Democracy Lab

Rebooting the Bureaucracy in Georgia

As Georgian voters prepare to vote in a crucial parliamentary election, a look back at one of the signature programs of President Mikheil Saakashvili. 

Note: This article is an abridged version of a longer historical case study produced by Innovations for Successful Societies, a research program at Princeton University. In light of the recent scandal surrounding the justice system in Georgia, we encourage readers to check out Tom De Waal's story on the latest events.)

Just months after the 2003 Rose Revolution (see photo) that swept Mikheil Saakashvili's movement to power, a team of new officials attempted to remake the Georgian government, reduce corruption, and improve transparency and efficiency. Youth largely defined much of the new government: The charismatic 36-year-old Saakashvili filled his cabinet with recent college graduates who had supported peaceful demonstrations against former President Eduard Shevardnadze's regime. The revolutionaries campaigned on an anti-corruption platform, and after winning the presidential and parliamentary elections, the new president and his United National Movement (UNM) party believed they had a mandate to dismantle the government and start anew.

Saakashvili looked for a clear departure from the practices of the previous regime. Konstantine Vardzelashvili, the new deputy minister of justice, recalled: "We knew what we didn't want to have and we understood well the reasons that made the previous system fail. Our strategy was ... to build from scratch. Limited bureaucracy and simplified procedures were at the core of our approach." In the early months of 2004, under the direction of Saakashvili and Prime Minister Zurab Zhvania, an opposition leader and past speaker of Parliament, ministries worked to tackle the corruption that had long characterized everyday interactions between government officials and ordinary citizens.

Saakashvili and Zhvania identified corruption as an impediment to the growth of private industry; their goal was to get Georgia's economy back on its feet. They sought the advice of international donors on how to reform the civil service, and at the same time, searched for someone to coordinate economic reforms. The man who came to their attention was Kakha Bendukidze. Bendukidze, a businessman of Georgian descent who had made a small fortune while living in Russia, was known for his outspoken views: He favored economic liberalization at a time when Vladimir Putin sought to increase state influence over the private sector. His economic principles aligned with the vision of the new government; Bendukidze agreed to join the cabinet as minister of economic development.

The new government had to confront the legacy of the Shevardnadze government. Ministries and departments were disorganized. They had minimal accountability and unclear responsibilities that overlapped. In the decade that followed Georgia's independence from the Soviet Union in 1991, the country endured an economic crisis. GDP per capita declined from US$1,611 in 1990, to $517 in 1994, and remained stagnant for the rest of the decade. As private sector employment fell, the government became the employer of last resort. Because of high unemployment, the Shevardnadze government refused to reduce the size of the civil service despite a weak revenue base. With poor monitoring, the central government was unable to determine how many civil servants it employed, much less hold its public institutions accountable. In 1998, Georgia's government employed 133 of every 1,000 citizens, according to the International Labor Organization. (By comparison, for that same year, Ireland, a similar-size country, employed 78 public servants for every 1,000 citizens.)

The government's weak revenue base meant salaries were low -- some staff members earned as little as 30 Georgian lari (about $15 at the time) per month -- driving civil servants to supplement their incomes with bribes. "Corruption was the alternate budgetary system for the country," said Giorgi Vashadze, who became head of the Civil Registry Agency. Transparency International rated Georgia 124 out of 133 countries in 2003. Although the government's dense network of licensing agencies (for automobile emissions, food safety, construction permits) served little regulatory function, officials exacted payments from citizens in return for certifications, and pocketed the money. In 2003, the government succeeded in collecting only 35 percent of the levies, according to the Ministry of Finance. Mismanagement, poor record keeping, bribes, complex regulations, and lack of enforcement all undermined revenue collection. Because tax inspectors were as poorly paid as other civil servants, many diverted the money they collected into their own pockets. The government was caught in a downward spiral.

Saakashvili had the political power to enforce his policies: In February of 2004, Parliament had passed crucial legislation with little debate, significantly increasing the president's powers. The president had the authority to reorganize the government and dismiss Parliament if legislators failed to approve a budget after three months. (Furthermore, under such circumstances, the president could approve the budget by his own decree.) The same legislation expanded the power of the prime minister to appoint almost all cabinet members.

There was a growing debate among political factions on how to structure employment for the civil service. One side favored a career-based civil service, advocating a clear separation of political appointees and professional civil servants to ensure that civil servants maintain institutional memory regardless of political changes in the cabinet. The other side wanted greater ministerial control, based on contractual employment of civil servants. Bendukidze pushed for the latter model, looking to reduce the size of government by privatizing many functions and employing the remaining workers under contracts. He argued that the job security of a career-based civil service would lead Georgia back down the path of corruption and nepotism.

