ticket sold is an important contribution to sustain and maintain our sporting arenas and develop our athletes in different sports.” Azerbaijan, enjoying loud support at every venue, has surprised many and was second in the medal table with 18 golds. Nearly 6,000 athletes from 50 countries competed in 20 sporting events at the Games that ended on June 28.
However, Azerbaijan was widely criticized before and during the games for politically motivated arrests and for banning the Guardian, along with a number of media outlets and human rights activists, from entering the country to cover the games.
Two days after the closing ceremony in the Baku Olympic Stadium, seating 68,000, the prominent human rights activist and director of Meydan TV Emin Milli posted that “It is remarkable that the government has started repressions against Meydan TV the day after the European Games’ closing ceremony. Several journalists from Meydan TV have been banned from leaving Azerbaijan, stopped at the border and were not allowed to come for a short trip to Tbilisi, Georgia. … from past cases, we may conclude that there is now a criminal case opened and an investigation going on against Meydan TV.”
On June 26, Milli reported that he had received a threat from Minister Rahimov, in connection with his critical reporting on the European Games. Meydan TV is a Berlin-based online television station that provides alternative news coverage of Azerbaijan. During the European Games, Meydan TV’s materials were widely used by international media, including critical cartoons, stories on an Azerbaijani bus driver who crashed into three Austrian swimmers and an interview by a national television station of a fake British tourist – both of which were highly embarrassing to the ruling regime.
International human rights watchdog organizations expressed their concerns over “an increase in the government harassment of independent journalists” in Azerbaijan in the wake of the European Games. “We fear that this growing harassment is a forerunner of a new crackdown targeting Meydan TV’s staff,” said Johann Bihr, the head of the Reporters Without Borders Eastern Europe and Central Asia desk.
Azerbaijan is ranked 162nd out of 180 countries in the 2015 Reporters Without Borders press freedom index. There are currently about 100 political detainees, at least 20 of whom are identified as “prisoners of conscience” by Amnesty International.
Sport for Rights calls on the Azerbaijani authorities to put an end to their ongoing attempts to silence critical reporting, and to take immediate steps to improve fundamental freedoms in the country, including by releasing all the journalists and human rights defenders currently behind bars for political reasons.
The campaign further calls on the European Olympic Committees to speak out, publicly condemning the threat against Milli, as well as the broader human rights crackdown taking place in the country. Finally, Sport for Rights calls on German authorities to provide Milli with immediate and full protection.
By Eka Janashia (06/24/2015 issue of the CACI Analyst)
Anti-western rhetoric has in recent years gained momentum in Georgian social networks, online media, and some radio and television channels. Behind the trend, observers easily detect Russian “soft power” promoted by certain Georgian non-governmental organizations (NGOs).
An “Initiative group,” committed to inform the public about actions aiming to undermine Georgia’s independence, published the report “Russian influence on the Georgian non-governmental organizations and the media.” The document lists numerous pro-Russian NGOs, founded in Georgia mostly after the Georgian Dream (GD) ruling coalition’s ascent to power in 2012, and presents a detailed analysis of their makeup and modus operandi.
According to the research, pro-Russian propaganda in Georgia’s civil sector stems from two key organizations: the “Eurasian Institute” (EI) and “Eurasian Choice” (EC), which have further spawned several other organizations and platforms.
EI is a founder of the “Young Political Scientists Club” and the “People’s Movement of Georgian-Russian Dialogue and Cooperation,” and is also a partner of “Historical Legacy” and the information portals “Sakinformi” and “Iverioni.” Historical Legacy, in turn, founded the online portal “Georgia and the World” (Geworld.ge). EI closely cooperates with various Russian organizations, including the “Caucasian Scientific Society.”
Another set of pro-Russian organizations – the “Erekle II Society” and the internet television “Patriot TV” are united under EC’s umbrella. The latter is also a partner of the “International Eurasian Movement,” led by prominent the ideologist of Kremlin expansionist policy Alexander Dugin.
While EI mainly focuses on analytical activities and outreach through organizing conferences and workshops, EC is committed to social activities by arranging protest rallies and demonstrations. The functional diversity makes the organizations effective in enhancing Russian soft power and churning anti-western rhetoric throughout Georgia.
