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Ivanishvili: two banks have ‘eaten up’ Georgia

25 July 2018
Bidzina Ivanishvili (1tv)

Two of Georgia’s banks, Bank of Georgia and TBC, have ‘eaten up the whole country’, according to the Chair of the ruling Georgian Dream Party, Bidzina Ivanishvili. In an interview Tuesday with the Georgian Public Broadcaster, Ivanishvili discussed his discord with former Prime Minister Giorgi Kvirikashvili, poverty in Georgia, the Khorava Street murder investigation, and the next president.

He said that Kvirikashvili disrupted the balance between state and business interests, using his tax policies to lobby for Georgian banks. He added that the former PM failed to sufficiently address the large debts held by many Georgians, a concern he said he brought up with Kvirikashvili ‘almost monthly’ throughout his time in office.

‘I used to remind [him] that two banks had eaten up the whole country’, Ivanishvili complained. Ivanishvili said it was ‘shameful’ that the Bank of Georgia and TBC are considered ‘global leaders in rentability’ while many Georgian people spend a third of their salaries covering interest fees. He added that his comments should not be ‘misinterpreted’ as an attack on the banks.

According to the International Monetary Fund (IMF), in 2015, 68% of adults in Georgia had active loans, and 30% of these borrowers had already been blacklisted. Ivanishvili accused Kvirikashvili and Kumsishvili of attempting to ‘hide the IMF report’ from both him and the public. In April, the National Bank of Georgia introduced restrictions on banks handing out loans regardless of a potential borrower’s ability to meet their debt obligations.

Ivanishvili slammed Kvirikashvili for his failure to work ‘with the team’, consulting only ‘his friends’ — referring to former Infrastructure Minister Zurab Alavidze and former Minister of Economy Dimitri Kumsishvili — in his decision making process as prime minister, and largely ignoring the rest of the cabinet and the parliamentary majority. In the same interview, Ivanishvili urged the new cabinet to work closely with parliament. ‘We are a parliamentary republic’, he said, ‘The government and the Prime Minister should […] report to Parliament’.

Ivanishvili said he and the party confronted Kvirikasvhili over the economy at a 12 June meeting, and that the ensuing argument lasted for three hours. The Georgian Dream Chair said it became apparent at the meeting that Kvirikashvili ‘had no more resources’ to run the country and eventually ‘had to go — and he did, rightfully so’.

Ivanishvili named fissures within Georgian Dream, which he said resulted from the former Prime Minister’s ‘method of governing’, as a key reason for his return to politics. He said the party was ‘on the verge of breaking up’, and that he found it ‘impossible to strengthen the vertical’ of the party leadership ‘from the outside’, referring to his replacing of Kvirikashvili as party chair on 11 May.

Ivanishvili also addressed accusations he had been informally ruling Georgia, confirming his influence over the ruling party and the government. He insisted that by ‘monitoring’ the government from the outside, he exercised ‘social control’ on behalf of society. Ivanishvili said he had warned Kvirikashvili not to call or involve him in the decision making process, reiterating that his public promises not to govern were serious. ‘I enjoy public trust and can use this at any moment in my criticism of any public official […] I don’t have an army or a police force, I can only come out and speak publicly. That’s what I did before’, said Ivanishvili. He said that he threatened to publicly criticise Kvirikashvili unless he resigned.

In his farewell speech on 13 June, Kvirikashvili cited disputes on economic issues with the party leadership as the motive for his resignation, also referencing economic achievements under his rule, including a 7.5% economic growth rate in May.

As the new cabinet under Bakhtadze has cited economic growth as one of the achievements of Georgian Dream, government critics, including the opposition and President Margvelashvili, have demanded a clearer explanation of Kvirikashvili’s resignation. In his interview, the Georgian Dream leader cited free trade agreements with China and the EU as the main contributing factors to economic growth, adding that Kvirikashvili ‘played no special role’ in those ‘achievements’, attributing them to Mamuka Bakhtadze’s work.

