The Billionaire Who Would Rule Georgia: An Interview With Ivanishvili

Georgia Dream candidate Bidzina Ivanishvili discusses Russia, NATO, democracy, and President Mikheil Saakashvili.

Georgian tycoon and politician Ivanishvili takes part in a mass anti-government protest in Tbilisi this past May. (Reuters)

There is arguably no American analogue to Bidzina Ivanishvili, the billionaire and now presidential hopeful whose Georgia Dream political coalition is vying against western favorite Mikheil Saakashvili's United National Movement in the Republic of Georgia's upcoming parliamentary elections. "The best way to fathom the influence and impact Bid­zina Ivanishvili has in the former Soviet republic," wrote Julia Ioffe in Forbes, "would be to imagine that a businessman worth $8 trillion -- Ivanishvili's $6 billion net worth is half of Georgia's GDP -- had established a statewide system of philanthropic patronage in, say, West Virginia and the whole state was subservient to him." At the same time, Ivanishvili, who Ioffe reports was once rumored to have bankrolled everything from the country's police force to its intelligentsia -- and who was one of Saakashvili's most important allies until a falling out three years ago -- is an enigmatic figure. "Before he announced his run, few people in Georgia had ever really seen Ivanishvili," wrote Ioffe. "He had given few interviews, and photographic evidence of him was scarce."

Now that he's leading a coalition that could potentially unseat the ruling party, Ivanishvili's public profile is far less opaque. A U.S.-based P.R. firm recently reached out to the Atlantic International Channel on Ivanishvili's behalf to help arrange a nearly hour-long Skype interview. Over the course of our talk, conducted through an interpreter but with no rules or preconditions from Ivanishvili's camp, the Georgian Dream leader was unsparing in his criticism of the country's direction. He accuses Saakashvili of harassing Georgian Dream supporters, a charge substantiated by a recent Amnesty International report. He says Saakashvili has been overly aggressive in his relations with Russia, whose military occupies the Georgian breakaway provinces of Abkhazia and South Ossetia, and was the alleged-aggressor in a brief-but-crushing war with Georgia in August 2008. He argues that Saakashvili's reputation as an economic and political reformer, which may help explain his party's lead the polls, is calculated to mislead outside observers. But he thinks that Saakashvili's sometimes-aggressive domestic political tactics could actually alienate Georgia's democratic partners. "A very large portion of the political spectrum within Europe and the United States are realizing that Sakashvili is a liar, and that he is building a façade democracy, not a true democracy," he told me. During our conversation, Ivanishvili spoke quietly but intensely. He never sounded bombastic or less than controlled, even when calling his opponent a liar and a fraud.

Although Saakasvhili's final term as president expires in 2013, he hasn't rule out trading jobs with Vano Merabishvili, a close ally and Georgia's current Prime Minster. Freedom House flatly states that "Georgia is not an electoral democracy," and relations with Russia remain tense. The American-educated Saakashvili is credited with reforming Georgia's post-Soviet bureaucracy and transforming the country's institutions and strategic orientation by helping lead the "Rose Revolution" in 2003.

An Ivanishvili presidency seems unlikely at this point, although not impossible. A Penn, Schoen, and Berland poll from July found a near dead-heat between Georgian Dream and Saakashvili's UNM. A National Democratic Institute poll from this past June found that the UNM led by 36 percentage points to Georgian Dream's 18 percent, but that the gap between the parties had closed considerably since the beginning of the year. In addition, 38 percent of respondents either refused to say who they were voting for, or were undecided. The most recent poll, by a Washington-based research firm, has Saakashvili's party up 55 to 33. But the billionaire and his party's entrance into Georgian politics could still bring meaningful change. Below, Ivanishvili provides a sense of what that change might look like, why he's running, and where he sees his country going.

Freedom House currently labels Georgia "partly free," calling it a "transitional government" or a "hybrid regime." Do you think this a fair assessment, and do you think that Georgia is currently a democracy?

There is a real and evident problem of democracy in Georgia and this was the core reason of my entrance into politics. We have no rule of law. It's absolutely absent.

