October 26, 2012 6:10 pm

Georgia’s billionaire premier

Can Bidzina Ivanishvili, once a reclusive tycoon and now the country’s incoming prime minister, bring real democracy?
Ivanishvili with his wife Eka Kherkheulidze (far right) and two of his children at an election rally in Tbilisi, September 29©Reuters

Ivanishvili with his wife Eka Kherkheulidze (far right) and two of his children at an election rally in Tbilisi, September 29

In dazzling sunshine on the final Saturday of September, an immense crowd gathered in Tbilisi. It filled central Freedom Square, and snaked back almost a mile between the plane trees of the main street, Rustaveli Avenue. On a rock concert-style stage on the square, a small, spry man in a business suit leaned over a lectern behind inches-thick sheets of bulletproof glass. At intervals, he punched the air. “Sa-kart-ve-lo!” (Georgia!), he yelled, smiling with faint bemusement at the crowd’s answering roar.

“It is clear as day – we will win and achieve another victory in the history of our nation,” he said. “We will not let anyone separate us from civilisation, modernity and democracy!”

The last time the Georgian capital saw crowds this size was for the pro-democracy Rose Revolution nine years ago, led by Mikheil Saakashvili. That swept away the corrupt, chaotic era of President Eduard Shevardnadze (best known elsewhere in his previous role as Mikhail Gorbachev’s foreign minister). In came a young, zealously reformist government, one the west hoped would turn Georgia and its 4.5 million people into a beacon of freedom and prosperity for other former Soviet republics. Saakashvili himself became a favourite in Washington and Brussels for his willingness to stand up to Moscow – for two centuries Georgia’s imperial overlord – and drive to bring his country into Nato and the European Union. That drive, in 2008, brought Georgia into a five-day war with Russia.

But the man working the crowd on this September afternoon was not Saakashvili. It was Bidzina Ivanishvili, 56, a once-reclusive tycoon, and a politician the like of whom the former Soviet world has never seen. Forbes says he is worth $6.4bn – equivalent to nearly half of Georgia’s gross domestic product. He does yoga. He has a private zoo, with zebras and penguins, near his central Georgian birthplace. He has a $1bn-plus art collection studded with Picassos and Freuds. In Tbilisi, he lives in a $40m high-tech palace on a ridge overlooking the city. He has two albino children (out of four); the elder is a rap artist.

Bidzina Ivanishvili’s $40m compound overlooking Tbilisi

Bidzina Ivanishvili’s $40m compound overlooking Tbilisi

And two days after this mass rally, the six-party Georgian Dream coalition Ivanishvili forged after entering politics only a year ago won parliamentary elections with 55 per cent of the vote. In a shock that reverberated through western capitals, it knocked Saakashvili’s United National Movement out of power. Ivanishvili would become prime minister, and form the government.

Ivanishvili’s victory was a paradox. Together with Saakashvili’s gracious concession of defeat for his party – though he remains head of state until presidential elections next year – it seemed an affirmation of Georgia’s new democratic foundations. But it was a slap in the face, too, for Saakashvili’s reformers, and in some ways their western backers.

In a rancorous campaign, Saakashvili painted Ivanishvili as a Moscow-backed stooge – the tycoon pledged to mend relations with Russia – who aimed to buy Georgia’s political system with billions he made in Russian business in the 1990s. The achievements of the “Rose” years – slashing crime and corruption, and catapulting a once almost failed state into the World Bank’s top 20 places to do business – were under threat, he said. Voters seemed more receptive to Ivanishvili’s message that most of them were little better off, and that Saakashvili’s team had, in their reformist fervour, bent too many rules and established a cronyistic monopoly on power.

An illustrated map of Georgia

As the Arab spring countries follow the former Soviet empire in trying to build democracy, Georgia’s example will be scrutinised. It highlights the balancing act of trying to push through radical, but often painful, modernisation in a poor country while preserving democratic freedoms – and hence the possibility of being voted out.

A decisive role was played by harrowing videos leaked during the election campaign showing prisoners in a Tbilisi jail being beaten, and sodomised with a broom handle. The clips shocked Orthodox Georgia, and seemed to crystallise Ivanishvili’s claim that beneath Georgia’s democratic veneer lurked an uglier reality. (Saakashvili accused Georgian Dream of being behind the leak.)

