|
Overview
Georgia is located in the South Caucasus region of Southwestern Asia, bordering the Black Sea, Russia, Turkey, Azerbaijan and Armenia. It has a population of 4.7 million and a GDP per capita of $ 3,300. The population is 83.8% Georgian, 6.5% Azeri, 5.7% Armenian, 1.5% Russian, and 2.5% other ethnic groups. The religion composition is 83.9% Orthodox Christian, 9.9% Muslim, 3.9% Armenian-Gregorian, 0.8% Catholic, other 0.8%, and none 0.7%.
Social Indicators
Demographic pressure received a rating 6.0 in the Failed States Index 2006 (FSI 2006). Population growth was negative at -0.34%. The unemployment rate is very high and is estimated at 20-25 % (two times the official figure). The high unemployment rate, which has caused many people to migrate from the country, is largely responsible for the rating of 6.0 for demographic pressures. The rating for refugees and internally displaced persons (IDPs) was 6.8. An armed conflict in South Osetia and Abkhazia led to an influx of over 300,000 refugees and IDPs (this number includes 240,000 Georgians). Despite the efforts of the government to deal with the problem of refugees the situation remains very difficult. Lack of progress in the negotiations over the conflicts in South Osetia and Abkhazia and growing tensions between Georgians and Armenians living in Djavakhetia, who want more rights for self-government, accounted for the rating of 7.4 for group grievance. Human flight received a high rating of 6.1 because the difficult socio-economic situation and political uncertainty caused people to leave the country.
Economic Indicators
Georgia has a high level of inequality, resulting in a rating of 7.0 for this indicator in the FSI 2006. The rating for the economy was 5.5 in the FSI 2006, reflecting a number of improvements in the Georgian economy in recent years. Although Georgia suffered from negative economic growth during the 1990s as a result of the conflict with Abkhazia and South Osetia and the collapse of the centrally managed industrial economy left from the days of the Soviet Union, there were positive growth rates from 1995-2005. Georgia managed to stabilize its currency and reduce inflation significantly, and the economy grew by an estimated 10% in 2005. However, the economy remains highly dependent on foreign loans and investments. The Georgian economy continues to experience large budget deficits due to a failure to collect tax revenues, although tax collection has improved since Mikhail Saakashvili became president. In mid-2004, Saakashvili appointed the Georgian businessman Kakha Bendukidze, previously based in Russia, to lead a large-scale privatisation program. Some 1800 enterprises have been selected for privatisation. By July 2005, the govermnet reported that 10% had been sold off, consisting of the most attractive concerns and representing a boost to government revenues of some $314 million. In additoin, a new tax code was passed that simplified and decreased the number of taxes. In the process, income and social taxes have been cut drastically. New licensing laws have been introduced to impove the climate for business investment. Most dramatically, the rebellious region of Ajara was brought back into the Georgian fold in May 2004. Restoring control over Ajara provided a much-needed boost to government revenues, as the regions’ contribution to GDP is estimated at 10%.
Political/Military Indicators
Saakashvili inherited a bankrupt and deeply corrupt state, with no control over large parts of its territory and declining international support. Given the state of affairs it inherited, the new Georgian leadership has achieved a tremendous amount since January 2004. The 2004 presidential and parliamentary elections were considered by international observers to be a significant step forward, although some irregularities were noted. But despite these recent improvements, the existence of the breakaway regions of Abkhazia and South Ossetia resulted in the high rating 7.7 for legitimacy of the state in the FSI 2006. Georgia received a rating of 6.3 for public services in the FSI 2006 because, although public services were fairly well developed under Soviet rule, they have deteriorated since independence from Soviet Rule. The human rights situation has improved since the “Rose Revolution,” resulting in a rating of 5.6 in the FSI 2006 for this indicator. Human rights abuses still occurred, including arbitrary arrest and abuse and torture of detainees, but the government was taking steps to improve its human rights record. The security apparatus received a rating of 8.1 in the FSI 2006 because of significant paramilitary forces in South Ossetia and Abkhazia. Security sector reform was among the first major steps of the new government, which considers strong armed forces a vital part of the conflict settlement process with these regions. Effective armed forces are also seen as a way for Georgia to contribute to international peace support operations. Factionalized elites received a rating of 7.1 in the FSI 2006, also due to the breakaway regions of South Ossetia and Abkhazia. The standoff between the Georgian central government and authorities in the two regions continues as the leadership of both breakaway regions continue to demand full independence rather than autonomy. External intervention received a rating of 8.6, the highest of any of the indicators, because of the presence of Russian troops in the country. Abkhazia and South Ossetia both have close ties to Moscow. Russian peacekeepers are stationed in both regions, and have often been accused of siding with the separatists.
Core Five State Institutions
| Leadership | Military | Police | Judiciary | Civil Service |  | |  | | | | Moderate | Moderate | Weak | Weak | Moderate |
Mikhail Saakashvili came to power after the Rose Revolution in 2004 and established strong presidential rule. Despite some positive changes in society (e.g. a campaign against corruption) the lack of expected results in the economic sphere shows that the current government faces very difficult problems.
Georgia has been rapidly increasing its military spending, partly to counter the influence of militias in the breakaway regions. The military was generally under effective civilian control.
The reform of Georgia’s police that reduced corruption can be considered as a major achievement of the current government. However, impunity remains a serious problem in the police force. Members of the police are still involved in a number of human rights abuses, including torturing of detainees and other forms of abuse.
Although the current government has reduced corruption in the judiciary system, the courts still remained susceptible to political influence. A 2004 constitutional amendment allowing the president to appoint or dismiss judges without parliamentary approval severely undermined judicial independence.
The civil service suffered from inefficiency, insufficient resources and occasional corruption.
Prognosis
The current government of Georgia faces a number of challenges, the most pressing of which is the struggle against separatism and the prevention of the consequences of uneven economic development. The strategy of the new Georgian leadership has privileged the settlement of the conflict in South Ossetia over that of Abkhazia. For Tbilisi, Abkhazia represents the big prize for a number of reasons, including its strategic importance on the Black Seas coast, the economic interest in restoring central power over this region, the difficulty of resolving this conflict, the high numbers of IDPs still affected by its non-settlement, and the stakes it raises in relations with Russia. Georgia is pinning its hopes for long-term recovery and alleviation of uneven economic growth on the development of an international transportation corridor through the key Black Sea ports of Poti and Batumi. However, the growing trade deficit, continuing problems with tax evasion and political uncertainties cloud the short-term economic picture. Copyright (C) 2007 The Fund for Peace
|
