Georgia enters uncertain new era in presidential election

TBILISI Wed Oct 23, 2013 1:09pm BST

1 of 4. A man reads a newspaper standing next to pre-election posters of presidential candidate Georgy Margvelashvili in Tbilisi, October 23, 2013.

Credit: Reuters/David Mdzinarishvili

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TBILISI (Reuters) - Georgia elects a new president on Sunday in a vote that will end Mikheil Saakashvili's decade-long rule but may provide only a brief respite from political uncertainty in the former Soviet republic.

The front-runner is Georgy Margvelashvili, a confidant of Prime Minister Bidzina Ivanishvili, whose Georgian Dream coalition ousted Saakashvili's cabinet in a parliamentary election last year.

Victory for the 44-year-old philosopher would cement Georgian Dream's grip on power. But the clarity may not last long as Ivanishvili, a billionaire businessman and fierce political enemy of Saakashvili, has said he himself will stand down after the vote.

The impending exit of the two rivals makes it hard to tell who will call the shots in Georgia, a country of 4.5 million people which fought and lost a 5-day war with Russia in 2008.

With pipelines that carry oil and gas from the Caspian Sea towards Europe, bypassing Russia, Georgia is strategically important to both Moscow and the EU. Under Saakashvili, who by law is not eligible to seek a third term, it strongly allied itself with the United States and pushed to join NATO, though membership remains a distant prospect.

Margvelashvili, formerly an education minister and vice premier, is a relative unknown. His main foreign policy goal is to pursue close ties both with the West and with Russia - a balance the country has long failed to achieve.

The political uncertainty has sharply slowed economic growth, and is compounded by the fact that constitutional amendments to curb some presidential powers - for example to form the government or sack members of the cabinet - will come into force after the election.

"We expected more from this government, of course, but I think when a new president will be from the same coalition as the prime minister, they will be able to fulfil their promises," said Gela Nakashidze, a 53-year-old unemployed man in the capital, Tbilisi.

SLOWING GROWTH

The two other leading candidates - all three were profiled in Georgia's edition of Forbes magazine under the headline "Who?" - are David Bakradze, a member of Saakashvili's United National Movement, and Nino Burjanadze, who helped lead the Rose Revolution in 2003 which brought Saakashvili to power.

She later fell out with the president, particularly over his handling of the disastrous war with Russia, and favours rebuilding ties with Moscow and setting aside NATO ambitions that she says are "an illusion".

Rivalry between Ivanishvili and Saakashvili, whose support of close ties with the West helped him overthrow former Soviet foreign minister Eduard Shevardnadze in 2003, has slowed implementation of laws and put off investors.

After years of a robust investment-driven growth, Georgia's gross domestic product grew just 1.5 percent in the second quarter this year, down from 8.2 percent in the same period a year ago.

"The current economic situation in Georgia is not as good as we want it to be and there is not much visibility as how things could develop in 2014," said Fady Asly, chairman of the International Chamber of Commerce in Georgia.

RUSSIAN TIES

Margvelashvili hopes to benefit from better ties with Russia forged by Ivanishvili. The tycoon premier built his business career in Russia but now lives in Georgia where, at one of his homes, he keeps penguins and kangaroos in a private zoo.

Russia has resumed importing Georgian wine, mineral water and fruit, lifting a ban imposed in 2006. But some economic and political analysts say that this will boost the economy only in the longer run.

According to a poll by the U.S. National Democratic Institute (NDI), Margvelashvili is set to win 39 percent, followed by Bakradze on 18 percent and Burjanadze on 13 percent, suggesting a second round run-off will be needed.

Margvelashvili said a week before the vote he would not stay in the race if he did not get more than half the votes in the first round: "It will be a miracle if the second round is necessary, and I don't want to participate in a miracle."

But analysts said this could be a tactic to encourage voters to turn out.

Some analysts say that even if Ivanishvili steps down as prime minister by the end of this year, as promised, he will still pull the strings, largely through his commitment to the Georgian Co-Investment Fund which will target investment into energy, manufacturing, tourism and agriculture. At $5.3 billion, his fortune is equivalent to nearly a third of Georgia's economic output.

More than 70 percent of people polled by NDI in late August and early September said they disapproved of his move to quit.

"My planned departure from politics will only help attracting investment," Ivanishvili said last month at a presentation of the Fund, to which he has committed $1 billion of his own money.

(Reporting by Margarita Antidze; Editing by Elizabeth Piper and Mark Trevelyan)

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