This chapter focuses on the Georgian state, its internal structure and its capacity to penetrate society during the period 1996–2001. By 1996, there was a certain feeling of optimism in Georgia, the like of which had not been experienced in the previous five years. The feature that grabbed the attention of most observers of Georgian politics during the period 1996–2001 was corruption. Power in Georgia during the period 1996–2001 was therefore dispersed amongst a number of semi-independent 'informal circles'. A key element of 'feudalization of power' in Georgia was the capture of local and national power structures by diverse private interests. Like in most societies in the world, in Georgia priority is given to personal face-to-face relationships over the impersonal rules and norms that are associated with the state. It is difficult to generalize about the distribution of power at local level in Georgia, because each region had its own specificities and its own mix of actors.