State, Capital, and New Antagonism

Georgian Statehood in Crisis

The recent Namakhvani Hydro Power Plant protests have clearly illustrated the problems of Georgian statehood and underlined the crisis of its form and functions. The antagonism of Rioni Valley Guardians and their supporters has not only created an unprecedented form of resistance, but it has also provided a brilliant possibility for rethinking the state, its relation to capital and society. Even though the international investor “Enka Renewables LLC” has lately notified the Georgian government about the termination of the agreement, many questions remain unanswered[1]. Yet, this is hopefully not the end of a long struggle, but a beginning of more important battles, which are embedded in state market relations in our globalized world.

The history of statehood in Georgia is inextricably linked to the emergence of capitalism in the country in the beginning of the 1990s. However, these two processes are not concurrent or parallel. Rather, they are inseparable because the state is embedded in the capital relations. The accumulation of capital also depends desperately on the state[2]. Consequently, a crisis of the accumulation regime, pushed forward by certain elites, is also a crisis of statehood. Forms of post-crisis statehood and economic reproduction depend on the outcome of struggles for new hegemony, what kind of new dichotomies emerge, and which discourses win[3].

The political or socioeconomic crises that have taken place in the history of Georgia have so far not resulted in a confrontation between alternative discourses on development and economic policy. Today, the Georgian state is just as much a guarantor (and not an instrument) of the interests of capital as it was in the first decade of the country’s independence. If foreign investment did not play a significant role in pre-revolutionary Georgia,[4] the post-2003 economic model was built on the assumption of a continuous inflow of foreign direct investments.

Georgian governments have demonstrated ultimate dedication to the country’s modernization and have successfully served the model of illusory economic development, which has exposed Georgian society to wild, primitive capitalism. We have already paid a dear cost for the untamedness of the capital. Deregulated labor markets, the financial sector, and environmental policies have taken workers’ lives, polluted rivers and air, destroyed cultural heritage sites, led to household over indebtedness, and left insolvent household borrowers homeless. It should thus come as no surprise that the Rioni Valley turned into a center of gravitation for the victims of the state’s economic policies. Their voices are not heard in any other political space.

At the Beginnings of Capitalism

While Georgian Prime Minister Irakli Gharibashvili unscrupulously referred to the Rioni Valley’s guardians as  “remnants of the dark ‘90s“, the government’s anti-state economic policy takes us back to the 1990s and makes us long for the debates over the market, privatization, and state of those times. Georgia, being freed from the shackles of the Soviet Union, was seduced by western-style capitalism and a space was opened to creativity and freedom of the subjects freed from the structural dislocation. This free energy led to the emergence of uncontrolled, speculative market activities in the wake of forming a new socioeconomic structure.

The advertising section of the newspaper Sakartvelos Respublika (Republic of Georgia) in the early 1990s accurately reflects the entry of capitalism into Georgia. Newspaper advertisements clearly dismantle the face of early capitalism, which sometimes promised the population of Georgia enrichment if they would invest the last savings in the firms like “Dato” (personal male name), or become capitalists through the Capital Bank[5], and offered firms to register in offshore countries through services provided by companies like ERI (Nation).[6] At the same time, the Georgian Stock Exchange, insurance, and real estate markets were established. One of the most common financial activities was foreign exchange transactions and foreign exchange lotteries, which were also an essential source of speculation (especially before the end of hyperinflation).

The rise of capitalism was immediately reflected in the fast emerging educational institutions, which offered newspaper readers the opportunity to study economics, business, or foreign economic relations.[7] The market euphoria on the newspaper pages, in the early 1990s, also points out the income inequality, which was an immediate result of the establishment of new market society structures and processes like privatization. Against the deficit of wheat, fuel, and sugar shortages, various companies invited newspaper readers to attend a Michael Jackson concert[8] or take a “prestigious” trip to Italy[9], Hong Kong, Malaysia or Singapore[10]. Meanwhile, the Georgian People’s Investment Company reminded the public:

“Remember! “Money goes with money, so the corporation will merge your indexed and ordinary funds and create capital of two billion.”[11]

The Premises of a Market Economy

Today we are often told that the model of capitalist economic development, chosen since the first years of independence, had no alternative. However, in the early 1990s, there were quite lively political, academic, and newspaper discussions regarding the forms of market economy, as well as  its ups and downs. Yet, nothing could stop liberalization policies and introduction of a market economy via “shock therapy”.

