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.
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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.)