Philanthropist billionaire transforms Georgian politics

CHORVILA, Georgia Thu Jun 7, 2012 7:46am EDT

1 of 3. Local resident Giorgi Ivanashvili walks in his courtyard in Chorvila, the home village of Bidzina Ivanishvili, about 170 km northwest of Tbilisi, June 5, 2012.

Credit: Reuters/David Mdzinarishvili

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CHORVILA, Georgia (Reuters) - Billionaire businessman Bidzina Ivanishvili has spent the last decade making dreams come true for Georgia's poor by dipping into his vast fortune to build houses, hospitals and schools.

He has paved roads, built villagers new homes with water, electricity and gas, provided each household with 200 lari ($120) a month and given newlyweds $3,000 in Chorvila, where he spent his childhood playing football with his friends.

But the self-styled savior of this hilltop village, a twisting two-hour drive into the mountains northwest of the capital Tbilisi, has had to suspend his own legend to pursue his ambition to become the former Soviet republic's premier

"It's been like a fairy tale where we haven't woken up," Valerian Ivanishvili, 41, said outside his Chorvila home, a two-storey town house built at his namesake's expense that would not look out of place in a wealthy Western suburb.

At his own three-storey mansion, Ivanishvili has a private zoo where he keeps penguins, lemurs and kangaroos.

Even so, down the hill from the heart of the village of 5,000 residents, a half-finished house bears witness to the end of his patronage, banned by electoral legislation.

It stands unpainted, with tape on its windows and cables dangling from the walls.

It is a price the 56-year-old entrepreneur has had to pay to challenge President Mikheil Saakashvili, who became the West's darling when he rose to power after the bloodless "rose revolution" that toppled Eduard Shevardnadze in 2003.

Ivanishvili has already reshaped the political landscape in the Caucasus state of 4.5 million by uniting the usually fractious opposition in a coalition and mounting an unexpectedly strong challenge to Saakashvili.

Aptly named Georgian Dream, the bloc could ultimately threaten any plans Saakashvili has to keep power when his presidency ends in 2013 by becoming prime minister, a post that will gain new powers next year under constitutional changes.

"Ivanishvili's arrival is like lightning. The most important thing is he's already shown he's a force," political analyst Alexander Rondeli said after Ivanishvili started the campaign for October's parliamentary election with a rally attended by tens of thousands in Tbilisi on May 27.

"In Georgia it's very important how many people you can bring out on the street. Ivanishvili has probably taken more than half the protest electorate. The rest of the opposition are left without support," he said.

MAN OF MYSTERY

The rally has also left Ivanishvili brimming with confidence as he prepares to campaign outside the former Soviet republic's capital, starting with a visit to the city of Kutaisi on Sunday.

Such confidence is perhaps surprising in a man who shunned the limelight to such an extent while he was making his fortune in Russia, with businesses ranging from banking to agricultural products, that he rarely allowed himself to be photographed.

Although he has a spectacular glass and metal home on a hill overlooking Tbilisi where he displays art works by Damien Hirst and Roy Lichtenstein, few people knew until recently what he looked like.

When he bought Pablo Picasso's "Dora Maar au Chat" for $95.2 million in 2006, he did so anonymously. Six years later, he is easily recognizable.

He has abandoned his privacy for what he says is a love of his homeland and a battle to oust a government he accuses of allowing the gap between rich and poor to widen.

"At the age of 56 it's hard to learn how to be a politician. I don't belong to myself. But the main thing is my country," he said in his Tbilisi office, flanked by the Georgian Orthodox Church's headquarters on one side and a casino on the other.

"When so many people turned up (on May 27), I understood that I'd got everything right."

Ivanishvili has set his sights on becoming prime minister although he says he would stay in the job for only two years before stepping aside for professional politicians.

He promises to boost the economy by reducing bureaucratic controls, ending monopolies and taking steps to woo foreign investors. He says he will improve healthcare and agriculture, make the justice system more independent and ensure the tax and customs departments are more transparent.

Making clear that he is prepared to help fire up the economy by again dipping in to his personal fortune, estimated by Forbes magazine at $6.4 billion, he says an investment bank he owns will offer loans at special rates.

Like Saakashvili, he wants Georgia to join NATO and the European Union. But he believes he would be better than Saakashvili at building bridges with Russia, with which diplomatic ties have been frozen since a five-day war in 2008 over the breakaway regions of Abkhazia and South Ossetia.

