Oligarchs Without Oligarchy: The Structural Factors of Institutional Reforms in Georgia

In: Mirovaja ėkonomika i meždunarodnye otnošenija: MĖMO, Band 66, Heft 11, S. 82-91

Abstract

After the 'rose revolution' Georgia significantly improved its governance and state institutions. Scholars explain it with the professional and personal qualities of the reformist team led by Mikhael Saakashvili, with the concentration of power in the hands of the reformers, and with the international settings. However, most of those explanations hardly work in case of the reforms that were implemented after Saakashvili's team lost the power in 2012. From 2012 to 2020 Georgia have retained and even slightly improved the quality of state institutions. Also, the governments of the ruling 'Georgian Dream' party implemented three major reforms: of judiciary, of local self-government, and of public service. Why did Georgia continue reforms despite its domestic political settings changed dramatically after 2012? The paper aims to reveal structural factors which support the long-term reformist course. We point out three factors. The first is that the structure of Georgia's economy and the constellation of the elite's interests preclude the making of influential oligarchy able to significantly distort the state institutions. Unlike Ukraine, Georgia did not inherit from the USSR large export-oriented and lucrative heavy industrial sector that could have become an economic base for making sustainable financial-industrial groups with strong political influence. Unlike Moldova, Georgian home-grown "oligarchs" were locked within the small consumer market of their country and served as clients of the political leaders. The richest politicians in Georgia like Bidzina Ivanishvili, late Badri Patarkatsishvili, late Kakha Bendukidze played their own political game but the main sources of their wealth were abroad, their economic interest lay far beyond the national scale and they have (had) no strong incentives to distort the state institutions in the country. Therefore "oligarchs" in Georgia did not make obstacles for reforms. The second factor is that the opposition in 2012–2020 had no reasons to obstruct reforms implemented by "Georgian Dream" governments, because most of those reforms opened new ways (municipal reform) or gave new guaranties (judicial and public service reforms) for political participation. The third is the geopolitical one. The confrontation with Russia since 2004 provides Georgian political elite strong motivation to continue reforms in order to secure the Western patronage.