On Capacity Building and Cooperation in Public Administration in the Caucasus

GEORGIA

ASSESSMENT STUDY

ON CAPACITY BUILDING AND COOPERATION IN PUBLIC ADMINISTRATION IN THE CAUCASUS

Tbilisi, May 2002

PREFACE

This paper is one of three reports on public administration education and policy formulation in South Caucasian countries. It was compiled by the staff of Georgian Foundation for Strategic and International Studies (GFSIS) upon the request of Local Government and Public Service Reform Initiative of the Open Society Institute (LGI). The report is designed to assist in the preparation for the implementation of Public Administration Reform in the Caucasus project funded by Canadian International Development Agency (CIDA) to be implemented by

Canadian Bureau for International Education (CBIE). The reports are designed as needs assessment studies, and may not cover extensively, or in depth, all issues pertaining to public administration in the South Caucasus. The reports may serve as an introduction to those interested in public policy and civil service in the South Caucasus, as well as international donor activities in these fields.

The GFSIS team that have prepared the reports included Alexander Rondeli, Archil Gegeshidze, Eka Metreveli, Lily Begiashvili and Shota Utiashvili.

LGI, CBIE and CIDA do not accept the responsibility for the accuracy and completeness of this publication. Any judgements expressed are those of GFSIS and do not necessarily reflect the views of LGI.

The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be send to GFSIS or LGI.

For the reports on Armenia and Azerbaijan, please contact OSI Budapest or GFSIS.

INTRODUCTION

Georgia is located in the Caucasus, South-Eastern Europe. Population of the country is 4,5 million[1]. Most of the population are ethnic Georgians (70%), also, Armenians, Azeris, Russian, etc. Population is predominantly Eastern Orthodox (75%), also Muslims and Armnenian Apostolic.

Although Georgia has a history of about three millenia, its has relatively short experience of independent statehood. It regained its independence from Soviet Union in 1991, and since then is undergoing very painful period of transition, made even harder by a civil war (1991-2) and two secessionist conflicts in Abkhazia and South Ossetia. Post-Soviet transition has been multi-dimentional, encompassing economic, political, administrative, judicial, financial, electoral and other reforms as well as creation of new instititions, that are associated with independent statehood (army, customs, national bank etc.)

Georgia is a Presidential republic. Power is separated into three branches: Legislative, Executive, and Judicial.

Legislative Branch: All legislative power is vested in the Parliament, which is the highest representative body of the State. It exercises legislative power, determines the main directions of domestic and foreign policy, carries out general control over the Government and other functions within the framework of the Constitution. The Parliament consists of 150 proportional and 85 majoritarian members, elected for a term of four years on the basis of free, universal, equal and direct suffrage by secret ballot.
The Parliament for the term of its authority elects the Speaker of the Parliament.
Parliamentary committees are established for preliminary preparation of legislation; monitoring of fulfillment of previously adopted Parliamentary decisions; supervision of activities of state bodies accountable before the Parliament and controlling over all other governmental activities. The Parliament can set up ad hoc Parliamentary Committees.
Members of Parliament cannot hold any office in Government. A member of Parliament has a right to question members of the Government and other executive bodies of the State.
Executive Branch: The President is the head of the State and executive power in Georgia. The President represents Georgia in foreign relations, forms the Government, guarantees the Unity and integrity of the country.
The President is elected for a term of five years on the basis of free, universal, equal and direct suffrage by secret ballot. One person can serve only two consecutive terms as President.
The President exercises supreme co-ordination of executive branch through the State Chancellery, which is directed by a State Minister.
The President cannot dismiss the Parliament; whereas the Parliament has a right to impeach the President in a case the President breaches the Constitution, or is convicted of high treason or a criminal offense. Parliament can also remove members of Government and other high officials within the executive bodies of the State.
Legislative power is exercised exclusively by the Parliament, however in case of emergency the President can pass decrees which have force of law. Laws passed by Parliament must be signed by the President. The President can refer any law back to Parliament suggesting amendments. In the case of the President's amendments being rejected by Parliament, the President is obliged to sign and publish the law.
The President appoints Ministers and other high officials, announces the state of war or emergency, signs treaties, and suspends or dismisses organs of local authority; all are exercised with the consent of the Parliament.
The President can call for a referendum on an issue.
Judiciary. The independence of the Judiciary is guaranteed by the Constitution. The highest court is the Supreme Court. It exercises control over lower courts. The Parliament appoints the Chairman of the Supreme Court upon the nomination by the President, and the Parliament can dismiss the Chairman.
The Constitution establishes the Constitutional Court. The Constitutional Court rules on the legality and guarantees highest authority of the Constitution of Georgia.