Stability in the area is vital for Western governments as Georgia is an important transit route for gas from the Caspian Sea to Europe that would reduce Europe's reliance on Russia.

U.S. Secretary of State Hillary Clinton underlined this by promising new military support for Georgia during a visit to the country this week and rejecting Russia's "occupation" of the two separatist regions.

Russia signaled its own sensitivity about security on its underbelly by quickly hitting back at Clinton, accusing her of encouraging Georgia to seek revenge for the 2008 war.

TOO CLOSE TO RUSSIA?

Ivanishvili's election chances have been boosted by a decline in Saakashvili's popularity because of his failure to carry out all his promised reforms and the disastrous war from which Russia emerged in control of the two rebel regions.

"We thought we were heading back towards something resembling democracy but now we have a totalitarian regime. Ivanishvili wants Georgia to be a normal country. At least there is hope of change if he comes to power," said Mevlud Philishvili, 63, a Tbilisi resident who is unemployed.

But Saakashvili, 44, is also credited by many with carrying out at least some political and economic reforms, even if he has not fulfilled all his promises, such as defeating corruption and ridding Georgia of poverty.

Almost 15 percent of Georgians live on less than $1.25 a day, the international poverty line, the United Nations Development Programme said in a 2011 report.

"I don't know what Ivanishvili would do. People say before they come to power that they'll do this and that but after a few months you realize it's the same as before. Saakashvili is more likely to do things. At least I know where I stand with him," said Imeda Makarashvili, 42, who is also out of work.

Opinion polls put Georgian Dream 20 percentage points behind Saakashvili's United National Movement, although Ivanishvili has huge financial resources and his coalition is still young.

His close business connections to Russia, where success can depend on currying political favor, have opened the way for some to accuse him of being a Russian stooge or that he could be manipulated by Moscow - a serious charge in a country which jealously guards its independence from its former master.

In response to the criticism, he says he has sold almost all his assets in Russia, where he started out selling computers as the Soviet Union collapsed.

But some also say Ivanishvili's programme lacks detail and that he could struggle to hold together a coalition that may be more united by hostility towards Saakashvili than a shared political vision. Maintaining unity could become even harder if he led Georgian Dream into power.

Giga Bokeria, secretary of Georgia's National Security Council, described Ivanishvili's emergence as a political force as an important development for the opposition but said it did not worry the country's leaders.

"According to all credible polls it has not changed the dynamic significantly between the ruling party and the opposition in general, though it has certainly created significant changes within the opposition," he said.

GOVERNMENT WATCHING AND WAITING

Such comments are somewhat undermined by the obstacles the government has put in Ivanishvili's way, including stripping him of his Georgian citizenship last year because he held French and Russian passports, although he should be able to run in October's election after a series of legal amendments.

Some people who collected signatures in support of Ivanishvili after he was stripped of his citizenship say they have since suffered reprisals.

In Chorvila, Temuri Kapanadze, a 52-year-old history teacher, said he had suddenly and without reason lost his job at the local school. Teimuraz Kvecadze, 40, who now heads security at Georgian Dream's office in nearby Sachkhere, said he had been dismissed as manager of the local swimming pool.

Some analysts say the government quickly realized it had overreacted and eased off because of concerns that this might play into his hands. It is now waiting for him to make mistakes.

Clinton said during her visit to Georgia that the United States wanted free and fair parliamentary and presidential elections in the coming year. This would reduce the risk of a violent aftermath that could destabilize the region.

The West also wants Saakashvili, who survived protests in 2009 over his handling of the conflict with Russia, to avoid the temptation of becoming prime minister when his presidency ends next year, and following Vladimir Putin's example by remaining Georgia's paramount leader.

"Though you did make history with the 'rose revolution', the more difficult and ultimately more important work may well be ahead - the work of building the habits and practices that sustain democracy over time," Clinton said this week in Georgia.

No matter who wins the election, Ivanishvili will always get a hero's welcome in Chorvila.

Kapanadze, the teacher, says the essence of the man can be found in a tale from their childhood. "When he left the village to go to Tbilisi he left us his football because that's the one we always played with."

(Additional reporting by Margarita Antidze, Writing by Timothy Heritage; Editing by Elizabeth Piper and Giles Elgood)

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