Georgia’s reluctance to freeze the assets of a former official accused by the United States of being a Russian agent has further tested Tbilisi’s ties with the West.
The U.S. State Department earlier this month added Otar Partskhaladze, who briefly served as Georgia’s chief prosecutor, to its sanctions list over reports that he allegedly obtained permission from Russia’s Federal Security Service to become a Russian citizen. FSB) security services, and said in return he agreed to “influence Georgian society and politics for the benefit of Russia.”
After initially supporting a freeze on assets covered by the sanctions, Georgia’s central bank changed compliance rules, effectively protecting Patzhaladze. Three senior bankers resigned in protest at the changes. What follows is a fierce domestic debate over why the ruling Georgian Dream party appears prepared to protect figures linked to its founding oligarch Byzina Ivanishvili at the cost of alienating its international partners .
“No one believes that the central bank is independent. It is part of the government,” said Alexandre Rakviashvili, an economist and member of the liberal Girchi party. “Patzhaladze is a very important figure in our country,” he added. “He is the prosecutor general and has close relations with Ivanishvili.”
In 2016, Ivanishvili stated that his son Bela was the godfather of Patshaladze’s grandson. Analysts say that although Ivanishvili no longer holds a formal political role, he still controls the “Georgian Dream”. The oligarch amassed much of his wealth in Russia in the 1990s, including his 1% stake in Russian energy giant Gazprom. His wealth is estimated at $6.2 billion, accounting for about one-third of Georgia’s total GDP.
Ivanishvili did not respond to a request for comment.
Patzhaladze, appointed by Georgian Dream, resigned in 2013 after just six weeks as chief prosecutor because of his criminal record in Germany. He issued a written statement saying he had been found guilty by a German court over a “verbal altercation” with a police officer. In 2018, he was charged with assaulting the former head of Georgia’s audit agency. In 2021, the Tbilisi City Court acquitted Patzhaladze.
The U.S. State Department described Patzhaladze as a “Georgian-Russian oligarch” who “frequently traveled to Russia” and obtained a Russian passport with the help of Russia’s Federal Security Service. Two Russian management consulting firms partly owned by Partskhaladze were also included on the sanctions list.
Patzhaladze could not be reached for comment.
Shortly after Irakli Kobakhidze, chairman of “Georgian Dream”, publicly warned not to freeze Patshaladze’s assets, the National Bank of Georgia’s attitude changed 180 degrees. The bank changed its sanctions compliance rules, saying only the assets of Georgian nationals prosecuted by local courts will be frozen.
Acting central bank governor Natia Turnava defended the decision and said it was a “better way” to impose international sanctions.
“We found that there may be some gaps and non-compliance between local legislation and the mechanisms for automatically imposing sanctions,” Tenava told the Financial Times. She said the legal framework “may need some fine-tuning for Georgian citizens” ”.
In July, the IMF delayed approval of a second $289 million loan, citing concerns about changes in the country’s bank’s management structure. Turnava confirmed the International Monetary Fund had suspended the program and said more questions had been raised following the resignation of three deputy governors of the bank.
The political atmosphere in Georgia remains tense as the country awaits a recommendation from Brussels within weeks on whether to grant the country EU candidate status, as it was granted to Ukraine and Moldova last year. EU concerns about democratic backsliding, corruption and oligarchization have put Georgia on the slow track to EU membership, with the European Commission granting it only a “conditional view” of candidate status based on the reforms it adopts.
Instead of focusing on judicial and economic reforms, the authorities have launched an intense campaign against an alleged pro-Western plot to overthrow the government. Last week, the country’s intelligence services announced without providing evidence that they had identified a former official who served under pro-Western President Mikheil Saakashvili and a commander currently fighting Russia in Ukraine official’s coup plan.
“This is what they always do when there’s a crisis in the country,” said Erka Gigauri, executive director of Transparency International in Georgia. “For example, governments create stories like this before elections and say that this or that Western country or Ukraine is helping people destabilize the country. It’s a story designed to maintain their supporters.”
Despite this, the public still largely supports the West, with the latest poll showing that 90% of respondents support EU integration.
Georgian Dream came to power in 2012 as part of the coalition that ousted Saakashvili, who has been imprisoned since returning to the country in 2019, with the former leader denouncing conditions of detention and going on multiple hunger strikes. It made him haggard.
Unlike most other EU candidates, Georgia has refused to join Western sanctions on Russia following last year’s sweeping invasion of Ukraine. Instead, it restored direct flights between Tbilisi and Moscow, welcomed Russian immigrants and sought to push for a Russian-style foreign agents law that would target NGOs and media critical of the government.
“Georgian Dream seems to have to pretend to advance the EU bid because people are so supportive of the EU,” said Sonia Shivers, director of the South Caucasus office of the German think tank Heinrich Böll Foundation. “They can’t do it without taking risks. Speaking out against Europe at the risk of mass protests, but much of what we’ve seen does nothing to help their EU bid.”
Svlook
