THE ROSE REVOLUTION: THREE YEARS ON

C O N F I D E N T I A L SECTION 01 OF 07 TBILISI 003069

SIPDIS

SIPDIS

DEPARTMENT FOR DAS BRYZA AND EUR/CARC

E.O. 12958: DECL: 11/22/2016
TAGS: PREL PGOV GG
SUBJECT: THE ROSE REVOLUTION: THREE YEARS ON

Classified By: AMBASSADOR JOHN F. TEFFT. REASONS: 1.4 (B) AND (D).


1. (C) Summary: The Saakashvili administration came to power
after the 2003 Rose Revolution promising to build
democracy, increase prosperity, and reincorporate Georgia's
separatist regions. Three years after the Rose Revolution,
the Saakashvili administration has much to be proud of. In
place of a nearly-failed state, the GOG has built a
cohesive nation with maturing democratic institutions, a
growing and diversifying economy, and a comprehensive
reform program that has been cited by the World Bank and
other international organizations for its success in
fighting corruption and improving the environment for
investment. The GOG successfully re-integrated the Adjara
region in 2004. Russian bases that have existed in Georgia
for over 200 years are being withdrawn and NATO, citing
reform progress has given Georgia Intensified Dialogue (ID),
bringing the country one step closer to its strategic
objective of membership in the Alliance. Serious challenges
remain including consolidating difficult reforms
as major economic and political pressure from Russia
threatens to undermine them. The pressure comes in the
form of economic bans on Georgian goods, the complete cutoff
of all transport and communication links with
Georgia, support to the separatist regions, and alleged
covert activities designed to undermine the Saakashvili
government. Achieving Georgia's strategic goals and
fulfilling the promise of the Rose Revolution, will require
continued political commitment to difficult reforms and
patience in the face of escalating pressure and
provocations from Russia. It will also require continued
help from the U.S. and Europe to keep the GOG on the right
path and to act as a check on Russian misbehavior. End
Summary.

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LOCAL GOVERNMENT REFORM
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2. (SBU) The decentralization of power from Tbilisi to the
regions has been a major achievement for the Saakashvili
government. With strong USG political and assistance
support, laws passed in 2005 and 2006 established viable
and accountable local governments that are elected by and
directly accountable to their constituents. In May 2006,
Parliament passed budget legislation that clearly defines a
formula by which money is distributed from Tbilisi to local
authorities. Power of the purse will strengthen the hand of
local administrators and give them the ability to better
address their constituents' concerns. Although the GOG has
passed good legislation, implementation will be the true
test. Mission will continue to urge central authorities to
refrain from interfering with nascent local governments and
USG assistance will help newly-elected local officials to
develop their technical capacity.

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JUDICIAL REFORM
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3. (U) One of the most difficult challenges to tackle has
been dismantling the corrupt Soviet era judiciary. Since
the Rose Revolution, the GOG has implemented a number of
measures to reform the judicial system including
consolidating a previously sprawling and inefficient court
system into a straightforward three tier system of trial
courts, Appeals Courts and Supreme Court. Corrupt and
incompetent judges were removed from the bench and replaced
with appointees drawn from a pool of candidates who had
passed an objective written examination. Other efforts to
promote judicial independence including granting contempt
powers to judges to impose fines or confine anyone who
disrupts court proceedings and introducing court
marshals/bailiffs to provide security and maintain order in
courthouses and during court proceedings.


4. (SBU) During 2006, at our urging, President Saakashvili
acknowledged the need to hasten judicial reform. Court
salaries were increased for the first time since 1998 thus
reducing the incentive for corruption. In April, the
composition of the High Council of Justice (HCOJ),the
disciplinary body of the court system, was changed to
remove the Prosecutor General and to increase the number of
judicial members elected by their peers so as to constitute a
majority on the HCOJ. The High School of Justice was also
established as a judicial training center where
starting in 2008, all newly appointed judges will undergo 14
months of training prior to assuming their place on the
bench. Pursuant to the constitutional amendments proposed by
the President in October, the President will no longer
have the unilateral power to appoint or dismiss judges. That

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power will rest with the HCOJ whose nominees to the
bench would be approved by Parliament. The President,
however, will remain chair of the HCOJ but a non-voting
member.


5. (U) Other complementary reforms have been implemented to
improve the legal profession and the effectiveness of the
administration of justice. A program of intense training and
a new code of conduct have been implemented within the
Prosecutor General's Office. The Legal Committee in
Parliament is working on legislation to ban ex parte
communications, an unfortunate legacy of Soviet-era
'telephone justice, legal systems. A newly reconstituted
bar association has drafted a code of ethics and introduced a
new disciplinary system. A new objective bar exam for
attorneys has replaced its corruption-ridden predecessor.
Access to affordable legal services, however, continues to
be a concern. Most defendants in criminal cases proceed
without benefit of counsel.

