GEORGIA: New President Faces Staggering Challenges
Vladimir Beron «View Bio

January 19, 2004

On January 15, Georgia`s Central Election Commission (CEC) released the results of the January 4 presidential elections, formally declaring a widely expected landslide victory for the National Movement leader, Mikhail Saakashvili. According to the CEC, Saakashvili received a little over 96 percent of the vote, while his closest rival, Temur Shashiashvili, finished with less than two percent. Certain opposition groups, particularly the Labor Party and the Union of Traditionalists of Georgia, questioned the outcome of the elections, alleging voting irregularities and claiming that the results were falsified.

Nonetheless, the elections received a positive assessment by the international community, with the Organization for Security and Cooperation in Europe (OSCE) and the U.S. State Department noting that the ballot represented marked progress in the voting process and the administration of the ballot, while recommending some improvements in the electoral legislation and clearer separation of party and state structures. The president-elect also received congratulatory messages from the U.S. President, the German Chancellor, and other world leaders. The European Union foreign policy chief, Javier Solana, pledged to Saakashvili the EU"s continuing support for political stability and democracy in Georgia.

Saakashvili"s ground-breaking election victory and the generous praise from the West notwithstanding, the president-elect is facing a steep uphill task in turning around Georgia"s gloomy outlook. Expectations are sky high for him to capitalize on the current wave of domestic and international support, as both can change in a hurry should he fail to deliver. More specifically, domestically, the president-elect is eagerly expected to make good on his promises of cleaning up the legacy of endemic corruption and government links with organized crime, left over from the previous regime. Saakashvili has singled out the war on smuggling as his first priority in his reform drive, but that could prove dangerous, both politically and for his personal safety. A large segment of the population relies on the trafficking of all kinds of goods for their subsistence, while organized crime remains entrenched and is unlikely to willingly let go of lucrative schemes.

On January 15, the interior minister announced that outdoor activities associated with the presidential inauguration, scheduled for January 25, would be limited due to security concerns. He stressed that unspecified groups might be planning actions aimed at disrupting the ceremonies. The announcement followed a word from the minister of state, who claimed that a possible assassination plot was intercepted, since the authorities uncovered a camouflaged position for a sniper not far from presidential residences. Politically, Saakashvili remains vulnerable despite his dramatic electoral victory, in large part because his institutional powerbase is yet to be solidified, and because he lacks experience in juggling the numerous competing interests on the national political scene. His push to schedule new elections on March 28 for some 150 parliamentary seats allocated by the party-list system is widely seen as a sign of insecurity, given that both the opposition and the OSCE strongly urged him to hold that ballot in April or May.

With regard to international relations, the president-elect is also in a rather precarious situation, mainly due to increasing pressures from the West on one hand, and Russia on the other. The U.S. government is strongly urging Saakashvili to demand the closure of Russia"s two remaining military bases in Georgia, a call echoed by European leaders. On January 17, the U.S. ambassador to Georgia announced that the American military contingent, deployed in 2002 to train Georgian forces as part of the war against terrorism and scheduled to be withdrawn in March, will remain in the country on a permanent basis. Russia, meanwhile, has vigorously protested the indefinite positioning of U.S. troops in neighboring countries, and although Saakashvili has openly voiced support for security guarantees from NATO member states, Moscow still has strong leverage in Georgia.

The president-elect will indeed find it hard to isolate Moscow from his country"s affairs, in part because of the presence of the Russian military bases, but also due to the strong grip Russian energy providers hold over Georgia"s distribution system. The Russian military bases are strategically located in the Adjarian controlled port of Batumi and in Akhalkalaki, which is situated in the predominantly Armenian populated southern region of Samtskhe-Javakheti. Adjaria openly opposed the ouster of former president Eduard Shevardnadze and its leadership declared a state of emergency following the downfall of his regime. Moreover, the presently close relations between Russians and Armenians make it unlikely that Tbilisi leaders can depend on local support in Samtskhe-Javakheti.

Furthermore, Georgia"s economy remains to a large degree dependent on Russian energy supplies, and that situation was greatly exacerbated in the summer of 2003, when Russia"s Unified Energy Systems acquired a 75 percent share in the Telasi energy-distribution company. The latter provides power to the Georgian capital and has great influence ove the government"s policies, given that chronic electricity shortages have caused significant unrest in the past. Meanwhile, Russia"s state-controlled Gasprom concern has secured a 25-year preferential deal for providing natural gas to Georgia, which is another powerful tool for control of the Georgian economy, should Moscow feel the need to use it. In addition, there are some long-standing links between Russia and powerful Georgian interests that will take a long time to undo, when time is a luxury the president-elect has little to enjoy.

The fortunes of Georgia"s new government remain quite uncertain, and the current popular exuberance is no guarantee for the normalization and stability of this embattled country. With the economy in taters, lingering regional hostilities, and a myriad foreign interests pressuring the young leadership, the situation could regress significantly, especially if the West fails to support the president-elect with timely economic assistance. To this end, Washington has pledged some aid to pay several months of salaries for Georgian military personnel, and Western energy interests so far remain steadfast in their determination to see a major oil pipeline project from Azerbaijan via Georgia to Turkey completed. But all this could change quickly in the event of new unrest.

Vladimir Beron is Senior Risk Analyst with the international risk management group, Sentigence.