June – July 2015

Political Shakeup And Pre-Election Landscape

On the 25th of May, four members of parliament from the opposition United National Movement (UNM) withdrew from the party. While a number of UNM members have left the party since the October 2012 parliamentary elections, this is the first time that high-profile members quit. After their withdrawal from the UNM parliamentary faction, the makeup of the oppositional wing in parliament continues to change.

Among the four members who left the UNM was the executive secretary, Zurab Japaridze, who was one of the new high-profile faces of the party. The former members declared that they quit because the UNM failed to rebrand itself; that they are going to focus their efforts on presenting an economic development plan for the country; and that they are planning to create a new platform for like-minded, pro-Western people. The real political impact of this split still remains to be seen.

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Public opinion reflect in the recent NDI poll is very conducive to the creation of new alliances. According to a recent National Democratic Institute (NDI) poll, only 24% of voters side with the ruling Georgian Dream (GD) coalition, 16% with the UNM, 5% with the opposition Free Democrats, and 45% are undecided. Furthermore, 35% of Georgians do not identify with the ideologies of any party. Based on these results, none of the main parties currently in parliament has a strong potential to acquire a majority in the upcoming 2016 parliamentary elections. Different public opinion polls as well as election results show that the GD’s approval rating is decreasing, while the UNM’s remains more or less the same.

"The voters’ final voting decisions will likely strongly depend on the new political alliances that will form in the coming year. There is potential for the creation of a strong political alliance among the pro-Western political forces, but there are also practical obstacles to it.

The voters’ final voting decisions will likely strongly depend on the new political alliances that may form in the coming year. There is potential for the creation of a strong political alliance among the pro-Western political forces, but there are also practical obstacles to it.

One potential center for a pro-Western opposition is the Free Democrats, who were part of the Georgian Dream coalition but quit in 2014. One of the proclaimed reasons for splitting off was the Georgian Dream’s lack of commitment to Georgia’s Euro-Atlantic integration. Though there is common ground between the UNM and Free Democrats, antagonism between the two parties is strong. The Free Democrats publically distance themselves from the UNM, including on issues of common interest such as political prosecutions. At the moment, it’s difficult to imagine an alliance between these two parties and though there are no attempts from either side.

In order to become part of a pro-Western coalition, Zurab Japaridze should first succeed in establishing himself as a political force and present himself as an important political player. The key challenges to this are finding financial sources, and attracting people to join his party. Japaridze’s personal popularity ratings are not promising, while there has not been a flow of new people joining his movement in the weeks after he had not announced establishment of a new political force.

On the other side of the political spectrum, pro-Russian forces are strengthening in Georgia. Pro-Russian organizations are engaged in active propaganda to undermine Georgia’s European choice. The number of supporters of the Russia-led Eurasian Economic Union (EEU) is increasing: According to NDI polls, in 2012-2013, only 11% of those surveyed supported Georgia joining the EEU; in the 2014 poll, it increased to 20%; and in 2015, it reached 31%. The leaders of the Georgian Dream party lack strong and consistent messages regarding Georgia’s Euro-Atlantic integration. The founder of the Georgian Dream coalition, Bidzina Ivanishvili, has not fully cut ties with parties that are considered to be pro-Russian. Meanwhile, there is Nino Burjanadze, the leader of the party Democratic Movement – United Georgia, who is a pro-Russian politician and often holds meetings in Moscow with members of the Russian government. Another rising politician, Irma Inashvili, who leads the Alliance of Patriots, is known for her anti-Western statements, is also gaining ground. The possibility of an alliance, formal or informal, between Nino Burjanadze, Irma Inashvili, and the Georgian Dream should not be excluded from the potential political landscape leading up to the 2016 parliamentary election.

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Georgia has not entered into a inactive pre-election campaign phase yet, though some political decisions reflect the potential establishment of political forces across the spectrum. The major political decisions that will shape the pre-election landscape have not been made yet, but even the minor shakeups that are occurring should be seen in a pre-election context.

The Possible Effect Of The Greek Crisis On The Georgian Economy

The Greek economic crisis will impact the economic stability of other countries, including Georgia, which has a specific connection on the Greek economy. Greece is the second largest recipient of Georgian migrants looking for work, behind only Russia. While there are no official statistics on Georgian migrants by country, according to unofficial information, approximately 200,000 Georgians live in Greece. The income they send home is a substantial financial source for their families back in Georgia. Before 2015, there was a positive trend of remittances from Greece. However, in the first five months of 2015, remittances from Greece declined by 18% (Chart 1). At the same time, remittances from Russia declined by 23% (120 million dollars).

Chart 1. Remittances from Greece to Georgia

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Source: National bank of Georgia

Georgia does not receive significant foreign direct investment (FDI) from Greece, and does not significant exports to the Greek market. However, the EU is one of the biggest investors and trade partners for the Georgia (Chart 2). For example, in 2014, half of FDI was from the EU, and exports to the EU were 22% of total Georgian exports. Therefore, the threat to the EU economy from the Greek crisis also contains a great risk for the Georgian economy.

Chart 2. FDI from EU and Georgian product export, in millions of dollars

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Source: National Statistics Office of Georgia

The Greek crisis coincides with a difficult time for the Georgian economy. In the last seven months, Georgia’s national currency, the Lari (GEL), depreciated 29% compared to the U.S. dollar. The economic growth rate diminished to 2.5%. The government cut the 2015 annual economic growth forecast from 5%, down to 2%. Inflation is growing: By the end of June 2015, the annual inflation reached 4.5%. In the first five months of 2015, Georgian exports diminished by 25%, and in the first quarter, FDI declined by 39%. The worsened economic situation impacted the state budget revenue, as the tax revenue forecast declined by 3% (200 million GEL) and the government had to change the state budget law. The changes in the state budget are currently under discussion in parliament.