In January 1992, Sakartvelos Respublika celebrated the end of “exaggerated socialism”[12] and blessed the way into a new future. Open-ended heartfelt rhetorical questions such as “What kind of market do we want?” [13] “What should banks look like?” [14] and discussions over the forms of capitalism soon disappeared from the political agenda. The International Monetary Fund’s (IMF) 1994 Macroeconomic Stability Program[15], along with the plan to overcome hyperinflation[16], laid the foundation for defining Georgia's financial system and market economy. It was hyperinflation that fixed the meaning of the Georgian National Bank along neoliberal central banking. If before 1994, the form and function of the central bank was a subject of political and academic debates, after hyperinflation, the trajectory of its transformation was finally determined according to the IMF reform package. However, even before the hyperinflation, the smell of victory of the IMF reforms[17] was in the air. This took place against the background of the political elite’s fears of “backwardness”. A clear proof of this can be found in the speech of the Deputy Prime Minister in the field of economic reforms Roman Gotsiridze at the November 24, 1992, parliamentary sitting:

“We have to use tested, working models. Let the rich countries experiment if they want to. […] The search for a new third way, the search for a specific Georgian way, which unfortunately is deeply ingrained in our psychology, such improvisation will possibly lead us to the point where the Georgian economy is forever doomed to backwardness.“[18]

The IMF concept presented by Mr. Gotsiridze was not met with enthusiasm. For example, member of the parliament from the Social Democratic Party Guram Muchaidze reminded him of the role of the state in the “spontaneous” and “inhumane” plan to move to a market economy:

“The concept suggests throwing people into the ocean and then watch who will reach the shore, and who won’t.” [19]

Gotsiridze agreed with Muchaidze on the importance of state intervention in the economy, but added:

“If we turn our backs on international monetary organizations, then Georgia, [....] is doomed to isolation for half a century. Today they dictate the fashion.“[20]

The path of economic development, that Georgia has chosen, made the wave of liberalization, deregulation, and privatization inevitable. At the same time, the Georgian economy was prematurely thrown under the wheel of global capitalism, and it was doomed for peripherality from the beginning. However, the fate of the country’s economic development was also determined by the trajectory of the implementation of the chosen reforms. Although Eduard Shevardnadze, Speaker of the Parliament and Head of the State of the Republic of Georgia, was very cautious about privatizing state property at the first stage, only political and financial elites benefited from this process. At the 1992 parliamentary sessions, Shevardnadze called on the parliament to undertake meaningful privatization:

“We should not talk about getting rid of everything that the state owns as soon as possible. It must be a manageable, planned, and scientifically thought-out process.[21] The minister should not take such a course that he should get rid of all the enterprises as soon as possible. This is disastrous. [...] You know, in two days you will sell shops in Tbilisi – you will sell cheaply… no one will give you a higher price. I ask you, who will buy them? Nobody thinks about it. [...] Therefore, a primitive approach is not acceptable. We have lost a lot, and you should not imagine that state property is an asset that we should get rid of so quickly [...]. We must select ministers who, firstly, do not betray knowledge or experience, and secondly, who know the purpose of every penny, machine, and every worker.” [22]

However, privatization based on rent-seeking aims failed to restore and develop the country’s economy. For years, scrap metal was the leading product in Georgia’s exports[23] -  a symbol of Georgian capitalism and privatization.

The  Post-Revolutionary Development Discourse

Reckless privatization continued after the Rose Revolution in 2003, with even more radical deregulation of the economy. Again, the process continued out of fear of being labeled backward and in the name of modernity. Thus, the Rose Revolution did not question the pre-revolutionary regime of capital accumulation. Instead, it aimed at its optimization through the inflow of foreign direct investments. The revolution and post-revolutionary discourses were based on a critique of Shevardnadze’s bureaucratic and corrupt state apparatus. The economic failure was blamed on poor governance and failed state institutions – not on the ideological basis of economic policy or development. Therefore, the minimal state agenda gained popularity after the revolution. In comparison, if Shevardnadze regarded the reduction of ministries for the sake of efficiency “mechanical” and “primitive” in 1992[24], establishing a laissez-faire state after the Rose Revolution became one of the central discourses of nation-building. The World Bank compared the State Minister for Economic Reforms Kakha Bendukidze’s approach to the abolishment of state agencies to the guillotine.[25] Bendukidze’s aggressive privatization policy was based on the belief in universal economic principles, the absolute trust in private market actors, and the neglect of the importance of the origin of capital[26]. Even before arriving in Georgia in June 2004, Bendukidze stated:

“Any economic policy should have maximum deregulation of the economy as its priority. In Georgia, this should take the form of ultra-liberalism, since if Georgia wants to build a normal country, its economy has to grow at very high rates.”[27]

