Georgia moves to defend property rights

Molly Corso 2/09/07

In a move that could prove critical for Georgia's controversial privatization campaign, Georgian President Mikheil Saakashvili has indicated to opposition leaders that he will propose a draft law to expand protections for property rights.

The pledge was made in response to widespread allegations of a government strategy to improperly redistribute private property. While the administration has routinely ignored both international and local accusations of property rights violations over the past three years, the demolition of several privately owned shops and kiosks in Tbilisi has recently brought the issue to the forefront of public attention.

Local opposition leaders and business advocates have long accused the government of depriving property owners of their rights in a bid to enhance state revenues. Georgian Public Defender Solzar Subari says that he has been demanding the government pay more attention to the guaranteed rights of property owners for the past two years.

"What is taking place now in Tbilisi and Sighnaghi [a walled town in the eastern region of Kakheti that is the focus of an ambitious, government-funded redevelopment project] is simply the same thing that Lenin did in the 1920s, when he took property away from owners," Subari said, in an interview with EurasiaNet. "[T]hey are not thinking about people like something valuable, but something like a brick to build a new state.... That is the main problem today with our government. It is not a government for the people."

The International Monetary Fund (IMF) has also drawn attention to the issue. In a December 12, 2006 report on Georgia, the IMF mission noted that the government needs "to accelerate structural reforms, especially in those areas pertaining to stronger property rights" to insure long-term economic growth.

Robert E. Christiansen, the resident representative of the IMF, noted in October 2006 that while international organizations like the World Bank and the European Bank of Reconstruction and Development have praised Georgia's improved business climate recently, the studies also highlight the inherent obstacles facing property rights protection.

"[I]f you look at these numbers closely, I think you will find that there are two institutional weaknesses: one is tax administration; the other is the judiciary," he said during the Cato Institute's Freedom, Commerce and Peace conference in Tbilisi. "There are serious questions about the strength of key property rights in Georgia, tax administration and the judiciary. Is this important? ... [G]iven international experience, they are hugely important."

While Saakashvili has still not publicly addressed the accusations, the president and several key members of the National Movement met with representatives from the opposition February 4 for a briefing on the government's position on various conflict resolution and foreign policy issues. Georgian media reported that during the meeting Saakashvili agreed that the wave of private property seizures in Tbilisi should end.

According to opposition New Rights Party leader Davit Gamkrelidze, Saakashvili was "concerned" about public fallout over the cases and pledged to draft a law to "create additional mechanisms" to protect property rights. No details about the proposed law have been released. According to Georgian media, the draft bill should be presented to the parliament in a few weeks. No exact date has been announced.

The president's office did not return a request for comment on the report and allegations of abuse of property rights. However, in a February 1 interview with Radio Free Europe/Radio Liberty, former Estonian Prime Minister Mart Laar, now an economic advisor to President Saakashvili, chided the government for following a "risky" policy that could "lead to a halt of foreign investments and to an endless process of redistributing property."

He added that transparent property rights are crucial to attracting foreign investors. "This must be clear, and when it is not clear, this is a big, big problem," he said.

Property rights have been a hot issue in Tbilisi since news broke in December 2006 concerning a group of business people who reportedly voluntarily gave the government several restaurants in the capital city's prominent central district of Rike. Over the past several weeks, numerous reports have surfaced of the government – particularly the city government of Tbilisi – destroying businesses and kiosks – all documented and legally owned property – throughout the capital. In particular, the city has targeted structures near centrally located metro stations, although there have been instances of shops being torn down in the suburbs.

Despite repeated reports and requests made to the government on the issue, according to Public Defender Subari, little has been done to address the issue. Documented cases of property rights abuse under the Saakashvili administration can be traced back to the 2003 Rose Revolution when the government embarked on a campaign to eradicate corruption, he said. Cases of gross misappropriation of property also marked the term of former President Eduard Shevardnadze, ousted from office in 2003.

"Of course, before the revolution the level of corruption was higher and a lot of the privatization was, in principle, not legal," Subari said. "But if something takes place illegally, if there is some fact about that, or evidence, you have to investigate that and accuse the guilty party and then start thinking about repossessing the property. That did not take place."

Six cases of alleged abuse of property rights have been filed with the public defender's office since the beginning of 2007, said Salome Vardiashvili, head of the division for administrative law and social-economic issues at the public defender's office. She noted that there were "so many cases" in 2006 that she "couldn't even count them."

Business owners who have "donated" land to the government have also complained, Vardiashvili stated, but have done so anonymously, claiming while they did in fact give the government their land, they were forced to do so.

The practice of giving the government land without compensation is, according to opposition Republican Party leader Davit Usupashvili, a new spin on the government's previous tactics against business people who allegedly misappropriated funds during the Shevardnadze period. Under an informal "plea-bargaining" system, individuals either gave the government money or property, he said.

According to Usupashvili, the financial police have become adept at getting around statute-of-limitation laws concerning privatization. "The most effective tool for pressure is [the] financial police. The government says if you don't [give us the property] we will go into your books and find violations that will cost more than the building [is worth]," he said.

Initially, government officials explained these hand-overs as connected to illegal privatization or the collection of outstanding debts to the government via the acceptance of property, instead of cash. In December 2006, National Movement Party Member of Parliament Nino Kalandadze, deputy chairperson of parliament's committee on legal issues, said it was "probably" a case of serious tax debts and that the property was used as a payment.

Conservative Party parliamentarian Kakha Kukava, who has proposed that a parliament committee be started to investigate these cases, noted that the government's first step in pursuing tax evaders should have been to open criminal cases, not to repossess property. Kukava claims that the general prosecutor's office has not opened any such cases to date. The prosecutor's office has refused to comment on property dispute cases.

Editor's Note: Molly Corso is a freelance reporter and photojournalist based in Tbilisi.

Posted February 9, 2007 © Eurasianet