Demonstrators outside the Georgian Parliament protesting the approval of the “Foreign Agent Bill”© Nrf
In the October issue of Europe Diplomatic Magazine, we presented our featured article entitled “CROSSROADS OF DESTINY: GEORGIA’S FUTURE IN QUESTION.” The piece offers an in-depth exploration of Georgia’s intricate history and political evolution since it liberated itself from the constraints of Soviet communism.
Building on the insights from our previous article, this sequel shifts its focus to the inner workings of Georgia’s political landscape. We delve into some of the more troubling aspects of its governance, shedding light on the rise to power of its de factor ruler, Bidzina Ivanishvili, as well as the significant challenges the nation faces as it strives to realise a fully functioning democracy—one that is not only recognised but also embraced by the West.
When it was under Soviet domination, Georgia was subjected to intense Russification, which today fuels deep resentment among Georgians towards their powerful neighbour. Furthermore, through its Euro-Atlantic aspirations, seeking to draw closer to both the European Union and the United States, Georgia has made some provocative political choices regarding Russia, particularly its bid for NATO membership. This climate of animosity, which the international community truly recognised with the outbreak of the August 2008 war, has always influenced Georgian political discourse, portraying Russia as the primary culprit behind the erosion of its territorial integrity due to its support for and control over secessionist entities.
And on Sunday, 27 October – one day following the parliamentary election – the worst fears of Georgian democrats and pro-European voters were confirmed. European observers reported that the election unfolded in a “climate of hatred and intimidation,” marked by numerous violations and instances of violence.
Observers from the European Network of Election Monitoring Organizations, highlighted several critical violations during the election. These included violence against opposition members, stuffing of ballot boxes, voter intimidation, smear campaigns aimed at observers, and widespread misuse of administrative resources.
The Election Administration of Georgia announced that the ruling party had secured nearly 54 per cent of the vote, while the four main opposition groups collectively received 37.5 per cent. This outcome could enable Georgian Dream to capture up to 89 seats in Parliament, leaving the remaining 61 for the opposition.
These issues cast a heavy shadow over the election results, raising extremely serious concerns about the future direction of the country in Europe.
Georgia is strategically located next to Russia, Turkey, Armenia, and Azerbaijan, in a region intersected by oil and gas pipelines and bordering the Black Sea. Since the collapse of the Soviet Union, it has been caught between Russia and the West, much like Ukraine, and both countries have been promised the possibility of NATO membership in the future. The West has a significant interest in whether Georgia will fall back under Moscow’s influence or break free, and whether this transition can happen without sparking further conflict.
In June 2024, the European Council raised serious concerns about Georgia’s recent passage of the so-called “Foreign Agents Bill.” Officially titled the Law on Transparency of Foreign Influence, this legislation mandates that any organisation receiving more than 20% of its funding from abroad must register as a foreign influence agent. Those who fail to comply could face crippling fines.
The Council indicated that this legislation marks a troubling departure from the progress outlined in the Commission’s recommendations, and they warned that, in practical terms, this move could effectively bring the country’s accession process to the EU to a standstill. Meanwhile the United States has temporarily halted joint military exercises and imposed visa restrictions on Georgians deemed responsible for or complicit in undermining democracy; a separate act in the U.S. Congress is proposing additional sanctions.
In any event, this situation highlights the delicate balance Georgia must navigate as it seeks closer ties with Europe and the West while addressing complex internal political dynamics.
| A BATTLE OF WILLS
The controversial “Foreign Agents Bill” that has triggered widespread protests was promoted by the ruling Georgian Dream party which, it says, is based on the U.S. Foreign Agents Registration Act and is necessary to enhance transparency while addressing what they see as “pseudo-liberal values” being imposed by foreign influences.
Georgian prime minister, Irakli Kobakhidze managed to push the law through with 84 votes in favour and 30 against, in the 150-seat legislature. Naturally, this markedly pro-Russian, authoritarian drift can only please Vladimir Putin.
Georgia’s opposition, on the other hand, has labeled the bill “the Russian law,” drawing parallels to similar legislation used by the Russian president to stifle political opponents and suppress dissent. Critics argue that this bill is part of a broader trend towards authoritarianism by the Georgian Dream party, which will jeopardise Georgia’s bid to join the EU. The party has already enacted laws to tighten its grip on the electoral commission ahead of the October legislative elections.