The government got rid of the social responsibility after the Rose Revolution, and economic development was entrusted to a deregulated market at the expense of exploiting labor and nature. No fundamental reflection or revision of economic development policies had taken place since 2012 when their opponents replaced the neoliberal government of the post-revolutionary elite through parliamentary elections. Privatization of state property is still considered to be the response to all economic challenges. One of its most symbolic manifestations was the sale of the Ministry of Economy building in 2015, to save the devalued lari.[28]

Thus, the Georgian state is built on the hope of the inflow of foreign capital, and its peripheral economy is unable to overcome its dependence on imports, capital, or currency. The Georgian government is willing and has to create all the necessary conditions and make all the required sacrifices to attract foreign investment. Otherwise, the regime of capital accumulation will collapse, and with it the power of the state apparatus will melt down. In this context, it becomes understandable why a sovereign government might agree to sign a contract with a foreign investor, which deprives the state of power and makes it extremely vulnerable to various risks for building a gigantic Hydro Power Plant (HPP) on the Rioni river.  

Antagonism from the Rioni Valley

The hegemonic discourse in Georgia considers the taming of capitalism as a sin, and the state is trying hard to maintain the existing order (even through such projects as Namakhvani HPP). Yet this hegemony has been shaken by the protests against Namakhvani HPP, which has evolved into a way more important battle than ecological concerns about the fate of the Rioni Valley or resettlement of locals from their homes[29]. The resistance of the Rioni Valley started to undermine the prevailing discourse on (economic) development and the role of the state. Concepts such as development, prosperity, democracy, state interest, security, politics, and civil society have been gaining new meaning and importance amid this process. The Guardians of the Rioni Valley started to dismantle the regime not only on a discursive level, but also shook the system literally through punching the wall erected by the state in Gumati, in summer this year. Moreover, the growing resistance from the Rioni valley bundled and intensified the social protests that have erupted in different parts of Georgia and echoed the pain of Georgian emigrants. Thus, the Rioni Valley became a gravitation field for country's socioeconomic, ecological, and political problems, where the Georgian government was fighting for its survival. Such a structural fracturing has not taken place since the collapse of the Soviet Union. The existing order – political and civil society – could not allocate or understand such actors as the Guardians of the Rioni Valley. The political elite in Georgia, as well as media and most civil society organizations still see all processes through pro- or anti-Russian prism. Positions and struggles that emerge beyond this dichotomic narrative are not understandable for these actors.

Social antagonism is often based on the image of the enemy, which creates a certain dualism, a dichotomy – without which, a new hegemony cannot emerge. This dichotomy created by the resistance in the Rioni Valley is built neither on the confrontation between the people and the government nor on the confrontation of corruption and transparency, as it was in the case of the Rose Revolution. The new antagonism dismantled the vulnerability of peripheral countries, which are dependent on foreign capital, through juxtaposing public and private welfare. This antagonism opposes all the foundations on which the imaginary of development of the Georgian economy stands since the Rose Revolution: commodification of nature, exploitation of workers, neglection of the public voice in the process of development, prioritization of private capital interests above the public welfare, technocratic decisions, and violent methods. Therefore, neither good words, nor compensation of financial loss or use of police power can resolve and transform the new antagonism based on such a dichotomy.

The Guardians of Rioni Valley can be seen as agents of change that have a potential of establishing a new hegemony through confrontation and antagonism. Their social antagonism has raised the hope of establishing a new hegemony as their articulation through confrontation hinders the closure of the existing structure,[30] as the protest that started with ecological concerns in the Rioni Valley turned into a critique of economic development and the forms of statehood. Yet, the agency of such actors acquires form and content amid the struggle[31] [32]. The unexpected developments that evolved around the highly debated LGBTI Pride this year in Georgia demonstrated that the outcomes of the process of agency formation are open. The decision of Rioni Valley Guardians to publicly announce their support to the Georgian Orthodox Church against the LGBTI pride parade, which resulted into violent attacks against journalists attending the pride[33], put down the sparkles of hope and excitement about fundamental change. Consequently, the Guardians lost supporters, who were deeply disappointed by such a public positioning of these actors.

The new antagonism cannot be successful or legitimate if it does not manage to keep clear lines between its object of critique and its own principles. The process of discourse formation is a long one and it will never be completed even when new meanings are established, nor can a totally closed structure be created.[34] Therefore the outcomes of the Rioni Valley struggle and most importantly the fate of its transformative power is now open. Yet, this antagonism will remain as a unique one in the recent history of Georgia, no matter how the resistance evolves and what the outcome of the negotiations with Enka Renewables be. Now it is crucial to think about future strategies, because today we are trapped under the wheel of capitalism more than ever – blood is shed, forests are cut down, workers’ mouths are literally sewn shut, rivers are silenced, and the unity of resistance is shattered.

