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“Deoligarchization” is one of the 12 conditions Georgia needs to meet in order to be granted the status of a candidate for EU membership. In mid-June, the Venice Commission published its final opinion on the draft law “On Deoligarchization”. The Commission urged the Georgian authorities to reject the draft in its current form. Despite the negative opinion, the Georgian Dream-dominated Parliament in Tbilisi adopted the bill on deoligarchization in the second reading (a third would be needed it to pass the law), and they are ready to withdraw the bill only if the European Commission scraps deoligarchization from 12 recommendations, the implementation of which will help to obtain the status of a candidate for EU membership. The opposition alleges that the actions of the Georgian Dream are another attempt by the ruling party to sabotage the status of a candidate for EU membership.
Georgia has to reign in its oligarch(s) if it wants to be a EU candidate
In June 2022, when Georgia was denied EU candidate status, the European Commission demanded “deoligarchization”, that is, to eliminate the excessive influence oligarchs have on the economic, political, and social life of Georgia, an influence they are using for their own benefits.
In the assessments of the European Commission, no specific persons were named; however, many MEPs mentioned the name of billionaire Bidzina Ivanishvili, the founder of the Georgian Dream, who made his fortune in Russia in the dashing 90s before entering politics more than a decade ago. Although Ivanishvili announced back in January 2021 that he was leaving politics, he still remains the shadow ruler of the country, a fact acknowledged by the European Parliament, which last year expressed concern about the destructive role that "the oligarch Bidzina Ivanishvili single-handedly plays in Georgian politics and economy."
In the fall of 2022, the Georgian parliament began discussing how to “de-oligarchize” the country in order to turn its “European perspective” into candidate status. In October, the Georgian Dream deputies submitted a draft to the legislature, stating that it was based on the anti-oligarchic laws adopted earlier in Ukraine.
The Georgian bill defined an oligarch as "a person with significant economic and political weight in public life". That meant that, in order to be designated an oligarch by the Parliament, a person had to meet at least three of the following criteria:
- Participation in political life;
- The presence of significant influence on the media;
- The actual receipt of benefits from a business that maintains a dominant position in the market;
- Personal and business assets that are one million times the amount considered the living wage in the country.
The opposition argued that the law is ill-suited to local conditions and does not affect Bidzina Ivanishvili, the only oligarch in the country. Instead, the proposed document, they say, gives the government the tools to deal with political opponents. But Georgian Dream leaders defended their version of the bill, citing European Union officials backing a similar Ukrainian law.
A law criticized by the Venice Commission
After the adoption of the bill in the second reading in November last year, the Georgian authorities agreed to ask the Venice Commission for its opinion on the draft law. On March 16, it became known that the Venice Commission recommended amendments to the document, as, in the opinion of its members, the draft law gives the Georgian government too much freedom of action, which is fraught with the risk of arbitrary application and violation of human rights. After that, the bill was modified and again sent to the Venice Commission in April this year.
In mid-June, the Commission sent a final opinion in which it called on the Georgian authorities not to adopt the draft law "On Deoligarchization" even with the amendments. The Venice Commission noted that the bill is based on an "individual" approach, and not on a "systemic" one. The option proposed by the Georgian authorities is an "undemocratic and ineffective" response to oligarchization.
The Venice Commission also wrote that the amendments made to the bill did not convince it that they could correct the inconsistency with European standards on the issue of human rights, democracy and the rule of law.
Among other things, the Venice Commission recommended that Georgia develop and implement an effective competition policy, strengthen the fight against corruption at a high level, maintain transparency in public procurement, strengthen media pluralism and transparency of their owners.
Despite the fact that the adoption of the bill on deoligarchization is one of the main EU conditions for Georgia to receive candidate status, the adoption of the law contrary to the recommendation of the Venice Commission is contrary to the spirit of the EU conditions.
The European Commission once again clarifies that deoligarchization in Georgia should be carried out by eliminating the excessive influence of the oligarchs on economic, political and social life. However, the European Commission emphasizes that all steps must be carried out in compliance with the recommendations of the Venice Commission.
The Georgian Dream is defying the Venice Commission
The Georgian Dream has repeatedly denied that its founder Bidzina Ivanishvili is still playing a role in the country’s political life. According to Prime Minister Irakli Garibashvili, Ivanishvili is a philanthropist, and the desire to influence the government comes from "millionaires who have settled down in the opposition".
“At least you don't even know the definition of 'oligarch'... It's just fantastic that you consider an oligarch someone who hasn't earned even one lari in Georgia. A person acquired property in other countries with his work, his talent, he spent his time on our country, including during your reign. The reform of the police, the reform of the army, their salaries, the salaries of civil servants – everything is connected with the name of this person” the prime minister told the opposition.
In addition, Garibashvili listed the names of millionaires who, in his opinion, are trying to seize power in Georgia with the help of the opposition, using unlimited financial resources. They, according to the Prime Minister, are ex-president Mikheil Saakashvili, the former Minister of Defense, David Kezerashvili, who owns a number of media outlets in Georgia, as well as the former head of the board of trustees of TBS Bank and founder of the opposition Lelo party Mamuka Khazaradze.
