Archive for October, 2012

Why Saakashvili Lost?

Mikhail Saakashvili, Georgia’s president conceded the defeat of his party at the parliamentary elections. His rival Bidzina Ivanishvili, a money-splashing oligarch who made his billions in Russia and and set up the Georgian Dream party – a motley crew of oppositionists ranging from very respectable centrist politicians or former diplomats to some loony nationalists and populists – got over 50% of the votes on party lists. Saakashvili might still get a majority in the Parliament because whereas he seems to have lost the contest for the Parliament’s half seats that are elected on party lists under proportional voting system, the other half is elected as single-seat constituencies where Saakashvili’s part might have the lead.

Anyway, the election results are a big surprise. Just a couple of months ago very senior Georgian politicians were expecting something like a 50% to 30% victory for Saakahsvili, and were saying that the main danger from Ivanishvili was not for this round of elections, but for the next electoral cycle where he could build on his 30% to make the leap towards a proper majority.

Of liberalism and social democracy

The reasons for the elections results are manifold. The most important is basically too right wing a government. In his near-decade in power Saakashvili achieved huge successes in state building. The list of achievements is very long and has been so often quoted by Georgia apologists and friendly lobbyists that many people are tired of it. However, what Saakashvili achieved is no mean feat. He drastically reduced low-level corruption when it comes to the interaction between the citizen and the state – from traffic police to construction-permit issuers. He attracted significant investments, and most importantly (re)built the skeleton of a more or less functioning state, starting with the police and tax-inspectorate, then moving on to courts, universities, and municipal services (Here is a good book from the World Bank chronicling Georgia’s reforms). All was supplemented with a huge deregulation drive – that ranged from cutting red-tape and giving as free a hand to investors to drastic liberalisation of visa procedures for as many countries as possible. Georgia was open to anyone who would come to spend money or invest – from Iranian or Turks going to casinos in Batumi, to Russian, Kazakh or Gulf investors. Read the rest of this entry »

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Time for Azerbaijan to open up

Foreigners normally tiptoe around Azerbaijan. They all want something from the country, be it in the field of energy or security. The EU wants Azerbaijani oil, gas and cooperation over building gas pipelines to Central Asia. The US and Israel value cooperation over Iran. Turkey has a strategic partnership with the country. Russia wants Azerbaijan not too align too closely with the US and to prolong the lease for the Russian radar station in Gabala. In its turn Azerbaijan is rarely a foreign policy demandeur. It has lots of oil money and a consolidated authoritarian regime which does not want to take lessons over foreign policy or lack of democracy at home.

Appearances can be deceptive

Money and a careful foreign policy between various great power interests made Azerbaijan the ultimate balancer and a fairly arrogant regional player. But the Azerbaijani system is more fragile than the country’s foreign partners think. The foundations of that system are increasingly shaky for several reasons.

One key factor is decreasing oil production. Oil production peaked in 2010; it will go down by half by 2017 and two-thirds by 2019. The hope is that new gas reserves will make up for the difference in incomes. This might compensate the fall in revenues, but only partly and insufficiently. Read the rest of this entry »

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