Georgia: Western-backed Saakashvilli regime loses election

But Ivanishvili’s ‘Georgian Dream’ is a false dawn for working class and poor

As the results of recent parliamentary elections in Georgia came in, shares in the country’s main bank fell and the currency jittered as it became clear that Michail Saakashvilli’s ‘United National Movement’ had lost the election. Gaining only 67 seats compared to 83 seats won by the ‘Georgian Dream’ movement, dominated by the oligarch Bidzina Ivanishvili, Saakashvilli’s days in office were over.

Ivanishvili is not just rich, but stinking rich, currently reported to be worth over $6 billion, a sum equal to over a third of Georgia’s GDP. With a home worth $50 million (built on a hillside overlooking the capital Tbilisi), he has amassed art collections and exotic animals, while the mass of the population live in poverty. Ivanishvili himself was not elected to a seat in the elections as he stripped of his Georgian citizenship when he applied for a French passport four years ago, after falling out with Saakashvilli.

The results caught the West, and particularly the US State Department, off guard. After all, Saakashvilli’s Georgia has been the most reliable US ally in the region. Squeezed between Russia and Turkey, Georgia’s southern border is just 200 km from Iran and 500 km from Iraq and Syria. During the election campaign, Saakashvilli accused Ivanishvili of being a Russian agent and of attempting to whip up a chauvinist mood against him. This worried the West, as the US, in particular, was concerned the new government would be allied more closely to Russia.

Ivanashvili indeed has vested interests in Russia. His obscene wealth was obtained through asset stripping during Russia’s mass privatization in the 1990’s. He is still a major shareholder in major Russian companies and banks, one of which he set up using a kindergarten as an office. Having been a fervent supporter of Saakashvilli during the “Rose revolution” in 2003 – which resulting in Saakashvilli coming to power – including personally financing Saakashvilli’s lavish inauguration ceremony, Ivanashvili fell out with Saakashvilli in 2007 after street protests were violently broken up by the police and Ivanishvili’s TV station was attacked. The breach became irreversible at the start of the Russo-Georgian war in August 2008, when Ivanishvili clearly saw the war as a threat to his Russian holdings.

Western imperialism however, seems to have little to fear. Although Ivanishvili is in favour of regulating Russo-Georgian relations by adopting a more friendly approach to its huge northern neighbor, his main foreign policy agenda is still aimed at integrating Georgia into the EU and NATO. During his first press conference five minutes after his victory was confirmed, Ivanishvili announced he had already agreed to visit the White House immediately after the US Presidential election. He added that he had not been congratulated on his victory by Moscow.

When Belarus’s President Lukashenko (where rigged parliamentary elections took place two weeks ago, leading to the election of a 110 deputies all loyal to Lukashenko) welcomed the Georgian result, saying it would lead to the speedy re-integration of Georgia into the CIS (the Russian-dominated Confederation of Independent States), Ivanishvili’s party was quick to pour cold water on the idea.

Rose Revolution

Saakashvilli came to power after overthrowing the former Soviet Foreign minister Eduard Shevardnadze in the Rose Revolution in November 2003. Like many of the “coloured revolutions”, the change of regime took place on the back of huge popular protests against the former regimes. But in the absence of any organized left or workers’ alternative, power was merely transferred from one section of the ruling elite to another, with the latter receiving financial and political help from the Western powers.

Even though the first five years of Saakashvilli’s rule coincided with general economic growth through the former Soviet Union, it did not take long before Saakashvilli began to lose support. The disastrous war against Russia in 2008, combined with the start of the global economic crisis, led Saakashvilli down a more authoritarian road. Street demonstrations against his rule have been common and frequently ended in clashes with the police. An attempted armed army mutiny was foiled in 2009.

Major demonstrations against the Saakashvilli regime broke out in the weeks before the recent parliamentary elections over prison conditions. This followed the screening by TV stations of videos showing the beating of prisoners and the use of rubber truncheons to rape some inmates. This provoked widespread outrage. Thousands blocked roads in centre of Tbilisi and planned to march on the Internal Ministry offices. The reaction of Saakashvilli to this was to denounce Ivanishvili (who controls one of the TV stations showing the film) claiming that the protests were the work of “dark forces” and Russian agents.

Popular anger over the prison’s issue was so widespread because the Saakashvilli regime was increasingly oppressive. The number of inmates in Georgian prisons has grown to four times the level they were at when Saakashvilli came to power, reaching the highest number of prisoners per head of population in Europe. Eventually Saakashvilli was forced to retreat on the prison’s issue, suspending all prison guards and replacing them with police officers.

