Georgia Between Freedom and Authoritarianism – Fair Choice or Russian Resolve?

The EU still lacks an impactful long-term strategy in this small, predominantly Western-oriented nation. Georgia’s location is pivotal, situated in the immediate EU neighbourhood as part of the strategically important Black Sea and Caspian region. Hybrid warfare waged by the Kremlin creates a challenging environment, threatening Georgia’s sovereignty in parliamentary elections scheduled for 26 October 2024.

“Polarisation” is the buzzword most associated with Georgia, whose EU candidacy is on shaky ground. In fact, “de-polarisation” was the first of 12 priorities set by the European Commission in 2022 as a prerequisite for granting Georgia EU candidate status. This emphasis was reaffirmed in the 2023 EC Communication on EU Enlargement Policy’s nine steps.

Strong pro-EU support in Georgia

The Georgian people leave little doubt that they see their children’s future in the EU. They are not divided over closer ties with Brussels rather than Moscow, partly because of Georgia’s forceful incorporation into the Russian empire and the Soviet Union. Unlike in the Republic of Moldova, where voters said yes to pro-EU constitutional change in an October 2024 referendum by a margin of less than one percent, the “full integration of Georgia into the European Union” has been part of Article 78 of Georgia’s Constitution since 2018.

When European Council President Charles Michel personally mediated between the Georgian government and opposition parties, ending a parliamentary stand-off in 2021, the gist was about “powersharing in the Parliament” and ensuring that reforms were “inclusive and viable” – not on choosing rapprochement with Russia over European integration. Reforms for deeper European integration, especially transforming the governance model, are proving difficult. This should not surprise anyone in the EU, particularly given Russia’s nefarious influence.

The mediated 19 April Agreement was not supported by all opposition forces and later annulled by the ruling party. However, fully proportional parliamentary elections remained a key outcome, long sought-after to level the political playing field and enable political pluralism.

With the latest parliamentary elections based entirely on proportional representation, many Georgians hope that the political opposition can overcome Georgian Dream, the powerful governing party.

But other factors affect the chances to get the freedom-loving Caucasian nation back on track, so it can continue its transformation into a liberal democracy. The ruling party did not stick to its pledge to reduce the electoral threshold to two percent, so less powerful political parties will struggle to make it into parliament.

Joining forces and creating common platforms is complex everywhere. But in a fragile democracy with no tradition of policy-based political parties and coalition-building, it is especially difficult. Newly established parties are afraid to compromise their fragile programmatic identities. This plays into the hands of Georgian Dream, as votes for parties that fail to clear the five percent hurdle work proportionately in favour of the strongest.

Georgian Dream’s pro-European masquerade has been crumbling

In 2011, Georgian Dream was created by billionaire Bidzina Ivanishvili to oppose the then-ruling United National Movement (UNM) party. It developed into a coalition united in the dislike of former Georgian president Mikheil Saakashvili.

Georgia Dream and its shadowy leader, who made his fortune in Russia and still maintains controversial ties, have long managed to strike an astonishing balance by conveying support for Georgia’s EU trajectory while concurrently pursuing democratic backsliding.

The party’s positive image has only started crumbling since its campaigning politicians brought up the 2008 Russia-Georgia war that left hundreds dead and tens of thousands displaced. Ivanishvili himself suggested Georgia should apologise for the war, shifting all responsibility to the main opposition party UNM and downplaying Russia’s involvement.

The Russian military still controls Abkhazia on the Black Sea and South Ossetia, internationally recognised as Georgian but ruled by so-called separatist leaders. The reasons for the war are complex, but many place most of the responsibility on Russia.

War versus peace, or isolation versus EU-orientation?

Georgian Dream has been presenting the upcoming election as a choice between war and peace, instrumentalising Georgian fears of all-out war as in Ukraine. The party blames a so-called Global War Party, an unclear notion that even led to its own Wikipedia entry.

Conspiracy theorists claim that the mysterious grouping is controlling the West and sowing wars globally to further its goals. This enables Georgian Dream to conveniently blame the Global War Party for a range of issues that plague Georgia.

Elections billboards display war destruction in Ukraine in contrast with peaceful Georgian life. And the re-integration of the Russian-occupied regions, which make up one-fifth of Georgia’s territory, is presented as a feasible option, that not Russia, but western forces are preventing.

A familiar playbook upgraded

Meanwhile, the most active segments and individuals of society are being targeted, suppressed and persecuted. This is creating an atmosphere of fear that, in Georgia, was believed to have been overcome with the end of the Soviet Union. A law passed in May 2024 was modelled on Russia’s notorious Foreign Agent Law, which requires civil society organisations and media outlets to disclose their funding from Western donors and stigmatise themselves as serving foreign interests.

Like its Russian model, the law denies individuals the autonomy to decide and work toward values and goals they choose for themselves. Dubbed the “Russian Law” by Georgians, it has not taken full effect immediately, but it has weakened NGOs during the crucial pre-election period, disrupting funding and leading to staff layoffs. At the same time, security forces have been strengthened and riot police have contained civil protests with excessive violence.

A so-called Offshore Law was passed on 4 June 2024 after an unusually swift legislative process that coincided with mass protests against the Russian Law, which diverted attention. The new law amends the tax code to ease the transfer of assets from tax havens to Georgia.

It exempts shares and equity from import and profit taxes, while shielding shareholders from transparency and sanctions in previously “save” offshore environments. Additionally, the law creates a loophole for tax avoidance. Companies operating in Georgia that are wholly owned by individuals or entities registered offshore are now allowed to withdraw accumulated profits without incurring tax liabilities.

