November 23, 2005

Two years on, Georgia slowly lifts itself up

By Margarita Antidze

TBILISI (Reuters) - Georgia marks the second anniversary of
its "Rose Revolution" on Wednesday but analysts say it still
faces huge challenges to transform itself from dysfunctional
ex-Soviet state to prosperous democracy.

President Mikhail Saakashvili, who led the popular protests
against a rigged election that forced Eduard Shevardnadze from
office in November 2003, has gone some way to fulfil promises
to bring in sometimes painful reforms and lure foreign

And, unlike fellow former Soviet state Ukraine which went
through its popular revolt a year later, Saakashvili has
managed to hold his government mostly together.

But the wide range of problems he faces in his Caucasus
nation of 5 million people run deep, not least widespread
poverty and unemployment, analysts said.

"There were positive shifts in all directions during the
last two years -- some more successful, some less. But the main
challenges are still ahead," said Alexander Rondeli, the head
of the Georgian Foundation for Strategic and International

While Saakashvili's support is still high in opinion polls,
analysts said he and his team still lacked experience and

He also suffered a heavy loss with the death early this
year of his talented premier and confidant, Zurab Zhvania, who
was able to temper the sometimes impetuous 37-year-old


Georgia's once relatively prosperous economy has never
fully recovered from the ravages of corruption and neglect that
followed independence from the Soviet Union in 1991.

When he came to office, Saakashvili ordered a crackdown on
widespread tax evasion and graft. Tax collection has improved
and once reluctant international creditors and donors have been
charmed enough to promise about $1 billion in foreign aid over
three years.

"With the 'Rose Revolution' things have changed very
quickly," Roy Southworth, the World Bank resident
representative in Georgia, told Reuters.

Experts praise progress in improving budget management and
the business environment.

They also say the new government is making an effort to be
open about privatizations and ensure that, unlike in the past,
the money goes into state coffers, not officials' pockets.

"They are trying to make this process as transparent as
possible and do not hide the fact that raising as much money as
possible is the main task," independent economist Mikhail
Jibuti said.

But for ordinary Georgians, life has not changed much.

Unemployment is running at close to 60 percent and shows no
sign of falling quickly.

The government has doubled pensions, but the amount is
still just 28 lari a month, barely keeping pace with inflation
which the authorities are struggling to keep to single digits.


On the political front, analysts said one of the toughest
tasks for Saakashvili is to manage a prickly relationship with
giant northern neighbor and former colonial master, Russia,
which is clearly irritated by Georgia's aspirations to join
NATO and European Union.

Moscow dominates two small separatist regions, South
Ossetia and Abkhazia, which belong to a handful of so-called
frozen conflicts left over from the collapsing Soviet Union and
which Georgia wants back.

Saakashvili did manage to pull off a deal under which
Russia has agreed to close down by 2008 its army bases
elsewhere in Georgia, a hangover from Soviet rule.

"Being able to work with Russia in a constructive way will
be one of the main challenges," said Zeyno Baran, a specialist
on the South Caucasus region with the Nixon Center, a
Washington think-tank.

"But the problem is that there are people in Russia who
want to maintain the frozen conflicts so they can have an
influence (over Georgian affairs)," she added.

Analysts said the Tbilisi government also needed to win
more support on the issue from Europe's major powers, some of
whom are nervous of damaging lucrative relations with Russia.

Perhaps the biggest challenge of all will be to create a
democratic political system in a country whose last two
presidents were toppled by popular protests.

"Saakashvili's presidency will be considered successful
only if he hands over power to his successor with due ceremony,
at the appointed time, and with a broad smile on his face," Gia
Nodia, an independent analyst, told Reuters.