The movement against prison torture was largely dominated by youth, particularly students. A key role appears to have been played by the organization, ‘Laboratory 1918’. Taking its name from a group of scholars who set up the first university in Georgia in 1918, this umbrella group involves student organisations and appears to include an anarchist tendency. It seems to be similar to some of the youth organisations which the Western powers financed during the colour revolutions but with one important difference; Laboratory 1918 campaigned against the pro-Western government of Saakashvilli.

Role of Laboratory 1918

Laboratory 1918 was involved in significant protests. Last January, it organized a protest against the new labour code, which removes the restrictions on employers to sack people. This protest won the support of the country’s trade union federation. Later in the year, a mass protest was organized at Tbilisi state university against the sacking of staff and demanding more autonomy. This shows how a relatively small group (a year and a half ago Laboratory 1918 consisted, in the words of one of its leaders, of “no more than 200 people who others looked on as strange. Among us we had socialists, anarchists, communist Gramsciists, atheists, people with long hair, those who like alternative music”. Yet by the time of the recent parliamentary election, the news media were reporting how Laboratory 1918 was leading the mass protests over prison torture.

One of the leaders of Laboratory 1918 group explained to the Russian press how “these strange kids turned into tough men, we were in the lead, and all the other student organisations wanted to work with us”. This strength, however, was tempered by a weakness. The same leader went on to explain how once the movement had gathered strength, Ivanishvili’s Georgian Dream began to get involved. He went on to say: “We are against the system, and that means against this government. We want a more socially orientated state. But for now we are all together in the fight against dictatorship, so that after we can begin to compete with each other”. A week before the election, the protest’s organising committee, dominated by Laboratory 1918, called off further protests against the prison torture until the elections “at the request of the country’s patriarch!” The next day it called on its supporters to join a religious procession to “bless” the city of Tbilisi.

This reflects a common mistake repeated by many Left organisations fighting against authoritarianism in the former countries of the Soviet Union. While it is quite correct to sometimes participate in common actions with other forces, including sections of the bourgeois opposition, over specific democratic demands, this should be done under an independent class banner, while also warning the working class and youth about what the bourgeois opposition will do when in power, and presenting a clear left alternative in an attempt to win over leadership of the movement to a left position.

This is particularly the case with Ivanashvili, considering how he has used populist slogans and activities to build his support. Somewhat reclusive, Ivanashvili was, as already explained, a keen supporter of Saakashvilli in the early years of his rule. Ivanashvili also became known as a philanthropist. It is estimated that in the past five years or so he has donated near to a billion dollars to different causes in Georgia. His money has seen churches, schools and hospitals rebuilt and theatres and museums supported. Those who work in the culture sector have their wages topped up in what is call the “Ivanashvilli pension”.

Although returning just a small proportion of what he robbed from the people in the nineties, Ivanasvili’s money was very significant in proportion to the Georgian GDP – he invested as much in proportional terms as that allocated by the government for the whole education system. This is presented as assisting the restoration of Georgian culture. While Saakashvilli attempted to frighten the electorate into voting for him by raising the Russian threat (including the movement of troops to the border in the weeks before the election), Ivanashvili prefers appeal to the ‘welfare’ of the Georgian nation. Ivanashvili’s pre-election rallies echoed with cries of "Sa-kar-tve-lo" (‘Georgia’). His speeches promised to restore an economic climate that is as attractive as possible for investment, to create as many jobs “so that no-one in Georgia is left unemployed” (officially there is an unemployed rate of 16%, but unofficially twice as many). unemployed promised to take immediate steps to put the relationship with Russia ‘in order’, while in parallel continuing to move towards Euro-integration and NATO.

Although Ivanashvili speaks of restoring the territorial integrity of Georgia (the regions of Abkhazia and South Ossetia are still controlled by Russia following the 2008 war), in reality, his promise to restore relations with Russia is limited to attempts to get Russia to cease its trade boycott. Georgia is famous for its wines and mineral water, the largest market for which is Russia. Since the imposition of the Russian trade boycott, wine growers have been almost unable to sell their harvest. The idea of moving further to retake control of Abkhazia and South Ossetia is out of the question due to Russia’s intransigence on the question.

During the election campaign Georgian Dream promised that when in power it would reduce unemployment and lower housing costs. Ivanashvili promised to use his own money to help growth, raising the prospect that the Georgian economy will turn into his own personal fiefdom. But the fact that the electorate was prepared to believe these promises is an indication of the desperate situation in which Georgians have found themselves.

Pretty façade

Saakashvilli boasts that during his rule, the economy has grown and corruption dramatically reduced. In 2007 the growth rate had reached 12% and the World Bank dubbed Georgia "the number one economic reformer in the world" because of the improvement in the ease of doing business. But even then, Georgia had not restored its economy to the level it had been when the Soviet Union collapsed in 1991. By 1994, the GDP of Georgia had fallen to 27% of its 1990 level and by 2008 had only reached 71% of that level. Even neighboring Armenia had achieved a better result. Oil-rich Azerbaijan recorded even better figures.