Bendukidze developed a policy of economic reform that emphasized deregulation, privatization, and a strong market economy. He slashed his ministry's staff by two-thirds, and moved to establish short-term, contract-based employment to increase managerial flexibility and control. During the first few months, the new leaders moved quickly, capitalizing on the momentum of the recent revolution, knowing that the window of opportunity for significant changes might be short. Bendukidze's influence grew during that first year. Cabinet members respected his success as an international businessman, his rhetorical skills, and his strong personality.

At the end of 2004, Saakashvili decided that Bendukidze's approach was the best for public sector reform, and put him in charge of a new unit, the Office of the State Minister for Reform Coordination; It would act as an umbrella organization for changes in the structure and size of the government during the next three years. Bendukidze recruited young and relatively inexperienced staffers -- people willing to disrupt traditional ways of doing things. Each ministry would design and implement its own reforms, and Bendukidze's office would help to synchronize policy objectives and principles. Ministries that performed well during the first few months of the transition received greater autonomy, while underperforming ministries worked closely with Bendukhidze's staff to ensure that their strategic plans were consistent with the government's overarching policies. 

In related efforts to reduce opportunities for corruption, the staff of each ministry was cut significantly. In the first year alone, the government laid off 40,000 civil servants; in many cases the government pressed many officials to submit letters of resignation, to avoid legal complications. Precisely because Saakashvili had consistently called for such sweeping changes during the lead-up to the revolution, the wholesale dismissals came as little surprise to the public.

The overhaul of ministerial staff began at the highest levels -- a clear assertion that the old way of doing business was no longer tolerated, and that no corrupt official was immune to investigation. Many well-known officials were detained and prosecuted on charges of corruption. Plea bargaining became common, to reduce the load on the prison system. Many officials agreed to pay fines in exchange for having charges dropped, and dozens of mid-level officials resigned in order to avoid prosecution. Prominent international organizations were concerned about the widespread use of plea bargaining. The practice allowed offenders to buy their way out of prison, and alternatively, it could be used arbitrarily for political reasons.

Although civil servants who lost their positions could reapply, many could not meet the new skill and testing requirements. Privatization and international investment created private-sector opportunities for many of those who lost their jobs, but unemployment remained above 12 percent during the first three years of Saakashvili's term. There was no set procedure for these personnel moves; many in the new government later conceded they had made mistakes by eliminating capable staffers.

In order to eliminate overlapping responsibilities, Saakashvili and Zhvania reduced the number of ministries from 18 to 13, identifying redundant functions and recommending consolidations. (For example, the government disbanded the Ministry of Infrastructure and shifted some of its functions to the Ministry of Economic Development; The Ministry of Internal Affairs assumed many of the responsibilities of the Ministry of State Security, and so on.) The Ministry of Justice's subordinate agencies, the Civil Registry Agency and the Public Registry (which administered the registration of personal identification documents, land, property rights, and titling), were examples of success in personnel management. Public opinion surveys had previously identified document processing as the most corrupt function of government. One advantage that both agencies had over other government operations was that they generated their own revenue; their semi-autonomous status gave them greater flexibility to overhaul ineffective systems, replace corrupt personnel, and improve service delivery. 

Changes in the operations of tax and customs agencies significantly increased revenues. To simplify Georgia's complex tax structure, the government slashed the number of taxes by two-thirds. For the first three years the new tax code included a flat-rate income tax of 12 percent, a 20 percent value-added tax (VAT), and a 10 percent tax on dividend and interest income. The changes created an environment that was friendly to business and foreign investment. From 2003 to 2007, tax revenue as a percentage of GDP increased to 23 percent from 15 percent, according to the Ministry of Finance. Tax reform this did not work smoothly throughout the country, however. The western region of Ajaria on the Black Sea coast, which was controlled by independent strongman Aslan Abashidze (who subsequently collected lucrative customs duties on oil), was one confrontation point with central control in Tbilisi.

Recognizing that higher salaries were necessary to deter bribery, the government took steps to raise the pay of public servants. Saakashvili courted international donors by trumpeting Georgia's democratic values. (For example, the Open Society Institute cooperated with the UNDP to fund a salary-supplement program.) Civil servants' salaries increased significantly: Even though the civil service shrank dramatically, the amount of money allocated for salaries went up by 132 percent between 2004 and 2007. Overall, the state budget increased from US$350 million before the revolution, to US$6 billion in 2006, corresponding with consecutive years of GDP growth of 9.5 percent in 2004, 9.3 percent in 2005, and 8 percent in 2006.

