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. Georgia now occupies the formidable 16th place in the Cost of Doing Business ranking and for several years held the title of the most reformist country in the world.

Georgia’s success has two key ingredients that are now becoming its weaknesses. The first was that the reforms were conducted with a firm hand, uncompromising manner and in a very centralised decision-making style. This was good for the speed and depth of reforms, but Saakashvili’s governing style alienated many of the better off, including a good chunk of the Tbilisi elite. The second was an extremely liberal approach to the business environment, as well as a preference for various ‘grand projet’ from producing a Georgian armoured vehicle (called Didgori) to a Georgian tablet computer, and from posh hotels (Tbilisi has two Marriots, a Radisson SAS, and a Sheraton) to ‘public service halls’ built by famous world architects. Such an approach attracted investments and increased tax-revenue, but created few jobs. And there has been little redistribution. All this alienated the poorer parts of society. Budgetary spending went into good salaries for the public sector (a key factor for the fight against corruption), rebuilding of the police (as an institution, and literary as a series of new glass buildings across the country), army, or roads. But not enough of it was properly redistributed via things such as pensions or support for agriculture. What was good for business was not always good for social protection. Ultra-liberalism generated growth and budgetary revenue, but was not enough to creating jobs or reducing substantially poverty. Between 2003 and 2012 Georgia’s GDP doubled in purchasing power parity (and rose by 3.5 times in nominal terms), and yet poverty was reduced from 28% to 24% only.  Saakashvili’s administration understood this, and the plan was to move the focus of the government from ‘liberalism’ to ‘social-democracy’, but this approach is too new to have visible effects.

So what explains Saakashvili’s success – quick, centralised, determined, non-consensual decision-making, deregulation, liberalism, and business-is-king attitude, also explains why parts of society grew increasingly disillusioned – from the elite that disliked political centralisation, to the underprivileged ones who got did not benefit from the growing economic pie. Another part of the explanation is politics. For a decade Saakashvili was so dominant and politically ruthless to his political opponents, than in the end all of them were forced to join forces under a single political roof – that of Bidzina Ivanishvili.

What next?   

In slightly over a year Saakashvili’s second presidential mandate will come to an end. So far he refused to say what he would do next. He was pondering his options, including the potential scenario where we would stay on as a prime-minister or speaker of the parliament. The parliamentary election results now make it much more difficult for Saakashvili to choose his options without facing strong opposition. Whatever will Saakashvili do (except from stepping aside from politics) will be much more difficult to achieve and contested in Georgia. But it also might strengthen his determination to continue the fight by staying in politics in a belief that the current opposition would just destroy his legacy, and his achievements are not irreversible enough for Georgian politics to move to a post-Saakashvili phase.

Either way Saakashvili’s defeat, is both good and bad for Georgia. It is bad because it is unclear what Ivanishvili stands for except being anti-Saakashvili and whether his party is committed enough to continue supporting Georgia transformation not just into a more pluralistic state, but into a better functioning state that continues to fight corruption, attract investments and modernise the country. But the election results can also be good news because even though not all opposition victories lead to or strengthen democracy (many of them actually don’t), fundamentally all democracies are built through victories and defeats of all governments. Benjamin Franklin once said that ‘our critics are our friends; they show us our faults’. So if these elections become a Franklin moment for Saakashvili making him and his party deliver better for the population at large and refocus their governance style and agenda – these elections might be turned from a short-term defeat into a longer-term victory.

  1. #1 by Victor on October 2, 2012 - 10:49 pm

    None of the western democracies came to be liberal and rich quickly without external support or a period of semi-authoritarian rule. Now Georgia is on its own. What model can they actually follow? Most governments in the former Warsaw Pact countries never finished even one parliamentary term. If it wasn’t for the EU perspective many would have never reformed.

  2. #2 by Geir on October 3, 2012 - 2:58 am

    Maybe because improvement of the state was linked directly to Euro-Atlantic international institutions that confronts Russia in a zero-sum game? What genius thinks that placing NATO on Russian borders will bring stability or peace. Georgia should modernise and democratise as a neutral state, which implies not becoming the front line for Western attempts to isolate Russia

    • #3 by Victor on October 3, 2012 - 5:25 pm

      Most neutral states throughout history have suffered from the non-alignment.

      Only Russia sees Nato as zero sum. Nato membership has allowed other countries to slowly normalize their relations with Russia and for Russia to treat them finally as sovereign states.

      • #4 by Pet on October 4, 2012 - 11:17 pm

        Agree. No neutral state can exist on the border of Russia. Only bordering countries off Russian threat for its sovereignty are Baltic States (all members of NATO).

