Democracy Lab

Don't Rush to Judgment on Georgia

The new Georgian government's arrests of oppositionists have critics crying foul. But they should let justice run its course.

Weeks after elections in Georgia brought billionaire Bidzina Ivanishvili's Georgian Dream coalition to power, the arrests of numerous senior officials from the former regime of President Mikheil Saakashvili have unleashed a wave of concern and criticism in the West. But the critics' quickness to pile on the new government glosses over the serious abuses perpetrated by the previous government and fails to give due process a chance.

Since the arrest in early November of Georgia's former defense and interior minister, Bacho Akhalaia, and a string of other ex-officials, a rash of articles and op-eds have appeared in the Western press warning against the specter of political vengeance from the Georgian Dream, which now holds a majority in parliament. Unsurprisingly, neither media clamor nor stern words from Western leaders have done much to stem the tide of arrests, and now it's been announced that former longtime Interior Minister (and briefly Prime Minister) Vano Merabishvili has also been brought in for questioning. For most observers, the optics of a campaign of arrests do not bode well for a new political movement aggressively (and likely unfairly) branded as Russian proxies by the ruling-turned-opposition United National Movement.

But for all the public dismay and expressions of concern, there has been a surprising lack of due diligence about who's being arrested and why. While the lion's share of English-language coverage has cast the situation as a politically motivated purge against a besieged pro-West administration, the reality is actually far more complex. Upon examination, the UNM's own record does much to dispel the notion of Akhalaia, Merabishvili, and their ilk as unfairly accused, embattled democrats.

It is rarely mentioned now, but the much-feared Akhalaia and Merabishvili were responsible for creating an extensive -- and very likely illegal -- surveillance and security apparatus in Georgia, thus substantially contributing to the same climate of state impunity that helped propel Georgian Dream to a surprise victory in the October 1 elections. Akhalaia, a close ally of President Mikheil Saakashvili and onetime head of the country's penitentiary system, resigned as interior minister after disturbing images of systemic abuse in Georgia's swollen prison system were leaked. Though Akhalaia served as interior minister when the scandal emerged, civil society groups and protesters alike demanded his resignation for his role as de facto prisons boss. After initial resistance, he complied. (Actual prisons minister Khatuna Kalmakhelidze, widely perceived as having little real power, also resigned.)

On cue, the interior ministry responded to the scandal by releasing its own set of conveniently available recordings and arresting opposition members. This continued a longstanding and curious Interior Ministry tradition of releasing damning audio or video evidence for seemingly every contingency. That Akhalaia's own downfall was precipitated by leaked videos contained more than a little irony.

Merabishvili, easily the longest-serving member of Saakashvili's cabinet, was an all-powerful interior minister. He has been alternately credited with spearheading the country's successful police reforms as well as presiding over a host of abuses of power. Aside from bearing responsibility for the climate of fear engendered by this ubiquitous national security state, Merabishvili -- as well as Akhalaia's brother Data -- has been implicated in the controversial death of 28 year-old Sandro Girgvliani at the hands of senior Interior Ministry officials following a reportedly tense exchange involving Merabishvili's wife in a Tbilisi café in 2006. The case, which came to symbolize a culture of official impunity and a pliant judiciary, ended with the jailing of a few interior ministry officials, leaving Merabishvili's role mostly ignored. Echoing this sentiment, a 2011 ruling by the European Court of Human Rights agreed that the case was insufficiently and deliberately ill-investigated. Even more ominously, a United Nations probe has also linked Merabishvili's interior ministry with a 2008 attack on two buses carrying ethnic Georgian residents from the breakaway Abkhazia region, which Tbilisi had originally blamed on separatist forces.

More broadly, the unfortunate reality is that the previous government has not lived up to much of its lofty pro-democracy rhetoric. While the UNM's enthusiasm for the West and relative success in modernizing Georgia may have made an indelible impression on their counterparts in Washington and Brussels, the UNM's decidedly pro-Western brand-building should not be confused with actual democratization, as extensive reports of an anti-democratic pre-election environment attest. And for all of the UNM's keenness for international indices and rankings, most democracy measures paint a very different picture than the one usually broadcast by the UNM and its allies.

