Regime Change Coming In The Republic Of Georgia – OpEd


Economic and political reforms have had mixed results in the former Soviet republics following the breakup of the Soviet Union in 1991. One of the success stories is the Republic of Georgia. Elections held October 1 will replace the party responsible for that success, raising questions about Georgia’s future.

Many of the former Soviet republics suffer from corrupt and authoritarian governments, and with substantial government involvement in the economy. Georgia fell into that category prior to 2004 when Mikheil Saakashvili was elected president and rapidly cleaned up corruption, fired all of Georgia’s police force and replaced them, jailed people involved in organized crime, and deregulated much of the economy. Georgia’s economy has thrived since, benefiting from low trade barriers, low taxes, and minimal government interference in economic affairs. Georgia stands out as a post-Soviet success story.

Despite these positive developments, President Saakashvili has had his detractors, who have accused him of providing government-granted monopolies to his cronies and using the force of government to confiscate private property without compensation. He has stood up to Russia, which may have played a role in Russia’s invasion of Georgia in 2008, and may have provoked Russia’s erecting trade barriers to limit imports from Georgia.

Two weeks before the election, a Georgian television station owned by opposition leader Bidzina Ivanishvili released a video showing prisoners being abused in Georgian prisons, which surely had an effect in turning voters toward Ivanishvili’s party. But, this by itself could not have turned the election without a substantial opposition to Saakashvili prior to the video’s release.

Constitutional reform in Georgia is also changing the form of government. The old form, which featured a strong president when Saakashvili held the position, will be replaced by a parliamentary democracy in which the prime minister will be the most powerful government leader. Whereas a year ago one would have thought Saakashvili’s party would be in the position of choosing the prime minister (which many Georgians expected would be Saakashvili), it will now be Ivanishvili’s party that will choose the prime minister.

The big question is whether this regime change will reverse the huge strides toward economic freedom that were made under Saakashvili’s leadership. Saakashvili tried to strengthen ties to Europe, and to NATO, whereas part of Ivanishvili’s platform was to work toward closer ties with Russia. A less hostile relationship with Russia would be good for everybody, but a move toward Russia’s economic policies would be undesirable, as Georgians well know, having lived under the Soviet system for decades.

A personal note: I spent a week and a half in Georgia this summer (teaching economics to students from 14 countries throughout the region). I asked one of my hosts if it was safe for me to walk around the neighborhoods of Tbilisi, the capital of Georgia, with my big DSLR camera, and he told me it was safe to walk anywhere in Georgia. That, he said, was one of the results of the cleanup of crime and corruption under President Saakashvili. So, I did walk around taking lots of photos, and returned unmolested.

On one of my walks someone stopped me and asked me if I was an American. It turned out he was too, and had moved to Tbilisi two years ago. I remarked on the incredible economic progress Georgia had seen over the past decade, and he said he could see how much better things were in just the two years he lived there. One would hope, for the sake of Georgians, that the new regime will not reverse the course the country has taken toward economic freedom.

Randall G. Holcombe

Randall G. Holcombe is Research Fellow at The Independent Institute, DeVoe Moore Professor of Economics at Florida State University, past President of the Public Choice Society, and past President of the Society for the Development of Austrian Economics. He received his Ph.D. in economics from Virginia Tech, and has taught at Texas A&M University and Auburn University. Dr. Holcombe is also Senior Fellow at the James Madison Institute and was a member of the Florida Governor’s Council of Economic Advisors.

2 thoughts on “Regime Change Coming In The Republic Of Georgia – OpEd

  • October 3, 2012 at 8:38 am

    I spent the past year in Georgia. It is indeed changing rapidly. I worked with both schools and the police and the corruption of before has been completely reversed. It is also, as you mention, completely safe, far more than many US cities and many other developing countries. Although many problems remain, Saakashvili implement far more improvements than most leaders manage in developing countries. Better relations with Russia would of course be desirable. But I am afraid that the new parliamentary system may lead to US style gridlock and slow the positive changes there. And having an election bought in the manner the very rish Ivanishvili has done is hardly a step towards a better democracy. I hope the best for Georgia, however, and strongly encourage people to visit – its mountains and wine and some of its towns etc are beautiful. Fascinating language and increbible dancers/singers.

  • October 18, 2012 at 6:36 pm

    I agree that the country is changing rapidly and for the better but I would disagree that it is completely safe for everyone. I do believe that it is safe for men but women is a different stories. I lived in Tblisi for about six months and one of the main reasons I left was because of two very scary and unsafe situations I found myself in (on of which was in the middle of the day, on a bus near freedom square) and not only were the situations scary but I was not supported very well in how to deal with either situation from my coworkers (native Georgians) nor the Monterey officials in charge of my program (save for the lead official) I wish that this was only my experience but I have heard similar stories from friends and even from my Georgian host mother. I still have Georgian friends who are amazing people and many of them are women, I hope that things continue to get better for them as we’ll as their families.


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