The Georgian Boys?
A brief sketch of Georgian neoliberal reformers continuing the tradition of the Chicago Boys in Georgia and Ukraine
We know that Chile’s democratically elected president, Salvador Allende, was overthrown in a coup, after which Augusto Pinochet installed himself as the dictator. This regime change provided Milton Friedman and the so-called Chicago Boys with a laboratory to conduct their neoliberal economic experiments. These experiments involved implementing free-market policies and reducing government intervention in the economy, often resulting in severe social and economic consequences. These policies were then promoted as “case studies” to justify similar reforms in other parts of the world. Georgian neoliberal reformers, following in the footsteps of the Chicago Boys, have been instrumental in shaping economic policies.
After the collapse of the Soviet Union, the post-socialist states became even larger testing grounds for neoliberal experiments. In these regions, neoliberalism was often introduced through significant Western-backed “revolutions” or political shifts that enjoyed substantial popular support. These political changes were accompanied by efforts to reshape historical memory, often by vilifying and banning symbols of communism. This strategy created an environment conducive to the acceptance of neoliberal reforms.
Civil society groups and individuals who had participated in these revolutions typically found their interests aligned with the new, neoliberal governments. Everything was accepted wholesale as “Western.” The influx of Western funding for civil society organizations increased significantly after these political changes. For example, following the Maidan revolution in Ukraine, Western financial support for civil society nearly doubled. Instead of encountering resistance, neoliberal reformers found a network of allies, supporters, and propagandists who facilitated and endorsed their reforms. You can see in the two examples below that such neoliberal reforms were facilitated with funding from USAID and the EU.
These neoliberal revolutions gave birth to a peculiar phenomenon where by numerous Georgians associated with the United National Movement (UNM) went to Ukraine after Mikhail Saakashvili's UNM party was defeated in 2012 in Georgia.
Previously in Georgia, Rose Revolution in 2003 enabled Mikhail Saakashvili and his associates to seize power and implement sweeping neoliberal reforms in Georgia, exceeding even the requirements of the IMF or World Bank. World Bank reports on Georgia expressed enthusiasm for the pace and scope of Saakashvili’s reforms. In contrast, earlier reports had criticized Eduard Shevardnadze for stalling on "reforms," which primarily involved privatizing public property, downsizing the government, and laying off employees.
After Saakashvili dismantled many state functions, including the labor code and labor inspection, and imposed a strict budget in the Georgian constitution with limitations on spending and a ban on progressive taxation, he was eventually ousted from Georgia. Misha wasn’t done yet, he is quoted as saying, “Sex can't compare with a revolutionary victory. A revolution is something more than adrenaline.”
He then found a new opportunity when the Maidan revolution began in Ukraine, allowing him and his associates to enter the Ukrainian government and implement their reforms on a larger scale. From Atlantic Council:
The likely threat of Saakashvili’s prosecution for alleged abuses of office by Ivanishvili’s government led to his self-imposed exile to the United States; but shortly thereafter, the success of the 2013 Euromaidan uprising in Ukraine led to the opportunity for Saakashvili’s political resurrection.
Mikhail Saakashvili didn’t stop with one Ukrainian administration. He also got in with President Volodymyr Zelenskyy to help “drain the swamp” in Ukraine. Consequently, Zelenskyy appointed Saakashvili to lead the executive committee of Ukraine’s National Reform Council. Saakashvili is also responsible for Zelenskyy’s’ barbaric labor code reforms:
Formally, the draft law was filed on behalf of Halyna Tretyakova, head of the parliamentary committee on social policy, and a number of other deputies from the ruling Servant of the People party. The bill was developed by a Ukrainian NGO, the Office of Simple Solutions and Results, which was set up by former Georgian president Mikheil Saakashvili, together with Ukrainian employers’ associations and a USAID programme.
While Saakashvili was maneuvering in Ukrainian politics, other Georgian neoliberal reformers were focusing on privatization schemes in Ukraine. The Maidan revolution and the subsequent ousting of President Yanukovych ignited neoliberal reformers in Ukraine.