Politically motivated investigations?

On 17 July, former Infrastructure Minister Zurab Alavidze and former Minister of Economy Dimitri Kumsishvili, key political allies of Kvirikashvili’s, were summoned to the Chief Prosecutor's Office for questioning regarding an investigation into possible misuse of authority, embezzlement, and misappropriation of budgetary funds. The specifics of the case are not yet public. Ivanishvili lambasted President Margvelashvili for suggesting that the probe into the ex-ministers ‘should not become similar to Tractors Case and the Cables case’.

In the 2013 ‘Tractors Case’, the authorities accused 7 individuals from the Agriculture Ministry of corruption soon after Minister Davit Kirvalidze resigned. In the 2014 Cables Case, five high-ranking officials at the Defence Ministry were accused of embezzling state funds, shortly before Irakli Alasania was sacked as Defence Minister. Alasania then withdraw his Free Democrat’s party from government, reportedly after a conflict with Ivanishvii. Alasania called the prosecutions politically motivated.

Democracy and poverty

After a 12 June party meeting, several members of Georgian Dream confirmed they had discussed the 2017 UNICEF Welfare Monitoring Survey during the meeting. The former Prime Minister Ivanishvili claimed in the interview that it was this report that made him realise ‘many Georgians fell below the poverty line after Georgian Dream came into power’. He called the survey results ‘tragic’ and said it made him ‘depressed for several days’. Ivanishvili named this revelation as the first reason for his comeback as leader of Georgian Dream and to formal politics.

According to official statistics, 21% of Georgians lived below poverty line in 2016. The UNICEF survey found that ‘an estimated 4.3% of all households, or 5.0% of the population, 6.8% of children and 3.7% of pensioners, live below the extreme poverty line’.

In his interview, Ivanishvili reiterated something he said in May, that on the background of poverty and unemployment, the economy lags behind democracy in Georgia. ‘Individuals and society should have not only freedoms of expression and other democratic values I could mention, but also the ability to realise them’.

Khorava Street investigation: No proof of abuse of power

Opposition groups including the United National Movement called Kvirikashvili’s successor, Mamuka Bakhtadze, ‘a Prime Minister of the economy’, who would have little influence over law enforcement. However, during the TV interview, Ivanishvili promised that Bakhtadze ‘would intervene in all ministries’ activities, — something Kvirikashvili did not do’.

The government’s law enforcement and justice system reforms and the state prosecution’s failure to identify the killer of a 16-year-old teenager in last December’s stabbing have been some of the main points of criticism from the opposition of the government. In his interview, the Georgian Dream leader did not mention the justice system, but did address the Khorava Street murders investigation.  

Ivanishvili called the killings ‘tragic’, but claimed there was ‘no proof yet that the Prosecutor’s Office abused its power’. He said the government and the ex-General Prosecutor Irakli Shotadze ‘responded adequately’ to protests over the case. He contrasted parliament’s investigatory commission into the murders, currently led by the opposition European Georgia party, to the commission set up to investigate the August War, which he described as a ‘formality’.

Independent presidential candidate

Ivanishvili said Georgian Dream had not yet decided on a candidate for October’s presidential election. He named several candidates that were ‘being discussed’, including the PM's Special Representative to Russiam Zurab Abashidze, Health Minister Davit Sergeenko, himself, Justice Minister Tea Tsulukiani, and ‘other worthy candidates’.

Ivanishvili said he was advocating for another idea, which he said was initially not shared by others in the party but was now increasingly being considered. ‘At present, Georgian Dream holds the entirety of power, from municipal head (gamgebeli) to prime minister, and we also hold a constitutional majority in parliament, which looks a bit wild in Europe. Europe likes a multiparty environment. On this background, it will be more interesting for the country if Georgian Dream does not name its own candidate’, said Ivanishvili.

[Read opinion from Tato Khundadze, editor at European.ge, on OC Media: Bank reforms touted by Georgia’s Prime Minister–to-be could spell the end of predatory lending]