In the meantime, Georgian Dream intends to continue its efforts to oust the country’s pro-European president, Salomé Zourabichvili, who has been accused of visiting Brussels, Paris and Berlin without official approval from the prime minister. The president, who has limited powers, opposes the Georgian Dream party, which holds the majority in Parliament and leads the government. Salomé Zourabichvili tried hard to unite opposition movements to win the parliamentary elections on October 26.
The President of Georgia serves as the ceremonial head of state and the commander-in-chief of the defence forces, but it is interesting to note that in 2013, a set of constitutional amendments went into effect, marking the country’s shift to a parliamentary republic. As a result, the president’s executive powers were greatly reduced, with more authority shifting to the Prime Minister.
It should also be noted that in the November 2024 presidential election, it will be a 300-member Electoral College that will choose the president, who will then be approved by the Central Election Commission. This college will consist of all members of Parliament, representatives from the legislative bodies of the Autonomous Republics of Abkhazia and Adjara, as well as nominees from various political parties who are part of local government bodies. Furthermore, the election will take place without debates and through an open ballot.
| THE PUPPET MASTER OF GEORGIAN POLITICS
He appoints the nation’s prime ministers. Three of the last four have previously held executive positions within his corporate enterprises. He claims to have stepped back from active politics, yet as the chairman of the Georgian Dream party, he remains the true power behind the scenes. Critics describe him as an “eminence grise,” maneuvering from the shadows like a puppet master in the nation’s political conflicts.
He is Bidzina Ivanishvili, a man of immense fortune and considerable power in Georgia. But, he is also the target of vehement dissent as civil disturbance engulfs his nation.
Emerging from modest beginnings, he left Georgia in around 1988 to amass significant wealth in Russia, forging close relationships with Vladimir Putin’s inner circle—the kleptocratic elites and oligarchs who have exploited the nation’s resources in exchange for unwavering loyalty to the Kremlin. Ivanishvili managed to acquire lucrative metals and banking assets on the cheap, and now his wealth is estimated at $6.4 billion by Forbes, which represent about one third of Georgia’s GDP!
Following Russia’s full-scale invasion of Ukraine in 2022 and the unprecedented sanctions imposed on Russia by the West, the ruling elite in Georgia has attracted considerable attention for its unique approach to managing relations with Russia.
After taking power, the Georgian Dream party made it clear that it intended to pursue a policy of non-confrontation with Russia. Over the years, this approach, along with other targeted policies, led to significant parts of the Georgian economy becoming heavily reliant on Russia.
In this context, it may prove insightful to explore the business interests that the Georgian ruling elite have in Russia, as these could influence their decisions on key issues affecting Georgia’s future. And in particular, the commercial ties of Bidzina Ivanishvili, founder of the ruling Georgia Dream party and the informal leader of Georgia, along with those of his relatives that reveal the depth of their entanglement and strategic alliances with the Kremlin.
After serving as prime minister from 2012 to 2013, Bidzina Ivanishvili publicly declared his retirement from politics. However, he made a formal “return” to the party in 2018. About three years later, he issued another letter announcing his “final retirement” from politics. In reality, he never truly stepped away, as many events in Georgia’s political scene have shown.
When he first entered politics in 2011, Ivanishvili declared that he would divest all of his Russian-owned businesses to prevent any unwanted scrutiny in Georgian society. Although Ivanishvili did sell the assets that were directly registered under his name in Russia, investigators at Transparency International found that he still maintained ownership of at least 10 Russian companies through offshore entities between 2012 and 2019.
He employs a similar strategy in Georgia, owning numerous companies in a way that keeps his name out of the spotlight. So far, Transparency International has identified three offshore companies—Vanity Overseas Limited, Wellminstone S.A., and Wenigen Management Limited—that Ivanishvili has used to manage his Russian businesses for years. After he announced his exit from the Russian market, over 20 other offshore companies emerged as current shareholders of his former Russian ventures. These companies were part of an even more extensive network of subsidiaries.
| NEPOTISM AND BUSINESS: A FAMILY AFFAIR
Many of Bidzina Ivanishvili’s relatives are involved in business in Russia, working alongside family members of both current and former high-ranking Russian officials. It’s important to view these companies as part of Ivanishvili’s wider business interests, and while Georgian media outlets have highlighted these connections in the past, the noteworthy fact is that one of Ivanishvili’s Russian business partners has recently faced sanctions from the U.S.