Local Governance. Capital of Georgia is Tbilisi. Administratively, country is divided into 53 districts. Districts are run by heads of district, called Gamgebeli and local councils called Sakrebulo. Gamgebeli is appointed by the President from the member s of Sakrebulo. Members of Sakrebulo are elected on the basis of free and direct suffrage. All mayors of the cities are directly elected except for Mayors of Tbilisi and Poti, which are appointed by the President.

The President also appoints governors to oversee regional administration.

There are two autonomous republics in Georgia, Abkhazia (which after the secession war of 1992-4 is de facto independent) and Adjaria. Former Autonomous Oblast of South Ossetia also remains de-facto independent after secessionist war of 1992-3. There are about 300,000 IDPs as a result of these wars.

Economy Georgia's economy has traditionally revolved around Black Sea tourism; cultivation of citrus fruits, tea, and grapes; mining of manganese and copper; and output of a small industrial sector producing wine, metals, machinery, chemicals, and textiles. The country imports the bulk of its energy needs, including natural gas and oil products. Its only sizable internal energy resource is hydropower. Despite the severe damage the economy has suffered due to civil strife, Georgia has made substantial economic gains since 1995, increasing GDP growth and slashing inflation. The Georgian economy continues to experience large budget deficits due to a failure to collect tax revenues. Georgia also still suffers from energy shortages; The country is pinning its hopes for long-term recovery on the development of an international transportation corridor. The growing trade deficit, continuing problems with tax evasion and corruption, and political uncertainties cloud the short-term economic picture.

The GDP for 2001 was Georgian Lari 6,505 million (average exchange rate 1USD=2,22GEL). This is 4,5% more than the previous year. Shadow economy is estimated 33% of GDP. Agriculture accounts for 19% of the GDP, and Industry – for 12%. GDP per capita varies according to different estimates, but it is estimated around 700 US dollars[2].

The process of reforming the public administration system began in 1991, as old soviet governing structures were abolished and new institutions were established. However, managerial and administrative inexperience among the new, non-Soviet elite, and the lack of a clear vision of the new system of central and local governance coupled with the political fragility of the government resulted in the reversal of early reforms after the coup of 1992. The years 1992-5 were characterized by nearly complete lawlessness in the country and the abolition of civilian government.

A new stage of reforms started in 1995 with the adoption of the new Constitution and restoration of civilian authority. The government declared its desire to be integrated in European and trans-Atlantic bodies and its intent to seek transformation in all sectors, including the system of public administration, with the aim of achieving European standards. The government’s commitment to reform was further reinforced by the conditionality of international assistance, particularly that coming from the IMF and World Bank.

The initial progress of reforms (from 1995 to 1998) was quite impressive, especially in the legislature, local administration, revenue and tax collection, and the legal and banking sectors. Unfortunately, there has been no rigorous effort to transform public administration; the changes implemented were few, unsystematic, and easily reversed.

Overview of Past Reforms.

Unfortunately, no consistent and comprehensive strategy for reforming public administration has ever been designed, which is quite natural, since the country has not yet decided what kind of government structure it wants to have. Institutional changes that have been implemented since 1995 reflected shifts of power distribution within the government, rather than the political will of the government to improve the policymaking process or the government structure.

Most of the persons interviewed noted, that the public administration reforms were cyclical. That is, the government would implement a reform, and then instead of building on the reform, it would revert to the previous position. This happened in a number of ministries, which merged and separated several times; the most notorious examples include tax and customs administration, and the Ministry of Finance and the various ministries concerned with economic issues.

Most of the reforms in different government agencies were personality driven. Both donors and local officials privately agree that reform in the government institutions greatly depends on the minister or other head of the agency. Mostly, these “reforms” are designed to respond to personal ambitions of the head, not to the institutional requirements. When the “reformist minister” leaves or becomes susceptible to pressure, the reforms are forgotten, their results are reversed, and the responsible staff are fired.

The most visible reform in public administration has been the continual reduction in the numbers of civil servants, as required by international donors (IMF, WB) and budget deficits that did not allow the government to sustain large numbers of public employees.

However, in most instances, institutions were ordered to reduce their staff by prescribed amounts, which was done at the expense of lower ranking and technical employees, keeping middle and senior levels untouched. These practices persist until now.