Do you think that Saakashvili's goal is to impose a Russian-style electoral autocracy on Georgia?

At this point he's not even hiding. Even when Secretary [of State Hillary] Clinton was visiting Georgia, a reporter asked the question, are you going to be the Prime Minister? And he circled around and never gave a solid response to the reporter.

And three days ago he made a very, very vivid statement about how he's not going to give what he built and what he achieved to anyone else, how he's going to retain it for himself. He's not hiding this at all.

Georgian Dream and its supporters claim they've been harassed by some in the government, and you've had some of your assets taken away. How have you been able to run a campaign in this atmosphere?

Not taking into account the fact that I have been personally targeted by the government, that I've been fined, and my assets have been seized, our supporters have been intimidated and imprisoned. We cannot finance the campaign. We were only able to raise 4 million lari [$2.4 million] in the beginning, and after that the government shut down all the sources to fund our campaign. No company can fund any political party, and even individuals cannot do it anymore because [the governments] fines them, and then they seize their property and then sell it on auction.

You say you want Georgia to have both NATO membership and normalized relations with Russia. How is that possible, and what does it even mean for Georgia to have normalized relations with Russia?

Of course I acknowledge the fact that it's a very tough question. The fate and the future of Georgia is Euro-Atlantic integration. Every conscious politician realizes it, and I'm not inventing a bicycle by saying this. This is given, and this is Georgia's fate.

With respect to Euro-Atlantic integration, we have to realize that we need to normalize the relationships with our neighbors, and especially with Russia. I am very confident that Georgian Dream will be able to open up the Russian market, regain the territories, the occupied territories [of Abkhazia and South Ossetia].

It's not an easy process. I realize it will not happen overnight. But the key to regaining the territories that are now occupied, the key to that is within Georgia, within building democratic institutions, rebuilding civil society, a true one, not the façade which is being imposed by Saakashvili. Georgia will not be able to do this on its own. We need the help of the United States and our European friends in order to see the right moment and resolve this conflict through negotiations.

At the same time, for Russia, those two regions are not an easy thing. It's a burden for them also. We hope Russia realizes that the current situation of having Abkhazia and South Ossetia as occupied regions is not a good thing if Russia wants to show its democratic side. It should be possible to find common ground.

During the last elections in Russia, we saw some democratic processes, the beginning of some democratic processes. A very high probability exists that these processes will deepen in Russia, also in many other countries, like we saw in China. This is the only correct way. Sooner or later, all of them will come to a realization of the democratic system.

Would NATO membership and normalization with Russia come before Russia's withdrawal from Abkhazia and South Ossetia, or would it come as a result of Russian withdrawal from Georgian territory?

It's hard to say which comes first, but we will not sacrifice one for the other. We will not sacrifice withdrawal of troops for the sake of NATO membership, and we will not sacrifice NATO membership for the sake of the withdrawal of troops. This needs to happen in the right time, and both of these need to be achieved. It's hard to answer precisely.

It's somewhat wishful to believe that you could convince the Russians to withdraw from Georgian territory while Georgia has NATO membership, given Russia's opposition to Georgian and Ukrainian NATO membership in the past. I'm wondering how you foresee building trust with the Russians while being a member of NATO.

Well, it's a very hard question. We need to see this within a global political landscape. The United States, Europe, NATO members, the West in general is trying to normalize its relationship with Russia.

Saakashvili was waving Georgian NATO membership in front of Russia's eyes like waving a red cloth in front of a bull. This was very bad rhetoric. This was provoking Russia, from [Russia's perspective]. But we'll be able to convince Russia that Georgia's NATO membership will not be so devastating for them, and we'll be able to normalize the relationship and not use this aggressive rhetoric that has been adopted by Saakashvili.

I know that you were investing in Russia financially at one point. Do you still have any business interests in Russia, or have you sold them?

I have sold all but ten percent of my assets in Russia, which are in the agricultural sector, and are going to be sold within literally the next couple days. The process is already finished, and I'm going to liquidate my remaining assets in Russia.