In this situation, the Georgian economy is especially sensitive to external shocks. Opinion polls show that people perceive that the country’s number one problem is unemployment. In 2014, the unemployment rate declined by 2.2%, and officially, 265,000 people are unemployed. However, more than one million of those who are ‘employed’ are actually self-employed; most of them live in rural areas earning very little, and want instead to have an official workplace. If the Georgian emigrants in Greece have to return to Georgia, it would be an even greater social burden for the country. Greek banks have been closed over the past week, and Georgian emigrants in Greece can’t send money back, meaning that thousands of Georgian families are left without any kind of income.

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ISIS At The Gates

ISIS is broadening its sphere of terrorist activities beyond its core of Iraq and Syria. In comparison to other terrorist organizations, ISIS is particularly dangerous in terms of recruitment because it has efficiently adopted new technologies, particularly social media, for the purpose of recruitment.

ISIS is becoming a serious threat and concern for Georgia and the entire Caucasus region. In June 2015, ISIS announced that it established a new caliphate province in the North Caucasus (Caucasian Villayet). The engagement and recruitment of former Caucasus Emirate leaders and combatants into the new ISIS branch should be an alarm bell for Georgia. Furthermore, based on the future map of the caliphate envisioned by ISIS, Georgia will be part of the desired “Qoqzaz” or Caucasus caliphate.

Certain regions and populations of Georgia are particularly vulnerable to recruitment to Islamic terrorist groups. According to the latest U.S. State Department Report on Terrorism, in 2014, around 50-100 Georgian nationals (according to certain sources, other statistics are much higher) were fighting in Syria and Iraq for either Al-Qaeda affiliates or ISIS. They are from regions with a predominantly Muslim population, such as Adjara (an autonomous republic located in south-west Georgia, near Turkey) and the Pankisi Gorge (located in the north-east of Georgia, bordering with Ingushetia, Chechnya and Dagestan) The population of Pankisi Gorge are ethnic Kists or Chechens, and there are a few dozen fighting under senior ISIS commander Tarkhan Batirashvili, aka Omar al-Shishani, who himself is a native of Pankisi Gorge.

"The major problem in combatting ISIS is still the government’s policy of non-response, and non-prevention." 

Battlefield explicitly moved close to Georgian borders after Turkey entered the war against the Islamic State. Turkey has finally made a decision to move on the active phase after a suicide bomber with suspected links to the Islamic State set off an explosive in the Turkish border town of Suruc on July 20. Turkish military piled up substantial military force on Syrian border, meanwhile actually hitting ISIS targets from above on 23th July. Another important upheaval related to Turkey was permission to U.S of using Incirlik air base in southern Turkey in order to launch air strikes against the Islamic State.

In spite of this tremendous threat and danger, the Georgian government and regular citizens still presume that they will not encounter terrorism inside the country. This perception is because Georgia has never been directly threatened by international terrorism. Even though Georgia has participated in international military operations against terrorism in Afghanistan and Iraq, for Georgians the struggle and war on terror is mainly perceived as the concern and business of the U.S.
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The government has not presented an all-encompassing approach for dealing with the potential threat of ISIS. There is a dire need for reforming and empowering Georgia’s security institutions to effectively deal with the threat.

On the 14th of June, four people were arrested following a special operation conducted in villages in Pankisi Gorge. Three of them were released soon after. Merab Tsatiashvili, the cousin of ISIS commander Omar al-Shishani, was among the three. According to locals, the special operation was linked to ISIS activities in recruiting local youth (the Ministry of Internal Affairs has not made any public statement). Another person, Giorgi Kuprava, was detained in Tbilisi. He was prosecuted for having connections with ISIS and aiding in the recruitment of fighters. In the months before his arrest he was openly active on social media groups, mainly on Facebook, advertising about joining ISIS.

The major problem in combatting ISIS is still the government’s policy of non-response, and non-prevention. As for an action plan, the government should take the following steps in order to stave off threats:

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- There should be a constant observation as well as deep analysis and research of Georgia’s vulnerable regions, understanding their socio-economic, religious, and cultural environments. This is key in preparing an adequate counter-recruitment strategy. While Georgia may be known as the “Lebanon of the Caucasus,” there is religious discrimination towards non-Orthodox Christians. For example, there are often difficulties for Muslims in Georgia to have their places of worship recognized as religious sanctuaries. Muslim places of worship have even been attacked, such as a boarding school in Kobuleti in 2014, and in August 2013 in southern Georgia a minaret of a mosque was removed. In another village in southern Georgia, locals Muslims received opposition from local Christians when they tried to restore an ancient mosque that was destroyed and where a library was put in its place. This issue of Muslim’s minority rights increases their vulnerability for recruitment.

- The government should actively participate in an international coalition against ISIS. The U.S. State Department lists 62 countries as members of the “global coalition to degrade and defeat ISIS.” Georgia is officially part of this coalition, but with a very low level of involvement, mainly on humanitarian issues. Active engagement in the coalition would be a great opportunity for sharing information, for training Georgian security bodies to ensure their readiness, and to plan a proper counter-combat strategy.

The world faces new security challenges from the spread of radical extremist ideology, and Georgia lies on the borders of those countries outsourcing terrorism. It is imperative for Georgia to conduct an in-depth study and analyse the problem to devise a security policy capable of fighting ISIS’ new strategy in terrorism.