Waiting for the elections

On the basis of recent experience we can assume that the development of the Georgian economy very much depends on the forthcoming elections and reaction of the people to their results. The Government, the opposition and the long-suffering population are all waiting anxiously to see what will happen after the elections, as anything could happen, including protests, confrontation or worse.

Elections are a very costly pleasure in Georgia. Some time ago President Saakashvili stated during a public appearance that he would not call snap elections because they cost USD 1 billion. Officially they do not cost this much, so the opposition leapt on this statement, saying it was a slip of the tongue and the President was revealing what the administration really spends on election campaigning, regardless of what the published figures are. It is very difficult to prove whether they are correct or not but even if we take the official figures elections are a serious burden for Georgia’s economy.

The situation in the country remains tough and the unemployment problem is pretty acute. There have been some positive export tendencies in the first quarter of 2010 but they are very insignificant in the broader picture. The administration has managed to mobilise some serious resources to undertake different projects, such as reconstruction work in Batumi, Kutaisi, Tbilisi and some regions, but as part of its election campaign. Some social projects have also been financed in order to attract public sympathy for the ruling party and its candidates. But the overwhelming victory the Government is targeting itself could in itself create a serious wave of protest which will eventually have a negative impact on economic development. If protest rallies attract serious support the amount of foreign investment in Georgia, already small, will further decrease. As summer is approaching the tourist business will also be affected. Inflation could take hold, although this is the argument often used by the authorities to persuade people not to take to the streets, and economists are not agreed on what the economic consequences of previous waves of public protest were.

The opposition think that Georgia's economic difficulties stem from the pressure which is applied to businesses by the administration through various structures. Many opposition members state that businessmen are complaining that they are happy to pay more to the budget but this money is used to finance projects purely beneficial to the ruling party. There are predictions that after the elections the pressure on business will increase further, and small and medium-sized businesses will also be subject to it. However there is still hope that the Government will exercise more thoughtful policy and balance its approach to the business community. Some steps are now being taken to attract investment from Georgian emigres, which might make putting pressure on people seem counterproductive in the longer term.

When you receive your next copy of The Messenger on Monday the elections would be over. Of course any consequences will not occur the next day but at least we will have the preliminary results of the poll to work on. On the basis of these we can make more accurate prognoses of what is in store.