Current global developments push many nations to define their political paths and choose their future strategic partners. Some have already applied to join the BRICS, which has expanded from 5 to 11 nations, while others stand in a queue. The European Union, recently hesitant about its enlargement, has accelerated membership discussions with nations in the Western Balkans and Eastern Europe.
Nations must decide which path attracts them more: the basic principles and rules of Western developed nations or the authoritarian rule of the other camp. One of the principles that can help distinguish between these two major camps is the Rule of Law – the first has a strong tendency to follow the Rule of Law, while the second tends to neglect it by any means. Georgia has received an invitation to become an EU membership candidate status but is also pressured by Russia to stay in its sphere of influence.
I previously wrote an article about what the Rule of Law means to me. I liked Friedrich Hayek’s approach (The Road to Serfdom, The Constitution of Liberty) to this point. However, I became more convinced when I read an article by Steve Hanke about the Rule of Law and monetary policy in Ecuador[1]. He writes:
“The concept originated with the Greek Democracy. The premiere Hellenist Jacqueline de Romilly captured the essence of the idea by stating that ‘The Greeks, jealous of their independence, were always proud to proclaim their submission to Laws…. They demanded only that their city be ruled by its own Laws and not by a man. The Law was thus the basis and the guarantor of all their political life’ (de Romilly 2001: 1).”
So, the major idea is that the Rule of Law is the opposite to the Rule of Man. According to this excellent article, a governmental monetary policy can be counted as quite opposite to the Rule of Law principle – the discretionary powers of a central bank, its arbitrary decisions, and total neglect of the rights and interests of individuals can be counted in of the Rule of Man (and much less of the Rule of Law). Some experts can always try to prove that the major principle for a central bank should be its total independence.
Kakha Bendukidze, a famous Georgian reformer, put a question this way: What if our national bank issues too much money into circulation, destroying the economy, businesses, jobs, and harming individuals and their families? Would any government tolerate its harmful political impact? He believed the independence requirement was quite chimeric and had very weak or no real-life meaning.
Any central bank should work according to the law, but the same law allows it to make various independent policy decisions, in most of the cases, secretly (sometimes even openly) negotiated with the leaders of the executive branch of the government. Such arbitrariness can hardly be put under the Rule of Law principle.
As I mentioned earlier, a law that violates the basic rights of an individual can easily fall under the principle of the Supremacy of Law (no law is violated) but definitely not under the Rule of Law. For instance, any local government permit to allow noisy activities violates the Rule of Law (violates individual rights) but can be done according to a law, and therefore fits the Supremacy of Law principle.
Recent developments in Georgia have shown how dangerous the discretionary powers of the central (national) bank can be. After the US Treasury and State Department announced a new list of sanctioned companies and individuals, the National Bank of Georgia (NBG) decided to only exempt Georgians in this list (who in fact appeared to be a Russian citizen). NBG issued an order that based on the constitution of Georgia defending any Georgian citizen and the constitutional rule of presumption of innocence, NBG rejected the implementation of the sanctions. The decision was an arbitrary one but also not made according to the constitution’s procedural laws.
This decision was criticized by local experts, opposition politicians, and free media, as well as international organizations – by almost everyone except the government and ruling party. The Georgian constitution itself recognizes the priority of international agreements as these agreements are signed by Georgian authorities. This rule is not obligatory and Georgia, of course, has the right to reject any agreement, but then it may have very limited access to international financial networks and services by rejecting their rules and making itself a suspicious member. This can be very harmful to Georgia’s economy, business, and individuals.
Some more decisions and events during the last few years in Georgia reflect its government’s confused visions of Georgia’s place in the world. This issue can be connected to what is the government’s stance on the principle of the Rule of Law.
The recent political division in the world can be very much the same – to which camp a nation wants to belong – the Rule of Law or Non-Rule of Law. The enlargement of the BRICS and Russian-led Economic Union aims to collect under their umbrella the nations who are not very much interested in the Rule of Law principle and, with different scales, represent authoritarian states. They frequently neglect and disrespect the international rules they previously agreed to and disregard human individual, economic, and political rights.
In fact, these nations represent the Rule of Man principle (Putin, Xi, etc). On the other side are the nations that clearly support the Rule of Law principle. Their political systems are much more transparent, with balanced power, and, most importantly, are strongly oriented toward respecting individuals, their lives, freedoms, rights, and properties.
Therefore, there is a clear division, a choice that can be difficult but decisive. The latest and most popular BRICS idea is to invent and substitute the US Dollar with their common currency. However, one must understand the need for very strict rules and discipline fulfilled by all participant nations in such a monetary union for inside and outside relationships. This seems simply impossible. In contrast, the USD is not a unit of exchange imposed by force, but an internationally recognized practical unit. Predictably, such a monetary system without the Rule of Law principle and discipline can collapse and even contribute to conflict.
