When President Eduard Shevardnadze abruptly fired Finance Minister Zurab Nogaideli on May 1, many observers saw the president consolidating his cabinet before local elections occur June 2. Shevardnadze had apparently concluded that Nogaideli's sympathies rested too firmly with former parliament speaker Zurab Zhvania, who has emerged as one of the president's key rivals. But by removing the finance minister, Shevardnadze may be assuming tighter control over public works budgets and combatting efforts to expose and fight Georgian corruption. Nogaideli had supported such efforts. By eliminating him, Shevardnadze may be trying to tighten control over the NGOs as well. That makes for a more dangerous game.
The intrigue surrounding Nogaideli's sudden dismissal comes just a week after Shevardnadze lost a key chancellery official, Badri Khatidze. Khatidze resigned in disgrace after freelance journalist Gigi Targamadze, with support from NGOs, exposed his financial improprieties. (Targamadze's work received support from the Soros Foundations Network, which owns this website.)
As head of the regional management service, Khatidze implemented presidential control over local bureaucracies. These bureaucracies' stability is critical for next month's local elections, which have been delayed since an autumn crisis forced Shevardnadze to sack his entire cabinet. Unlike Khatidze, Nogaideli had pushed for greater cooperation with NGOs. Shevardnadze has been pressing for new legislation that would give the government greater oversight over Western-supported NGOs, at one point claiming that such oversight is necessary to prevent money from aiding terrorist organizations.
Members of Georgia's Parliament saw Nogaideli's sacking as a sign that such legislation would soon become harder to resist. "The example of Nogaideli clearly demonstrates that an honest, competent and simply not corrupt person has no room in President Shevardnadze's government," opposition MP Mikhail Saakashvili told Rustavi-2.
The question of monitoring NGOs divided Nogaideli from his former boss. The finance minister appeared on state television on May 1, refusing to sanction Shevardnadze's plan to step up monitoring of internationally funded NGOs. Nogaideli insisted that ensuring proper use of NGO funds is the job of donors and that the effort to control NGOs was undemocratic. He also threatened to resign. A National Security Council meeting late Wednesday night decided on his dismissal shortly thereafter.
The president used Nogaideli's departure to reshuffle his cabinet. Young technocrat Mirian Gogiashvili, the well-regarded if inexperienced executive director of the Anti-Corruption Council, became Finance Minister, while Kaha Ugulava, the council's chief of staff, replaced him on the anticorruption job. Some experts consider Ugulava even less experienced then Gogiashvili, and therefore weaker. "The moves have one aim," says Levan Ramishvili, also of the Liberty Institute, "and that is to make the anti-corruption campaign weaker. The president is very unhappy with the criticism he is receiving."
Nogaideli had been in his post for about two years and had earned a reputation as standing up to persistent bribery efforts and, as best he could, to politically inspired directives from his superiors. "He refused money, [and so] he made a lot of enemies," said a foreign businessman with extensive experience in Georgia. Raising state revenues in the country is one of the most pressing issues facing Tbilisi. The government projects to run a budget deficit of about 100 million dollars this year if it can increase state revenues by 40 percent. The daunting revenue challenge grows steeper by the fact that Georgia's only really competent officials are too young, according to foreign experts here, to gain the stature to effectively pursue the most important "big fish" tax evaders.
A recent letter from Washington to the Georgian government reportedly echoed Nogaideli's protests against government monitoring of NGO budgets. Shevardnadze has squabbled with donor nations over this issue for months. He is reported to have raised the issue as an unscheduled item towards the end of his October meeting with US Secretary of State Colin Powell. The overture was rebuffed, according to Georgian sources, a position apparently reinforced by a letter this week to Tbilisi from a senior State Department official.
The Georgian government presented this week's dismissal which accompanied a decision to fold state revenue collection into the finance ministry as a bureaucratic rationalization blessed by international donors. A recent IMF delegation visit made this idea plausible. But a senior donor representative however insisted that such a consolidation was not a major priority and was certainly undermined by greater "negatives" associated with the finance minister's sacking. "[Nogaideli] was performing much better than several predecessors and if this performance is not valued and instead rewarded by sacking, it makes you wonder twice where this country is going," said the official. "Too frequent changes [in ministers] is not very conducive for moving this country forward."
Sulkhan Molashvili, chairman of a financial authority called the Chamber of Control, argued on TV for greater oversight of NGOs and blamed the finance ministry for revenue shortfall and failing to pay income taxes for ministry employees. As finance minister Nogiadeli had no responsibility for collecting taxes, which is the purview of Minister of State Revenue, Levan Dzneladze. The council dismissed him at the same time. Critics say Dzneladze, regarded as a neutral technocrat, was essentially collateral damage in Shevardnadze's more focused aim to be rid of Nogaideli.
The Chamber of Control, which was created to be a parliamentary vehicle overseeing government spending, has instead become an instrument of presidential power, explained David Usupashvili, formerly Shevardnadze's chief legal adviser. "The Chamber of Control has a clear plan to discredit everyone around Saakashvili and Zhvania." On May 3, a court upheld Shevardnadze's request to ban Zhvania's party from the upcoming local elections.
Ramishvili of the Liberty Institute, which also withstood verbal attacks during the televised debate, says Shevardnadze wants to put the government in a position to approve or block funding as well as to supervise programmatic activities. Whatever his strategy, Shevardnadze seems to have bought momentum for the June elections. "This dismissal clearly benefits the president through this move he has removed money power from his possible opponent," said Fady Asly, a businessman with experience in Georgia.
One of the most pervasive forms of corruption is the use of state money in electoral campaigns. Observers suspect this happens regularly, most often in ingratiating public works projects shortly ahead of balloting. An international banker conceded that state funds are used in Georgian elections but, the banker said, "not very extravagantly." Information from NGOs can give the Anti-Corruption Council, which is only a consultative body, important information. After learning from the Liberty Institute about Khatidze, the Council voted unanimously for his dismissal.
Ken Stier is a freelance journalist who has worked in several countries.