The content of this article is the sole responsibility of the author and can in no way be taken to reflect the views of the Heinrich Boell Foundation Tbilisi Office – South Caucasus Region.

References

1. BBC News, „Georgia: Tbilisi Pride cancelled amid violent protests”, July 5, 2021, https://www.bbc.com/news/world-europe-57720366
2. Bob Jessop, State Theory: Putting the Capitalist State in its Place, Polity Press, Cambridge, 1990.
3. Center for Social Justice, Assessment of Namakhvani HPP Contract, 2021, https://socialjustice.org.ge/ka/products/emc-namakhvanhesis-khelshekrulebit-mnishvnelovani-sakhelmtsifo-interesebi-datmobilia-kerdzo-kompaniis-sasargeblod
4. Civil.Ge, “The government plans to intensify the privatization process against the background of GEL depreciation”, February 25, 2015, https://civil.ge/ka/archives/153916
5. National Bank of Georgia, Annual Report, Tbilisi, 2001.
6. National Agency for State Property, “Ministry of Economy Building Sold for $ 9,450,000,” June 26, 2015, http://nasp.gov.ge/pages/show.php?postid=100
7. Ernesto Laclau and Chantal Mouffe, Hegemony and Socialist Strategy: Towards a Radical Democratic Politics, 2nd edn. Verso, London, New York, 1985.
8. European Stability Initiative, “Georgia’s Libertarian Revolution, Part Three: Jacobins in Tbilisi,” 2010.
9. Jacob Torfing, “Discourse Theory: Achievements, Arguments, and Challenges,” in Howart, D. and
10. Jian-Ye Wang, “The Georgian Hyperinflation and Stabilization,” IMF Working Paper, No 99/65, 1999.
11. Joachim Becker, “Der Kapitalistische Staat in der Peripherie: polit-ökonomische Perspektiven,” in: Journal Für Entwicklungspolitik, XXIV (2), 2008, S. 10-32.
12. Joachim Becker, Akkumulation, Regulation, Territorium: Zur kritischen Rekonstruktion der französischen Regulationstheorie, Metropolis Verlag, Marburg, 2002.
13. Lela Rekhviashvili, “A Louder Periphery: Guardians of the Rioni Valley against the “Namakhvani Hydroelectric Power Plant (HPP)”, Lefteast, https://lefteast.org/a-louder-periphery-guardians-of-the-rioni-valley-a…
14. Mikheil Saakashvili, Kakha Bendukidze, “Georgia: the most radical Catch-up Reforms,” in: A. Aslund, S. Djankov (eds), The Great Rebirth: Lessons from the Victory of Capitalism over Communism, Peterson Institute for International Economics, Washington D.C. 2014.
15. RFE / RL: “Gharibashvili on Namakhvani HPP Opponents: Talking with Ultimatums is a Reminder of the Dark 90s”, May 24, 2021, https://www.radiotavisupleba.ge/a/31270333.html
16. Stenographic report of the Parliament of Georgia, November 19, 1992.
17. Stenographic report of the Parliament of Georgia, November 24, 1992.
18. Ulrich Brand, Gegen-Hegemonie: Perspektiven globalisierungskritischer Strategien, VSA-Verlag Hamburg, Hamburg, 2005.
19. Torfing, J. (eds) Discourse Theory in European Politics: Identity, Policy and Governance, 2005.
20. World Bank, “Fighting Corruption in Public Services: Chronicling Georgia’s Reforms,” The World Bank, Washington D.C., 2012.
21. 1 Tv.Ge, „Police erect iron wall in Rioni Gorge after anti-Namakhvani HPP protesters' decision to relocate”, May 26, 2021, https://1tv.ge/en/news/police-erect-iron-wall-in-rioni-gorge-after-anti…

Newspapers

1. Sakartvelos Respublika Newspaper [Republic of Georgia], N133, July 9, 1991
2. Sakartvelos Respublika Newspaper [Republic of Georgia], N10, January 22, 1992
3. Sakartvelos Respublika Newspaper [Republic of Georgia], N50, March 26, 1992
4. Sakartvelos Respublika Newspaper [Republic of Georgia], N138, July 25, 1992
5. Sakartvelos Respublika Newspaper [Republic of Georgia], N102, May 19, 1993
6. Sakartvelos Respublika Newspaper [Republic of Georgia], N125, June 15, 1993
7. Sakartvelos Respublika Newspaper [Republic of Georgia], N170, August 5, 1993
8. Sakartvelos Respublika Newspaper [Republic of Georgia], N170, August 6, 1993
9. Sakartvelos Respublika Newspaper [Republic of Georgia], N247, November 17, 1993
10. Sakartvelos Respublika Newspaper [Republic of Georgia], N155, September 2, 1994