Giorgi Margvelashvili, an inexperienced ally of billionaire Prime Minister Bidzina Ivanishvili, won the presidential election by a landslide putting an end to tense cohabitation between the PM and the former president Saakashvili. In October 2012, the United National Movement (UNM) of the former president already lost the parliamentary majority it had held since 2003. Hence the Georgian Dream coalition now controls the presidency and the government. Following the victory of his Georgian Dream coalition, Prime Minister Ivanashvili plans to resign. He already nominated the interior Minister Irakli Garibashvili as successor. The nomination of the 31-year-old minister reinforces opposition claims that Mr Ivanashvili will continue to influence the political scene. Following the October 2012 election, several former ministers and officials were arrested or faced criminal charges. Many fears that former President Saakashvili will also face harassment as PM Ivanishvili already mentioned that he could be questioned or even prosecuted for alleged crimes when he loses his presidential immunity.
Impact on country risk
Following the announced departure of PM Ivanishvili scheduled end November, the new PM will have the difficult task of holding his majority together. After all, Georgian Dream (GD) – a six-party coalition - is a heterogeneous alliance of which the unity laid in a joint wish to defeat former President Saakashvili and his UNM, but which saw internal bickering once concrete policies needed to be put forward. It is therefore likely that the GD coalition will collapse, leading to cabinet reshuffle and legislative stalemate. Continued policy and political uncertainty exacerbates the current economic slowdown (GDP growth is expected to reach 2.5% from 6.1% in 2012). In this context, MLT political risk category 6 remains highly appropriate, all the more so since external debt and current account deficit remain large even if they are on a declining path. Moreover, no structural reform is likely to be adopted which could contrast with the major economic reforms adopted during the Saakashvili era. Besides, foreign policy is driven by two contradictory objectives being the strengthening relation with Russia and closer integration with the west.
Analyst: Pascaline della Faille, email@example.com