The law exemplifies cronyism and corruption. Even liberal Georgians, who traditionally support tax reductions and advocate for the abolition of profit taxes, oppose the amendments as preferential treatment that undermines equality before the law and fair competition. Growing entanglements between business and politics would negatively affect governance and asset protection, especially given the poor state of the judiciary and the rule of law in Georgia.

The law runs counter to the development of the Georgian economy in terms of deeper EU integration and attracting investment that could boost productivity and growth. This is because it deters foreign capital, which is crucial for the small nation’s development, where a significant portion of domestic consumption is financed by foreign investment, such as FDI, loans and grants. Ultimately, the law could turn Georgia into a haven for those seeking to protect their assets from Western sanctions.

Election and post-election scenarios

In the capital city of Tbilisi, where the most active segments of civil society are, a fundamental desire for change is in the air. Even those not deeply involved in politics or societal engagement have been alarmed by the use of force to suppress democratic protests.

It is another matter in rural areas, where anti-EU narratives and fake news, amplified by state-controlled media, are fuelling a conservative fear of (too) rapid and sweeping change. Russian state-controlled propaganda channels target the concerns of more vulnerable segments of society, undermining trust in opposition parties. Together with social media networks, these channels spread fake news about how Western powers provoked the Russia-Ukraine war.

The situation is reminiscent of Ukraine in November 2013 in that the violence against protesters in Tbilisi has had a rallying effect, uniting a broader swathe of society against the authorities. 11 years ago in Kyiv, the excessive use of force against youth protesting former Ukrainian President Yanukovich’s rejection of the EU Association Agreement sparked widespread outrage, eventually drawing the general population into the streets.

Can a fair and free election bring change?

The EU through its High Representative described the forthcoming elections as a “crucial test for democracy in Georgia and its European Union path”. On 17 October 2024, European Council summit leaders stated the importance of reforms and free and fair parliamentary elections, underlining how Georgia’s current course of action ”jeopardises the accession process”.

Most alarming from a Georgian perspective, in September 2024, the European Commission contemplated a potential temporary suspension of the visa-free travel agreement, which has been in place since 2017, if Georgia’s ruling party continued on its “authoritarian trajectory”.

It is important to note that the elections cannot provide a definitive solution. The outcome will not solve the EU’s dilemma of wanting and needing a stable and peaceful Georgia in its neighbourhood, while resisting resignation in the face of Russian propaganda and malign influence. Defending democratic spaces is central to the EU’s tug-of-war with Russia over the future of its neighbours, so that authoritarianism, injustice and corruption do not spread.

It might seem striking that Georgian Dream is pushing through critical laws before the election, while making no secret of its intentions to crack down on opposition parties. If Georgian Dream wins the election, they can claim their actions are based on the will of the people. The likely consequences would be the complete alignment of the judiciary and the elimination of opposition parties through legalistic means. European integration would become a distant dream.

Will the ruling party accept the peaceful transfer of power?

In the alternative scenario with the opposition parties prevailing, it will be essential for them to remain united on a common government programme and the appointment of key personnel. The risk cannot be dismissed that, in this case, Georgian Dream may refuse to recognise the election results and resort to more repression and violence.

It must also be considered that Russia might openly or covertly intervene in disputes over the election outcome.

While a reset in EU-Georgian government relations in the event of more moderate behaviour from Georgian Dream cannot be ruled out, this scenario carries the risk that deeper integration would merely aim to weaken the EU from the sidelines.

There are five actions that Georgia’s friends should consider.

• It is important to stand firm behind a joint strategy designed to address high-risk scenarios, combining pressure on the ruling party’s oligarch leader to peacefully transfer power with an exit strategy that he finds acceptable. The familiar Russian pattern of testing the political West underscores the need for a swift, coordinated response.
• The Organization for Security and Co-operation in Europe’s Office for Democratic Institutions and Human Rights, which oversees large-scale election monitoring, should avoid restricting itself to a purely technical assessment of the election. This would give Georgian Dream dangerous leeway in shaping public perceptions, which could be exploited to destabilise the small South Caucasus nation.
• Georgia’s friends should keep communicating that European integration and the objectives of the Georgian Dream are fundamentally incompatible. The prospect of a “reset” under a more restrained Georgian Dream should not go unchallenged, despite appearing less risky in the short term. The potential for Russian hybrid warfare, even as Russian military capacities are tied up in Ukraine, should not be underestimated and must be countered, regardless of Georgia’s ability to pursue deeper EU integration. A strategy that supports the Georgian people should include mitigating the effects of Russian/Georgian government propaganda, a prerequisite for Georgians to defend their sovereignty.
• Turkish and Chinese interests and motives should not be ignored. Turkey is opposing Russian dominance of the Black Sea and Caspian region; China is pursuing an assertive economic stance in Georgia. Some view China’s actions as aggressive, while others hope it will serve as “a bridge to the EU”. Given intensifying global rivalries, Chinese infrastructure investments should be scrutinised to assess whether they make Georgia give up disproportionate control.
• Long-term strategies to protect Europe’s economic sovereignty, while actively countering grey zones of foreign malign influence, need to be developed and implemented.  The Offshore Law highlights the dangers posed by a strategically located nation becoming a hub for money laundering and sanctions evasion. This could undermine European financial security and broader geopolitical stability.

The author thanks Egnate Shamuglia, Researcher at Gnomon Wise Research Institute at the University of Georgia, for his valuable insights regarding the details and potential impact of the Offshore Law.

About the author

Miriam Kosmehl has been Senior Expert Eastern Europe with the Bertelsmann Stiftung’s “Europe’s Future” Program since 2017. From Berlin, she works primarily on the Eastern Partnership region, since 2022 with a particular focus on the strategic management of global interdependence.