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EDUCATION REFORM
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6. (U) Education reform has been one of the most successful
areas of progress made by the GOG. Two important laws were
passed in 2005: the Law on General Education and the Law on
Higher Education. The Law on General Education reorganized
the Ministry of Education's standards for teaching,
curricula, textbooks and testing. By establishing a new
system of school governance involving boards of trustees,
teachers' councils, and parents' consultative bodies, the
Law has made secondary schools more independent from the
Ministry of Education and more accountable to local
families. The elections of school boards were widely
attended by the public underlining Georgian support for
this reform. The Law on Higher Education created
accreditation standards for universities to meet: in 2006,
32 Universities obtained this accreditation. It also
provided for uniform entrance exams, making predictable and
transparent a previously and often corrupt process.
University reorganization has made many institutes of
higher education financially independent from the Ministry of
Education.


7. (U) In 2006 the Ministry opened 17 Education Resource
Centers, making the control of local education bodies the
responsibility of publicly competitive positions. The
Ministry of Education's ongoing efforts to extend inclusive
education and vocational training programs are also a major
focus for the GOG: 12 rehabilitated and modernized
technical education centers were opened in 2006. Further
steps are required to ease University faculty members into
a system of openly competitive academic positions, and to
fully implement the policies outlined in the two major
Education laws, for example expanding the GOG plans to give
each school in Georgia a board of education, board of
trustees, student council, and pedagogical council to empower
local stakeholders and guarantee qualified and
consistent education standards.

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ANTI-CORRUPTION
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8. (U) The fight against corruption has been a major area of
focus for the Saakashvili government and a major area of
assistance for USG programs. GOG initiatives including the
prosecution of corrupt officials and businessmen including
those from the ruling party, along with continuing
deregulation and tax and customs reform supported by USG
technical assistance and programming have created a more
transparent business climate with less opportunity for
corruption in government institutions. The World Bank hails
Georgia as the top reformer in its 2006
Anti-corruption in Transition report, the Millennium
Challenge Corporation's 2007 indicators shows Georgia
scores above its peer group on anti-corruption efforts, and
in an April 2006 International Republican Institute poll,
96 percent of those surveyed said that they had not had to
pay a bribe to receive a public service in the last 12
months. Georgia has also significantly improved in
Transparency International Corruption Perception Index,
moving from 130th place to 99th from 2005 to 2006.


9. (SBU) Similarly, a 2006 World Bank/EBRD survey states that
the percentage of firms that identified corruption as a
significant obstacle fell from 60% in 2002 to 39% in 2005 and
the percentage of firms that paid bribes during the
same period fell from 44% to 11%. Increased compliance with
financial structures, improved implementation, and

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more participation in the formal economy have significantly
increased public trust in the Government and increased the
size of the national treasury five-fold. The USG will
continue to push the GOG to fulfill the steps outlined in
its 2006 Anti-Corruption Action Plan in order to consolidate
gains made in the last three years.

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ELECTION REFORM
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10. (U) Nation-wide local elections were held on October 5 in
which ruling party National Movement notched a big
nationwide victory capturing over 70% of the votes throughout
Georgia. The Organization for Security and
Cooperation in Europe /Office for Democratic Institutions and
Human Rights (OSCE/ODIHR) concluded that the elections
were conducted with general respect for fundamental freedoms.
In a post-election statement, ODIHR praised the
Central Election Commission (CEC) for its "commendable
efforts" to improve the quality of the voters, list and the
"professional and inclusive manner" in which the election was
conducted. In the October 2005 Parliamentary
by-elections, observers had noted problems with the voters,
list and had recommended that the CEC to take steps to
address this concern. USAID-funded local NGOs International
Society for Free and Fair Elections (ISFED)
and new Generation new Initiative (nGnI) concluded that the
October 5 local elections were fundamentally fair and the
results represented the will of the electorate. ODIHR, ISFED
and nGnI recommended that the CEC continue its
efforts to improve the voters, list in the run-up to the
Fall 2008 Parliamentary and Presidential elections. USAID
in conjunction with OSCE is funding a civil registry project
which will computerize all civil records in
Georgia. This multi-year project will ultimately fix the
voters list. In the meantime, USAID is funding a program
to help the CEC implement some of the changes recommended by
ODIHR.