Yet no one seemed more surprised by Ivanishvili’s victory than the man everyone in Georgia calls Misha – Saakashvili himself. Two days before the opposition rally, I chatted with him on his presidential Gulfstream jet on a campaign trip to Batumi, a once dreary Black Sea resort now refurbished as a playground of Iranian and Turkish high-rollers, and over dinner on a newly created piazza there.

Georgia’s timeline

Zviad Gamsakhurdia, Georgia’s first elected president, toppled by a coup in early 1992

April 1991-January 1992

Zviad Gamsakhurdia, Georgia’s first elected president, toppled by a coup in early 1992

Saakashvili admitted the videos had damaged his campaign, and exposed failings in his reforms. But he seemed to have little inkling of the electoral upset to come. “I still believe there will be a good outcome, if I understand anything about elections,” he said.

Over glasses of amber Satrapezo wine, Saakashvili regaled the four journalists present with tales of his brushes with Russia’s Vladimir Putin (who once vowed to hang Georgia’s president “by the balls”). There was the time he sat between Putin and Alexander Lukashenko, the Belarusian dictator, at a dinner days after former KGB agent Alexander Litvinenko was poisoned with radioactive polonium in London, and publicly blamed Putin.

“I said, ‘Vladimir Vladimirovich, can I eat from the dish in front of you?’ And Lukashenko said, ‘Yeah, it’s much safer to eat from his dish!’” (Guffaws all round.)

Then there’s Putin’s Bond-villain-style parting shot, when the two last met before the 2008 conflict. “Your allies promise you lots of nice things, but they never deliver,” Saakashvili recalled the Russian leader saying. “I don’t promise you nice things, but I always deliver!” (More guffaws.)

1992-2003

Eduard Shevardnadze returns as Georgian leader in 1992

Eduard Shevardnadze returns as Georgian leader in 1992, and is deposed by the 2003 Rose revolution

Saakashvili portrays himself as a one-man protector of Georgia from Russian domination. Its opposition parties were, he said, too weak for the task. And while Ivanishvili’s money had welded them temporarily into a ragtag coalition, this would fall apart once, as he confidently predicted, they lost the election.

But what, I asked, about the charges that his team had authoritarian tendencies?

“Look,” said Saakashvili. “I sit in restaurants and from time to time somebody comes and screams at me. Nobody ever suffers any consequences. People are not afraid to speak their mind.

“When I drive by, some people do this” (he waved), “and some people do this” (he raised his middle finger). “If they do that to the president, it’s an indication [of freedom],” he said.

But talking to Georgians in the days around the election, I began to understand why Ivanishvili struck a chord with them – and why Georgia’s Rose, if not entirely shrivelled, is looking a little wilted. Some of the reasons are rooted deep in the country’s turbulent post-Soviet history.

. . .

November 18 2003

A 35-year-old Mikheil Saakashvili leads protests against alleged vote-rigging

A 35-year-old Mikheil Saakashvili leads protests against alleged vote-rigging

I was in Georgia, by chance, the night the Soviet Union ceased to exist. Sent to cover an armed clash between supporters of Georgia’s first elected president, Zviad Gamsakhurdia, and opposition forces who said he was a tyrant, I arrived in Tbilisi on December 31 1991.

Five days later, as Kalashnikovs crackled and mortars exploded overhead, I was smuggled into a bunker beneath Georgia’s parliament building to interview the lugubrious, sunken-eyed Gamsakhurdia. The next morning, I picked my way along a debris-strewn Rustaveli Avenue to the now empty parliament; Gamsakhurdia had fled into exile in dead of night. By day’s end, Eduard Shevardnadze – Georgia’s Communist party boss before he worked for Gorbachev – said he was ready to return as national leader.

The coup against Gamsakhurdia by former allies and a warlord army set a dangerous precedent: that Georgia’s elected leaders could be removed by means other than free elections. Gamsakhurdia’s brief presidency also saw tensions spiral towards eventual civil wars in two separatist regions, Abkhazia and South Ossetia; the latter was the flashpoint where war erupted with Russia in 2008. Gamsakhurdia himself attempted an armed comeback from western Georgia in September 1993, but died of a gunshot wound that December.

