Letter From Tbilisi: Georgia's Confidence Game

A Change of Fortune for Saakashvili's Regime

The tallest building in downtown Tbilisi is the former Intourist hotel, built during the Brezhnev era to host foreign visitors and later used to house Georgian refugees from the war in Abkhazia during the 1990s. Today the 16-story building is in the middle of a multimillion-dollar renovation and will reopen later this summer as a Radisson hotel. Its grandeur, however, is something of a mirage. The hotel dominates a skyline largely filled with ambitious construction projects in seemingly permanent states of half-completion -- glitzy, unfinished monuments to what might have been.

Ever since the Rose Revolution brought Georgian President Mikhail Saakashvili to power in 2003, the country has presented itself as a democratic, free-market oasis stuck on the edge of the post-Soviet world. For much of the West, particularly the United States, Georgia was an ally and a friend to be nurtured and protected. This dynamic reached a dramatic crescendo last August when Georgia and Russia fought a brief war over the breakaway province of South Ossetia -- a moment when John McCain, then a U.S. presidential candidate, boldly declared, "We are all Georgians."

But in the year since, the fallout from the war -- which has left Georgia with tens of thousands of internally displaced refugees -- has turned the country's machismo into a sense of defeatism and left it increasingly estranged from its Western friends, most especially the United States. Georgians -- who greet one another with a variation of the phrase for "victory" -- are growing tired of conflict and distrustful of their leadership. Support has grown for the country's opposition, a disparate collection of Western-educated reformers and former allies of Saakashvili who are disaffected by his heavy-handed rule.

After a moment of dominating international headlines last summer, Georgia is now figuratively -- and literally -- a rump of its former self. Russian forces occupy two breakaway provinces, Abkhazia and South Ossetia. Georgia's economy has slowed considerably after its double-digit growth in 2007, and the country's Ministry of Finance predicts that it will contract another 1.5 percent this year. Foreign investment has fallen by almost 75 percent since early 2008.

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