      • #5 by paco on October 6, 2012 - 1:41 am

        Uh, Sweden, Finland, Austria (when it was just next to Soviet control)? Along with Switzerland, aren’t those neutral countries by far the most desirable places to live in the world? How in the world did you come up with the observation that these places are “suffering”?

        Ukraine suffers because it tries to play both sides down the middle – always threatening its neutrality. Its politicians use this to distract the public from their constant stealing.

  3. #6 by Renaldas on October 3, 2012 - 9:41 am

    Nicu, what are the chances that after the first constituent session of the new Georgian Parliament, the GD coalition wont fall apart. As you rightly point out there are respectable elements in it and there are those that are hardly credible. Also UNM, ousted from the government will be exposed. Many boys and girls will loose their jobs, so the infighting is not unlikely and UNM is large enough to crack into two. More centrist and more nationalist. Renaldas

    • #7 by Nicu Popescu on October 8, 2012 - 10:01 am

      hard to say, but they will probably stick together for a while on both sides of the political divide. i don’t think there will be an early majour split..

  4. #8 by Roger Cole on October 5, 2012 - 10:58 am

    There are 120 states in the non-aligned movement representing 55% of the world’s population and there are 17 observer states. There are only 28 in NATO representing 20% of the world’s population and it has spent most of its time over the last decade supporting wars in Afghanistan, Iraq, Libya and is on the verge of going to war with Syria and Iran. It is of course up to the people of Georgia whether they join in NATO’s perpetual wars or not or if they should join the non-aligned movement. My country Ireland, is not a member of NATO, but is a member of the EU which NATO has described as a “strategic partner” and has actively engaged in NATO’s wars for over a decade.

    • #9 by Victor on October 6, 2012 - 1:08 am

      The Non-Aligned movement is an incoherent joke. But your point actually proves mine. Where did the Cold War confrontations (wars) take place? In non-aligned countries!!

      Only the Irish consider Ireland “neutral”. It is very easy to be neutral when you are an island in the middle of the West. And if you know the history of your country, you know that it didn’t behave neutrally in the most important periods of confrontation.

  5. #10 by Electoral on October 5, 2012 - 3:01 pm

    It is good to see that this post Soviet Country that decided to be Democratic, is remaining Democratic, even though the Government lost the Election.

    I have no opinion on other Countries as respect to their System of Government, other than to say that Countries should not interfere in the internal affairs of other Countries as is enshrined in the United Nations Charter.

    There has been allegations of Vote Rigging and Election Fraud, and I have to say that have difficulty understanding how a 15 % overall lead in the Single Seat Electorates using the First Past the Post Voting System could produce such a small majority, because it should produce much larger majorities.

    The new Prime Minister has done the right thing by seeking a Legal and Constitution answers to the concerns of Vote Rigging and Election Fraud.

    This is the Proper Approach, not only because of the regrettable and example with the last Moldavian Election where Rioters took to the streets on rumours, even though it was discovered after much unrest and a second unnecessary Election that no Vote Rigging and Election Fraud had occurred in Moldova.

    The new Government can hold proper Opinion Polls in each Single Seat Electorate so as to know how to have a Democratic Redistribution of Electoral Boundaries for the next Election, and to better understand if there was any Vote Rigging and Election Fraud.

    The newly Elected Government now has the responsibility to Represent the Citizens of Georgia.

  6. #11 by Adrian on October 6, 2012 - 8:34 pm

    Nicu, you have a sense of humour! :)
    I totally loved the way you turned around Saakaschvili’s defeat into a “long-term victory” :)

    • #12 by Nicu Popescu on October 8, 2012 - 10:04 am

      This was of course written on Tuesday early morning before all the results came in, and before it was clear that UNM lost not just the proportional voting but also the competition for single seat constituencies

      • #13 by Vladimir on October 16, 2012 - 10:24 am

        perhaps you may re-write this article?

  7. #14 by ahto on October 6, 2012 - 9:29 pm

    whilst the social side of the economy was an important factor, it was the prisons that did it (dwarfing the effect of the roughly 10% “adjustment” of the vote the UNM had seemingly prepared for).

  8. #15 by Roger Cole on October 11, 2012 - 1:43 pm

    I don’t know what country you are from. Victor sounds like it is English, but I could be wrong. Anyway, the only point I was making was that the vast majority of states are not members of NATO, the nuclear armed military alliance that has been going to war with, invading and occupying country after country for over a decade and is about to go to war with Iran. I agree with the point made by Electoral, that countries should not interfere with the internal affairs of other countries as outlined in the UN Charter, which is why PANA opposes Irish membership of NATO and the creation of a common EU foreign, security and defence policy. After all, Ireland was part of the British Union for 119 years and that Union was at war somewhere in the world for all of them. Once in our history is enough, and there is no rational case for doing the same within the European Union. What the people of Georgia decide is their own business.