Notably, the founders of pro-Russian NGOs as well as the participants of their conferences and meetings are mostly the same people. For example, the former public defender Nana Devdariani is a founder of several pro-Russian organizations, including “Caucasian Cooperation,” “The Center of Global Studies” and "People’s Orthodox Christian Movement.” The leader of EC, Archil Chkoidze, a person frequently quoted by Russian propaganda media, simultaneously established “Erekle II Society.”
As for cultural activities, EI conducts free Russian language courses for Georgian citizens with support of the Russian state-funded organization “Russkiy Mir.” Another Russian organization, “Gorchakov Public Diplomacy Fund,” launched the “Russian-Georgian Society Center” in Tbilisi which, among other activities, organizes tours for Georgian journalists in Russia.
In parallel, the multimedia project “Sputnik,” which is known as the locomotive of Russian propaganda media internationally, has also recently expanded its activities in Georgia. Although Georgia’s National Communications Commission deprived Sputnik of its radio broadcasting license, it has managed to secure a place in Georgia’s internet space by actively posting video materials and radio stories. Only a small share of pro-Russian NGOs in Georgia make the sources of their funding public.
The Initiative Group’s research unveils that Georgia’s pro-Russian NGOs are promoting a shift in public attitudes towards issues that were previously supported by a vast majority of the population. In a referendum held in 2008, 75 percent of the voters supported Georgia’s accession to NATO. Although the Georgian government has declared their country’s Euro-Atlantic course irreversible and that Georgia remains a committed partner to NATO and a contributor to Euro-Atlantic security, pro-Russian NGOs are cogently styling the West as an oppressor, propagating that it just needs “cheap” Georgian soldiers for its missions and will exploit the country’s territory for deployment of NATO bases and anti-missile weapons. A new referendum is therefore one of the priorities on the agenda of these NGOs.
Another component of the anti-Western discourse includes xenophobic and homophobic narratives where the U.S. and EU are depicted as destructive forces and threats to traditional social institutions in Georgia and Russia as a powerful defender of Orthodox Christianity. Most Georgians believe that Christianity is the foundation of their identity and faith the only means by which their culture can be preserved in the context of intensified globalization. Russian ideologists seek to leverage conservative attitudes among Georgians to alter the perceptions ensuing after the war between Russia and Georgia in August 2008, which strengthened the view of the Kremlin as the enemy and enhanced public support for Georgia’s Euro-Atlantic orientation. By labeling the EU as a protector of LGBT rights, Moscow seeks to change its role as an occupant into that of a generous guardian of Georgia’s historical values and identity. In this sense, the Kremlin also casts itself as a force against Islamic expansion. In 2014, EI along with the Institute of Strategic Studies, held a roundtable on the topic “Islamic ideology and security problems of the Caucasian region.” Pro-Russian NGOs promote an anti-Turkish narrative in Georgia and encourage the idea that it is better to be under Russian influence than becoming an object of the Islamic State’s expansion.
Another theme relates to the Kremlin’s “constructive” role in the resolution of Georgia’s conflicts. Proponents of this approach insist that if Georgia changes its Euro-Atlantic course and restore its strategic partnership with Russia, the latter will certainly support a peaceful settlement of the conflicts.
According to the report, the pro-Russian lineup has supporters in both the executive and legislative branches of the government. For example, the parliamentary majority member Gogi Topadze is well known for his anti-NATO statements.
While the activities of pro-Kremlin NGOs in Georgia will not easily affect the country’s foreign policy priorities, they will certainly contribute to the polarization of an already fragmented Georgian society and against the background of the country’s ongoing economic crisis, will also increase the skepticism of Western values.
By Erik Davtyan (06/24/2015 issue of the CACI Analyst)
In June 2015, Armenia and Iran held numerous talks on political and economic cooperation, energy security, and the Nagorno-Karabakh peace process. On June 10, Armenia’s ambassador to Iran, Artashes Tumanyan, met with Alaeddin Boroujerdi, the chairman of the Committee for Foreign Policy and National Security of Iran’s Islamic Consultative Assembly (parliament). Boroujerdi welcomed the fact that Armenia and Iran pursue a high-level political dialogue and successfully cooperate at the level of parliaments, emphasizing the unique role of the Armenian Diaspora in Iran’s development. In turn, Ambassador Tumanyan stressed the importance of deepening political dialogue and economic exchange and expressed his gratitude to Iranian authorities for the warm attitude towards Iranian Armenians and the preservation of Armenian cultural heritage in Iran. Touching upon the current turmoil in the Middle East and security issues, the Armenian ambassador stated that all regional issues should be solved only by political means and that Armenia runs a constructive and balanced policy in this context.