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PRISON REFORM
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11. (U) Changes to the Criminal Procedure Code have increased
the protections provided to the accused. By
requiring that a defendant confirm to a judge any statements
given in pre-trial detention before it can
be introduced as evidence, the incentive for investigators to
coerce a confession was reduced. Bail is now the
legislatively mandated preferred force of pre-trial restraint
in instances where the accused does not pose a
threat. As a result over 50% of arrestees are currently
released on bail as opposed to less than 10% in 2005.


12. (U) Despite the increased use of bail and the opening of
new and remodeled facilities, however, conditions in
pre-trial detention facilities as well as post-conviction
prisons generally remained poor. The International
Committee of the Red Cross, the OSCE, and many NGOs including
Human Rights Watch report inhumane and
life-threatening conditions compounded by overcrowding and
inadequate nutrition and health care. The Ministry of
Justice, which oversees the penitentiary system, announced
that as a result of increased budgetary commitment, by
2008, all inmates in Georgia will be housed in newly
constructed or completely renovated facilities that meet
international standards. At present, approximately 4,000 of
Georgia's 14,000 inmates are housed in the new
facilities financed by the European Union. Expected
improvements in prison conditions as a result of increased
budgetary allotments may be unrealistic as a result of the
increase in prisoners following the GOG's crackdown on
crime. While the inmate population has grown 56 percent from
the end of 2005 to mid-October 2006, the per inmate
budget allocation has only increased 19 percent in that same
period.

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POLICE REFORM
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13. (SBU) The Saakashvili administration famously fired
15,000 police officers in 2004 and with strong USG
assistance, hired and trained a new force in an effort to
clean up this corrupt and ineffectual institution. In an
April 2006 poll, the police had an over 70 percent approval
rating according to the International Republican Institute
-- a figure unheard of in the former Soviet Union. The
Ministry of Internal Affairs (MOIA) has done much to
improve equipment, provide for operating funds, and build or

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upgrade new facilities. The USG will continue to push
the GOG to expand on this success by targeting structural
reform in the MOIA.

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RELIGIOUS FREEDOM
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14. (U) The status of religious freedom continues to improve
through increased government responsiveness to the
needs of minority groups as well as investigation and
prosecution of harassers of nontraditional faiths. The GOG
has also implemented a registration process for religious
groups that grants them legal status, for example, to buy
or sell property. Previously, no registration process
existed yet non-registered groups were subject to fines and
other administrative penalties.

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TIP
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15. (SBU) The government has taken significant steps to
combat trafficking in persons (TIP) including the passage
of a new anti-TIP law that went into effect in July 2006, the
formation of a permanent inter-agency anti-TIP
government commission, and the development of a government
fund that will provide assistance to TIP victims which was
approved by the inter-agency council in November. In June,
the President signed the Law on Elimination of Domestic
Violence which when implemented in 2007 will allow victims
for the first to file for immediate protective orders
against their abusers thus giving them more practical
recourse than pressing criminal charges. The GOG has
committed to taking over the financing and administration of
a shelter built with USAID assistance in Adjara and has
acquired another building which it plans to develop as a
shelter in Tbilisi. Mission will continue to press the GOG
to fight for increased prosecutions and tough sentences for
traffickers that match the heinous nature of their crimes.

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HUMAN RIGHTS
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16. (U) Since the Rose Revolution, the Saakashvili government
has committed itself to observing
internationally recognized human rights. Throughout 2005 and
2006, there were several cases of police officers
brought to trial, dismissed, or demoted for abuses. In July
2006, four Ministry of Internal Affairs officers were
convicted and sentenced to seven years in the beating death
of Sandro Girgvliani. In August, a police officer was
sentenced to four years in the shooting death of Amiran
Robakidze. The level of abuse committed in police stations
declined sharply after a program of monitoring was introduced
in 2005. Despite these positive developments,
however, NGOs note that close ties between prosecutors and
police and the lack of professionalism and independence of
the judiciary hinders systematic investigation, prosecution
and punishment of abusers, especially outside of Tbilisi.
Moreover, NGOs note that an aggressive "zero tolerance" for
crime policy which they claim violates the presumption of
innocence, resulted in an increase in the number of deaths
during police operations earlier in 2006, though they
acknowledge this situation has improved as the year
progressed.