The transition process was not without faults. Saakashvili frequently shuffled cabinet members in the first three years. As a result, institutional memory was short and internal operations were often poorly organized. Some ministers held their positions for only a few months before they were transferred, and new ministers typically brought deputy ministers who had their own ways of doing things. Not surprisingly, agencies that experienced fewer turnovers achieved greater success in implementing long-term strategies. In addition, the contract-based model failed to retain many of the young, talented professionals who had joined the government in the exuberance that followed the revolution; their departure left many ministries without long-serving staffers to maintain consistency in policy implementation.

Saakashvili had varied reasons for constantly shuffling ministers. He replaced some for underperformance, and he often moved competent ministers to other jobs where their skills were needed. From a political standpoint, the frequent high-level transfers limited the power of potential rivals by restraining ministers from establishing their own fiefdoms. But cabinet shuffles kept many ministries off-balance and added to the challenges of implementing sustained reforms.

In 2007, political crosscurrents began to slow Georgia's reform momentum. In September, former Defense Minister Irakli Okruashvili, who had resigned following allegations of corruption, accused Saakashvili of having ordered the murder of a prominent businessman. When Saakashvili had Okruashvili arrested, protests erupted. In November, Saakashvili sent riot police to clear the protesters from the streets, and violence broke out. Police shut down the opposition television station, and Saakashvili declared a state of emergency.

The episode tarnished the image of Saakashvili's government, and the rapid nature of the reforms slowed considerably in the months that followed. Bendukidze became a target of criticism as Saakashvili's detractors claimed that aggressive privatization facilitated foreign (particularly, Russian) ownership of formerly state-owned enterprises. As pressure mounted, Saakashvili again shuffled his cabinet. In January 2008, he eliminated Bendukidze's office and gave him a role with less public visibility. The global recession -- and the August 2008 war with Russia -- diverted the government's focus from structural reforms in the civil service. Many Georgian officials said that civil service reform was simply a lower priority for the president when compared with fighting corruption and fixing the economy.

In liberalizing the Georgian economy and transforming the government into a leaner, less corrupt organization, Saakashvili's reform team made impressive gains. In 2010, Transparency International found that 78 percent of Georgians felt that corruption had decreased. Increased transparency at the lower levels of government improved the business climate: The World Bank-IFC Doing Business Report for 2012 rated Georgia 16 in the world for ease of doing business, up from 112th six years earlier, due to the simplified tax and customs policies. Revenue from economic gains paid higher salaries that provided additional motivation for civil servants.

The reformers were convinced that speed and magnitude were crucial for success. In the absence of extensive planning and coordination, influence and personality in many ways became the driving forces behind the reforms. Indeed, Bendukidze's deputy Lejava said Georgia's success could be attributed to the dedication and resolve of its reformers. "If you are not prepared to really change things and you don't believe in the change, then you have excuses," he said. "People generally don't trust those leaders who themselves have no confidence in their ideas."

 

The restructuring of Georgia's public sector in the aftermath of the Rose Revolution offers an example of a young cohort of reform-minded leaders attempting to reboot a stagnant and corrupt bureaucracy by tearing it down and starting anew. The changes were sweeping and early results were impressive. Saakashvili's government relied on the momentum from the revolution to push through significant changes that ultimately increased the power of the executive branch. Such drastic cuts would not have been possible without the president's political capital in the wake of the revolution and his subsequent consolidation of power. In more recent years, however, the country's leaders face the challenge of institutionalizing these reforms, building a strong and stable team of ministers that can sustain consistent progress, and diffusing the increasingly centralized power and influence that fueled the initial fervor after the revolution.

Photo by AFP/Getty Images

Democracy Lab

Taking on the Gangs in Cape Town

How local officials in a township in post-apartheid South Africa confronted the challenge of gang violence.

Note: This article is an abridged version of a longer historical case study produced by Innovations for Successful Societies, a research program at Princeton University.

In August 1999, a tornado devastated the Cape Flats, a working-class area on the outskirts of Cape Town. Hardest hit was Manenberg, a neighborhood known for gang violence and drug trafficking. Shortly after the tornado tore through blocks of public housing apartments, looters took to the streets to plunder homes and storefronts.

The tornado exacerbated the city's existing problems. City employees struggled to deliver services in the crossfire of gang warfare, and health workers feared that by treating wounded gang members, they might inadvertently bring the violence into the clinics. Ahmedi Vawda, who led Cape Town's Directorate of Community Development, or ComDev -- responsible for improving residents' access to resources, services, and decision making -- recalled that the city officials suddenly had to ask themselves, "Who runs Manenberg? Do we run Manenberg?" They saw the devastation wrought by the tornado as a chance to reassert the government's authority and credibility in a community that felt abandoned to the gangs.