To illustrate the problem one can read two reports of economic freedom by the Fraser Institute and the Heritage Foundation. Both of them have the Rule of Law measures as major components. Both studies are based on neutral, internationally available data and show a very clear division mentioned above.
The Rule of Law direction of the 2023 Index of Economic Freedom by the Heritage Foundation[2] includes three components:
- Property Rights
- Judicial Effectiveness
- Government Integrity
All the developed world nations’ scores are well above the 50% world average, with most of them averaging at levels between 80-90%. In contrast, the members of the BRICS have average scores of around 40% across these three components, with some dropping as low as 20-30% score. Most of the Eurasian (Russian) Economic Union (EEU) members have scores below 30%. Comparatively, Georgia holds an average score of 58%, placing it 64th among all nations surveyed by the Economic Freedom of the World Index (EFI).
The Fraser Institute’s “2023 Economic Freedom of the World” study[3] includes a component of the Legal System and Property Rights, comprising eight sub-components. This study shows the similarity to the Heritage Foundation Index results. Developed nations have an average score of 8 out of 10 points, while BRICS and EEU nations average lower than 5 points (some of them as low as 3 points). Georgia again finds itself situated between these two camps, scoring 6.33 and ranking 45th globally.
Another interesting study of the World Justice Project measures the Rule of Law Index[4]. Here again, the scores of the nations of the BRICS and the EEU, all falling below 0.5 out of 1, are notably behind the scores of the EU, G7, and other developed nations, averaging around 0.8. Georgia is ranked 49th among 140 studied nations, scoring 0.6.
It is worth taking a closer look at the Transparency International Corruption Perceptions study (2022)[5]. Except for Saudi Arabia (54) and UAE (67), other BRICS nations have scores between 25 to 45. EEU nations receive scores between 27 to 46. In contrast, EU nations score between 43 and 90, with most Western developed nations leading the index. Georgia scores 56 and shares the 41st place with countries like Czechia, Italy, and Slovenia.
It can be easily visible that the nations who tend to follow the Rule of Law principle have lower corruption. Western organizations tend to cooperate with nations striving to combat corruption, respect individual rights, and make progress in their adherence to the Rule of Law. Conversely, organizations on the other side of the spectrum might engage with nations that lack the Rule of Law and have widespread corruption issues.
It is important to mention that Georgia has recently experienced a regression in its economic freedom studies. While the component of the Rule of Law was on the rise and higher than many ex-Soviet nations, it has not yet reached higher levels, indicating the need for more time.
Georgia’s current political stance falls between the EU and the Russian-led EEU and the BRICS. The political choice of the Georgians clearly favors EU membership, although the government believes this must be balanced with a very cautious foreign policy to maintain peace and stability.
In addition, the government has signed a new treaty with the People’s Republic of China (PRC) about Strategic Partnership. This alarmed the opposition and expert circles in Georgia. It suggests that the Georgian government is intensively looking for alternatives in the non-Rule of Law camps.
Interestingly, this new strategic cooperation on the Georgian side is linked to possible participation in the new Silk Road projects that have never been officially suggested by CCP/PRC leadership. It is important to add that there are very few, if any, Rule of Law camp nations within this initiative (One Belt One Road). It means that this initiative is purely political and can only function under political coverage relying on political means and heavily influenced by corruption. Therefore, it cannot substitute any alternative transit routes as it will be much more costly.
In the best-case scenario, Georgia will continue to maintain its current position, allowing the EU to make decisions. In the worst-case scenario, this uncertainty could lead to regression in reforms, economic and civil freedoms, as well as a weakening of Rule of Law values. This could result in closer alignment with Russia and China (PR), increased corruption, and abuses of power.
[1] Reflections+on+the+Rule+of+Law+and+Dollarization+in+Ecuador:
https://sites.krieger.jhu.edu/iae/files/2017/04/Hanke_Rule-of-Law_Dollarization_Ecuador.pdf
[2]Heritage Foundation Index of Economic Freedom: https://www.heritage.org/index/ranking
[3] Fraser Institute, Economic Freedom of the World: https://www.fraserinstitute.org/studies/economic-freedom
[4] World Justice Project, The Rule of Law Index: https://worldjusticeproject.org/rule-of-law-index/
[5] Transparency International, Corruption Perceptions Index: https://www.transparency.org/en/cpi/2022
Continue exploring:
Foreign Agent Draft Law Triggered Anger among Georgian Youths
