ABSTRACT
This chapter provides an explanation of dollarization hysteresis by analysing the state building and development rhetoric of Saakashvili’s government, the main foci of the civil society, and the post-revolution accumulation regime. The Rose Revolution of 2003 marked the beginning of a new Georgian state in terms of institution building and establishing formalized relations between the state apparatus and society. The economy was growing and the shadow economy was being unmasked. Georgia was becoming an attractive country for foreign investors and the government was praised by international actors for its exemplary reforms. Yet, nine years of turbulent changes left dollarization untouched and unnoticed – the dollar persisted as the dominant currency. The post-revolutionary government even considered such radical ideas as abolishing the Georgian central bank and establishing a free currency zone, in order to attract more foreign capital. However, a free currency zone and full dollarization turned out to be contested ideas within the governing political power. Therefore, the main aim of this chapter is to answer the following questions: how did dollarization fit into the state building project of Saakashvili’s government? How was dollarization perceived by political and economic elites, civil society and international actors? How did the new (if it was new) accumulation regime embrace dollarization?
