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On 4 February 2014, Giorgi Vashadze was interviewed on the TV show, Archevani,

regarding ongoing important political events in Georgia. He asserted that together with some other factors, statements made by the Government of Georgia have also contributed to the worsening of the country’s economy. Mr Vashadze said that a clear illustration of this was a statement made by the then Prime Minister of Georgia, Bidzina Ivanishvili, in Davos in 2013 where he doubted that Georgia’s international rankings were true.

FactCheck

took interest in Giorgi Vashadze’s statement and verified its accuracy.

Former Prime Minister of Georgia, Bidzina Ivanishvili, attended the Economic Forum in Davos in 2013. He addressed the Forum and then stated that his speech indeed deserved some "great applause" from the attendants and added that Anatoly Chubais commented that never before has anyone received such a round of applause. Mr Ivanishvili then proceeded to take and answer questions. When asked about the ease of doing business in Georgia, he pointed out: "I have analysed both the advantages and the disadvantages and have put particular emphasis upon the fact that the 9th place which Georgia held had nothing to do with attracting foreign investments and that this position has never been decisive. The fact that one could register a company in one day or retrieve goods from the customs office on the next day does not really mean anything and, again, is not decisive. The most important condition which was not met was that private property rights were not protected in Georgia. I promised them (the audience) that private property rights will be strictly guaranteed and nobody will dare to violate those rights again. I also told them that an interesting experiment was about to unfold in Georgia and everyone had to watch carefully. We will lose our 9th

place but investments will start to flow into Georgia because the defining criteria are the inviolability of private property rights and the competitive market. All of these were non-existent in Georgia and everything was governed by monopolies and cartel agreements."

In addition to Bidzina Ivanishvili, similar statements have also been made by some other members of the government in the initial period of the Georgian Dream’s coming to power. According to the then Ambassador of Georgia to the OSCE, and Director of FactCheck, Paata Gaprindashvili, the Minister of Foreign Affairs of Montenegro, Igor Lukshich, after meeting with his Georgian counterpart during the OSCE Dublin Ministerial Council in 2012, declared that Georgia’s economic reforms were very impressive for Montenegro. Respectively, Georgia’s high position in the Doing Business ranking (Georgia had the 16th place whilst Montenegro was positioned in the 56th)

was exemplary and Mr Lukshich asked his Georgian colleague to share her country’s experience in that regard. However, Georgia’s Minister of Foreign Affairs, Maia Panjikidze, replied that indicators of Georgia’s success in different rankings, including Doing Business, had been falsified.

Now, however, the Government of Georgia is paying considerable attention to the international rankings and often uses their assessments. Clear examples of this are the statements of Prime Minister, Irakli Gharibashvili, regarding the Heritage Foundation’s risks of corruption and other rankings (see source 1 and source 2).

Quite frequently, the Prime Minister uses these rankings to introduce Georgia’s business climate to foreign investors which can mean that he trusts the accuracy of the rankings.

Other members of the government and MPs from the Georgian Dream also pay considerable attention to the international rankings including Doing Business (see source 1 and source 2).

The fact that the Government of Georgia uses these rankings has, of course, to be appreciated and welcomed. These types of rankings offer a potential investor impartial information about a particular country which in turn has a positive impact upon the country’s future. Nevertheless, it is regrettable that the Georgian Dream government has not been following this principle from the start of its coming to power.

Let us now come back to Bidzina Ivanishvili. According to his statement, Georgia risked losing its 9th place in the Doing Business ranking but this would not have affected the investment environment; on the contrary, the volume of incoming investments to the country would have increased. Of note is that Georgia no longer occupies the 9th place in the aforementioned ranking.

At the same time, foreign investment numbers for the country do not show any particular signs of growth.

Graph 1:

 Foreign Direct Investments in Georgia in the Period 2005-2014 (USD million)

Year

In Total

I Q

II Q

III Q

IV Q

2005

449.8

89.4

105.9

75.6

178.9

2006

1,190.4

146.0

306.9

280.7

456.7

2007

2,014.8

421.4

401.5

489.1

702.9

2008

1,564.0

537.7

605.4

134.7

286.2

2009

658.4

114.0

177.2

173.2

194.0

2010

814.5

166.5

208.3

225.6

214.1

2011

1,117.2

209.7

248.3

316.6

342.6

2012

911.6

261.2

217.7

199.0

233.7

2013

941.9

252.3

207.9

254.8

226.9

2014*

923.3

265.3

150.5

507.5

Source: National Statistics Office of Georgia

Conclusion

At the Davos Economic Forum in 2013, the then Prime Minister of Georgia, Bidzina Ivanishvili, expressed his doubts in regard to the accuracy and significance of Georgia’s position in the Doing Business ranking. Analogous statements were made by some other high-ranking officials of the Government of Georgia as well. In time, however, the Government of Georgia has come to frequently use the information contained in various international rankings.

According to FactCheck, Giorgi Vashadze’s statement is TRUE.