November 22 2003

Rose revolution co-leader Nino Burjanadze enters parliament to declare its session illegal

Rose revolution co-leader Nino Burjanadze enters parliament to declare its session illegal

Shevardnadze found a modus vivendi with Russia. But he struggled to build a state. Georgia’s under-developed industry shrivelled, cut off from suppliers and customers elsewhere in the ex-USSR. Its agriculture, exposed to global competition, withered too. By 1994, the economy had collapsed to a quarter of its 1989 size.

The criminal underworld took over chunks of the economy. Even for those with regular jobs, corruption became a way of life. Wages went unpaid; by the early 2000s, electricity and water often worked for only a few hours a day.

Finally, after attempts to rig parliamentary elections in 2003 to keep Shevardnadze’s government in power, a 35-year-old Saakashvili led thousands of protesters carrying roses in a march on parliament. The next day, Shevardnadze stepped down. In 2004’s presidential elections, Saakashvili got 96 per cent of the vote. He plunged headlong into liberal reforms.

November 23 2003

Opposition suporters celebrate the Rose uprising on the streets of Tbilisi

Opposition supporters celebrate the Rose uprising on the streets of Tbilisi

In early 2006, I returned to a Georgia already being transformed. Electricity and water were flowing, and investment too. The economy was growing. New buildings were sprouting. An EU flag fluttered, optimistically, over the parliament where Gamsakhurdia had been holed up 14 years before.

One night I had dinner with some of Saakashvili’s twenty- and thirtysomething reformers. All spoke fluent English, often after studying in the UK or the US on grants from the Soros Foundation. Their energy and determination were infectious.

They talked enthusiastically about the police reform that has become a textbook example of corruption-fighting. (The government dismissed Georgia’s entire 15,000-strong traffic police, notorious for extorting bribes, and replaced it with a smaller, better-paid force). They described how they had used a form of “plea bargaining” to get senior officials accused of corruption, or tycoons accused of acquiring state property in dubious fashion, to cough up fines or payments to legitimise their assets.

But the conversation rang alarm bells too. One official talked of the arrests made in the anti-corruption campaign. “It was a difficult time,” he remarked. “We even had to arrest some of our friends.” Here was a phrase that could have come from Stalin’s USSR. When, in the coming years, I heard Saakashvili’s reformers called “liberal Bolsheviks”, the description rang true. When I returned to Georgia this year, those tendencies had become even more evident.

. . .

August 9 2008

Separatist troops in breakaway South Ossetia during the five-day war with Russia

Separatist troops in breakaway South Ossetia during the five-day war with Russia

Even on a Saturday, Nino Burjanadze looks the part of the senior stateswoman, immaculate in a navy power suit. In 2003 she was one of the Rose revolution’s three leaders: Saakashvili became president, Burjanadze speaker of parliament, and the third, Zurab Zhvania, prime minister. (Zhvania, then 41, died mysteriously in 2005 of carbon monoxide poisoning from a faulty gas stove.)

A few years ago, Burjanadze had the likes of Condoleezza Rice, then US secretary of state, on speed-dial. Now she is shunned – and, she claims, bugged by Georgian security; an opposition figure accused by the government of working for the Russians after she led demonstrations last year in Tbilisi and, in 2010, met Vladimir Putin. The real reason, she says: she fell out with Misha.

Speaking in her party office, Burjanadze acknowledged the government’s achievements. But she told me she had early misgivings about its rule-bending tendencies.

July 1 2012

Billionaire Bidzina Ivanishvili (waving) greets supporters in Mtskheta, Georgia

Billionaire Bidzina Ivanishvili (waving) greets supporters in Mtskheta, Georgia

“On one hand, if you really do everything according to all laws and regulations, you need more time,” she told me. “[But] if you put yourself once above the law, it’s very difficult next time not to do the same.”

Burjanadze nearly resigned, she told me, after authorities violently broke up opposition demonstrations in 2007. But she stayed until April 2008, after Saakashvili was re-elected president. “Unfortunately, when Misha was already president again, I saw these people were not going to change anything. What they learnt was that they should find PR, and lobbying companies that would help them make better PR.”