According to Freedom House, Georgia has made no progress with democracy development since 2005, and press freedom remains roughly the same as it was under the kleptocratic pre-Rose Revolution presidency of Eduard Shevardnadze. Other assessments are even less encouraging: The Economist Intelligence Unit's Democracy Index shows Georgia backsliding from 2006 to 2011. And Reporters Without Borders shows major regression in press freedoms in Georgia since 2003. The country now languishes just below 104th place, underneath such paragons of liberty as unrecognized North Cyprus, Chad, and Ecuador. Even Georgia's economic reforms, widely praised for its pro-business posture, look hollow on closer examination. Indeed, the effort to portray billionaire prime minister Bidzina Ivanishvili as the planner of a Viktor Yanukovich-style anti-democratic counterrevolution is hardly supported by the UNM's own poor record. Given the climate of impunity that permeated much of the UNM's tenure, the new government is both politically and morally obligated to investigate and address these past wrongs.

This should put the new government's arrests in a more appropriate context. While no good adviser should be surprised by reactions to the arrests, the Western outcry has nonetheless been much too hasty. Ultimately, it's not the arrests themselves that will test the new government's commitment to democratic ideals and the rule of law so much as the Georgian judiciary's commitment to transparency and due process. On that count, issuing harsh judgments now would be premature, and could aggravate already raw feelings in Tbilisi, where many feel that the West was much too close to the UNM and often too passive to its excesses.

The accusatory and very public denunciations of the new government -- which overcame significant structural odds to win the elections, by the way -- can easily be construed by Georgian Dream as evidence that reflexively pro-UNM sentiments remain engrained in some quarters of the Western media and governments. From Georgian Dream's point of view, the UNM received little more than the rare wrist-slap during a tenure pockmarked with abuse, not to mention a war with Russia, yet the new government's attempt to bring those responsible to account draws howls of protest. Unfortunately, it would be hard to say that they don't have a point.

There's no question that democracy in Georgia still has a long way to go. UNM misrule aside, the new government's reactions and rhetoric fail to appreciate legitimate worries that Georgia is swinging from one autocrat to the next. Still, the burden of democratic maturity should rest with the West and not Georgia's six week-old government or its green prime minister. By all means, Tbilisi's actions should be monitored and held to its constitutional obligations, but it remains much too early to declare Georgia's first modern constitutional change of power a failure and risk alienating a Georgian leadership already sensitive to demonstrations of Western partiality. If the West is genuinely concerned about the fate of Georgia's political development, it's important to give Tbilisi the time and space to ensure due process is observed and justice is served.

Photo by VANO SHLAMOV/AFP/Getty Images

Democracy Lab

The Migrant Money Machine

The developed world could make a big difference to the global economy simply by helping migrants to do what comes naturally: send money home.

Everybody knows that the tens of millions of migrants from developing countries (documented and undocumented) who work in Europe, North America and the Persian Gulf send home a lot of money. What most don't know, though, is that the sums are triple the development aid budgets of the rich donor countries, and growing rapidly. Nor are many people aware that remittances have morphed from an afterthought to a key component in strategies for transforming poor countries into successful "emerging market" economies. Indeed, it's becoming clear that Lant Pritchett, a brand-name economist now at the Center for Global Development, was ahead of his time in arguing that the best thing rich countries could do for the developing world is to let their migrants do the heavy lifting.

Start with the numbers. Remittances to developing countries, which were below $100 billion as recently as 2002, reached $372 billion in 2011. Not surprisingly, India and China topped the list of recipients with $64 billion and $62 billion respectively, followed by Mexico ($24 billion), the Philippines ($23 billion), Egypt ($14 billion), Pakistan ($12 billion), Bangladesh ($12 billion) and Nigeria ($11 billion).

What may surprise, though, is that the impact on these large countries with relatively large economies was dwarfed by consequences for a dozen small countries that are effectively remnants of colonial empires or economic satellites of the oil states. Think Tajikistan, Moldova and the Kyrgyz Republic, ex-Soviet republics that each receive more than one-fifth of their incomes from migrants. Or Lesotho (29 percent of GDP), which is surrounded on all sides by South Africa. Or Lebanon, which derives 20 percent of its income abroad, mostly from the Gulf. There's a three-way tie for most dependent Latin American country, by the way, with El Salvador, Haiti, and Honduras each pulling in about 15 percent of their income from migrants living in the United States.