Bidzina Ivanishvili’s brother, Alexander Ivanishvili, and his cousin, Ucha Mamatsashvili, are involved in business ventures through a company called Geo Organics. Their business partners include some notable figures.
One of them is Georgy Poltavchenko, a former KGB general and Governor of St. Petersburg, who has been sanctioned by the United States. Another partner is Roland Kherianov, a former high-ranking official from Volgograd. Interestingly, Kherianov’s wife, Anna Kuvichko, is a former member of the State Duma and has become known for creating and appearing in the controversial propaganda music video, titled “Uncle Vova, We Are With You.”.
This video, glorifying Vladimir Putin, can be viewed on You Tube at the following address: https://www.youtube.com/watch?v=Pveg6rf2D_c
When it comes to state matters, Ivanishvili has often placed significant trust in his relatives, highlighting the special bond he shares with them. One notable example is Ucha Mamatsashvili, his cousin, whom Ivanishvili has called his most “beloved” and trusted family member. Mamatsashvili has held key positions, including Deputy Director of Georgia’s state investment fund, JSC Partnership Fund, and he is also a shareholder in the company overseeing Ivanishvili’s private investment venture, the Georgian Co-Investment Fund.
Ivanishvili’s nephew, Kakha Kobiashvili is another notable figure who has served as the official representative for Ivanishvili’s offshore companies in Georgia for quite some time. Given the level of trust Ivanishvili places in his relatives to manage his assets, it is clear that the companies run by them, including those in Russia, are part of his larger business interests. Moreover, it is difficult to believe that his relatives could forge successful business connections with powerful Russian politicians – who might act as their ‘cover’ – without Ivanishvili’s backing.
| LOYAL SERVANTS
The fact that individuals who once managed Bidzina Ivanishvili’s personal assets now occupy top positions in Georgia’s executive government raises further suspicions. It suggests that some decisions made by the Georgian government might be aligned with the interests of their former boss. Nevertheless, Bidzina Ivanishvili continues to run his businesses and manage his assets through certain trusted individuals, including:
- Irakli Gharibashvili, current Prime Minister of Georgia
- Giorgi Bachiasvili, Chair of the Advisory Board of the Georgian Co-Investment Fund
- Irakli Karseladze, current Minister of Regional Development and Infrastructure
- Zviad Khukhunashvili, former head of Cartu Bank’s securities department
Several other prominent figures have also played significant roles in managing the country’s politics, economy, and resources. These individuals, often tied to the ruling party or Bidzina Ivanishvili’s personal network, wield considerable influence over key decisions that shape national policies and economic strategies.
Their involvement raises concerns about the concentration of power and the potential for self-serving agendas to overshadow the public interest, further entrenching an oligarchic system in the governance of the nation.
One of the most prominent among these figures is Otar Partskhaladze, the former Chief Prosecutor of Georgia designated as a Georgian-Russian oligarch, due to his cooperation with the Russian Federal Security Service (FSB).
Transparency International Georgia has obtained documents revealing that Partskhaladze received his Russian passport in February 2021. Since then, he
has acquired a substantial amount of personal property as well as real estate in Russia, indicating a significant investment in the country.
This resulted in sanctions being imposed on him in 2023 by the Office of Foreign Assets Control (OFAC) of the US Treasury Department.
In late 2016, at the Chinese-Georgian Business Forum in Beijing, one of China’s largest conglomerates, CEFC China Energy, announced it would open a regional office in Tbilisi and that it aimed to acquire a substantial stake in the Poti Free Industrial Zone, located near the Black Sea port of Poti.
Georgia was represented at the forum by Ivane Chkhartishvili, a very controversial businessman and former economy minister who is also a close ally of Bidzina Ivanishvili. Chkhartishvili played a crucial role in facilitating CEFC’s entry into Georgia and in strengthening ties with Beijing over the years.
Prviously, Ivane Chkhartishvili had been identified as a beneficiary in a questionable court ruling involving a Georgian cigarette company and the local subsidiary of tobacco giant, Philip Morris International.
Grigol Liluashvili, currently head of security services in Georgia and special advisor to Bidzina Ivanishvili, plays a key role in managing relations between Georgia and Russia. Liluashvili is particularly tasked with conducting activities aimed at circumventing the economic sanctions imposed on Russian entities.