The personnel reduction did not achieve its main goal: retaining the most promising employees and attracting new, better trained, and more open-minded ones. Internal corruption and cronyism was the main impediment to achieving the first goal, and very low salaries prevailing in the public sector the second one.

Another aspect of reform, institutional optimization, was mostly ignored. Georgia currently has 21 ministries, 18 state departments and 15 independent agencies, more than 200 so-called “entities of public law” employing about 17,000 civil servants. Another 17,000 are employed in local governance and self-governance institutions[3]. All of the persons interviewed have noted that this number is too large and a substantial reduction is required. Public administration in Georgia is characterized by a large number of state agencies with similar functions. For example, there are four agencies responsible for promoting foreign investment, and their charters are copied from each other.

One of quite rare examples of institutional reform was the merging of the Presidential apparatus and the staff of cabinet of ministers implemented in 1995, after the President acquired functions of the head of government. It resulted in eliminating a large number of parallel structures and reducing employees from over 1000 to 380. However, in most cases reduction has been implemented within each structure without eliminating parallelism. The reductions usually were at the expense of low ranking employees, which caused an excess of executives. According to a government official, in the State Chancellery 2/3 of employees are decision-makers. Similar problems persist in other state bodies.

Perhaps the only example of what can be described a successful personnel and structure reform took place in the Parliament. Parliament has chosen systematic, top-down approach and managed to institutionalize reform. First, a new charter was adopted, followed by the new regulation. These two documents defined the functions of the staff of the Parliament, and appropriate structure. The next step was defining required quantity of personnel in each structural unit and the necessary skills and qualifications of each employee. After that, an independent commission was established with the function of attestation of employees and also hiring new ones. With very clearly defined job descriptions and required skills and qualifications, successful job competitions were held. The results of the reform were higher prestige of Parliament staff, increased salaries and much better chances of career advancement for the employees.

The persons interviewed have unanimously noted, that success of this reform owes to strong political will and support of the Parliament’s leadership.

Various ministries have gone through a number of structural reforms, with many mergers and splitting of ministries. Another reduction in the number of ministries is planned for this year. But, again, no development strategy exists to guide reforms.

Tax administration was subject to the most rigorous reform, including tests of tax inspectors and some structural changes, such as consolidation of inspectorates. Reform was supported and supervised by USAID and Barents Group (a unit of KPMG Consulting) and was widely publicized.

Reform in tax administration: fewer employees and more qualification exams

The reform program of the tax administration was developed in accordance with a memorandum of understanding signed in March 1999 by the Georgian and US governments. The major features of this reform were a reduction in the number of employees, the selection of personnel on a competitive basis, and the provision of good salaries to combat corruption. A similar reform is planned in the Customs Department.

The first stage of reform in Tbilisi was implemented by the end of 2000. The number of tax inspection offices has been reduced by half, and the structural reorganization of the central staff of the tax department and of the inspection of large taxpayers has been completed. Qualification exams for tax inspectors were held in the Kvemo Kartli region in October 2000, and similar exams were planned for other regions.

However, most of the respondents from government and civil sector agree that this reform was a total failure. The reasons named were a lack of political will to support and sustain reform, imbedded special intersects (this field remains one of the biggest source of illegal income), and ill-designed tests (which did not reflect specifics of tax administration and consisted of general questions). Also, although the first stage was a written test and free from cheating, the second stage were less easily monitored oral interviews. Furthermore, the Soviet legacy of an Appeals Commission makes fair assessment more difficult.

Two important steps were made in the field of public administration education reform

• Opening of the Public Administration College in Tbilisi by EU TACIS in 1994-98. [See, Chapter 5].
• Establishment of the Georgian Institute of Public Administration [GIPA] was founded in 1994. [See, Chapter 5]
• Legal Reform.

More positive results were observed after the legal reform that was undertaken, again with assistance of international donors. The reform included tests for judges, the selection of qualified judges, and an increases in their salaries (to at least GEL 500 per month). The prestige of the court system significantly improved as a result of these reforms. However, the government soon found itself unable to pay the increased salaries in a timely manner, thus leaving judges’ salaries below subsistence level. Although this was a blow to legal reform, it still remains one of the very few success stories of reform.

Assessment of Legal Environment

The Law on Civil Service of Georgia was adopted on October 31, 1997. Its purpose was to create a uniform system of civil service, to establish a concept of civil service, to lay out the principles of implementation of civil service, to elaborate its legal base, to establish the qualification requirements of civil servants, to establish the rules and procedures of recruitment and attestation, and to provide legal and social guarantees to civil servants.