In late June, Georgians took to the street to protest the European Commission’s suggestion to defer the state’s EU candidacy. The main reason is not Georgia’s economy – the poverty rate improved significantly – but the oligarchs’ breaches of the EU’s democratic values.

Recent EU Pushback

In 2014, Georgia signed association agreements with the European Union to set the country on the road to EU candidature status. On June 23rd, 2022, the EU held back from granting Georgia the status, placing the nation behind Ukraine and Moldova. These two other post-soviet countries followed a similar timeline to Georgia’s path into Europe.

Though candidate status does not guarantee membership, it would be a significant step forward for the Caucasus country. In 2020, 80% of Georgians reported that they supported joining the EU and tens of thousands of people protested in the capital to express their frustrations with the government, which they deem responsible.

Their anger could be justified, for the European Commission did not withhold candidature status due to economic shortcomings. Indeed, the percentage of people living below the national poverty line in Georgia dropped significantly in the last decade, from 37.3% in 2010 to 21.3% in 2020.

Instead, the EU decided that Georgia does not show sufficient support for the democratic values European nations must respect through solid institutions. The European Commission emphasized that the government should focus on dismantling the oligarchic structure that dominates Georgian politics if it intends to continue Georgia’s path into Europe.

Effects of Oligarch Rule in Georgia

The billionaire Bidzina Ivanishvili created the current ruling party, Georgian Dream (GD), in 2012 and served as prime minister until 2013 before resigning. However, Ivanishvili maintains a strong hold over the party from the sidelines. During his tenure, he appointed political actors that are personally loyal to him, and he continues to influence prominent politicians by funding their campaigns.

Moreover, Ivanishvili openly stated his intention to eliminate opposition parties, turning the nation into an autocracy. Since GD came to power, multiple affluent political opponents were accused of criminal charges, leading them to be jailed or sued.

As long as the status quo does not disrupt business interests, oligarchs have no interest in cultivating significant change in the nation, for rule-of-law systems would threaten their interests. This lack of reform means the country will not modernize and its weaknesses will only worsen. Under the Georgian Dream’s rule, crime rates increased dramatically and economic growth slowed, according to New Eastern Europe.

Furthermore, the decline in Georgia’s absolute poverty rate stagnated after 2015 and increased by 1.8% in 2020 following the pandemic.

The World Bank reported that from 2010-2014, the country’s most significant progress in reducing poverty came from increased household income due to economic activity: the country’s strong economy helped all tiers of its society. The report also emphasized the importance of the government’s redistributive policies in continuing poverty reduction and the oligarchic adversity to investing in public spending jeopardizes the continuation of these efforts.

Geopolitically, Georgia is more vulnerable to Russia than Ukraine – its entire territory is smaller than the Russian-occupied parts of Ukraine. If it was to join the EU, it would benefit not only from protection from Russia, but could also have access to more trade deals that could stimulate its economic activity, hence reducing poverty.

Oligarchs’ Relationship with Russia

Ivanishvili’s promised to improve relations with Russia without compromising Georgia’s path into Europe and NATO. However, tensions persist over the independence of the Abkhazia and South Ossetia regions, which Russia has occupied since the 2008 Russia-Georgian War.

Moreover, the Georgian government did not impose sanctions on Russia following the Ukraine War, claiming that the country was too economically dependent on Russia. Non-governmental Georgian advisors refute this claim and claim that the government lacks the political will to go against Russia.

Unlike Ukraine and Moldova, oligarchs in Georgia are Georgian-descent Russian industrialists that came to Georgia in the late 2000s. The oligarchs’ origins and their disdain for democratic values align the ruling class closer to Russia than to the European Union, according to a study by 3 DCFTAs.

Georgia’s Future Path

Georgia’s path into Europe could determine whether the oligarchic structure is dismantled. Solid democratic institutions could help pass needed reforms to help reduce the rate of people living in absolute poverty. For the institutions to exist, however, democratic values must be respected. By distancing itself from Ivanishvili, the Georgian government could gain the European Union’s trust and its people’s trust.

– Elena Sofia Massacesi
Photo: Flickr