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  • New Georgian PM: Promote Economic Freedom, Not the Statism You Learned in Russia

    Former AC Milan star Kakha Kaladze is more than comfortable on the soccer pitch, where he played for 10 years as one of the club’s defenders. But how comfortable will he and the rest of Georgia’s new ministers be at governing a country and promoting economic freedom? We may soon find out.

    Kaladze was recently appointed Minster of Energy by Prime Minister Bidzina (Boris) Ivanishvili, whose Georgian Dream coalition swept to power after the country’s October 1 election.

    However, Ivanishvili, a Georgian businessman who made billions in Russia’s telecommunications market, has yet to prove his commitment to the market reforms that were implemented by current President Mikheil Saakashvili.

    Indeed, instead of formulating an economic plan, Ivanishvili has done a good job cultivating a seething rivalry with Saakashvili—which Georgian bloggers cleverly mocked after their first meeting.

    Behind all the politics and rhetoric is a true policy conundrum: Will Georgia continue on its path of reform, or will it revert to its old, corrupt, and statist ways?

    Saakashvili has done an admirable job opening up the economy, reducing corruption, doubling the GDP in six years, and indicating his intentions to join NATO and the EU. Through these market reforms, Georgia has risen 57 places in The Heritage Foundation’s Index of Economic Freedom since 2004. In order to grow the economy, Ivanishvili should continue to do the same.

    One indication of the new government’s intentions will be their commitment to Saakashvili’s “Law on Economic Liberty,” which caps the size of government and puts a strict limit on the deficit and debt. Implementation is set to begin at the end of 2013. Repeal of the law would mean a reverse in the economic direction of the country. That would be bad for growth and reform.

    Ivanishvili should heed Saakashvili’s words of advice. When he was asked why he wants to bind the hands of future policymakers, Saakashvili replied “I don’t trust any government, including my own.”

    Posted in Economics [slideshow_deploy]

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