Another chain of paradoxical and uncertain events is unfolding in Georgia.  Former Prime Minister Bidzina Ivanishvili decided to return to politics as the official leader of the party he founded – The Georgian Dream Coalition (GD).  Ivanishvili has often been cited as the GD’s de facto ruler since 2012, perceived as the sole decision maker, and the man who has held considerable influence over the Prime Minister’s after him – including former PM Irakli Garibasvili (his young protégé), and current PM Giorgi Kvirikashvili.

Ivanishvili’s second coming is paradoxical, adding more uncertainty to the failed policies of the GD. Although he will now be exposed to greater scrutiny on his governance because he will no longer rule from the shadows, but in an official capacity; his dominant position in a country with a weak rule of law means that he will avoid allowing an independent system of checks and balances to emerge.

Impact

  • This does little to change the negative interplay between the opaque investment climate and Ivanishvili’s official role. Even if he does not secure a protective role throughout the Georgian economy, inherent difficulties that clan-based and interest-based groups create in key economic sectors will continue to induce uncertainty and feed the perception that only Ivanishvili can fix these problems, and not the rule of law.  
  • The current political environment has a two-pronged effect on Georgia’s business and investment environment: on the one hand, Ivanishvili’s official status might create a modicum of certainty for investors; on the other, he remains the sole authority with the power to manipulate the investment climate to the advantage of his cronies and his inner circle. This places investors at the mercy of his power to act as an arbiter on significant investment projects.
  • Finally, and more specifically, key industries in Georgia - particularly the fertilizer-producing sector, the gold mining sector and the ferroalloys sector - have shown cracks in an otherwise well-guarded image of the country as a friendly place for western investments. This is because influential clans continue to use state resources to consolidate their economic interests in the country.