• ‘Drawn-out decision-making hurts business’;
• Parallel structures with overlapping functions weaken state institutions;
• The state should be governed by competent institutions;
• National Security Council facing ‘artificial obstacles’;
• Majoritarian component of electoral system should be changed;
• ‘There was actual absence’ of proper economic forecasting;
• Russia is a ‘serious problem for our security’;

President Giorgi Margvelashvili delivers his annual speech in the Parliament chamber in Kutaisi, March 31, 2015. Photo: parliament press office

President Giorgi Margvelashvili delivered his second annual state of the nation address in the Parliament on March 31, giving praise to some of government’s policies, but also criticizing the way the country is governed, speaking out against what he called “parallel” structures and warning against weakening of state institutions.

He started his speech by saying that in order to take “right steps we have to tell the truth to each other.”

In his 50-minute wide-ranging speech, Margvelashvili raised for number of times, what he called, the problem of “systemic parallelism” involving setting up of numerous parallel councils and commissions under the Prime Minister with overlapping functions be it in economy, foreign policy or other areas. He said this trend leads to “inefficiency” in governance and triggers a question “who is responsible for decision making?”
 
“I deem it unimaginable to implement correct economic policy and reforms under conditions of currently existing systemic parallelism,” Margvelashvili said in his speech delivered in the Parliament chamber in Kutaisi in presence of lawmakers, chairpersons of supreme and constitutional courts, central bank chief, foreign diplomats and civil society representatives.

Despite President’s multiple calls for the government members to be present at his annual address, PM Irakli Garibashvili and cabinet ministers snubbed the event like they did last year. 
 
“Economic development is impossible, when on the one hand we have the Economy Minister, who is also the vice premier, and on the other hand when his decisions are being hampered by various economic councils or agencies,” Margvelashvili continued.

The President, who under the constitution has less power than the PM, also said that functions of the Foreign Ministry should not be “duplicated or scattered” throughout various other agencies either.

“For example, a newly created Inter-Agency Council on Foreign Policy partially duplicates the functions of the Foreign Ministry and the government,” the President said.

Margvelashvili said that the mandate of PM’s special representative for relations with Russia, Zurab Abashidze, who is tasked to lead bilateral dialogue with Moscow, “is not defined clearly by law.”

“It is also necessary to fully integrate his [PM’s special envoy] activities into the policy of the Foreign Ministry,” the President said.

Margvelashvili also said the work of the National Security Council (NSC) under the president is being hindered by “artificial obstacles.”

“Believe me it causes uncertainty in our society and among our [foreign] partners,” the President said.

The role of the NSC, which is chaired by the President, was sidelined by the Security and Crisis Management Council, which was established late 2013 and which is chaired by the Prime Minister.
 
Later during his speech, when speaking about the need for strong state institutions, Margvelashvili again touched upon this issue of “parallelism”.

“The state should be governed by competent institutions,” he said. “Regrettably, we have up to two dozen of councils and structures, which are duplicating functions of and in most of the cases act as superiors to those agencies existence of which are already envisaged by the law,” he said.

“For example there is a minister in the cabinet with a specific portfolio, but at the same time a council is being established under the Prime Minister with the same portfolio and that minister is an ordinary member of that council. It triggers a question: who is responsible for decision making? Unfortunately, such cases are not rare,” the President said.

“Unjustifiably large number of various commissions, councils and agencies with duplicated functions, as well as who is in charge remaining undetermined, creates confusion in business circles, investors, international partners and in the society,” Margvelashvili said.

“Eventually it leads to weakening of institutions’ sustainability, inefficiency in governance and dragging out of processes,” he added.

“We should know who is actually a decision-maker in which sector and who is responsible for successes and failures. Therefore, we should form such system of governance, where persons in charge will be clearly defined,” Margvelashvili said.

“A notion as if the state institutions should be relegated leads us towards anarchy,” he said.

“The society acts as a watchdog on government, but burden to govern is on the state institutions and their heads. Breakdown of these institutions will lead us to chaos. No one will be a winner in such situation,” Margvelashvili said.

“We [officials] are responsible for our choice to serve our homeland, Georgia. And to whom are we accountable? No one but people can be considered as our employer and our judge,” he said in what some have described as a veiled reference to ex-PM Bidzina Ivanishvili and his informal powers; previously Margvelashvili said in one of his public speeches that the state should be ruled by strong institutions and “not from backstage”.

‘Government Listens to People’

The President said that “today the government listens to the people” and he considers it to be “a huge achievement.”

“Public opinion is often decisive in political processes,” he continued. “This is a chance for the people to get more actively involved in country’s life.”