This includes developing strategies to facilitate economic exchanges and strengthen trade ties, despite international restrictions. His involvement raises questions about the integrity of national security policies and the enduring influence of Ivanishvili in Georgian affairs.
He also oversaw the special security escort for Yekaterina Vinokurova, the daughter of Russian Foreign Minister Sergei Lavrov, who travelled to Georgia by private jet to attend a wedding in 2023. This mission required close coordination between Georgian and Russian security services to ensure the safety of the high-profile guest in a delicate diplomatic context. Police detained 19 people protesting the visit outside the wedding venue at Kvareli Lake Resort.
Liluashvili’s role in this operation highlights not only his influential position within the security services but also the importance of bilateral relations, even during times of political tension.
| A THREAT TO NATIONAL SOVEREIGNTY
More recently, as a kind of retaliatory measure against the West, Bidzina Ivanishvili has begun to promote the concept of a “Global Party of War”. This rhetoric posits that Western governments and their allies are engaged in promoting conflict and instability around the world. This narrative is not only echoed by his supporters in the government, but also embraced by those aligned with Russia, creating a chorus of voices that amplify this perspective.
By framing the political landscape in such confrontational terms, he seeks to cast doubt on the motives of Western nations, suggesting they are driven by a relentless agenda for conflict rather than cooperation. This strategy serves to unite his base, fostering a sense of shared purpose and animosity toward perceived adversaries.
And Russian encouragement not only strengthens Ivanishvili’s position domestically but also fits into Russia’s broader strategy of undermining Western narratives and fostering scepticism towards Western policies in the region.
Even though Bidzina Ivanishvili has officially stepped away from politics, he obviously still wields considerable influence over Georgia’s ruling party and several key institutions, which are led by individuals who have previously worked for his business concerns.
This type of influence over democratic institutions closely resembles what is referred to as ‘state capture’, a term first coined in 2000. In this scenario, an unaccountable elite takes control of the political, legal, and economic levers of a country, undermining the integrity of democracy and the rule of law. At its core, ‘state capture’ involves a small, unaccountable elite gaining control over the mechanisms of the state. This can manifest in various ways, such as corrupt practices, lobbying, and the appointment of individuals into key positions who are aligned with the interests of these elites. Instead of serving the public good, government officials may prioritise the needs of their benefactors, leading to policies that favour specific businesses or sectors at the expense of broader societal interests.
Given this clear evidence of state capture, the fact that Georgia’s’s informal leader has significant business interests in a hostile state poses potential risks to national security and could jeopardise the country’s foreign policy direction.
| AN UNCERTAIN PATH AHEAD
Pro-European Georgian democrats seem to be resolute in their mission to thwart the man they perceive as Putin’s puppet, viewing him as a direct threat to their aspirations. This determination stems from a deep-seated belief that if he succeeds in consolidating power, he will effectively extinguish their hopes for closer ties with Europe and the eventual goal of European Union membership. For many Georgians, this is not just about politics; it is about preserving their national identity and autonomy in the face of external pressures.
The stakes are incredibly high. Georgia has a rich history and a unique cultural heritage that many citizens feel is at risk of being undermined by a government that prioritises allegiance to Moscow over the aspirations of its own people. The desire for integration with Europe is not merely a political goal; it represents a longing for democratic values, human rights, and economic opportunities that are often associated with membership in the EU.
Moreover, the situation is intricately linked to Vladimir Putin’s broader strategy in the region. By maintaining influence in Georgia, Putin aims to project power and control over former Soviet republics, reinforcing a sphere of influence that counters Western presence. This is crucial for him, as losing Georgia could signal a significant weakening of Russian authority in the South Caucasus, potentially inspiring similar movements in neighbouring countries.
The protesters are aware that their struggle is part of a larger geopolitical contest. They view their resistance not only as a fight against a potentially authoritarian regime but also as a crucial step in reclaiming their sovereignty from foreign domination. Their protests serve as a rallying point for those who wish to see Georgia flourish as an independent nation, free to forge its own path without the shadow of Russian influence looming overhead.
As tensions rise, the outcome of this struggle will likely have profound implications for both Georgia’s future and the dynamics of power in the region. A victory for the protesters could pave the way for genuine reforms and stronger ties with Europe, while a triumph for the current leadership could solidify Russia’s grip, further isolating Georgia from its Western aspirations. In this context, the protests represent not just a political battle, but a defining moment in the ongoing quest for national identity and self-determination in a rapidly changing world.
