Democracy and Western orientation in danger

The parallels are great. Under the motto “Roses instead of bullets”, the Georgian people peacefully forced the long-serving president and former Soviet foreign minister Eduard Shevardnadze to resign in the so-called Rose Revolution in 2003. This marked the beginning of the energetic, pro-Western reformer Mikheil Saakashvili’s time.

In the Orange Revolution (named after the party color of the pro-Western challenger), Ukrainian civil society fought for a repeat of the 2004 presidential elections and thus a victory for Viktor Yushchenko over the Russian-backed Viktor Yanukovych.

In 2008, the Kremlin’s first military campaign could have warned the West. Moscow increased Russian troops in Abkhazia and South Ossetia, attacked Georgian territory and finally wrested the two breakaway provinces from Tbilisi’s influence. But the actual occupation had largely no consequences for Russia.

In 2014, Vladimir Putin occupied Crimea, and once again the West’s protests were lukewarm. In 2022, Putin invaded Ukraine – and war continues to this day.

Meanwhile, in Georgia, tens of thousands are taking to the streets again, but so far without success. The “Russian law”, which is being protested against mainly by young people, was passed this week by the “Georgian Dream” party with almost no opposition. Thanks to the majority voting system, its parliamentarians dominate politics, and were thus able to override the veto of Georgian President Salome Zurabishvili.

In any case, the politicians of the “Georgian Dream” seem to be strangely compliant and remotely controlled, like Putin’s Duma representatives in Russia. And the man pulling the strings in the background is the oligarch Bidzina Ivanishvili, who made his billions in Russia in the wild 1990s and who has successfully sued Credit Suisse for damages in the hundreds of millions.

Although four-fifths of Georgia’s population are in favour of joining the EU and even wrote this goal into the constitution under the “Georgian Dream” government, Ivanishvili’s party is taking an increasingly anti-Western, conservative-authoritarian and pro-Russian stance, reminiscent of Viktor Orban’s policies in Hungary.

Traditional sympathy for strong hand

But how is it possible that the country that once reformed the most consistently and turned away from Russia is now moving so close to Russian conditions again?

There is no single causal explanation. Traditions, economic connections, but also Western failure and the frustration caused by this are likely to play a role. The final word has not yet been spoken – a new parliament is to be elected in Georgia in the autumn. But the development should alarm the West.

In Georgia, the rural population is poor, life is strongly hierarchical and traditional, not to say clan-based. Officially, 16.5 percent of the workforce works in agriculture. If you include the 450,000 people estimated by the International Monetary Fund who farm for themselves, the figure would be almost 40 percent. They generate only 6 percent of the gross domestic product, a substantial portion of which is in wine-growing.

Both former President Shevardnadze and Saakashvili were far-sighted and courageous reformers in their early days. But as their reigns progressed, elitist structures became more rigid. The traditional sections of society expect strong rulers, but their “strong hand” ultimately serves primarily to maintain power. This now seems to be repeating itself under Ivanishvili and his “Georgian Dream.”

100,000 Russian refugees

Similar to Ukraine, this is countered by a vibrant, primarily urban civil society that does not want to live and be governed under Russian conditions, but rather in a “normal” way, like in Europe.

In addition, according to the latest estimates, 100,000 people have fled from Russia and Belarus to Georgia since the war began. They have settled mainly in the capital, are on average only 31 years old, 69 percent have a university degree, over half are employed, 44 percent of them in the IT sector. Economically, they have given the country an additional boost in growth.

The value of Georgia’s exports of services is expected to exceed that of its exports of goods. In addition, remittances from new immigrants have strengthened the local currency. The resulting lower prices for imported goods have helped to keep inflation under control.

Against this background, it seems paradoxical that Georgia’s politics are now once again openly moving closer to Putin and his methods. The hard-earned reputation as the best reformer in the class is at stake. After the Rose Revolution, radical deregulation, consistent bureaucratic reform and the fight against corruption have made the country with its almost four million inhabitants the most attractive location in this respect in the geostrategically important Central Asia and the Caucasus within a very short time.

