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Leadership and Management for Integrity
Budapest, July 5, 2012
The Georgian Case
10:4512:00 CEU TIGY Room
Between 2004 and 2012 Georgia underwent major transformation. One of the mostcorrupt countries in the world became an example for others in successfully defeating
corruption. The third poorest country of the former Soviet Union in 2003 tripled its GDPPer Capita, had a ten fold increase in the National Budget and became the biggest
exporter of electricity in the region by 2012. The home to Pankisi Gorge, no mans landknown for businessmen kidnappings, and Soviet era mafia, Thiefs in Law, made it to
the top ten in Doing Business ranking of the World Bank and holds the second position inthe world for registering property and 8thposition in starting business.
So how did Georgia, the country known for its limited natural resources, manage toachieve so much while dealing with two breakaway regions of Abkhazia and South
Ossetia, engaging in armed conflict with Russia and being brushed off by two of its mainallies, the European Union and the United States.
This session will focus on the reality of post Rose Revolution setting and the difficultiesthat abrupt changes of power bring to reformers. It will look at The Georgian Case
through the prism of four basic principles: Full Eradication of Corruption, Efficient andResponsive Governance, Libertarian Vision in Policy Development and Implementation,
Total Deregulation and Complete Privatization leading to total liberalization. Thediscussion will focus on anticorruption reforms, crime prevention and law enforcementimprovements, building transparent and friendly business environment through easy
licensing and registration procedures, liberal labor legislation, taxation and trade policies,reforms in energy, educational, social protection and penitentiary systems.
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GEORGIA IN 2003
1. The Regime: Unpopular and Visibly Weak
2. The Electoral Process: Transparently Fraud3. Economic Situation: Desperate
4. Communal and Social Services: Virtually
Nonexistent
5. Security Forces / Military: Undersupplied and
Hungry
6. Corruption: Widespread
7. Opposition Leaders: Credible, (Eventually) United,and Decisive
8. External Pressures
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Treasury empty State weak
Micro management at governmental level
Credibility of the new government low
Supporters / Participants waiting for returns
Expectations of the population very high
No time to develop policy, plan reforms
Result: Make decisions and deal with consequences later
IMMEDIATELY AFTER REVOLUTION
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No natural resources
Small country / Small market
Destroyed infrastructure
Unskilled workforce
Poor fiscal and monetary standing
Abkhazia / South Ossetia conflicts
Survival Mode / No Vision
Oligarchs running the country
Solution: Experiment with total liberalization and build a strong
state
WHAT TO DO?
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Full Eradication of Corruption
Efficient and Responsive Governance
Libertarian Vision in Policy Development and Implementation
Total Deregulation and Complete Privatization Leading to Total
Liberalization
BASIC PRINCIPLES
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VISION / STRATEGY FOR REFORMS
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ERADICATING CORRUPTION
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ERADICATING CORRUPTION: Getting Rid of Licenses and Permits
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ERADICATING CORRUPTION: Property Registration
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50,000 policemen fired in one day
Higher requirements and vigorous trainingBetter salaries and benefits
Permanent undercover operations to identify bribe-takers
82% of population developed trust in police
ERADICATING CORRUPTION: Police Reform
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Economic Success
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Fiscal and Monetary Performance
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REFORMS: Full Privatization
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REFORMS: Labor Legislation Reform
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SUCCESS: Reform of the Energy SectorFull Privatization
GETTING IT RIGHT: Reforms in Taxation and Trade Policies
IN THE PROCESS: Education ReformA Bumpy Ride from
Deer Leap to Bear Step
FAILURE: Health Sector Reform
Does privatization always
work?
REFORMS: Policy Lab
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Judiciary reform
Elections
Media pluralism Monopoly and regulations
EU requirements:
Deep an Comprehensive Free Trade AgreementVisa Facilitation
REFORMS: Far from Perfect
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