If international observers determine that the forthcoming election is stolen, or if there is overwhelming evidence of electoral fraud, what is your plan or Georgian Dream's plan?

In no case will we call upon civil unrest. The only method which we will employ will be a peaceful rally like we are doing right now in order to show the United States and Europe and observers the amount of people really supporting us, and in order for them not to sign off on that election fraud.

Could you identify one institution in Georgia that's especially in need of reform?

The economy is governed through cartel agreements and monopoly. The attorney general is the one who's controlling funds. There is no free business in Georgia. So since the economy is in such bad shape and Saakashvili ends up lying about numbers, none of the other sectors can be healthy. What they claim as economic growth is a lie, and the world's financial institutions in some cases agree to this, a feat that [the previous president, Eduard Shevardnadze] was not able to manage.

Saakashvili learned how to gather funds from customs and from tax authorities. So in actuality what they call the economic growth was not economic growth: it was the government being able to properly collect funds through customs and revenue services. This is the core main responsibility and function of the government, and the previous government was not able to do this.

At the beginning, for the first few years I was guiding them, I was giving them advice, I was helping them to set up. So I gave them money to buy equipment, monitoring equipment, cameras, and other surveillance equipment. And of course the budget, the state budget grew in several folds, but the economy didn't grow.

So they're bragging right now about foreign direct investment and other investments in Georgia. But in reality it's a credit that has been given. Some 4.7 billion has been given to Georgia ever since the August 2008 war with Russia, and only a third of those credits were used for their intended purposes. Two thirds has been taken away by corruption -- I'm saying approximately, not precisely -- and they're bragging and showing these new Justice Houses to Hilary Clinton and others. They built these so-called Justice Houses, one big one in Tblisi and a few others in other regions, and they're bragging about this and saying it's a great achievement.

He's calling this an achievement of the economy. Paved roads were no less during Shevardnadze. In both cases, during Shevardnadze's period and now, they were built through grants and other foreign assistance.

So, in your mind, the idea of there being a foreign investment economy in Georgia is a fiction?

Absolute fiction. They cannot name a single investor. They brought in [U.S. real estate mogul Donald] Trump. You can research this yourself. Trump did not put any investments. He was actually paid from us. You can double-check this with this Donald Trump example. The government was saying, promoting in the States as well as in Georgia, that Trump is going to invest in Georgia.

Well, no investment came from Trump. Two months they have been circulating this on TV. Not a single cent has been invested by Trump. It's a complete lie. Quite the contrary: Trump wanted to sell his brand, and we don't know what actually happened. One thing is evident: when the government controls business totally, not a single investment goes to that country.

[According to a 2012 AFP report, Donald Trump signed a licensing agreement with the Silk Road Group, the developer of a $200 million Trump Tower in the Black Sea resort city of Batumi, Georgia. I was able to reach Michael Cohen, the Trump Organization's point-person for the project in Georgia. "Mr. Trump has developed a very strong relationship both professionally and personally with President Saakashvili, who he admires tremendously," he said. He described the modest progress of the project thus far: there is "a fully complete set of architectural drawings for the building," and a sales office with model units is under construction. Cohen says that the project has attracted interest from buyers in Turkey, Azerbaijan, and Russia, among other countries.

Cohen would not elaborate on the nature of the relationship between Silk Road and the Trump Organization. When asked if Trump had invested any of his own money in the Batumi high rise, he responded that "The terms of the agreement are propriety and confidential."

While Silk Road is by all accounts a private development corporation, it did receive a substantial loan from the Bank of Georgia for a hotel project in Tblisi.]

If you were in power, how would you further deregulate the economy?

Sakashvili's a professional liar. He learned how the World Bank is doing their ratings. If you come to Georgia, you can open up a company in a day. You yourself can come tomorrow and establish a company in a day and you're not halted by paperwork.

If we look only at the paperwork, yes this is an achievement, for Europe and for the World Bank, yes, this gives them the right to say that yes, in Georgia you can found [businesses]. But as soon as the smoke hits the chimney and that company starts to generate revenue, they come after you and they take away from you. So opening up in a day doesn't really matter much. And no real business is coming.