Neighborhoods like Manenberg suffered from long histories of discrimination and neglect. Under the apartheid government, the 1950 Group Areas Act forced the removal of black and "colored" families from Cape Town's developed inner-city neighborhoods. (The term "colored" denoted those of mixed race who possessed some black African ancestry.) Many families relocated to Manenberg, approximately 15 kilometers outside the Cape Town city center; these areas had limited access to government services and economic opportunities. Along with the booming drug trade, unemployment fueled gang activities throughout the 1980s and 1990s.

Vawda's job was to establish social development efforts to reduce poverty levels, but he and ComDev officials worried that asserting the presence of local government might spark a dangerous backlash from the gangs. They had to seek a more subtle approach. Through the lens of a popular counterculture, gang leaders were often viewed as Robin Hood figures battling against the injustices the community faced. For young, unemployed residents who had few economic prospects, promotion to leadership positions in the gangs (often based on reputations for violence) became a source of pride. Although gangs relied heavily on intimidation and the threat of violence to control swaths of territory, they also provided a variety of support services -- loans, food, protection -- that bought them a certain level of respect and credibility.

Not all community members, however, bowed to the burgeoning influence of the gangs. Vigilante organizations sprang up as a reaction to the lack of government security. In August 1996, the assassination of a prominent gang leader brought national attention to the situation and caused a war between the gangs and the vigilantes; police lost control of the streets. In Manenberg, gangs in effect supplanted the government as the legitimate civil authority. According to the South African Police, more than 130 gangs operated in Cape Town with more than 80,000 members -- in a city of just over 2.5 million.

With as many as 50 shootings reported monthly in early 1998, many municipal workers in the Cape Flats feared for their safety as they tried to do their jobs. The residents of the community distrusted outsiders, not knowing whether gang members would retaliate if they accepted offers of government help. Gangs had a vested interest in making sure that government workers did not interfere, especially with regards to housing, where gangs often decided on evictions and subletting.

Vawda reasoned that in order to think of themselves as sharing responsibility for the welfare of their neighbors, residents had to have a better sense of what citizenship meant. In what he described as "particularly traumatized communities" like Manenberg, Vawda saw the need to build new norms of active citizenship and community participation so as to enable residents to make intelligent choices. By fostering stronger relationships between the community, community organizations, and city officials, ComDev hoped to limit the influence of the gangs in residents' everyday lives, build a sustainable framework of shared public service delivery, and reconstitute community confidence.

Vawda worked closely with Ivan Toms, Cape Town's director of health. A respected physician who had been a prominent anti-apartheid activist in the field of community health, Toms gave ComDev's efforts a public face and a strategic focus for reforms. To achieve sustained reductions in homicides and other crimes, the local government would have to address the underlying reasons that young people joined gangs and participated in violence. Vawda and Toms had a team review the city's levels of development and deprivation. In addition to the 1996 census data on education and unemployment, Vawda's team gathered health sector statistics on maternal mortality, infections, HIV/AIDS, tuberculosis, teenage pregnancies, nutrition, and so on. Vawda and Toms looked for areas where steep unemployment coincided with high rates of tuberculosis and HIV; by overlaying health statistics with socioeconomic data and incidents of violent crime, they were able to designate six geographic zones in need of ComDev's intervention. Manenberg and its surrounding neighborhoods ranked as the most urgent.

At the time, the national South African Police Service took a hard line in its attempts to suppress gang activity. Likewise, the national government drafted legislation that criminalized gang membership and set harsh punishments. In discussing the best way of establishing a foothold in the community, the ComDev team initially considered whether to take a hard line similar to that of the national police. Some endorsed informal dialogues with the gangs in order to facilitate service delivery and protect their workers. Initially, Vawda worried that talking to the gangs would only grant them greater authority, and thought it best to operate in spite of the gangs and avoid legitimizing their presence.

But an incident in February 1998 caused Vawda to doubt this approach. Cape Town's new director of housing, Billy Cobbett, wanted to impose order on the chaotic housing committee. He identified cases where gangs had forcefully removed residents and taken over buildings, and obtained court orders for the city to reclaim the residences. But when the police went in to force the eviction, they quickly found themselves surrounded by armed gang members. Cobbett refused to negotiate or rescind the order. The gang issued kidnapping and death threats against him and his family; soon after Cobbett fled with his family. The episode illustrated the challenge of government intervention in the Cape Flats, and left Vawda searching for ways to communicate directly with the community without agitating the gangs.