Reforms have paid off

The economic development of the past two decades reflects this achievement. Since 2003, Georgia’s economy has grown by an average of 5.3 percent annually in real terms, which is one of the highest growth rates in the region and significantly more than in Ukraine, for example. The official Georgian gross domestic product per capita is now more than twice as high as that of Ukraine.

To date, the business climate in Georgia is uncharacteristically business-friendly for the region. When asked by the World Bank about the biggest obstacle, no companies cited customs administration, and only a very few mentioned corruption or taxes. Management in Georgian companies spends just 3 percent of its time on regulatory requirements (in Europe and Central Asia the average is 9 percent).

Many business leaders say that their biggest concerns are the electricity supply – 42 percent of companies are struggling with power outages -, access to capital and the lack of adequately trained workers. And a full 28 percent are now most concerned about political instability.

But this probably also has to do with the changing economic and geopolitical realities.

Only limited welcome in the West

The reformer Saakashvili relied primarily on the USA. With their help he wanted to modernize and reorient his country. For the subsequent governments, at least officially, rapprochement with the EU was the priority. This was supposed to offer protection against Russian attacks and enable a rapprochement with Western conditions, such as in Poland.

But if you look at the development of Georgia’s exports, the reorientation has largely failed. After an initial increase, the share of exports to the EU has decreased significantly since 2015. Instead, sales to Russia and other former Soviet countries in the Commonwealth of Independent States (CIS) have increased again. China has also become important. The USA does not play a significant role as a sales market.

Despite improved conditions, opening up new markets in developed countries in Europe has proved difficult. Georgian wine and agricultural products have a tradition that goes back thousands of years. However, southern Europeans often produce reliable quality more efficiently, are better aware of market expectations and can rely on existing logistics. In the former Soviet republics, on the other hand, Georgian products have an established reputation and are in demand.

The Russian invasion has made the situation for Georgia significantly worse again. The transport route through the Black Sea is disrupted and hardly anything can be sold to Ukraine anymore. Last year, 66 percent of all Georgian exports went to the CIS countries and a significant portion of this probably went directly or indirectly to Russia (in 2022 it was 48 percent).

Is Ivanishvili planning retaliation?

In addition to the economic constraints that speak in favor of a deal with Russia, general and personal disappointments are undermining the western orientation of Georgian politics. The Georgians tried to get closer to the EU earlier and tackled more rigorous reforms than the Ukrainians. Nevertheless, they were put off for a long time. It was only at the end of last year that the country, together with Ukraine, officially received the status of an EU candidate, with which accession negotiations are to be conducted.

The Georgians also see how the Ukrainians fighting against Russia are doing. Ivanishvili and his government justify their increasingly anti-Western policy and their rapprochement with Russia by saying that they want to keep their country out of the war and prevent the West from using the Georgians in their fight against Russia.

In addition to soberly weighing up the economic opportunities and risks, Ivanishvili’s actions may also be influenced by a personal insult. The oligarch, who first made his money in Russia and has a certain closeness to it, had entrusted his money to the fraudulent customer advisor Patrice Lescaudron at Credit Suisse, who misused it.

A bitter legal battle ensued, which is still ongoing today and involves hundreds of millions of Swiss francs. Ivanishvili has also apparently observed how the West has imposed sanctions on people and frozen their funds. He seems to feel he has been treated unfairly and may want to take revenge.

Don’t let Georgians down

Georgia is not lost yet. The civil society is too vibrant, and the current president is an advocate. The desire among the population to turn away from Russia and towards Europe remains too widespread. But pro-Russian circles are already publicly suggesting that the current government, which is in trouble, should ask Russia for help against subversion from the West.

There is a danger that Europe will not be interested enough and will react too late. If Georgia were to become destabilised and, politically torn, return to Hungarian conditions, this would be the best proof for Putin that even the most ardent reformers are unable to pursue an independent, Western-democratic path.

Russia would like to force the country back into its sphere of influence. Georgia’s fate is therefore important for the development of the strategically important region far beyond its four million inhabitants – the West should not abandon Georgia’s courageous youth, even out of self-interest.