Georgia’s Prime Minister Resigns

Georgian Prime Minister Giorgi Kvirikashvili announced his resignation, on June 13 (Civil Georgia, June 13). For those following the protest rallies in Tbilisi, Kvirikashvili’s departure may not have seemed particularly unexpected. Thousands of Georgians had, for weeks, gone out into the streets, calling for the dismissal of the government because of the authorities’ failures to investigate the brutal “Horava Street murders” (see EDM, June 5).

But in fact, Kvirikashvili’s resignation had nothing to do with the protesters’ demands. On the day the prime minister announced his decision, there were no more street demonstrations in the Georgian capital: the organizers decided to stop after becoming convinced that too few people were ready to support their radical demands. Rather, the resignation was motivated by “fundamental differences” between Kvirikashvili and the chairman of the ruling Georgian Dream (GD) party, billionaire Bidzina Ivanishvili, over the government’s social and economic policies (OC Media, June 13).

On May 12, at a meeting of the GD Political Council (the party’s executive body), Ivanishvili harshly criticized the government for allowing the number of poor in the country to increase and referred to the latest report by the United Nations Children’s Emergency Fund (UNICEF), which documented growing rates of poverty in Gerogia (Unicef.ge, accessed June 20). However, while announcing his decision to step down, Kvirikashvili asserted that the disagreement between him and the founder of the party was actually about the prime minister’s support for a market economy and liberal development conditions, with minimal intervention from the state. Whereas, Ivanishvili evidently argues that this approach leads to an increase in the number of poor in the country. Therefore, the GD chairman advocated for a stronger “social policy” and government intervention, including state subsidies and greater regulation of the financial markets (Kommersant, June 13).

To illustrate his point, Kvirikashvili noted his government’s stand-off approach to artificially supporting the Georgian national currency, the lari. Despite the fact that the devaluation of Georgia’s currency has had painful consequences for a significant portion of society, he said he opposed buying up lari at the expense of state reserves. “We made painful decisions, but I am sure that this is the only way out of the crisis and overcoming poverty,” Kvirikashvili said, citing the rapid growth of Georgia’s GDP: from 2 percent at the end of 2015, when he took over the government, to 6.5 percent in April–May 2018. Without a “liberal” fiscal policy, he contended, this level of economic growth would have been impossible (Vestnik Kavkaza, June 14).

Following the ouster of Giorgi Kvirikashvili, the leader of the ruling party offered up the heretofore (since November 2017) minister of finance, Mamuka Bakhtadze, to take on the post of prime minister (Civil Georgia, June 14). Bakhtadze has long advocated for a more active state role in regulating the economy and financial system. While finance minister, he pushed to forbid commercial banks from issuing loans to individuals without first confirming their regular incomes. Kvirikashvili opposed this decision, claiming that the “socialist approach” to bank lending would lead to a “rise in the price of loans” and the disappearance of “cheap money” in the economy.

In fact, however, the minimal government control over private banks’ ability to issue loans has had serious social consequences in Georgia (OC Media, June 15). Former president Mikheil Saakashvili has claimed that almost one third of the country’s adult population is “in debt bondage and dependence” on the banks (Kvirispalitra, April 14).

But the differences in economic policy between Ivanishvili and Kvirikashvili was perhaps not the main issue highlighted by the recent resignation of the head of government. More importantly, according to David Avalishvili, an expert with the information-analytical agency GHN, this story once again pointed to the “unconsolidated” nature of Georgian democracy. “The decisions in this party [Georgian Dream] and in the whole country are made by one person [Bidzina Ivanishvili],” Avalishvili stressed (Author’s interview, June 15).

David Darchiashvili, one of the leaders of the opposition European Georgia (EG) party, pointed to the same problem. “Billionaire Ivanishvili wants to rule in the Communist style: In the Soviet Union there was a ‘Communist Party,’ and the general secretary of this party appointed or expelled the prime minister. So [the general secretary] defined economic and social policy,” Darchiashvili noted (Author’s interview, June 15).

Meanwhile, President Giorgi Margvelashvili, commenting on the resignation of the prime minister, called the event “a masquerade.” He rhetorically advised Ivanishvili that if the GD founder wants to lead the government, he should head the cabinet himself. “In most European countries with a parliamentary form of government, the heads of the ruling party are prime ministers,” the president stressed (Civil Georgia, June 14).

But as the former head (2004–2008) of the State Chancellery of Georgia, Petre Mamradze, said in an interview with this author, “Bidzina Ivanishvili hates publicity, he wants to lead the country from the shadows, appointing and dismissing prime ministers.” He continued, “Ivanishvili chose Mamuka Bakhtadze because this 36-year-old man will exactly follow his instructions.” Mamradze considers Kvirikashvili’s departure a big mistake: “This will frighten investors, and the new prime minister will probably pursue a populist, socialist policy that could lead to high inflation, the collapse of the national currency, reductions in the budget and job cuts. A real crisis will overtake the country and be exploited by ‘street demagogues’ ” (Author’s interview, June 15).

Ivanishvili’s former partner in the 2012 Georgian Dream coalition, Republican Party (RP) founder Levan Berdzenishvili, mused that the GD leader “was far more intimidated by the strike of Tbilisi subway machinists, than by the [street] rallies connected to last year’s killings on Horava Street” (Report.az, June 5). “Ivanishvili knows, that he can cope with a protest movement espousing political slogans, but social protests threaten the country’s stability and, therefore, threaten his capital. So it is most important for him to reduce the number of people dissatisfied with domestic living conditions. The new prime minister, Mamuka Bakhtadze, is a much more comfortable choice for him,” Berdzenishvili argued (Author’s interview, June 15).

Kvirikashvili’s ouster is a victory for proponents of an alternative, more state-directed development program for the country. And though this may decrease the current high growth rate of the economy (6.5 percent), Ivanishvili and his backers believe that the new cabinet will be better able to guarantee social stability and tranquility. The question is, how long this stability can last.