The flows are volatile. Changes in oil prices affect the gush of money sent from Russia and the Gulf, for example, while the global recession (in particular, the collapse of the construction industry) took a hefty chunk out of remittances from Europe and the United States. But that hit was cushioned in part by the strength of the dollar and euro through the recession, which meant the money that was sent paid more bills in local currency back home. Note, too that the average rate of growth in remittances is so rapid that the cycles are overwhelmed by the trend.

Of course, the primary beneficiaries are the migrants' families. But the long-term effect on economic growth is considerable, and for a variety of reasons. China had a big head start in this regard. Overseas Chinese provided huge amounts of capital -- and more important, the mix of technological and managerial knowhow and experience in international trade -- to power China's takeoff in the 1980s. 

 

India is far behind, in part because a large percentage of overseas Indians are semi-skilled workers in the Gulf. Ironically, India's well-developed financial markets have also played a role: That has made it possible for affluent overseas Indians to invest in stocks and bonds back home rather than in new businesses. But there's little doubt that the Indian-American high-tech connection is beginning to pay off, both in terms of direct investment and in the ease of technology transfer. Though hard to quantify, the success of India's North American diaspora clearly offers aid and comfort to interests back home that are fighting to open the country to foreign business -- an uphill struggle in a country long dominated by politicians and bureaucrats who have much to lose in a more competitive, less regulated economy.

Savings rates in Asia are very high -- embarrassingly high in the case of China, which saves more than it can easily invest at home and thus depends on big trade surpluses to sustain growth in output and employment. But Latin America, where domestic savings rates are anemic, is an entirely different story. Today, migrant remittances are mostly fueling consumption -- poor people need to eat more than they need to save. But that could change as Latinos in the United States climb the economic ladder. Their money could supplement the availability of capital back home, especially for small business start-ups from Mexico to Brazil that are now largely shut out of the credit markets.

Actually, the poorest countries are starving for capital for public infrastructure as well as for private business. Hence the new interest in "diaspora bonds" -- government-issued debt denominated in local currencies that is marketed to expats to finance specific projects. There's no magic here: Migrants know as well as other potential investors (maybe better) that such bonds carry the risk of default as well as the risk that currency depreciation will eat into their principal. Still, the bonds make sense, at least in theory, both because they appeal to migrants' patriotism and because currency risk matters less to migrants since their relatives could always use the local cash.

Thus far, diaspora bonds have worked best where special means of raising capital are needed least (see India and Israel). But the World Bank is pressing the issue, and there's hope the bond approach could make a difference, in particular, in sub-Saharan Africa.

What we know for certain, though, is that more remittances are better than less -- and that Pritchett's exhortation to let migrants help their home countries by doing the jobs nobody wants in rich countries was on the mark. Migration policy is not about to be liberalized in the United States or Europe -- indeed, net migration could well remain negative, as chronic unemployment (not to mention xenophobia) dogs the developed world. Even Saudi Arabia, the second-largest national source of remittances after the United States, is making serious noises about forcing employers to substitute unproductive Saudi labor for Asian and Arab workers.

But there is one, widely ignored way to increase the sums going back to developing countries. The great bulk of remittances are sent home in sums of a few hundred dollars. And the costs of sending the cash is startlingly high -- as much as 30 percent in some remittance "corridors." In part, that's because the real cost of wiring $20,000 across borders is hardly different than wiring $200. However, it's also a function of competition, or lack thereof.

The World Bank maintains a website in eight languages in which the fees charged by every major financial institution in every international cash corridor are posted. Unfortunately, though, the people who need the information the most are also the people least likely to use websites, and also the least likely to have the time to cross a city to find a cheaper service.

Governments generally aren't inclined to lean on financial providers to offer more competitive service; this is a large and profitable business that knows how to push back. But it may be an arena in which NGOs could make a difference, publicizing abuses and praising do-gooders in cities and neighborhoods where immigrants have economic power by virtue of numbers. Paring the average fee from around eight percent by a single percentage point would mean an extra $3 billion for recipient countries -- roughly the aid budgets of New Zealand, Austria, and Finland combined

Screen Grab of Remit 2 India Ad