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Anders Aslund: In memory of Kakha Bendukidze, a great reformer

November 14, 2014

Sadly, Kakha Bendukidze suffered a mortal heart attack in London on Nov. 13. He was only 58 years old. Few had thought and done as much good in their lives as Kakha. He was wise and kind, with a wonderful sense of humor. Nothing could stop him.

I met him in Moscow in 1993, when he was an up-and-coming big Russian businessman. He had bought the vast machine-building company Uralmash in Yekaterinburg cheaply in a voucher auction and would soon buy a similar Soviet giant, Izhorsky Zavod in St Petersburg. He successfully turned around their production, focusing on oil-drilling rigs for the reviving Russian oil companies, notably Yukos. He lived in Moscow and built an office for himself that looked like one of his factories in Arbat in central Moscow.

But Kakha was different from all the other big Russian businessmen. He was calmer and wiser. He loved ideas and figured out how things really functioned, telling well-researched stories about how absurdly the state worked. Kakha knew everybody in the Moscow elite, and he was a fixture in the economic policy discussion throughout the 1990s. Needless to say, he was a convinced libertarian, but he stayed out of politics in spite of his strong views. He stuck to his Georgian roots and took his large family with him to Moscow, but they all lived in a large house outside the city perimeters because they did not have Moscow residence permits. His single drawback was that he was quite stingy. He tended to complain how salaries rose excessively, and his collaborators were often bought over by other businessmen who paid better.

After the Rose Revolution in Georgia in 2003, Kakha linked up with President Mikheil Saakashvili and moved to Georgia. He became the chief architect of the very successful Georgian economic reforms, first as minister of economy in 2004 and then as minister of economic reforms until 2008. Here, Kakha’s Moscow discussions and can-do attitude came to fruition. In one area after the other, he saw what was needed. With his supreme and well-deserved self-confidence he did exactly that. One of his great achievements was to sack all the 6,000 thoroughly corrupt traffic police at once, building up a new corps. Nobody but Kakha would dare to do that and succeed. Thanks to Saakashvili and Kakha’s endeavors, the previously thoroughly corrupt Georgia became the least corrupt country by far in the former Soviet Union and it is the most successful economic reform. When moving to Georgia, he could no longer hold on to his large Russian corporation but was forced to sell his OMZ cheaply to Gazprom. Kakha claimed that the price was less than half of a decent market price.

From 2009, Kakha devoted himself to a new old passion, higher education. He founded the Knowledge Fund and the Free University of Tbilisi and put more than $55 million of his own money into higher education, drawing on his own background as a Ph.D. in biology from Moscow State University and his early life as a researcher. He traveled the world to figure out the best and most innovative form of higher education. Recently, however, the new Georgian government had caused him so much trouble that he was about to move from Tbilisi to Miami, Florida.

After the ouster of President Viktor Yanukovych on Feb. 22, he engaged with the new Ukrainian government as an economic advisor. We worked quite intensively together with him in an Economic Advisory Council with Professor Daron Acemoglu, Oleh Havrylyshyn and Basil Kalymon. Kakha combined his trademark preference for simple, radical measures and great personal wisdom. Saakashvili has stated that Prime Minister Arseniy Yatsenyuk asked him to join his cabinet of ministers the very day when he died.

Last May, my Peterson colleague Simeon Djankov and I organized a conference in Budapest on the lessons from a quarter of a century of post-communist transition. Among our paper authors were the great reformers Leszek Balcerowicz, Vaclav Klaus, Ivan Miklos and Mart Laar, but also Kakha and Mikheil Saakashvili, who delivered an excellent paper on what they achieved in Georgia. One of Kakha’s memorable quotes is “We are going to sell everything apart from our morals.” The book came out just before he died.

One of the greatest reformers in Eastern Europe has passed away. The world has lost a wise and good man with a wonderful sense of humor. We shall all miss him. God bless him!

Anders Aslund is senior fellow with the Peterson Institute for International Economics in Washington, D.C.

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