The real rift with Misha began after the Russian war that August. Burjanadze told a reporter that the “time for questions would come” in relation to whether the conflict – in which Georgia lost both Abkhazia and South Ossetia, one-fifth of its territory – could have been avoided. Within 24 hours, she said, Saakashvili announced on TV that “people who say the time for questions will come are traitors and Russian spies”.

In May last year, when she led 10,000 demonstrators in Tbilisi demanding Saakashvili’s resignation, state TV broadcast that Burjanadze was preparing a Russian-backed coup. Police dispersed demonstrators with tear gas when some remained after a protest permit expired. Burjanadze accused police of deliberately encircling the crowd. She handed me photos of demonstrators with blood pouring down their faces. “But if the authorities really believed I was preparing a coup d’état, why are my driver and 40 party activists in jail, and yet I am here speaking with you?” she asked.

September 29 2012

Ivanishvili’s Georgian Dream supporters stage the biggest opposition rally in Tbilisi since Rose revolution days

Ivanishvili’s Georgian Dream supporters stage the biggest opposition rally in Tbilisi since Rose revolution days

Yet what about her meeting with Putin? (Even people in Ivanishvili’s camp raise questions about this, apparently considering the Burjanadze brand too tarnished to work with her.) “I didn’t make any secrets,” she insisted. “I said I have to know what Russia thinks about possible future relations with Georgia. If I’m elected president, do I have a chance to negotiate? But immediately after that [meeting], I became the most serious enemy of the country.

“This is like the Bolshevik system,” she added. “If you criticise the regime, you’re an enemy of the people. This is very far from democracy.”

I heard echoes of Burjanadze’s comments when, a day later, I went to see friends of friends in the Tbilisi outskirts. Though their communist-era prefab block was dilapidated even by post-Soviet standards, the hospitality was typically Georgian, the table laden with khachapuri (cheese-filled flatbread), wine and other specialities.

Givi is a nightwatchman for a company linked to Georgian railways, his wife Irina a switchboard operator. The government’s modernising efforts reach right into their cramped living room; their six-year-old daughter sat playing with a child’s laptop supplied by her school.

October 9 2012

President Saakashvili (left) meets incoming prime minister Ivanishvili

President Saakashvili (left) meets incoming prime minister Ivanishvili

“I can’t say Saakashvili hasn’t done anything,” Givi told me. “He’s done a lot of good. He built new roads. I’m working. I have a wage. Though it’s difficult to live on my wage.” His salary, he added, was a not untypical 380 lari (about £140) a month.

“But under Shevardnadze we had a lot more freedom than now,” chipped in his wife. “No one was afraid to curse Shevardnadze. This government is using fear again.”

What did she mean? “I’m a state employee,” Irina said. “If I’m seen going to an Ivanishvili rally, the next day I could lose my job.” Givi added that he had attended a pro-Saakashvili rally at Tbilisi’s national stadium that week with workmates “because at work they said if we didn’t go, there could be problems”.

They were outraged by the prison abuse videos, particularly the sexual abuse of a male inmate. “What began with roses is ending with brooms,” said Irina.

I had had similar conversations in former Soviet republics, from Belarus to Kazakhstan. But, I reflected as I left their apartment, Georgia was supposed to be different.

Two days later, however, Georgia proved it was indeed different: Saakashvili’s government was beaten. On the day after Ivanishvili’s victory was confirmed, I went to meet him.

. . .

Bidzina Ivanishvili’s Tbilisi residence-cum-business centre is a citadel of steel and glass designed by Japan’s Shin Takamatsu, its cylindrical towers wrapped in aluminium rings. The grounds are dotted with Henry Moores; nestled in subtropical foliage is one of Robert Indiana’s “Love” sculptures, with its right-tilted “O”. And then there is the view; a panoramic sweep over Tbilisi and across to Saakashvili’s Reichstag-style presidential building on the opposite side of the Kura river valley.

Ivanishvili’s office is a grey-and-marble refuge of air-conditioned quiet. And the man himself, small, trim and quietly spoken in a well-cut grey suit, is in many ways the antithesis of the heavy-set bundle of manic energy that is Saakashvili. Artwork is everywhere. Behind his desk hangs an Egon Schiele; above the cream leather sofas a Lucian Freud, behind the conference table a De Kooning. But these are replicas. The originals, I discovered, are abroad.

