Republic of Georgia

Republic of Georgia

After the Revolution In Russia's Shadow, Georgia's Leader Remakes Nation Mikheil Saakashvili Overhauls Economy and Judiciary; Concerns About Rights
'We're in a Rush Against Time'
By MARC CHAMPION
July 6, 2006; Page A1
(See Corrections & Amplifications item below.)

TBILISI, Georgia -- Georgian President Mikheil Saakashvili stood 200 feet above this capital city one recent afternoon, pointing out pet projects from the rotating deck of an observation tower his nation had just purchased in France. Along the river, he said, ground was about to be broken for his "personal favorite," a ballet center. At the foot of the tower, a planned $250 million shopping complex and park was the subject of a competition between architects from Japan, Britain and Denmark. Hyatt and Hilton had just agreed to build hotels. A new teaching hospital was to open this fall.


Below him, in all directions, lay the medieval churches and public buildings he ordered lit to brighten the city, which until recently lacked regular electricity and "was so depressing," he said. "Maybe we're overplaying it. We're putting lights everywhere." The so-called orange and yellow revolutions that brought Western-leaning governments to Ukraine and Kyrgyzstan have bogged down in political feuding. But Georgia's three-year-old "rose revolution" has started to deliver dramatic change, driven by its energetic 38-year-old president.
Mr. Saakashvili, who has strong backing from the U.S., is trying to transform Georgia's economy in a hurry. His aim is to end centuries of Russian domination and to forge new ties with the West. Corruption is down, and tax revenues have at least doubled since 2003, due in part to a new flat tax and improved collection, helping to pay for the government's many projects. The nation's gross domestic product rose 8.5% during the first quarter. Mr. Saakashvili recently hired Mart Laar, the former Estonian prime minister responsible for Eastern Europe's most radical free-market economic makeover, to advise his government on how to follow Estonia's path.
Mr. Saakashvili faces enormous challenges. Georgia sits at the center of an unstable region and shares borders with both Russia and Iran. If he succeeds, Western nations stand to benefit.
New pipelines that pass through Georgia are coming on line this year, giving Western nations access to oil and gas from the Caspian Sea area, one of the world's few significant new sources of energy outside of the Middle East and Russia. Georgia also is a key plank in the Bush administration's efforts to promote democratic governments in the former Soviet bloc.
But Mr. Saakashvili's methods also are raising concerns among civil-rights groups and some Western governments. Freedom House, a U.S.-based nonprofit promoting democracy, said in an annual survey that judicial independence and media freedoms in Georgia are declining. Former allies of Mr. Saakashvili have joined the political opposition, claiming that Mr. Saakashvili doesn't consult with parliament and has accumulated too much power.
The president, a graduate of New York's Columbia Law School, disputes the findings on the courts and media, and notes that Georgia will have its first free local elections in October. But he is unapologetic about his political tactics. "If we consulted like normal countries, we wouldn't be where we are," he said during a recent series of interviews. His role models, he said, are Kemal Attaturk of Turkey and Josip Broz Tito of Yugoslavia, both authoritarian nation-builders. Current Western leaders, he noted, didn't have to build their countries from scratch.


Georgia threatens to become a flash point in the West's increasingly delicate dealings with Moscow. The U.S. maintains a 650-person embassy here, which dispenses one of America's highest per capita assistance programs in the world. The Russian government views U.S. efforts to promote energy security and democracy in Georgia as muscling in on its backyard and undermining its interests as the region's dominant distributor of energy.
Russian troops protect two separatist enclaves in Georgia. Mr. Saakashvili wants Western leaders to press Russia at the G8 summit in St. Petersburg next week about what he says is Russia's suppression of democracy in Georgia. France and Germany have blocked North Atlantic Treaty Organization membership talks for Georgia, largely due to concerns over relations with Russia, according to people involved in the talks. During an appearance in the White House yesterday with Mr. Saakashvili, President Bush said: "I believe that NATO would benefit with Georgia being a member."

Georgia's role as an energy transit route is set to grow. An important new oil pipeline from the Caspian Sea started to fill last month and will soon transport one million barrels per day to the world market. It passes through Georgia and Turkey, bypassing both Russia and the Middle East. A natural-gas pipeline from Azerbaijan to Georgia and Turkey is due to start operating in September, and a European consortium has plans to extend it to Western Europe by 2011. Mr. Saakashvili is also determined to see a gas pipeline built from Central Asia to Poland that would cross Georgia, run under the Black Sea, then cross Ukraine. That pipeline also would bypass Russia, breaking Moscow's grip on the supply of Central Asian gas to Ukraine and the West.
Mr. Saakashvili cites these energy projects, along with intense political and economic pressure from Russia and Georgia's recent history of civil war, as justifications for rapid change. The nation needs to pursue change quickly, he says, or it won't happen at all. "We're in a rush against time," he says.
Mr. Saakashvili, a tall, burly man with a loping gait, burst onto the political stage in 2003, when he stormed Georgia's parliament in a bloodless revolt against stolen elections. He was carrying roses.
Mr. Saakashvili was elected president in a landslide in 2004. David Usupashvili, a lawyer who had worked for six years with a U.S.-sponsored program to support the rule of law in Georgia, says he was offered the job of justice minister. Although he was from a different party, Mr. Usupashvili had backed Mr. Saakashvili's revolt. He wanted to know what he'd be asked to do. "They said, 'Prepare amendments to the constitution to reduce parliamentary powers so it cannot block reforms.' I refused the job," Mr. Usupashvili says. "They didn't want checks and balances."
Georgia's constitution was subsequently changed to strengthen the presidency. Last year, Mr. Usupashvili's Republican Party moved into the opposition. "We lost hope that Saakashvili could change," he says.
Mr. Saakashvili says he has studied closely the mistakes of leaders in former communist bloc countries as they shifted to market economies following the 1989 collapse of the Berlin Wall. One common problem, he says, was a failure to move quickly enough, in part due to opposition from parliaments that blocked change.