Despite the negative conclusion published by the Venice Commission on June 12, on June 13 the Parliament of Georgia adopted in the second reading the draft law “on deoligarchization”. The draft law was supported by 81 deputies, 2 deputies voted against.
According to Irakli Kobakhidze, chairman of the Georgian Dream, the Venice Commission and the European Commission contradict each other. In addition, he emphasizes that the adoption of this law was not the initiative of the ruling party of Georgia.
“As for the content itself, it was not our idea to pass this law, as you know, it was the idea of the European Commission. This is part of the 12 points. The Venice Commission says one thing, the European Commission another. If the European Commission comes to an agreement with the Venice Commission, then in this case we will no longer use this law, and the law we have adopted will be canceled in February,” Kobakhidze said.
Representatives of the Georgian authorities put forward an ultimatum: either the European Commission removes the item on “deoligarchization” from 12 recommendations, or the Georgian authorities, despite the criticism of the Venice Commission, will enact the law.
The leader of the ruling majority faction, Mamuka Mdinaradze, said that the authorities expect the European Commission to completely remove the issue of deoligarchization from the agenda by the end of the year. Otherwise, according to him, the second edition of the law will come into force.
MP from the ruling party Mikhail Sarjveladze notes that before obtaining the status of a candidate for EU membership, a similar law was adopted in Ukraine. The Georgian version of the bill, he said, is almost identical to it.
"There is no reason to believe that oligarchy means one thing in Georgia and quite another thing in Ukraine," Sarjveladze said.
The oligarch of the ruling party and the oligarchs in opposition
The Georgian opposition accuses the authorities of resisting the European recommendations, which may prevent Georgia from obtaining the status of an EU candidate. Opponents of the authorities stress that this is the second time the Venice Commission has warned the leadership of the Georgian Dream that the amendments they have made do not meet the standards.
The opposition also emphasizes that the European Commission's recommendation to Tbilisi to conduct deoligarchization concerned Bidzina Ivanishvili exclusively. And the adoption of the law in its current version, the oppositionists warn, will only strengthen the ex-premier's position and call into question Georgia's European integration. The opposition believes that the assessment of the advisory body of the Council of Europe once again confirms the fact that power in Georgia without an official mandate belongs to the oligarch Bidzina Ivanishvili.
At the same time, the opposition fears that the adoption of the law in its current form may affect businessmen who finance opposition parties and the media. First of all, this refers to the founder of the Lelo opposition party, banker Mamuka Khazaradze, and former Georgian Defense Minister David Kezerashvili, who lives in London (at home, he was sentenced in absentia to five years in prison for embezzlement and embezzlement of public funds).
Opposition MP Roman Gotsiridze sees no point in adopting such a law in the country, since "deoligarchization cannot take place where the country is ruled by an oligarch”.
Anna Tsitlidze, a representative of the United National Movement opposition force, also believes that the Venice Commission has clearly said that “deoligarchization” is “debidinization” of power in Georgia.
According to Giorgi Vashadze, leader of the opposition Strategy Agmashenebeli Party, the authorities have a “last chance” to stop sabotaging Georgia’s European path and implement 12 EU recommendations to become a member of the European Union:
“The ball is on their side, and the whole field belongs to them,” Vashadze said.
However, according to international relations expert Tornike Sharashenidze, due to the fact that Brussels does not name specific names, it will be difficult to adopt a law against Ivanishvili.
“Because there is no direct evidence of his interference in Georgian politics,” says Sharashenidze.
Is the Ukrainian experience of deoligarchization useful for Georgia?
Two other countries of the "Associated Trio" - Ukraine and Moldova, which have applied for EU accession together with Georgia, were also told to improve their positions regarding the "deoligarchization" of the country. To date, Ukraine has been the most successful of the three, as it is the only country where a legal framework has been created against this phenomenon. In November 2021, in order to limit the excessive influence of the oligarchy on the economic, political and social life of Ukraine, the so-called anti-oligarchic law was adopted. However, the process was suspended after the start of a full-scale war in Ukraine.
Despite the fact that the Georgian version of the bill is almost identical to the Ukrainian version, according to the director of the Georgian Institute of Politics Kornely Kakachia, Georgia has a different political context that must be taken into account when adopting a law. The debate over the interpretation of the term "oligarch" is complicated by the fact that the European Commission has not come forward with its own definition.
“There are several dozen oligarchs in Ukraine, and only one in Georgia - Bidzina Ivanishvili. And no one can challenge him. In addition, in Ukraine, unlike Georgia, there is no rich person who rules the country from behind the scenes, and appoints prime ministers and ministers without the participation of parliament.”
The Law on Deoligarchization will come into force in Georgia on March 1, 2024, Executive Secretary of the Georgian Dream Mamuka Mdinaradze said at a briefing. According to him, its adoption can be canceled only if "the European Commission itself removes this issue before the end of the year". At the same time, the negative conclusion of the Venice Commission once again gave impetus to the ruling party to intensify aggressive rhetoric against Brussels and make decisions contrary to the recommendations of the European structures. This, according to experts, can become a serious obstacle to obtaining the status of an EU candidate.
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