The money for all this was made mostly in Russia, where Ivanishvili, clever fifth child of a miner from Chorvila, a mountain village in central Georgia, studied in the 1980s and gained an economics doctorate. Though he kept a low profile, and in those days called himself Boris Ivanishvili, from that point he has a fairly typical Russian oligarch’s CV. When Gorbachev legalised some private business, he began importing sought-after personal computers and video recorders. That produced the seedcorn to co-found a bank – Rossiisky Kredit – which provided funds to buy assets in post-communist privatisations, soon worth many times what he paid for them.

He left Russia in 2002, moved to Paris for a year, then came home to Georgia. But he did not spend his money only on himself. He spent a fortune building new homes, schools and hospitals around Chorvila, and quietly helped out churches and theatres in Tbilisi. He says he also privately funded some early Saakashvili reforms, including the police reform (though Saakashvili told me this was “total bullshit”).

So, I began by asking him, had Georgia just witnessed a new revolution, albeit an electoral one?

Ivanishvili lacks, as yet, the politician’s polish, switching slightly nervously from Georgian-accented Russian to faltering English. “It’s a clever question,” he said, with a pause. “It wasn’t a revolution. But people were very unhappy. If you compare how many people gathered at the time of the Rose revolution, we gathered even more. So I think people wanted change even more now than they did then. But we did all this by the law, so you can’t call it a revolution.”

But was Georgia’s democratic future safe with him? In Ukraine, after all, whose “Orange” revolution followed Georgia’s in 2004, president Viktor Yanukovich then won free elections in 2010, imprisoned one of the Orange leaders, Yulia Tymoshenko, and turned back the democratic clock.

“I don’t think anyone has the idea that Ivanishvili came to power so that he could take bribes,” he said, with a discreet nod to his surroundings. “My only goal is for real democracy to be built in Georgia. Not a façade, as under the previous government.”

And the claims that he’s a Russian agent? “Only Saakashvili spreads this [idea]. It’s not true,” said Ivanishvili with a faint flash of irritation, denying reports that he had somehow managed to cash out of his remaining Russian assets at suspiciously high prices in the past year. In fact, he insisted, he sold many at below true value.

Ivanishvili is open about wanting better relations with Russia, but insists he will also continue Georgia’s pursuit of Nato and, ultimately EU, membership. That sounded a difficult circle to square, I suggested. The former Soviet Baltic republics had managed it, he retorted. “If our diplomacy is clever enough, we can do the same,” he insisted.

But why did he plunge into the snakepit of post-Soviet politics? Why give up the quiet life with his family, his art, his penguins and zebras?

Ivanishvili told me he was under mounting pressure from the authorities, which began after he broke in 2008 with Saakashvili. By October 2011, he had a plane standing by to take him and his family to France. His paintings were sent to London.

“I didn’t have a choice: either I left my homeland, which I love very much … or I had to go into politics,” he said. “It was dangerous for me to live here any more. And the only person capable of changing the situation was me.

“I postponed the plane three times,” he continued. “For three days we agonised. We really wavered. Things had got impossible here. We feared if we didn’t go in October, they might be capable of anything.”

Instead, Ivanishvili announced he was entering politics. Given all that has passed between them since then, can he manage to cohabit for a year with Saakashvili? Though Ivanishvili quickly withdrew a suggestion the day after the parliamentary poll that Saakashvili should immediately resign, their rivalry seems to go beyond politics into the realms of personal feud. “We’re ready to co-operate with him,” he said. “I think there will be no problems.” Yet even now, Ivanishvili could not resist a jibe. “Saakashvili …drove out people who didn’t think the same way as him. With us, it won’t be like that. Our goal is to unite Georgia.”

Leaving his hilltop stronghold, I reflected that, for the third time since Soviet power collapsed and Gamsakhurdia was toppled, Georgia is entering a deeply uncertain new phase. Its new premier is a political neophyte, sounds naive in some of his aims and leads a quarrelsome coalition that could easily crumble. But at least this time, so far, the transition has been peaceful.

“I was happy,” the billionaire told me as he recalled confronting his supporters at his mass pre-election rally. “Happy because I had analysed the situation correctly. It was proof of what I knew a year ago. That the country wants something different from what Saakashvili has been trying to force upon it.”

Neil Buckley is the FT’s eastern Europe editor

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