POWER, REVOLUTION AND BUSINESS IN POST- REVOLUTIONARY GEORGIA1 (Part Two)

Abstract

The United National Movement declared the development of small and medium businesses as one of its main aims and promised to remove the taxation issue, the main irritant, from the agenda.

Under Eduard Shevardnadze tax evasion was easy: businessmen and bureaucrats established unofficial relations regarded at the top as a natural development pattern of capitalism and primary accumulation. Businessmen were free to break the law, while bureaucrats seized the moment to grow rich by using their official positions to raise their personal prosperity. Even though the country’s leaders alleviated state economic pressure on business, they increased their political and bureaucratic pressure by the same token, making the business community a hostage of the state and its bureaucracy. The latter was not only growing rich on bribes, but it also wanted large chunks of the businesses as well. Corrupt politicians and top bureaucrats protected the lawbreakers. In other words, while economic coercion was alleviated, pressure from the country’s political leaders and corrupt bureaucrats was doubled.

Businessmen were naturally displeased: they wanted to wriggle out of the double pressure. At one time, Eduard Shevardnadze used this to tighten his control over the business community and strengthen the social base of his power. After coming to power through a coup that toppled the regime of legitimately elected president Zviad Gamsakhurdia, he badly needed all the support he could master. The deposed president’s allies stood opposed to him, while most of the population badly hit by the economic devastation and sliding standard of living posed a serious threat to his political system. To strengthen the regime’s economic and social basis, President Shevardnadze assembled a business community out of his friends and political allies and enlisted new allies from among the businessmen connected with his regime.