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Gilauri - Practical Economics Economic Transformation and Government Reform in Georgia 2004–2012

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Book:
Practical Economics Economic Transformation and Government Reform in Georgia 2004–2012
Author:
Gilauri / Nika
Publisher:
Springer International Publishing&Palgrave Macmillan
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Books / Politics
Year:
2017;2018
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Cham
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The Author(s) 2017

Nika Gilauri Practical Economics 10.1007/978-3-319-45769-7_1

1. Carpe Diem

Nika Gilauri 1

(1)

Tbilisi, Georgia

Abstract

This chapter, the introduction to Practical Economics, discusses the challenge of fixing a broken country and describes the situation in Georgia in the early 2000s. The author, Georgias former prime minister, Nika Gilauri, explains why he believes that other countries can learn from the reforms he oversaw between 2004 and 2012. The chapter contains an overview of the impact of this large-scale transformation in areas ranging from corruption and doing business to economic growth and energy supply, as well as a personal account of how Mr. Gilauri, a political novice at the time, became a member of the cabinet in 2004.

Keywords

Practical Economics Georgia Prime minister Nika Gilauri Doing business Reforms

As I said, you never know when you will get a chance to do something good for your country. For me, the call of duty came in December 2003, shortly after the Rose Revolution. I didnt recognize the number on my phones display, but I had a distinct feeling that something important was about to happen. I took the call.

Hello?

Hi, this is David. I am calling from the Prime Ministers Office. He would like to see you.

When?

Right now?

Of course. Im on my way.

I was stunned. I had never met the prime minister. I didnt know any other cabinet members either. I had attended the protests on Rustaveli Avenue the previous month, but I had not met any of the leaders. I really had no idea why the prime minister wanted to see me.

How did his office even get my number? Was it related to my job? I was working in the energy sector at the time, and I had a reputation as a critic of the governments energy policy. Perhaps they had come to me for an insiders perspective? Or had I done something wrong and was about to be reprimanded? But why would the prime minister deal with me personally?

Either way I looked at it, this was big. I hurried to the State Chancellery.

The prime minister was sitting in his office by himself. We exchanged very brief hellos.

What do you think about the energy sector in Georgia?

Excuse me, but how do you even know about me?

Irrelevant. Answer my question.

I described some of the challenges I had encountered, but he quickly interrupted me.

How long do you need to prepare a presentation about the energy sector?

Until tomorrow?

Tomorrow? Thats not possible.

I already have a presentation. I just need to go over it one more time.

He looked puzzled.

Did you know that this is why I asked you to come here today?

No, but I have been working on improvement ideas for the energy sector for some time.

I wasnt lying. I was so fed up with the blackouts, the mismanagement, and the corruption that I had written down my thoughts on how to make it work. But I had not shown this to anyone.

Okay, come back the day after tomorrow.

When I went back, the prime minister was not alone. About half a dozen people were gathered at the table, including his chief of staff and the minister of finance. I started my presentation. The prime minister interrupted me with a question, but I asked him to let me continue and save his questions for later. I said this simply because the answer to his question was on my next slide, but the second I had said it, I was afraid I might have been overly brusque. Curiously, everybody present seemed to be impressed with my bold move, especially the prime minister himself.

I think we have found our man.

He was whispering, but everybody heard him. I went on, but he interrupted me again.

Will you be my Minister of Energy?

Now it was my turn to look puzzled.

Huh?

How old are you?

Thats very young, but we are a revolutionary government. We have to revolutionize everything. There are opportunities in your life that you should not say no to. So will you be the Minister of Energy of Georgia?

I mustered all my courage.

On one condition.

Whats that?

I will not cut my hair.

At the time, my hairstyle was not what most Georgians would have described as ministerial.

Of course. No problem.

1.1 Learning from Georgia

Why should you read this book, even if you are neither Georgian nor a student of the country and its history? Because the lessons learned in Georgia between 2004 and 2012 are applicable to many other countries, both developing and developed. Here is why:

In that period, Georgia was the closest thing to a laboratory for political and economic reform you will find in real life.
In that short period, Georgia went through more political permutations and economic cycles than many other countries experience in a century.
Although the transformation happened under unique circumstances, the challenges Georgia faced will be familiar to governments in many countries.

Think of this book as a blueprint for successful transformation, and Im sure you will find something of value in it, wherever you live and whatever your position is.

1.1.1 Laboratory of Reforms

The nine-year period after the Rose Revolution was one of those rare occasions when the vast majority of the population is yearning for change. The new government enjoyed an 80 percent approval rating when it started conducting its reforms. In November 2003, during the Rose Revolution, people had taken to the streets, demanding a new government. When that new government was in place, they demanded fast reforms across the board political, economic, and social. The major factions in Georgias society were on the same page politicians, common people, captains of industry, intellectuals, and even the opposition.

There was broad consensus that change needed to come fast, if it was to come at all. The new government duly adopted what was sometimes referred to as the Big Bang approach. We would reform everything, and we would do it quickly. Instead of drafting comprehensive development plans, taking one step at a time, and reviewing progress every step of the way, we went in like the mavericks we were. We decided to do and learn, rather than to sit and wait. We were aware that we would get some things wrong at first, but we were willing to take that risk and prepared to learn from our mistakes.

From the get-go, we were determined to take inspiration from successful reforms in other countries, much the way I encourage the readers of this book to take inspiration from Georgia. We studied what other countries had done in similar situations, where they had succeeded, where they had failed, and what mistakes they had made along the way. We took what worked and adapted it to the new political reality and the specific local requirements in Georgia.

Post-revolution Georgia was the rare case of a country tackling reforms in all areas: fiscal and monetary policies; welfare, healthcare, and education; and public accountability, security, and agriculture. Nothing was left out. What makes this case so rare is the fact that most governments initiate reforms in one or two areas but almost never across the board. This is due to the fact that most societies are not ready to embrace change on this scale. All things considered, we set out to build a modern state not from scratch but from the ruins left by decades of corruption and neglect 70 years of Soviet regime; Russian-led wars on the Georgian territory and a civil war in the post-Soviet 1990s; and corrupt and criminal governments rule in late 1990s through early 2000s. The starting position was not the best.

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