The reality is that, rather than creating real jobs and living conditions, Saakashvilli merely created a pretty façade to show the world, while the population lives in poverty and the country swims in debt. When Saakashvilli came to power the foreign debt of the country was less than $2 billion; today it is $12 billion. Just 1% of the country’s budget, mainly financed by grants from Western powers and credit (currently about $4.5 billion a year) goes to support agriculture. Another 1% goes to education while two thirds of the budget is used to support the army and police.

Even according to official figures, unemployment since Saakashvilli came to power has increased from 12% to 16%. But rural workers are excluded from these figures. If they are taken into account, up to 60% of the potentially working population has no job.

The average wage, according to the government, is $400 a month, which is almost as high as that in Azerbaijan and about half of that in Russia ($750). But the government’s figure is high due to the high wages paid to the police and army. A medical worker gets about $300, a teacher less than $200. But because nearly 60% are unemployed, nearly a quarter of families have an income of less than $100 a month. A survey conducted last May showed that in the previous three months, about a third of the population had no income at all.

Even the claim to have dealt with corruption is false. The number of bribes paid out was reduced dramatically by abolishing the traffic police (and increasing the number of accidents), but large scale corruption, usually involving government officials, has grown.

Foreign visitors are shown new roads, government buildings and tourist resorts that have been constructed by Saakashvilli’s government. But as one of Tbilisi’s residents commented: “He built everything out of our pocket. All these new buildings and roads were built on my money. But I don’t want my money to go into Batumi [Georgia’s Black sea resort] because I can’t afford to go there on holiday. I would rather they gave me and my son a job. If I don’t manage to pay for electricity, the very next day they cut me off. Now I have to pay 11 lari (about $5) a month for street cleaning – what do I need that for when I have nothing to eat?”

At a post-election press conference, Ivanashvili spoke of encouraging foreign investors. However Georgia is not exactly attractive for foreign direct investment (FDI). The lack of a developed industrial base, together with an agricultural sector without a market, compounded by political instability and disputes over the regions currently held by Russia, have meant that the trickle of FDI entering the country in 2007 (0.75% of GDP, less than $200 million) has practically dried up.

For now, Saakashvilli appears to be assuring a stable transition. He is still president for another year and cannot stand again. Before Ivanashvili can even attempt to attract investment, however, he has a fight on his hands to establish a stable government. His Georgian Dream movement is not a homogenous block. It consists of six formerly competing political parties, with ideologies mainly linked to the right and Georgian nationalism. It includes the so-called ‘Conservative Party’, which was originally established by Gamsakhurdia, who when president in the early 1990s led Georgia into brutal ethnic war. Georgian Dream also includes a party linked to the French ‘new right’ and parties that mainly gain support amongst Georgians expelled from Abkhazia and South Ossetia. Ivanashvili’s new government appears to consist of a third from the ‘new right’, a third from former opponents of Saakashvilli and a third from former ministers of Saakashvilli’s government.

Can stability be maintained?

But for investors, this is something of a sideshow. More pressing is whether domestic stability can be maintained, and with it the relatively positive climate for foreign investment created in the past eight years.

Neil Buckley wrote in the Financial Times Blog, 5 October:

"Once a new government is in place, Ivanishvili faces the challenge of holding together a disparate and squabbling coalition that includes nationalist elements. Rather desperately, Ivanishvili insisted to the London Financial Times that his business success proves he is a “good manager”. But leaked recordings of phone calls from within Georgian Dream – though who actually made these calls and who made them public is hotly disputed – suggest there is no love lost between some key figures within the movement.

Ivanishvili will also have to cohabit for a year with Saakashvilli, who retains strong presidential powers. Only then must Saakashvilli stand down and a new constitution takes force that transfers many powers from the presidency to the prime minister.

A final question is whether Georgian Dream supporters, once in power, can resist the urge – common in post-Communist politics – to go after their Saakashvilli regime predecessors. Here lurks the spectre of Ukraine-style revenge. There, since Viktor Yanukovich became president in a broadly-free poll in 2010, former Orange Revolution leader Yulia Tymoshenko and about a dozen associates have been jailed."

Clearly the Left has a huge responsibility, not only to present a clear alternative to the current economic and social policies of the Georgian government but also to ensure that the country is not allowed to sink back into the ethnic conflicts and wars that have ravaged it since independence in 1991. This requires struggling to form an independent mass party of the working class, rural poor and youth, to take on all the various factions of the ruling elite and to fight for a society based on need not profit.

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October 2012