Kakha Bendukidze

Is this man the godsend of Libertarians and free-market lovers everywhere? Could Georgia be the model for future economies? Or will it end up plunging into war with Russia?

None of my readers know it, but one of my pet subjects is Caucasian politics. I read about it regularly, and discuss it with some very nice Georgian people. I have picked up the odd bit of Russian and Georgian. Raghorakhar Bijou. [loose phonetics].

Here are some choice quotes for people that I know will like this guy, namely Frank.

He says that Georgia should be ready to sell “verything that can be sold, except its conscience”.

Next year “if not sooner” he will cut the rate of income tax from 20% to 12%, payroll taxes from 33% to 20%, value-added tax from 20% to 18%, and abolish 12 kinds of tax altogether. He wants to let leading foreign banks and insurers open branches freely. He wants to abolish laws on legal tender, so that investors can use whatever currency they want. He hates foreign aid it “destroys your ability to do things for yourself,” he says though he concedes that political realities will oblige him to accept it for at least the next three years or so.

As to where investors should put their money, “I don’t know and I don’t care,” he says, and continues: “I have shut down the department of industrial policy. I am shutting down the national investment agency. I don’t want the national innovation agency.” Oh yes, and he plans to shut down the country’s anti-monopoly agency too. “If somebody thinks his rights are being infringed he can go to the courts, not to the ministry.” He plans, as his crowning achievement, to abolish his own ministry in 2007. “In a normal country, you don’t need a ministry of the economy,” he says. “And in three years we can make the backbone of a normal country.”

The lesson he drew from the Russian experience, he says, is to change the method of privatisation, not the principle of it. He promises public sales to the highest bidder, and cash only: “no conditions, no promises, no beauty contests”.

Big improvements in business conditions are needed in order to offset big political risks and to keep investors coming. “Other governments make budgets,” he says. “We are making a nation.”

7 thoughts on “Kakha Bendukidze”

  1. I’m so behind with my Economist-reading that I read this article only yesterday (Saturday 7 Aug). Like you I was gobsmacked, and tore it out for future reference.

    Kakha (an unfortunate first name) Bendukidze is a man in a hurry, reckoning Georgia will have to do everything at once and in a rush so as to get the pain over with fast.

    For Georgia’s sake, let’s hope both Mr Bendukidze and his boss President Saakashvili will have the courage to stick with this bold programme through the inevitable period of turmoil and anguish, until positive results start to emerge.

    Actually, for the world’s sake let’s hope this. Because success from such an audacious plan will be a shining example for other countries to follow and drag themselves out of a hole.

  2. I am Georgian leaving in Europe and I truly hope that Kakha bendukidze will succeed in his plan.
    Georgia’s future is to be decided within a short period. Either it integrates into developed countries or becomes a place of continuous turmoil.
    Its’ geographic location offers a lot of opportunities as well as risks. Their duty is do exploit opportunities and avoid risks. If young government of Georgia today manages to concentrate on economic development rather than playing tough guy’s role with Russia, I am sure we as a nation will have a future and will establish our deserved place on the world map.

  3. With the greatest respects to the new Minister of Economy of Georgia, Mr. Kakha Bendukidze, I would say that his economic policies are those such a necessary for the Country to grow and prosper. I am Georgian myself and of course, I carefully look at the developments in my country. Thus, I know that some of the politicians contradict with Mr.Benduqidze and argue that he wants to sell everything. I would answer to these so-called politicians that only increase in FDI can help Georgia to improve its economic situation and put her name on the world map as developed country. Moreover, Poland did the same, India did the same, therefore did they loose something? Definitly no.
    And finally I would state again that I do believe if business and government sectors follow Mr.Bendukidze`s proposal, in the nearest future Georgia will become attractive place to invest and live.

    Guram Tsanava, MBA
    France, 2004

  4. We need to think for Georgian people first of all, I do not think such intensive investment drag from outside sources is a good sign. We need to bring of course outside investors but, we need to think for small medium and large business development inside the Georgia. We make opportunities for outside investors and doing everything to bring them in Georgia, this will harm the country. Smooth growth and planned investment is a good policy. We increased prices for everything in Georgia, and still very high interest rates for loans to finance the businesses so this policy is not definitely for Georgians this policy is to attract investors. And the biggest problem is with that we increase the gap between poor and rich and it is going to increase further which is a very bad sign. And this is the reason why crime is increasing currently.
    Investors gain from investment and give up some gains when they exchange currency in Georgia you still gain from that because GEL becoming stronger every day. We are not in a fool employment point yet so we need to thing about the growth.
    We need more Government spending, low interest rate, moderate decrease of reserve requirement for banks and more exports. We can manage to fight against inflation as well if we plan economic growth properly and not make everything only to attract outside investors and harm Georgian people!

  5. We need to think for Georgian people first of all, I do not think such intensive investment drag from outside sources is a good sign. We need to bring of course outside investors but, we need to think for small medium and large business development inside the Georgia. We make opportunities for outside investors and doing everything to bring them in Georgia, this will harm the country. Smooth growth and planned investment is a good policy. We increased prices for everything in Georgia, and still very high interest rates for loans to finance the businesses so this policy is not definitely for Georgians this policy is to attract investors. And the biggest problem is with that we increase the gap between poor and rich and it is going to increase further which is a very bad sign. And this is the reason why crime is increasing currently.
    Generally, investors gain from investment and give up some gains when they exchange currency, but in Georgia you still gain from currency exchange, that because GEL becoming stronger every day.
    We need more Government spending, low interest rate, moderate decrease of reserve requirement for banks, more exports, investment in education and investment in business. We can manage to fight against inflation as well if we plan economic growth properly and not make everything only to attract outside investors and harm Georgian people!

  6. Hello,

    I would like to drop a few lines regarding our tragedy which concerns to my little Mariam.

    We are from the village Brotsleti, which represents the buffer zone and all our property was destroyed during the war. Both my husband and me are unemployed. My husband has some health problems as well. I myself have been operated twice on my leg. (Because of the birth trauma I was suffering from sepsis which caused coxarthrosis). We can hardly earn our living….

    My Little girl Mariam has had health problems since she was born and this increased in losing her hearing. During the war time we were staying in Gori at my mother’s, nearby the place where the most explosions happened. The stress worsened her health conditions. After the medical examinations she was given the diagnose: the fourth degree intracochlear form of neurosensory deafness.

    Mariam is a very clever girl. She herself learnt how to contact people with gestures.

    After her medical examinations in the clinic named after Khechinashvili the doctors ascertained that Mariam needs cochlear implantation. The operation costs extremely expansive for us: the implant which should be put into the helix costs 30 000 GEL, and the operation itself 3 500 GEL. We have no possibility to cover the expenses.

    We are begging you to take into consideration our deplorable situation and give the hand of help to my pretty little girl and give her a chance to live as a normal person.

    Please, give some assistance or advice at least what to do or whom to address….

    My contact e-mail address is: laliko55555@gmail.com

    With regards,
    Mariam’s mother: Natia Tulashvili
    And grandma : Leila Khmiadashvili 899-24-42-89

    This is my little Mariam

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