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ECONOMIC REFORM
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17. (SBU) With unofficial unemployment at 50%, the
Saakashvili government has made job creation and improving
the climate for foreign and domestic investment in Georgia
top priorities. The progress made has been recognized by
the World Bank in its Doing Business 2007 study, which
compares the ease of opening, conducting and closing a
business in 175 countries. Georgia vaulted from 112th on the
World Bank's list to 37, making it the fastest
reforming economy in the world. The government has lowered
taxes, reduced the number of required licenses,
strengthened and harmonized standards, reduced state
regulation, cut tariffs, and simplified customs
procedures. The government privatized almost nine times the
value of assets in 2005 as it did in all of 2000-2003.
The government hopes to attract as much as a billion dollars
in foreign investment in 2006, even after the
Baku-Tbilisi-Ceyhan (BTC) oil pipeline construction has been
completed. Although stiffer enforcement has increased
tax revenues since the Revolution, reports of ham-handed

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tactics by the Financial Police remain common, sowing
uncertainty among businesses. Mission has proposed
significant reforms to the GOG that will alleviate problems
associated with the Financial Police.


18. (SBU) Macroeconomic management has so far been adequate.
The economy continued to show strong real growth through
2005, reaching 9.3% year on year in 2005. The Russian bans
On Georgian exports, the severing of transport links and
major increases in energy costs however, may limit growth by
1-3%, according to the IMF. The IMF adds that the
longer the blockade is in place - the worse the damage will
be. The economy could still grow as much as 6-7% in 2006.
Inflation has been relatively moderate for such a
fast-growing economy, at 8% in 2005, but it is trending up
as a result of a quickly expanding money supply, higher
costs, and more vigorous government spending permitted by
growing tax revenues.

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ENERGY REFORM
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19. (SBU) Georgia's energy supply picture is much improved
since the Rose Revolution. From 1998 to 2004, USAID
provided $47.3 million in cash subsidies to needy Georgians
for energy. Last winter was the first the time Georgia
took this burden on itself. With USG assistance, electricity
supplies have become more reliable, approaching
consistent 24-hour-a-day service through improved management,
systems and anti-corruption efforts.
Hydropower output has increased almost 27%, and thermal by
28%, from 2005 to 2006. Georgia is even beginning to
export electricity to its neighbors. Natural gas supplies,
especially this winter, are more problematic. Russia
quadrupled the cost of gas in two years, interfered with
Georgia's efforts to contract with Azerbaijan for
alternative supplies, and threatened outright cutoffs to
Georgia. Nevertheless, with more gas becoming available to
Georgia via the Shah Deniz pipeline from Azerbaijan, and
increased reliance on domestic hydroelectric power, the GOG
expects that the situation will significantly improve after

2008. The GOG has asked for USG support as they work with
Azerbaijan and Turkey to strengthen their energy situation in
the short-term.

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NATO INTEGRATION
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20. (C) The Saakashvili has identified NATO integration as a
top national strategic objective. NATO's decision to
give Georgia Intensified Dialogue in September was a major
success for Saakashvili and was a strong acknowledgment
from the West of GOG progress in political, economic, and
defense reforms. The GOG needs to target judicial reform,
rule of law, and structural reform at the MOD while remaining
calm in the face of Russian provocations.

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DEFENSE REFORM
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21. (C) Georgia continues to make progress on defense reform.
Significant progress in meeting Individual
Partnership Action Plan (IPAP) goals was noted during the
NATO International Staff (IS) assessment last
spring, but the challenge for the Ministry of Defense now is
to implement into operational practice many of the plans
and programs that have been successfully developed thus far.
A key shortcoming noted during the assessment was in
the field of Personnel Management, but several initiatives to
progress in this area were made this fall.


22. (C) The next two key challenges for the Ministry of
Defense will be to demonstrate continued progress in
implementing IPAP objectives during the forthcoming Spring
2007 NATO IS assessment, and in completing and publishing
the ongoing Strategic Defense Review (SDR) in July 2007,
Georgia's stated goal. Deciding on a stable force
structure that can be properly resourced into the future will
be key to completing the SDR.

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RUSSIAN BASE WITHDRAWAL
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23. (SBU) On May 30, 2005, the Russian and Georgian Foreign
Ministers signed a Joint Statement agreeing to a timeline
for the withdrawal of Russian military forces from its bases
in Batumi and Akhalkalaki by October 1, 2007. Russia

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fulfilled the 2005 provision of the Joint Statement calling
for the removal of 40 armored vehicles, including 20 tanks,
by the end of October 2005 (slightly behind schedule because
of weather delays). Russia fulfilled its 2006
withdrawal requirements ahead of schedule, removing all
remaining heavy equipment from Akhalkalaki, as well as
equipment and ammunition from Batumi, by mid-September 2006.
All remaining Russian military forces and equipment
in Akhalkalaki and Batumi are on schedule to be removed from
Georgia by October 1, 2007. The status of the Russian
base at Gudauta, in Abkhazia, which the Russians agreed to
close at the 1999 OSCE Istanbul Summit, remains
unresolved. The base has not been transferred to Georgia,
and Russian troops remain at the base as peacekeepers.