Another big mistake, he says, was to leave security services intact. Serbian leader, Zoran Djindjic, did so after deposing Slobodan Milosevic in 2000. Less than three years later, Mr. Djindjic was assassinated. "We are learning from Djindjic's mistakes," said Mr. Saakashvili.
One of Mr. Saakashvili's first steps in office was to overhaul the country's corrupt and hated traffic police. He sacked half of the force's 30,000 officers, then gave the rest a tenfold pay raise and merged them into the regular police force. Now, even opponents say it was a good move. He next purged the ranks of customs officials. Then he downsized the old KGB and put it under the interior ministry to create a department styled more like the U.S. Federal Bureau of Investigation.

Within the army, 34 of the 35 generals were removed, according to Deputy Defense Minister Mamuka Kudava. Now four generals run a military that bears little resemblance to what it looked like a few years ago. A new military base in Western Georgia, built to NATO standards, houses 3,000 troops. Soldiers there watch flat-screen televisions in an air-conditioned cafeteria. An indoor swimming pool is half-finished. "We didn't used to have boots," notes one officer.

During a trip to Monaco, Mr. Saakashvili noticed that concrete apartment buildings had been brightened with colored-glass balcony fronts. The buildings, he recalls, "were just as ugly as ours, and if they can have these colored glass balconies, why don't we?" he says. Bright colors now can be seen on Soviet-era apartment blocks across Georgia.

Police uniforms and patrol cars have been replaced and marked with English lettering. Unpopular Soviet technical colleges were re-branded "American schools" because Mr. Saakashvili believes Georgians associate the English language with quality and honesty. The new teaching hospital in Tbilisi will be run by a team of Georgian doctors returning from practices in the West and Russia. The curriculum and exams, once in Russian, will now be in English.
Since Mr. Saakashvili's election, corruption has declined, according to the European Bank of Reconstruction and Development. "This was a totally corrupt country," says Mark Rhodes, who runs the Georgian operations of Greenoak Holdings Ltd., a United Kingdom-based group that ships Azerbaijani oil from a terminal at Batumi on the Georgian coast. The company just bought the city's port in a competitive, $92 million privatization. That kind of move once involved payoffs, says Mr. Rhodes.

Simplified taxes helped to double tax revenue between 2003 and 2005, and as economic changes kick in, the government is budgeting for revenue to double again by this year. The number of licenses needed to start and operate a business has been cut by 80%. Tens of thousands of businesses have emerged from the illegal economy to register. The World Bank and International Finance Corporation this year said Georgia's economy is reforming at the second-fastest rate in the world.

But increasingly, Mr. Saakashvili's just-do-it approach to government has been making enemies of civil-rights leaders and pro-democracy activists who were once supporters. In January, a banker named Sandro Girguliani was taken to a cemetery with a friend and severely beaten by members of the government security service. The two men had just left a café where Mr. Girguliani had insulted the security service's chief. Mr. Girguliani was found dead in the morning in a ditch where he had fallen. His friend survived. The four men responsible have confessed to the beating and are now on trial. But their insistence that they acted on their own has not quelled public suspicions that the country's security chief was involved.

During prison riots in March, seven inmates were shot dead, something Mr. Saakashvili says was regrettable, but necessary to keep thousands of prisoners from escaping. The government fired allegedly corrupt judges, prompting accusations of political interference in the courts. Mr. Saakashvili also introduced a plea-bargaining system, whereby officials and businessmen accused of corruption now can return money to the government instead of going to jail, a procedure that some businessmen have criticized as arbitrary.
"They have supported selective justice, undermining the rule of law," says Anna Dolidze, chairwoman of the Georgian Young Lawyers' Association. "If someone had told me [at the time of the revolution] that this would happen, I would have laughed at them." "We started firing judges, and then people accused us of political pressure. That's rubbish," responds Mr. Saakashvili. The judges were fired for corruption and incompetence, he says.

Georgia's government has formed a committee to develop and propose sweeping changes to its legal and penal systems. Mr. Saakashvili say s he asked the European Union to provide Georgia with 100 Scandinavian judges to work alongside their Soviet-trained Georgian counterparts to help change the legal culture. "They said they'd consider it, but as always, they'll consider it for a long time," he says.
Mr. Saakashvili's often blunt and emotional style has infuriated Moscow. Earlier this year, Russia banned all imports of Georgian wines and mineral water, claiming it had health concerns. Russia has given passports to residents of Abkhazia and South Ossetia, two separatist enclaves within Georgia. Russian officials all the way up to President Vladimir Putin have hinted that they could support the territories' calls for independence.
Mr. Saakashvili recently opened a Museum of the Soviet Occupation in Tbilisi, which focuses on Moscow's repression of Georgia after the Red Army invaded in 1921. "It's weird," says Mr. Saakashvili. "We are perceived [by Russia] as some kind of forefront in a world-wide plot of the CIA and the Western world against [its] greatness."

Write to Marc Champion at [ mailto:marc.champion@wsj.com ]marc.champion@wsj.com

posted on Saturday, July 15, 2006 10:41 PM