One notable example is ProZorro, digital public land procurement. Chatham House article lauds Georgian reformers:
ProZorro, a digital public procurement system, was developed by a group of Euromaidan activists. They were stock exchange traders, digital marketing experts, management consultants, investment bankers, and activists at Transparency International…
When the Viktor Yanukovych regime collapsed in February 2014, one of these activists, Oleksandr Starodubtsev, an expert in digital trading systems, started an informal initiative hosted by Pavlo Sheremeta, then the dean of the Kyiv School of Economics. With $35,000 in start-up funding from six online trading companies, Starodubtsev and his team developed the first prototype of a digital platform that would later become ProZorro, meaning ‘transparent’ in Ukrainian…. The IMF also made reform of the procurement system a condition for disbursement of funding under its framework programme for Ukraine.
Georgian reformers played an important part in inspiring and guiding the Ukrainian teams. David Margania, who had modernized the Georgian public procurement system, and Tato Urdzymelashvili (Urjumelashvili), the former head of Georgia’s state public procurement agency, helped to galvanize support for the proposed reforms.
Let’s look at Tato Urjumelashvili’s presentation at the conference organized by SIGMA, in collaboration with the Ministry of Economic Development and Trade of Ukraine. This event, known as the Second Regional European Neighbourhood (ENP) East Conference on Public Procurement for ENP East countries (Armenia, Azerbaijan, Georgia, Moldova, and Ukraine), took place in Kyiv on 29-30 May 2018 and was funded by the EU.
We can see how Tato outlines his ideology in his own slide presented at this conference. In typical Friedmanite fashion, Tato, the transnational neoliberal reformer, argues that most problems arise from spending someone else’s money. This echoes Margaret Thatcher’s famous comment, “The trouble with socialism is that eventually you run out of other people's money.” Chile was the original testing ground for Milton Friedman’s neoliberal reforms, often referred to by Friedman as the “Miracle of Chile.”
These experiments are now in jeopardy, according to an article published just days before the Russian invasion, titled "Ukraine Risks Becoming a Case Study of Liberalization Lost," found on the Atlas Network site. The Atlas Network, akin to Libertarian International, is known for training and supporting libertarian and neoliberal reformers and activists worldwide. The article expresses concern that Ukraine, which has hosted aggressive neoliberal reforms, is at risk of undermining one of their significant libertarian achievements, ProZorro. The article describes ProZorro as “facilitating privatization,” highlighting the potential threat to these reforms.
The Ukrainian people have struggled to overcome the deadening legacy of the Soviet Union. Ukrainians are burdened by over 3,500 state-owned enterprises, or SOEs, which drag down the economy and provide convenient vehicles for corruption. The state operates in many sectors and holds significant market share in some, including banking and energy.
Nonetheless, SOEs have been privatized on a large scale…In 2021, the ProZorro.Sale system—a platform for auctions facilitating small-scale privatization—hosted more than 1,200 successful auctions that accounted for nearly $180 million in transactions. In the process, Ukraine transferred loss-making government assets to those who can use them more productively.
Have no fear! Even if Ukraine is at risk of these reforms “backsliding,” the success of this privatization scheme has been turned into a case study and is being promoted by the Development Bank of Latin America and the Caribbean. This means it will likely find a new life and be implemented in other countries:
The project was led by a collective action initiative resulting from the so-called Revolution of Dignity of 2013 and 2014, which turned into an opportunity to transform the system and build trust among citizens about the quality of public spending…this case and others that seek to inspire and promote improvements in the efficiency of the State and the quality of the services offered to the citizens of Latin America will be presented.
And we return to Latin America. The case studies of neoliberalism developed in Latin America were exported to post-socialist countries, leading to the creation of additional case studies and even more radical experiments. These new approaches were then exported back to Latin America, further advancing neoliberal reforms. All of this was made possible by various “revolutions” that provided a framework for implementing and promoting these economic policies.
Was the rose revolution a coup?