After the 2012 parliamentary elections, he said, “we created freer Georgian society and now it is up to us how to use this freedom and in where to direct this released energy – towards hatred, aggression and pain of past or towards hope for the future.”

In his speech he also hailed increase of foreign direct investment in 2014, and praised the government for keeping “human-oriented budget”; he also noted “successful” state-funded projects in the healthcare sector, and state-funded assistance programs for small and medium enterprises in agriculture.

‘Unprepared for External Shocks’
 
On economy, the President said that recent depreciation of the Georgian currency, lari, demonstrated that the country was not prepared for external economic shocks.

“The fact is that we have not yet reached a desirable dynamism in economic processes. The level of unemployment and inequality is still high; and we are facing slowdown of economic growth,” Margvelashvili said.

He then spoke about opportunities opened up for Georgia after deep and comprehensive free trade agreement with the EU and noted the need for providing more information to the citizens and businesses about possibilities that this treaty creates. 

The President said that “sharp fall of lari” and economic slowdown made the authorities to consider revision of budgetary targets and halving of growth outlook. Although the government said last month it may more than halve its current 5% growth forecast, Finance Minister, Nodar Khaduri, said last week that final decision will only be made after economic data for first quarter becomes available. Real GDP growth was 2.7% y/y in the first two months of this year.

Margvelashvili said that these developments showed “once again the lack of Georgia’s preparedness in the face of external economic risks” and “actual absence” of proper economic forecasting.

“To better tackle external shocks we need a flexible system of economic forecasting,” he said. “Cooperation should be deepened between the Finance Ministry, Economy Ministry and the National Bank in a way in which the independence of this latter will be protected.”

He then raised the issue of what he called problem of “oligopolies” in economy; Margvelashvili recalled Georgian Dream’s (GD) platform under which it ran a campaign ahead of the 2012 elections and said that tackling of this problem was among GD’s pre-election promises.

“But questions are still acute about oligopolies,” Margvelashvili said. “Therefore it is logical when questions about efficiency of the Competition Agency arise.”

‘Drawn-Out Decision-Making Hurts Business’

The President said that protracted decision-making on various policy issues by the government creates problems for the economic development.

“Local or foreign business representatives are still frequently talking about dragging out of various decisions by the authorities as a result of which implementation of business initiatives are delayed and attracting of investments hampered,” Margvelashvili said.

“It is important to involve businesspeople in the process of making business-related decisions. It is essential to have more communication with business before unveiling or enacting those initiatives, which are related to business environment, investments, tourism; at the same time, when decision are made, they should be implemented quickly and vigorously,” he said.

Foreign Policy

On foreign policy issues, the President reiterated need to continue pursuing Euro-Atlantic path and said that Russia is a “problem”.

“Georgia’s security and welfare is directly linked with European and Euro-Atlantic integration,” Margvelashvili said.

He said that Georgia needs more support from its western partners on the path of the Euro-Atlantic integration.

Margvelashvili said that from the upcoming EU Eastern Partnership summit in Riga Georgia needs “concrete results, which will clearly outline country’s European perspective and make benefits of the European integration tangible for the population.”

On NATO he stressed on importance of “timely and efficient” implementation of the substantial package of cooperation, approved by the Alliance at its summit in Wales in September.

Margvelashvili recalled that he asked twice the government to summon a meeting with his participation to discuss the implementation of this package.

“So far I have received no response from the government,” the President said.

Margvelashvili said that Georgia has to intensify cooperation with those NATO-member states, which are “still skeptical about Georgia’s NATO integration.”

He said that Georgia’s NATO integration, as well as planned joint training center in Georgia, “is not directed against anyone.”

He also said that Georgia’s “problems should constantly stay” on the international agenda. 

“It is inadmissible for narrow party interests to cast doubt over this agenda,” the President said.
 
“Our task is to maximally demonstrate Georgia’s geopolitical role and those advantages, which make our country interesting for other countries,” he said.

On ties with the United States, he said that potential of charter of strategic partnership between the two countries is not yet fully tapped.

‘Russia is a Serious Problem’

Russia, he said, is a “serious problem for our security” and added that Moscow is “punishing” Georgia, Moldova and Ukraine for their free choices.

“Occupation of Georgian territories in 2008, war in Ukraine, and problems in Transnistria [Moldova] represent a punishment of Georgian, Ukrainian and Moldovan people by Russia for their independent choice,” the President said.

He said that Georgia should demonstrate to its western partners that it is “sparing no effort” to defuse tensions with Russia. “Of course we need more support in these efforts from our partners,” Margvelashvili said.
 