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SEPARATIST CONFLICTS
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24. (C) From the beginning of his presidency, Saakashvili has
made it clear that he wants the reunification of
Georgia to be part of his historical legacy. His active
approach has produced some impressive successes, bringing
Adjara and the Upper Kodori Gorge back under Georgian
government control. But the hardest nuts -- Abkhazia and
South Ossetia -- remain uncracked. Over the past year,
Russian support for the separatist regimes has become, if
anything, even more unyielding and overt, making it hard to
predict a breakthrough in the near future. Even so, the
Georgian government's approach has over time become steadier
and smarter, as evidenced by the contrast between
the government's poorly coordinated behavior during the
violence in South Ossetia in 2004 and the well-run Kodori
operation in July 2006.


25. (C) Since Kodori, the government has shown notable signs
of improved internal coordination and, under the
influence of Foreign Minister Gela Bezhuashvili, of
recognizing the importance of getting its side of the story
out to the international community. The government wisely
moved to get behind the donors' economic rehabilitation
projects in South Ossetia, despite some qualms that these
could benefit the de facto Kokoity regime. It has also put
on hold the idea of unilaterally terminating the mandate of
Russian-led peacekeepers in both conflicts.


26. At the same time, however, the government has rejected
suggestions -- such as a statement on non-use of force or
abandonment of its push to change negotiating and
peacekeeping formats -- that it believes would signal
weakness to the separatists and the Russians. The
government's position is tough, but not unthinkingly so,
and this approach appears to have the broad support of the
Georgian public. If anything, any potential opposition is
likely to come from those -- like former Defense Minister
Okruashvili -- who would push for a harder line.
Saakashvili has told us that he believes time is on Georgia's
side in the conflicts: Georgia's economic
development will over time draw the separatist regions back
toward Georgia, and an outbreak of major violence would
undercut this favorable long-term dynamic.

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RELATIONS WITH RUSSIA
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27. (C) Georgia's reforms have come in the face of an
increasingly aggressive Russian policy that many Georgians
believe is designed to thwart the reforms and to produce
"regime change" in Georgia. Between December 2005 and May
2006, Russia imposed bans on imports of Georgian agricultural
products, wine, cognac, sparkling wines, and
mineral water, all products for which Russia had previously
been Georgia's primary market. Russia has also closed the
only legal land border between the two countries, and severed
all air, rail, and sea transportation links.


28. (C) Following the Russia-Georgia spying confrontation in
September-October 2006, Russian officials conducted a
highly publicized campaign of harassment and deportation of
Georgian citizens in Russia, many of whom had been sending
remittances to Georgia for years. Many Georgians expect
Russia to disrupt gas supplies this winter, as happened
last year. All these steps have hurt the Georgian economy,
but they do not seem to have undermined support for the
government; if anything they have done the opposite, as
evidenced by the National Movement's huge wins in October
local elections.


29. (C) With few exceptions, the opposition has supported the
government's handling of relations with Russia and its

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NATO aspirations. This level of support appears to give the
government the time it needs to see Georgia through to
a more diversified economy in which Russia holds much less
economic leverage. As Georgia becomes more closely and
irreversibly integrated with NATO, we may eventually see a
lessening of Russian military and political pressure, but
in the interim as Georgia moves from Intensified Dialogue to
a possible Membership Action Plan (MAP) this pressure
seems likely to become even more intense.

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COMMENT: A REVOLUTION IN NEED OF SUPPORT
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30. (C) Comment: The GOG has made tremendous progress but it
faces a hard road ahead. Following an overwhelming
victory in the October local elections the Saakashvili has
targeted 2007 as a year for continuing its difficult reform
program in order to consolidate gains ahead of the 2008
Parliamentary and Presidential elections. Escalating
Russian pressure however, is designed to derail the GOG's
reform program and efforts to integrate with NATO, and
Saakashvili is counting on U.S. and European support as a
counterweight to its great northern neighbor. The U.S. and
Europe need to speak with one voice on the need for Russia to
cease its economic blockade and continued obstruction to
the peaceful resolution of the separatist conflicts. The
dreams of the Rose Revolution, inspired by western ideals and
values, remain very much alive. Continued success will
require Georgian steadfastness as well as continued western
support if the goal of rebuilding Georgia into a democratic,
prosperous and unified country is to be achieved. End
Comment.
TEFFT