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BUSINESS & ECONOMICS

AS BUSINESS SUPPORT EBBS, GEORGIAN PRESIDENT ADJUSTS TACTICS

Jaba Devdariani 4/21/03

One day after Parliament Speaker Nino Burdjanadze accused Georgian President Eduard Shevardnadze of subverting democracy, the president met with her and embraced part of her agenda. Burdjanadze lambasted a scheme Shevardnadze had endorsed, extending the terms of parliamentarians from districts with only one seat. Many suspected this would entrench corrupt loyalists and block reform parties. Burdjanadze told reporters after meeting Shevardnadze that the president had disavowed the scheme. Shevardnadze may have blunted Burdjanadze’s criticism, but the episode reflects his vulnerability as key constituencies look elsewhere.

Burdjanadze, in an April 15 television interview, objected to the deferred-election scheme and to a new bloc of loyalist parties, dubbed New Georgia, that Shevardnadze plans to lead into parliamentary elections this fall. "Regardless of what the authorities claim their motives are, in reality they are guided by the need to have 85 deputies who are indebted to them and who will vote the way the authorities want them to vote on specific issues," she said. "That is absolutely unacceptable."

Burdjanadze, who has seen her name surface as a potential presidential candidate in 2005, said the deferred-election scheme would amount to "destroying with our own hands the buds of democracy that, one way or another, exist in this country." The speaker’s willingness to make such strong remarks indicates how sharply Shevardnadze’s support base has fallen.

The president heard similar vitriol at the April 2 congress of the Taxpayers’ Union, a corporate alliance of the biggest Georgian businesses. A year ago, union member Badri Patarkatsishvili, a former aide to Russian tycoon Boris Berezovsky, invoked "new rules of the political game" that most analysts called an endorsement of a Georgian oligarchy. In 2003, he accused the president of "plundering and racketeering" the national economy. A fugitive from charges in Moscow, Patarkatsishvili openly voiced support for two ardent opposition parties, New Rights and United Democrats. He said he "sees no other serious force" to come to power in pending parliamentary elections this fall.

Shevardnadze responded by lashing out at executives in general in an April 7 interview. After chiding businessmen for forgetting what the government had done for them, he warned: "the parliament should not become a shelter for oligarchy, neither a guarantee of security for those people to attain immense riches illegally." Shevardnadze appeared to be addressing years’ worth of criticism from activists and journalists that many of his favors for large companies since the mid-1990s have exceeded the law. While businesspeople provided loyal support to Shevardnadze’s Citizens Union, the government denied such accusations.

In the April 7 interview, Shevardnadze said he provided an "exclusive deal" on an insurance market to David Gamkrelidze, current leader of the New Rights who chaired the Aldagi insurance company in mid-1990s. This "exclusive deal," which many say in fact provided a monopoly to the company in a compulsory state insurance contract, was frequently criticized by the Georgian and foreign business observers.

In the same interview, stressing how helpful he had been to the private sector, Shevardnadze said he had provided support to corporate interests "within and sometimes beyond my [capacity]." This gaffe immediately backfired. Koba Davitashvili, political secretary of the United National Movement, called a press conference to declare that using official position beyond official capacity could bring Shevardnadze up to five years in prison; Gamkrelidze, on April 8, dubbed the president’s remarks "a bit delicate" and said the insurance deal, if determined to be illegal, could lead to impeachment.

Meanwhile, Shevardnadze’s New Georgia coalition is trying to build strength. The president, who has promised to step down in 2005, has said he agreed to lead the bloc in order to keep his party in power by "all the available constitutional, legal means." Apart from Shevardnadze’s Citizens Union and the Socialists, the alliance includes railway chief Akaki Chkhaidze, head of the Silk Road political movement.

Shevardnadze’s embrace of the New Georgia coalition may convince business leaders to join moderate reformists or field their own candidates, observers say. Niko Lekishvili, chairman of the Taxpayer’s Union and former state minister, said some 20 members of his union, including himself and former minister of economy Vano Chkhartishvili, plan to run in parliamentary elections. Burdjanadze singled out Lekishvili as an outspoken critic of the deferred-election scheme. The New Rights party, with its pro-market ideology, is known to include several influential businesspeople.

In this fragmented market for votes, business support may be critical. Most political parties officially oppose the government, obliging any party to stand out from the crowd. Success figures to follow parties that can draw strong media coverage and conduct wide outreach. This increasingly requires financial strength. Money buys television time in unprecedented ways: while in previous elections the state-run TV channel reached the widest coverage area, today the private channels, one run by Patarkatsishvili of the Taxpayers’ Union, can reach most homes in Georgia. As private media has expanded, parties have spent more on speechwriters, publicists, and pollsters.

Shevardnadze, though, can draw on the "administrative resource," a euphemism for support from appointed provincial administrative officials. These officials campaign aggressively for the government; opposition groups accused them of "completely rigging" the 1999 parliamentary vote. The president also dispatched State Minister and Citizens Union Chairman Avtandil Jorbenadze to coordinate his loyalists’ bloc. Jorbenadze reportedly met in April with the Industrialists Union, in an apparent attempt to offset the Taxpayer’s Union. Sources say that the Industrialists mainly used the meeting to propose changes to the tax code; they have not yet formally entered the alliance.

Parliamentary action this summer may determine the business lobby’s attitude this fall. Observers expect the government to float tax breaks or pro-business legislation in order to win support. But such moves might fizzle. Some argue that business groups will remain nonpartisan and press their interests with all political forces, creating an interest-group tradition in Georgian politics.

While Burdjanadze champions populism, business may grow as a political force. Recent polls show at least 54 percent of Georgians positively evaluate corporations, while 89 percent tend to disapprove of the government. If businesspeople gain political influence, they may face tests like those the president is enduring now.

Editor�s Note: Jaba Devdariani is a founding director of the United Nations Association of Georgia (www.una.org.ge) and Research Director of the UNA’s program for applied research.

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