“Georgia is one of the targets of Russia’s global propaganda-ideological campaign. The essence of this campaign is to divert Georgia from European and Euro-Atlantic choice through so called ‘soft power’,” he said.

“A conglomerate of local [Georgian] anti-western forces is also involved in this campaign. Stronger consolidation of pro-western agenda within the country is required in order to [repel] this attack,” the President said.

He said that Georgia should further intensify and promote policy of non-recognition of breakaway Abkhazia and South Ossetia.

“It should be stressed that non-recognition does not aim at isolation of people living in those territories,” the President said, adding that “direct dialogue” with Abkhazians and South Ossetians is needed.

Democracy and Human Rights 
 
The President said that strengthening of democracy and “establishment of high standards of human rights remains our primary task.”

“We often hear that the situation is much better in this respect now than it was under previous government and of course this is true,” Margvelashvili said.

“But I think it is high time to look towards future. We should proceed from those requirements, which are set by our goal – modern European state. Strengthening of democracy is a permanent process. But have we done enough in this respect?”

“Developments over the so called surveillance [legislation] speak volumes in this regard,” he said.

In November, 2014 President Margvelashvili vetoed government-backed bill allowing the Interior Ministry to retain direct access to telecom operators’ networks and proposed lawmakers his alternative version of the bill; the Parliament overrode the veto.

He said that “no one wants” reoccurrence of mass illegal surveillance practice of the previous authorities.
 
“But what made both the parliamentary majority and minority groups to get united to vote down the bill proposed by me and to pass the bill, which was not supported either by the public or the international organizations?” Margvelashvili said, but at that point he was interrupted by complaints voiced from the chamber as some UNM lawmakers told him that they were against of the government-backed bill too. Although UNM MPs did not support president-proposed bill, they, like some GD MPs, did not either vote for overriding presidential veto.
 
The President mentioned separately importance of protection of minority rights, saying that “our goal should be eradication of causes of discrimination.”

“The problem is not only violence, but the way of thinking through which an individual is discriminated, stigmatized on the grounds of political or religious views, sexual orientation, illness or disability,” the President said.

Margvelashvili also touched upon gender equality and reiterated his support towards introduction of mandatory quotas for women to help increase the number of female members in the Parliament.

In the speech he also called for a reform of electoral system and in particular stressed that “changed” of existing majoritarian component of electoral system is of “principle” importance. He said that the reform should be initiated by the parliament during its spring sessions in order to have enough time for its introduction by the next parliamentary elections in 2016.
 
Judiciary

He said that “important steps have been taken to strengthen the judiciary” since Georgian Dream came into power in late 2012.

“But it is obvious that judicial reform needs more stimulus. Judicial independence should be strengthened; judicial accountability before the public and quality of justice should be increased. There should be no place for doubts either inside or outside the country that justice system can be used for the purpose other than legitimate one,” Margvelashvili said.

When speaking about the judiciary, he recalled the case of Sakdrisi gold mine, when the authorities issued permit to a company for carrying out mining operations at the site, which some archeologists believe is the world’s oldest gold mine, at the time when the case was still in the court.

“The fact that Sakdrisi was blown up before court’s ruling speaks about disrespect towards the judiciary,” Margvelashvili said.
 
The President said that “timely” reform of the prosecutor’s office and the Interior Ministry was needed. Government announced about the intention to carry out these reforms in December.

MPs’ Reactions

After the President’s address, one representative from each of the 11 factions in the Parliament was given 15 minutes to deliver their response.

UNM lawmakers focused mostly on criticizing the government and “informal rule” by ex-PM Bidzina Ivanishvili, and saying that absence of government members in the chamber is disrespect of the President and the Parliament. Many of the GD lawmakers, who spoke during the debates, were focusing on government’s achievements, and Free Democrats (FD) opposition party was criticizing both UNM and GD.

“I would agree with many things said by the President today,” UNM MP Giorgi Gabashvili said.

“But unfortunately today’s symbol is not your address, but these empty chairs,” he said pointing at the part of the chamber, which is designed for government members. “Georgia has no government at all; Georgia has several executives of one man’s [Ivanishvili] will.”

FD MP Irakli Chikovani thanked the President for his “clear position and assessments, which were really objective.” After criticizing both GD and UNM, MP Chikovani said that FD party was emerging as an “alternative force.”

GD MP from the Republican Party, Tina Khidasheli, said that this was “the address by the President of Georgia as of a unifying [figure] and not as of a leader of any political force.” “It should be welcomed when the President manages to be a unifier,” she said.