An Oligarch Goes Home to Lift Georgia's Economy
By ERIN E. ARVEDLUND
Published: November 5, 2004
The languishing of the hundreds of thousands of displaced people is "a huge problem," [Kakha] Bendukidze said. "These people were being used as a political tool, as a sword of Damocles. They need to be integrated in society and have property rights like everyone else."
They also are occupying some of Georgia's most valuable real estate, the sale of which Mr. Bendukidze is hoping will help undo decades of decay and revitalize a country where nearly half the population lives below the official poverty line.
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Under Mr. Shevardnadze, many tiny enterprises were privatized, but only a few large, important businesses, like the Batumi Oil Terminal. Mr. Bendukidze's list, however, has 1,800 enterprises of all sizes - including a proctology clinic, vineyards, factories, a hydropower station, Georgia's aging airport and beach resorts (refugees included). At the dusty Ministry of Economic Development, off Tbilisi's main street, Mr. Bendukidze has set up a hotline and a Web site (www.privatization.ge) for anyone interested in buying government-owned assets. Turks, Europeans, Americans and especially Russians have been poking around.
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Mr. Bendukidze rarely minces words, and his temper is well known among foreign aid organizations. According to a BBC report, he called International Monetary Fund representatives "fools" on Georgian television when they cautioned against major tax cuts he had suggested. And a World Bank employee recalls being cursed out at his office.
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Back in Russia, he ran a company with twice the budget and seven times the debt of his home country, and was free to hire and fire without political fallout.
Not in Georgia. But he is determined to set an example by cutting bureaucracy at his own ministry, letting two-thirds of his 2,400 staff members go. The only way to pull Georgia out of poverty, he says, is to cut the bloat, strip vested interests and end corruption.
"There are a lot of people who own or run government property burning state money and putting ash in their own pockets," Mr. Bendukidze says. "It's not two or three people, it's managers with thousands of employees whom no one needs, workers who aren't creating wealth.
Ah-h! That's the way to handle complaisant bureaucrats.
With the Finance Ministry, Mr. Bendukidze is helping to write and submit new laws for passage in parliament that would lower the personal income tax rate to 12 percent from 20 percent, cut taxes on corporate profits and deregulate the banking and insurance industries.
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What about the seeming incongruity of his laying down rules in Georgia - for transparent, honest privatizations with clearly enforced property rights - that many of his fellow oligarchs in Russia did not follow during the rough-and-tumble privatization there?
"I'm sorry," he said, shrugging. "But that game is over."
Those who can't handle the fact that "life's rough" don't get rich. Though we're all riding free on their innovations.
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