He decided to have ComDev focus on less confrontational issues. They would ask residents to make critical decisions about the kinds of programs and projects their neighborhoods valued most. The participatory element would help build trust and was aimed to forge new norms of engagement between community and city councils. "There was a debate about whether we were taking on the gangs or not," Vawda said. "And we were. But we were not taking them on as gangs, but the predominance of their influence... What we were trying to do was reclaim public services in the name of the community and [establish] that the community has a right to shape them, to be a party to the processes involved."

Vawda and Toms created Area Coordinating Teams, or ACTs, to encourage community participation in influencing budget allocations for local development efforts. The teams -- comprised of local councillors, city officials, other government officials, and leaders of community-based organizations -- met monthly to gather information on local conditions and to discuss potential courses of action. The meetings were open to the public (ComDev actively recruited community and religious leaders in order to ensure that key stakeholders were present), giving a voice to residents while not entering into direct confrontation with the gangs.

The August 1999 tornado that swept through the Cape Flats -- with Manenberg at the center of the destruction -- prompted Vawda and Toms to open an ACT forum in Manenberg. Vawda's team had coordinated the city's emergency aid and reconstruction programs, and established strong relationships with community leaders and local council representatives. Toms agreed to chair the Manenberg ACT, lending it a prominent name. But he needed to convene the right kinds of people so that the ACTs would be effective: He created a team of experienced community activists in order to facilitate meetings, manage the participating parties and agencies, and schedule follow-up.

When the first meeting of the Manenberg ACT convened in March 2000, it did not go smoothly. Long ignored by the government, community members would not allow officials to speak. "They said, 'We've had to be the front line against the gangs. For 20 years where were you?' They would just scream at us, literally just scream at us," Vawda explained. But as community members came to realize that the ACT provided an opportunity to vent their frustrations -- and perhaps influence outcomes in their communities -- participation grew. Having a space to air grievances was an important step in building partnerships between officials and the community, but the process took time and patience. In an effort to involve as many community members as possible, ComDev arranged smaller meetings to tackle specific issues, and invited the organizations and individuals who had expressed concerns during the larger sessions. By pooling their resources, groups that sponsored women's rights, youth programs, and elder care, for example, could focus on their common goals.

Of the eight pilot ACTs, the ones in Manenberg and Hanover Park were the most successful, due to Toms' ability to lobby the city council. In other ACTs, the chairperson played a less prominent role in building support, and those ACTs' forums subsequently had much lower attendance rates. According to longtime community activist Faldiela De Vries, "one of the reasons why the ACT worked was that people were taught how to engage with government, and both sides began to know how the other functioned." Local residents cited better communication among the NGOs, and the meetings moved from reactive complaints to proactive solutions.   

The first year of the ACT forums coincided with a period of transformation in Cape Town's city government. Following its victory in municipal elections in December 2000, the Democratic Alliance Party eliminated ComDev; much of its portfolio was transferred to the new Department of Community Services. (The Democratic Alliance viewed the forums as an initiative of its rival, the African National Congress, and limited political and financial support.)

The national government also passed a new act which obliged local governments to enhance community participation in service delivery. The legislation also mandated community participation in drafting municipal budgets and in determining resource allocation; Toms encouraged existing ACTs to form the basis for community involvement in regards to the new legislation. As the Democratic Alliance reduced support for the ACT program, the teams' meetings lost their influence. By the end of 2001, only the Manenberg ACT was still meeting on a monthly basis.

Despite the lack of government support, though, community-based initiatives continued to coordinate their efforts. In 2005, for example, a group of local activists joined together to form the Proudly Manenberg campaign to express their frustration with the persistent presence of gangs after a student was killed. The goal was to carve out a space for the community separate from gang life. Just as the ACT coordinated local civic organizations and development projects, Proudly Manenberg gathered key stakeholders in the community to chart a social development plan that centered on local empowerment through education, business, environment, health, sports, arts, housing, and safety.  

The extent to which the ACT forums impacted the confidence, social capital, or well-being of the community was difficult to measure. In a 2004 survey of Manenberg residents, about half said communication from the council to the community had improved since the beginning of the program (and vice versa), and 55% said the ACTs held the council accountable. Although Manenberg saw a steady decline in gang-related violence following the first year of the ACT program, it was difficult for officials to conclude this correlated with ComDev's activities.

Vawda was confident that the ACTs had provided the space for the community to take on an active role. "I think the intervention that we made had opened the wider process of communities reasserting themselves," he said. ComDev's initiative in the Cape Flats showed that, by carving out a space for civic participation and using local input to accurately map out the challenges, the community and the government could together begin to identify alternative solutions while not risking confrontation with the gangs.

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