As the former Soviet republic of Georgia’s new leadership determines which direction it will take a country with a struggling democratic transition, the new ruling party sent its first delegation to Washington recently to discuss what each side will contribute to the relationship—and what the other will need in return, both politically and economically.

USIP President Jim Marshall greets David Usupashvili, the chairman of Georgia’s Parliament.
USIP President Jim Marshall greets David Usupashvili, the chairman of Georgia’s Parliament. (Photo credit: Courtesy Embassy of Georgia)

As the former Soviet republic of Georgia’s new leadership determines which direction it will take a country with a struggling democratic transition, the new ruling party sent its first delegation to Washington recently to discuss what each side will contribute to the relationship—and what the other will need in return, both politically and economically.

The March 11-15 visit, led by David Usupashvili, the chairman of Georgia’s Parliament and a member of new Prime Minister Bidzina Ivanishvili’s Dream Coalition, included a meeting with USIP President Jim Marshall and Stephen Hadley, the Institute’s senior adviser on international affairs and a former national security adviser.

Leading up to Georgia’s October parliamentary elections, and following the upset of President Mikhail Saakashvili’s party in the vote, Western officials feared Georgia’s democracy could backslide in a manner similar to nearby Ukraine. European and U.S. leaders are pressing the Dream Coalition and its relatively unknown leadership on freedom of speech, the rights of the political opposition, and the respect of human rights. Power-sharing relations between President Saakashvili and Prime Minister Ivanishivili are tense.

Georgia’s path to democratization is important to the U.S. and its western allies. Georgia contributes the largest contingent of troops to the international coalition in Afghanistan outside of NATO, and is posturing for closer ties to the West as a potential NATO and EU member. Even if membership in these organizations is a long way off – neither is financially capable of expanding at the moment – the former Soviet republic remains a linchpin to stability in the Caucasus and plays a role in the energy sector by virtue of its location for oil and gas transit routes.

Many remember the brief war between Russia and Georgia in August 2008. Still lacking a lasting solution to the disputed border, Georgia and the rest of the region, which also includes the historic powder kegs of Armenia and Azerbaijan, are vulnerable to conflict triggers. Strong adherence to human rights and a stable democratic transition in Georgia should be seen as a win-win for everyone.

Usupashvili and the Dream Coalition could benefit from stability more than anyone in Georgia. Currently, Georgia’s economy is recovering from several big-ticket purchases in past years intended to put Georgia on the map. The country boasts a futuristic new parliament and the “largest mall in Europe.” What they can’t boast about is a sound and growing economy, or an American business presence.

Usupashvili lamented that the largely healthy political relationship between the U.S. and Georgia is not mirrored on the economic side. Beyond McDonalds and Marriot, the Georgian public sees little concrete evidence of the benefit of our bilateral ties.

To generate tangible economic improvements that Georgians can feel, and thus bolster U.S. credibility in the region alongside a democratic transition, the country needs more U.S. investment to fill in the gaps.

But Georgia suffers from weakness in the rule of law that fails to adequately protect investments and tacitly encourages corruption. American companies will avoid investing in Georgia if they see too high a risk of instability and bribery, which could jeopardize them under U.S. anti-corruption laws that extend to business overseas.

USIP’s experience has shown that efforts to strengthen rule of law depend on key social and political dynamics that have to be taken into account. This multi-layered process can require deep structural reforms. While difficult, the reforms can provide a foundation to lure foreign investment and help fill that empty shopping mall with U.S. business.

In the chicken-and-egg debate over economic reforms and foreign investment, what do you think needs to come first in Georgia’s case? Submit your comments below.

Hanne Bursch is a USIP program assistant to Senior Adviser Stephen Hadley and earned her master’s degree from Georgetown University in European studies.

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