Archives

Georgian Elections

After an inconclusive first round of presidential elections in late October, Georgians have elected their second female president, Salome Zurabishvili. Winning 59.52% of votes in the second round, Zurabishvili is a former French career diplomat who has been been both France’s ambassador in Tbilisi and Georgia’s Foreign Minister from 2004 to 2005. Although running as an independent candidate, the new President is backed by the Georgian Dream Party, which is headed by Bidzina Ivanishvili, Georgia’s richest business tycoon and a former Prime Minister from 2012 to 2013.

Zurabishvili defeated Grigol Vashadze, also a former Foreign Minister, who represents the opposition, particularly Mikheil Saakashvili’s National United Movement. Saakashvili was the President during the 2008 conflict in Abkhazia and South Ossetia, which opposed Georgian and Russian forces. Holding strong pro-EU and NATO positions, he gradually fell from grace in Georgia and was replaced by the Georgian Dream Party, which pursues a more conciliatory approach towards Russia.

Since constitutional reforms, the office of the presidency in Georgia is not as important as the Prime Ministership, but the conduct of the country’s foreign policy remains at the President’s helm. This is why these elections are important. Although many commentators are concerned with Georgia Dream Party’s consolidation of power, it is helpful to visualise Zurabishvili’s victory as a balancing act between Russia and the transatlantic alliance, something that will help Georgia deepen its links to the EU and continue liberalising reforms, without antagonising Russia. In that sense, her opponent Vashadze would have been far more disruptive if elected President.

Holding pro-Western views and deemed too close to Saakashvili, Vashadze’s election would have hurt Russian sensibilities at a time when Putin increasingly feels Ukraine sliding away from his influence. Putin and Saakashvili hold a personal feud which does not only stem from the 2008 war but also from Saakashvili’s actions as the Governor of Ukraine’s Odessa Oblast, from where the former Georgian President turned Ukraine’s presidential hopeful both criticised Putin’s annexation of Crimea and challenged Poroshenko for his alleged corrupt government. Following the elections’ results, Saakashvili called for “mass peaceful rallies” and snap parliamentary elections, which are normally scheduled for 2020. Therefore it is likely that the elections results reflect a Georgian preference for a non-conflictual foreign policy and domestic political stability, which are likely to allow the country to progress economically. Yet, an important portion of the population considers Zurabishvili as a “Putin apologist” who does not dare stand for Georgia’s sovereignty, a country where 20% of the territory is under Russian control. Some commentators have even branded Georgia’s style of government as a “managed democracy”, allowing Russia to regain influence in the post-Soviet space.

Another controversy surrounds the elections and marks Georgia’s idiosyncrasies, or rather the remaining challenges of being a post-Soviet state. The elections have been branded as a “grudge match” between Saakashvili and Ivanishvili by Carnegie Endowment’s Thomas De Waal. Instead of representing their own platform, candidates are likely to represent the interests of prominent yet less public figures, and this is particularly visible in the elections being an uneven playing field, where the Georgian Dream Party has allegedly benefitted from private media bias, voting fraud and state resource misuse. The elections have quickly shown the emotional and politicised character of national debate and media, the latter overwhelmingly controlled by Ivanishvili.

Both rounds of the elections were monitored by the OSCE, EU personnel and NGOs. Transparency International has claimed that voting irregularities were committed in favour of Zurabishvili. The Georgia Dream Party’s promise that 600,000 people would be relieved from their debt engagements also raised eyebrows and led NGOs to denounce this as “vote bribery”, considering that the plan was announced 9 days prior to the second round. Purportedly paid by Ivanishvili’s Cartu Bank, the $560 million worth of debt are mostly likely to benefit the Georgia Dream Party’s leader, since the latter’s financial institutions are themselves the biggest lenders of bad loans in the country.

Georgia’s economy faces serious social challenges as 21.7% of the population lives below the poverty line according to UNICEF, a rate which increased by more than 2% in the last 3 years. Yet, the country represents tremendous economic opportunities for investors. Its growth rates are not expected to be lower than 4.8% for at least the next four years and the country is ranked 9th in the World Bank’s 2018 Ease of Doing Business index. With a relatively low public debt of 44% of GDP in 2017 and being a world leader in terms of having an open budget, Georgia is bound to attract increasing amounts of foreign direct investments, which reached nearly $2 billion last year.

Georgia’s proclaimed greatest asset is its location. The country’s Prime Minister and former Finance Minister, Manuka Bakhtadze, seeks to present Georgia as the shortest link between Europe and Asia, a key point of attraction for China’s Belt and Road Initiative. The country’s trade regime is liberal and enjoys free trade agreements with the EU, Turkey, China and the former Commonwealth of Independent States. In addition to positioning itself as a regional hub for trade, finance and logistics, Georgia also attracts an increasing number of tourists, which reached a number of 7.5 million in 2017, nearly twice more than the country’s population. It is therefore highly likely that investors will welcome Zurabishvili’s electoral victory, as the latter is committed to continue successful economic reforms and integration while keeping a conciliatory stance toward Russia, which is likely to prolong stability in the country.

Sources:

Bloomberg Markets and Finance, Interview with Mamuka Bakhtadze, 5 February 2018, “Georgian Minister of Finance on Free Trade and Economic Growth”.

Foreign Policy, Michael Hirsh, 28 November 2018, “How Putin Is Perfecting His Border Plan”.

Jam News, Zaza Abashidze, 22 November 2018, “Will Georgia’s grey eminence pay off the public’s debt?”

Radio FreeEurope, 19 November 2018, “Zurabishvili Wins Georgia’s Presidential Runoff Criticised For Its ‘Negative Character’”.

The Washington Post, Ia Meurmishvili, 26 November 2018, “Why Georgia’s presidential election is a make or break moment for Eastern Europe”.

 

[contact-form-7 id="345" title="Order Report"]