Protesting The CEO Of Georgia.(World Affairs)(Mikheil Saakashvili)

Byline: Stefan Theil

One reason Saakashvili is in trouble is his hyper-capitalist reform agenda.

Since he was swept into power in the aftermath of Georgia's 2003 Rose Revolution, President Mikheil Saakashvili has had a job that few would envy.

His massive daily task list includes building democracy in what by all accounts was a failed state, reasserting control over two secessionist regions supported by neighboring Russia, rescuing the economy from Moscow's trade embargo and reorienting his country toward NATO and the West. If that weren't enough, he has also been conducting the world's most radical experiment in economic reform.

Last week, Saakashvili's juggling act came crashing to the ground. After six days of protests called by a dozen opposition parties in the capital, Tbilisi, ended in street fights between demonstrators (who were 70,000 strong) and riot police, Saakashvili imposed a state of emergency to shut the protests down. Opposition politicians accuse Saakashvili of ruling like an autocrat, changing election rules in his favor and throwing his foes in jail. Special forces closed the opposition TV station, Imedi, controlled by Badri Patarkashvili, a billionaire oligarch with a murky Moscow past who now vows to spend his entire fortune to bring Saakashvili down. In hopes of a fresh mandate, Saakashvili (who enjoyed 60 percent approval ratings in polls before the protests) has called for an early election.

It's a sudden tragic twist in what otherwise has been an incredible tale. When Saakashvili, a 39-year-old Columbia University-educated lawyer, took over in 2004, years of autocracy and civil war had left the dirt-poor ex-Soviet ministate in the Caucasus seething with corruption and crime. Public services had collapsed as citizens abandoned the country in droves. The new leadership cracked down on graft, crime and over-regulation -- in some cases, to the extreme. Greedy cops taking bribes? The new Interior minister sacked the entire 16,000-strong traffic police. Bureaucracy dragging the economy down? More than 1,000 types of permits were abolished and 40 percent of civil servants fired. Taxes too high? The types of tax have been cut from 22 to seven. A flat tax on income of only 12 percent has raised the government's take by 220 percent. More important, the low and user-friendly tax has been an incentive for many companies to leave the black market and go ...