The Georgian Paradox

Georgian President Mikheil Saakashvili is a happy man. Yesterday U.S. President Barack Obama bestowed upon him the privilege of a high-profile visit to the Oval Office. The Obama Administration was rewarding Georgia for its support in Iraq and Afghanistan. Georgia also won points for a recent gesture that has helped to defuse tensions with Russia. (Which perhaps explains why Obama confused the two at one point.)

Today Saakhashvili made an appearance at the World Bank’s Washington headquarters. The Bank used the occasion to issue a highly complimentary report on Georgia’s anti-corruption campaign. When I caught up with President Saakashvili there, he boasted that Obama had singled out Georgia for its recent efforts to improve governance. "He also was talking about Georgia as a role model for reforms for the whole region," Saakhashvili said.

There’s something to that. Anyone who wants tips on tackling sleaze should take a look at the World Bank study. Georgia has made some impressive progress.

Soon after coming to power after the Rose Revolution of 2003, Saakashvili’s government decided to demonstrate its commitment to fighting bribery through a dramatic gesture. One of the peskiest forms of corruption plaguing ordinary Georgians at the time involved the notoriously rapacious traffic police, who made a habit of topping up their meager salaries through a variety of petty shakedowns. Overnight Saakashvili fired the whole force of 16,000, replacing it with a much smaller group of carefully vetted, better-paid police. The reform was backed up by spot checks and other measures to ensure that new recruits stuck by the rule of law. Fines were no longer collected at the scene of the misdemeanor but paid at commercial banks. A 24-hour hotline was set up for citizen complaints about law enforcement.

The measures dried up graft in the police force and smoothed the way for a drastic decline in overall crime. The police reform included measures for cutting the red tape involved in issuing driver’s licenses and car registrations. The government set up a series of one-stop shops to streamline applications and prevent artificial delays. Among its other positive effects, that move had the unexpected side-effect of transforming Georgia into a regional hub for the lucrative trade in used cars.

The government didn’t stop there. It also embarked on a radical simplification of the tax code that dramatically improved collection while broadening the tax base. Electronic filing options for businesses boosted the transparency and efficiency of the whole process. Similar reforms were applied to the customs service, to university entrance exams, and the municipal bureaucracy.

One of the most dramatic reforms involved the energy sector. By 2000, power generation in Georgia had fallen to half of its 1990 levels. Georgians had become accustomed to rolling power cuts – a result of years of financial mismanagement and ubiquitous corruption. Utility companies and the public officials associated with them charged bribes in exchange for providing reliable electricity.

The new government made state utility employees responsible for cash collections. Thousands of electricity meters were installed to track usage and promote transparency. (Since there weren’t enough meters to go around, collective meters were sometimes installed for apartment blocks or groups of houses. It wasn’t perfect, but still a vast improvement over the old way of doing things.) Electronic billing systems were introduced. The government demonstrated its seriousness by turning off the power to prominent companies that didn’t pay their bills. Safety nets were set up for vulnerable groups who couldn’t pay the new rates. The government sold off state utilities, but made provisions to ensure the viability of the overall sector.

The World Bank notes that other countries can extract a lot of useful lessons from Georgia’s experience. Georgia, and Saakashvili, clearly have a lot to be proud of. "The place is just astronomically better now than it was 10 years ago, and anyone who doesn’t admit that isn’t being honest," says Mark Mullen, the Georgia director for the anti-corruption watchdog Transparency International. He points out that Georgia is doing far better on almost every measure than regional rivals Azerbaijan and Armenia.

Yet buried in the World Bank study is also an intriguing cautionary note. As the preface rather cryptically observes, Georgia still faces an "unfinished agenda of institutional reforms, which will be needed to ensure the sustainability of Georgia’s anti-corruption results by putting in place a robust system of checks and balances."

Wait a minute. So what’s not to like?

It turns out that the anti-sleaze campaign is not the only thing that has been happening in Georgia over the past few years. Corruption has shrunk, but the power of the central government has increased. "Georgia’s human-rights record is poor," no less than The Economist wrote last year, on the occasion of another Saakashvili visit to Washington.

The media are no longer as free as they used to be. Saakashvili’s ruling party, the United National Movement, has steadily chipped away at the independence of the press. The national TV channels are firmly under state control, and their news coverage shows it. A few small outlets are still allowed to report more or less freely in the capital, but most provincial newspapers and broadcast stations are firmly under the government’s thumb. In the most recent Reporters without Borders survey of global press freedom, Georgia scored 104 out of a possible 179. That ranking put it below Chad, Northern Cyprus, and Gabon. Sure, that’s still better than Ukraine (116) or Russia (142). Not exactly a model, though.

Saakashvili’s party controls all of the major executive positions in the country and dominates both parliament and the judiciary. As British Georgia-watcher S. Neil MacFarlane noted in a thorough study last year, Georgian courts have an acquittal rate of less than 1 percent. Freedom House, in its last "Nations in Transit" study, gave Georgia an overall score of 4.86 – putting it roughly in the middle of the chart for the formerly communist countries of East and Central Europe.

In our conversation today, President Saakashvili touched upon recent reforms to the electoral system that shift power from the presidency to parliament. Skeptics say that Saakashvili might well "do a Putin" by taking the job of prime minister when his presidential term expires two years from now. When asked about this, he was coy: "The last thing I want to do is to turn myself into a lame duck by speculating about my own future."

And when I asked whether he was worried about the state of Georgian democracy, the president sidestepped again. Instead he chose to riff on the opposition, which he accused of attempting to "undermine the whole political process, either through shortcuts or radical acts or indeed lots of money poured in." He was clearly referring to his prime challenger, Georgian billionaire Bidzina Ivanishvili, whom he accuses of fronting for his archenemies in the Kremlin. But it wasn’t Ivanishvili I was asking about. He’s not the man with the power in Georgia. So the real question went unanswered.

"If you bury the democratic shortcomings with the narrative of better governance, you’re missing the bigger story," says Columbia University’s Lincoln Mitchell, author of Uncertain Democracy: U.S. Foreign Policy and Georgia’s Rose Revolution. After the 2003 revolution, he says, Saakashvili and his entourage revised the constitution to tilt the electoral playing field in their favor. The result is a classic example of a system that has all the trappings of a liberal democracy but little in the way of genuine political competition. "The elections are as good as they can be without giving the opposition a chance to win," says Mitchell. He credits Georgia’s progress against corruption. But good governance, he points out, is not necessarily the same thing as vibrant democracy. In some cases, indeed, the two may be at odds. "Georgia’s elite are modernizers, not democrats," writes Tom de Waal, a leading Georgia-watcher with the Carnegie Endowment for International Peace in Washington.

Transparency International’s Mullen concurs. The problem, he says, is that Georgia’s dynamic young rulers "think they know what needs to be done, and the population doesn’t." Saakashvili and his team "talk about the need to transform Georgia into a modern country – even if people are kicking and screaming along the way." For the time being Saakashvili’s emphasis on good governance has served to keep his approval ratings high among most Georgians even as he has undermined democratic institutions. Yet Mullen wonders how long a patronized citizenry, and an increasingly marginalized opposition, will settle for the trade-off.

It’s a good question.