The official political dialogue between the two neighboring states continued in the following days in Yerevan. On June 11, the President of Armenia’s National Assembly Galust Sahakyan received the head of the Friendship Group Armenia-Iran Ali Qaidi and other members of the group. The parties discussed the Nagorno-Karabakh peace process, as well as issues related to Armenia’s accession to the Eurasian Economic Union (EEU), parliamentary cooperation and especially the activity of the Friendship Group. On June 12, Iranian members of the Friendship Group were received by Armenia’s Minister of Foreign Affairs Edward Nalbandian. Nalbandian stressed the importance of political dialogue at both the executive and legislative levels and emphasized that several Armenians are engaged in Iranian parliamentary affairs as deputies in the Islamic Consultative Assembly.
Simultaneously, on June 11-12 Armenian officials held separate consultations with another Iranian delegation. The consultations were headed by the Deputy Ministers of Foreign Affairs Shavarsh Kocharyan and Ibrahim Rahimpour. According to the press release of Armenia’s Ministry of Foreign Affairs, the activation of political dialogue and enhancing cooperation in energy, trade-economic, and humanitarian fields bilaterally as well as in the framework of international organizations were on the agenda of the consultations. The counterparts also discussed the realization of joint economic projects in detail. Along with issues of common concern, the interlocutors reciprocally presented the current developments on top priority issues in Armenia’s and Iran’s foreign policies. Kocharyan presented the efforts of Armenia and the OSCE Minsk Group Co-Chairs towards the settlement of the Nagorno-Karabakh issue. In turn, Rahimpour briefed on the recent developments in the negotiation process on Iran’s nuclear program. On June 14, Ambassador Tumanyan met with Iran’s Minister of Petroleum Bijan Namdar Zangeneh and discussed issues relating to bilateral economic and energy cooperation.
Despite the active and regular interaction between Armenian and Iranian authorities, it is obvious that the vague perspective of constructing a new railway is still the most important problem on the two states’ official mutual agenda. By connecting its railway network to Iran’s, Armenia seeks to circumvent the dual embargo by Turkey and Azerbaijan (imposed more than 20 years ago) and receive the status of a transit state, thereby raising its international importance. For Iran, the new railway will open new opportunities for linking the Persian Gulf through Iran to the Black Sea basin. According to News.am, Tumanyan declared that Iranian authorities will build 60 kilometers of the railway, reaching the Armenian-Iranian state border. Regarding the existing difficulties for this infrastructural program, the Armenian ambassador explained that the construction of an Iran-Armenia railway needs a colossal investment, hence “the railway will be constructed as soon as financial needs are satisfied.”
Tumanyan also said that “Armenia aims at linking Iran and the Eurasian Economic Union” and added that “the members of the EEU are also interested in a broader cooperation with Iran”. In August 2014, the Armenian government approved the railway project at a cost of approximately US$ 3.5billion. Armenia has to build a nearly 300 kilometer-long section of the railway, the construction of which is estimated to be completed in 2022.
By Natalia Konarzewska (06/24/2015 issue of the CACI Analyst)
Azerbaijan’s president Ilham Aliyev made a last-minute decision not to attend the European Union’s May 21–22 Eastern Partnership (EaP) summit in Riga, citing the need to focus on the upcoming European Olympic Games, which were about to start in Baku. However, high-ranking officials quoted in the media asserted that president Aliyev did not attend the summit due to Western criticism towards Azerbaijan. Baku also expressed dissatisfaction with the summit’s results as Azerbaijan hoped to receive more vocal Western support for the resolution of the Nagorno-Karabakh conflict. Instead, attention was focused on human rights violations in Azerbaijan. Azerbaijan’s relationship with the EU is becoming increasingly strained and displays growing disappointment from both sides.
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.