Jim Armitage: Investors need not worry: Georgia's new leader is no Kremlin stooge – yet

 

Global Outlook The Tbilisi bar owner preferred to remain nameless. Given what he was about tell The Independent about his predictions for Georgia under its newly elected prime minister, you can understand why.

Speaking in one of the elegant art-nouveau streets in the centre of the capital, he frets about street crime: "I know these mafia guys. They will come back now. On the street there will be beatings, people will come in here and cause trouble. Will I even be able to call the police now? I know what it was like before. It will be like that again."

Georgia – this forested, mountainous country strategically key for the economies of western Europe – has been more in the news lately than at any point since its ill-advised fight with its vast neighbour, Russia, in 2008. The reason? Parliamentary elections that saw the charismatic Mikheil Saakashvili's party's rule unceremoniously ditched for the first time since his Rose Revolution in 2003.

Mr Saakashvili ran the country with something of an iron fist – a fact applauded by our Tbilisi bar owner. On the positive side, he once sacked the entire traffic police force due to its endemic corruption. On the negative, stories emerged – most damagingly before the election – of appalling brutality in Georgia's jails.

As a result of his heavy-handedness, and due to his long term in office, many had been worried he would refuse to bow out gracefully.

But bow out he did, averting the prospect of major civil unrest in a country where memories of the war with Russia remain vivid. History will remember him kindly: some may even argue he's more deserving of the Nobel prize than the European Union – although that's not saying much.

Mr Saakashvili will remain in his post as president until next October. But there is surely a new chapter afoot in the story of this country whose territory is the main transit route for Caspian oil and gas to the energy-hungry West.

In control will be Bidzina Ivanishvili, a billionaire who made a killing from the Russian privatisations after the Soviet Union collapsed. Until recently, he was the biggest private shareholder in Gazprom, the vast Russian gas company.

While Mr Saakashvili was relentlessly anti-Russian, the suspicion among his critics is that Mr Ivanishvili will pull the country towards the Kremlin and away from the West.

This seems only half right. He will, of course, be more constructive in his dialogue with Russia. He would be insane not to be, and the Georgians will be best served by a new broom government rebuilding relationships with the economic giant next door.

But surely the most likely outcome is that he will also look West, continuing his predecessor's friendly relations with the US and Europe.

So far, so good. His first official visit is already in the diary for the US, and he has confirmed the country will still seek to join Nato, retaining the relatively high numbers of Georgian troops in Afghanistan.

Meanwhile, the Kremlin has welcomed his election as potentially allowing relations to "normalise".

Georgians can only hope he is able to serve both masters, and that Russia's President Putin does not demand he makes a "with us or against us" type ultimatum.

These are big questions for the politicians and diplomats, but also big risks for investors considering a punt in the Georgian economy.

The relatively few already there should have been doing nicely of late.

Mr Saakashvili's iron fist created less-corrupt institutions and industries that have led to an environment where economic growth is forecast at 6 per cent this year.

And, if Mr Ivanishvili proves to be an adept administrator – although questions do remain about his competence – there are some major potential gains to be seen in further efficiency improvements.

For instance, one statistic often bandied around is that agriculture (wine is big business here) employs about half the working population but makes up less than 10 per cent of GDP.

Investors are hoping that the best clue about the future direction of this first non-revolutionary government is in its bigger neighbour Ukraine. There, the Orange Revolution leaders were booted out by the electorate in 2010, but the new leadership has continued the effort of flirting with both East and West.

But enough of the macro stuff. I'll leave the final word to property investor Mark Mullen, a larger-than-life Texan with an Obama-Biden badge permanently on his chest. He's lived in Tbilisi since the bad old days of the late 90s and played a role in the Rose Revolution. Looking out across the cobbled streets of Tbilisi's old town from the hotel he co-owns, he is sanguine about the transition.

"There were fairly significant problems under the old government. Things were overly personalised, it was about who you know. And while the old government didn't control every business like some people claimed, it did control whatever business it wanted to. There was a general sense of vulnerability, there was anxiety about what the authorities would do. You could make a mis-step and end up in jail. There is optimism now about all that changing."

* Additional reporting by William Dunbar.

News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
news

As anti-Semitic attacks rise, Grant Feller re-evaluates his identity

Life and Style
food and drink

Savoury patisserie is a thing now

News
news

Meet the primary school where every day is National Poetry Day

News
people Biographer says cinema’s enduring sex symbol led a secret troubled life
PROMOTED VIDEO
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people

Kirstie Allsopp has waded into the female fertility debate again

News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
News
The moon observed in visible light, topography and the GRAIL gravity gradients
science

...and it wasn't caused by an asteroid crash, as first thought

News
people
News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
News
peopleStella McCartney apologises over controversial Instagram picture
News
Gillian Anderson was paid less than her male co-star David Duchovny for three years while she was in the The X-Files until she protested and was given the same salary
people

Gillian Anderson lays into gender disparity in Hollywood

Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
Life and Style
fashionThe Secret Angels all take home huge sums - but who earns the most?
Sport
football

Striker ignored Brendan Rodger's request to applaud audience

News
i100
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?