Georgia’s puppet master turns towards Moscow

There are few places in Tbilisi from where you cannot see the steel and glass palace perched on Mount Mtatsminda belonging to Bidzina Ivanishvili. But unlike his imposing property, the richest and most powerful man in Georgia has stayed out of the public eye.

Since serving as prime minister from 2012-13, the oligarch — whose $5bn fortune is equivalent to one-third of his country’s GDP — has largely wielded power from behind the scenes.

Last week, however, he descended from his mountain to deliver a conspiratorial, anti-western speech in which he depicted Georgia as a victim of a “global party of war” and its alleged agents among civil rights groups.

His rare address, at a pro-government rally, was a show of support for a highly contentious foreign agents law being pushed through parliament by his Georgian Dream party. The law would require NGOs and media outlets with foreign funding to register with the justice ministry or face fines.

Critics say it has been inspired by Russia’s crackdown on civil society and will be used to help Georgian Dream win parliament elections due in October.

The bill has sparked the country’s biggest demonstrations in decades, with many Georgians fearing its passage will jeopardise — and indeed may be designed to stymie — their hopes of joining the EU.

The Georgian government’s rapprochement with Moscow has been under way for three years, despite Russia’s war against Ukraine. But analysts and government critics say that the foreign agents law and Ivanishvili’s speech, in which he echoed Kremlin lines, mark a turning point and that the former Soviet republic is now heading back into Russia’s orbit.

Ever since independence, Georgian governments have sought to integrate with the west, said Natalie Sabanadze, a former Georgian ambassador to the EU, now with the Chatham House think-tank. But recent events, she said, had been a “big, dramatic shift”.

Ivanishvili spent his formative years in Russia where he built his fortune like other oligarchs who acquired Soviet-era state assets through privatisations. While studying at a Moscow university in the 1980s, he teamed up with a Russian-Israeli national, Vitaly Malkin, and began trading in computers and telephones from Hong Kong. They expanded into banking and metals.

The Georgian oligarch is part of semibankirshina or “seven bankers” — a group of influential Russian financiers and businessmen that included Boris Berezovsky, Mikhail Khodorkovsky and Mikhail Fridman — who salvaged Boris Yeltsin’s campaign for re-election as Russian president in 1996.

In 2003 Ivanishvili returned from Russia to his native Georgian village of Chorvila. He stayed out of politics until 2011 when he founded Georgian Dream, a coalition of all the forces opposing then president Mikheil Saakashvili. Within a year, the new party won parliamentary elections, marking the first peaceful transition of power in modern Georgia, and the billionaire became prime minister.

During his time in office, Saakashvili passed successful, albeit painful economic reforms. His attempts to steer Georgia out of Russia’s orbit and into the EU and Nato prompted a Russian invasion and occupation of two border regions in 2008. Saakashvili became increasingly authoritarian, cracking down on dissent to hold on to power.

“People were so tired that they would vote for anyone who opposed Saakashvili”, said Victor Kipiani, a senior partner at Tbilisi-based law firm MKD that represented Ivanishvili for five years until the oligarch halted their co-operation in 2023, after Kipiani criticised the ruling party’s first attempt to adopt the foreign agents law.

Ivanishvili tried to stabilise relations with Moscow, with the blessing of the west, while at the same time prioritising Georgia’s integration into the EU and Nato, says Chatham House’s Sabanadze. But the balancing act became impossible after Russia’s full-scale invasion of Ukraine in 2022.

One theory is that, as is the case with many Russian oligarchs, his business interests are under threat unless he toes the Kremlin line. Another possible explanation is that he is reacting to an EU request for Georgia to drastically curb the sway of its oligarchs before starting accession talks.

Ivanishvili did not respond to requests for comment.

As honorary chair of Georgian Dream, a role created specially for him, he holds no formal government or party role. But he crucially has the right to nominate the party’s candidates for prime minister.

“This arrangement gives Ivanishvili almost absolute power without any formal accountability,” said Eka Gigauri, head of Transparency International Georgia.

Ivanishvili maintains his grip on power by appointing close associates to key positions. His bodyguard is now the minister of interior, former chief executives of his companies have been appointed at the helm of the intelligence service and the ministry of infrastructure and the former minister of eduction was once a maths tutor for his children, said Gigauri. “The list goes on and on.”

Another explanation for his Russia pivot is that, with elections looming, Ivanishvili is adopting tactics used by Hungary’s Viktor Orbán, polarising the political debate, painting domestic opponents as foreign lackeys and fighting culture war issues to appeal to socially conservative Georgians, especially those in rural areas.

“People support EU integration because they believe that life is better there,” said Kornely Kakachia, the director of the Georgian Institute of Politics. “But when it comes to values, many do not believe in them,” he said, giving the example of LGBT+ rights.

In his speech Ivanishvili reiterated that it was still Georgia’s objective to join the EU. But Brussels has warned that passing the NGO law would threaten Georgia’s membership prospects.

As many as 89 per cent of Georgians support EU accession, according to the Washington-based International Republican Institute. Tens of thousands have taken to the streets of Tbilisi since early April and clashed with police, some draped in EU flags, to protest against the law and their country sliding back into Russia’s sphere of influence.

So Ivanishvili is taking a “possibly suicidal” risk, said Sabanadze. Some members of the European parliament have called for sanctions against the oligarch.

Georgian Dream has paid lip service to EU integration to buy domestic and international legitimacy while “incrementally eroding democracy in the country”, said Anastasia Mgaloblishvili of the German Marshall Fund think-tank. Now, she said, “the pro-EU veil has finally come off”.