Last month’s anniversaries of Ukraine’s Orange and Georgia’s Rose Revolutions revealed two countries on divergent paths. One has a failing economy, suffers from rampant corruption and has a justice system condemned by the U.S., Europe and Russia.

The other is regarded as one of the world’s top business reformers, has virtually eliminated corruption and enjoys a justice system that runs on European lines. What can one learn from the other?

Today, Ukraine is stuck in a mire entirely of its president’s making.

Democratic backsliding and the imprisonment of opposition leader Yulia Tymoshenko have set the country on course for international isolation rather than closer integration with the EU (The long-awaited association agreement with its wide-ranging free trade accord will not be ratified unless opposition leaders are freed).

A Georgian woman holding flowers smiles as special forces leave the presidential residence of Eduard Shevardnadze on Nov. 22, 2003. Georgia’s Rose Revolution came one year before Ukraine’s Orange Revolution, and had very different consequences. (AFP)

Meanwhile the economy is flat-lining under renewed recessionary pressure and as investors look for safer bets in an uncertain world.

The Tymoshenko trial was a huge own goal for the authorities – not just politically but economically. The uncompromising message to the outside world was if we can prosecute and lock up a former premier on spurious “economic grounds,” just think what we can do to your investment.

It’s no wonder that businesses, investment firms and banks are already voting with their feet.

Last month the mobile retailer Euroset quit the Ukrainian market while Unicredit, Italy’s largest bank, wrote down multi-billion euro losses in its third quarter citing a writedown of its entire operation in Ukraine. Just last week Ukraine came a dismal 152nd place out of 183 countries surveyed in Transparency International’s Corruption Perceptions Index 2011.

That’s 18 places lower than the previous year.

Of course it doesn’t have to be like this. Ukraine’s natural resources and skilled low-cost labor market should be a magnet for investors.

But if the investment community cannot see beyond the endemic corruption and has no faith in the justice system, then no amount of PR will paper over the cracks or open check books. If the government really wants to attract investment it should perhaps take a leaf out of Georgia’s book of reforms.

Failed Caucasus state

For most of the 1990s Georgia was a near-failed state, possessing one of the most corrupt justice systems in the world. Yet in 2006 and 2008 the World Bank dubbed it the world’s top reformer.

In the bank’s 2012 ‘Doing Business’ report, Georgia leads the Eastern Europe and Central Asia table and comes a highly credible 16th out of 183 countries surveyed. Ukraine comes second to bottom in the regional table and 152nd place overall. So what is Georgia doing right that Ukraine isn’t?

Firstly, like a recovering alcoholic, Georgia’s leaders had to first admit to having a problem before they could do anything about it.

As Deputy Justice Minister Giorgi Vashadze said, “The system wasn’t corrupt, corruption was the system.” Under the stewardship of President Mikheil Saakashvili, the government set about ambitious root and branch reforms. Fighting corruption became a national priority.

The authorities realized that anti-corruption measures were pointless unless underpinned by the rule of law and a justice system that could not be bought off.

So from 2003-2010 they cleaned the stables with the prosecution of 1,064 policemen, 109 investigators, 20 prosecutors and 30 judges. In the same period the country’s prison population swelled from 6,274 to 23,789 as the anti-corruption drive bore fruit.

Legislative reforms saw a purging of the Soviet-era Criminal Code with a new Criminal Proceedings Code which became effective in 2008. The simplified code is fully adversarial, has clear standards of evidence and a preference for non-custodial sentences in pre-trial situations.

Also introduced was trial by jury, a right reinstated by the constitution in 2004. “It’s harder to pressure 12 people than it is to pressure one judge,” explained Levan Ramishvili, executive director of the Liberty Institute, an independent NGO.

In comparison, Ukraine has no framework for jury trials and operates under the old Soviet system where the prosecutor is all powerful with the judge a bit-part arbiter.

In Georgia many long-serving judges were sacked and a new generation of young Western educated judges emerged. New standards were adopted, including a written examination for judges.

At the same time, the salaries of public officials, including policemen, prosecutors and judges were hiked, reducing incentives to take bribes.

While critics say that the younger inexperienced judges are still susceptible to outside influence, even the harshest voices concede progress in establishing a judicial system aligned with European standards and that the Rose Revolution was a catalyst for widespread reform.

As Georgia’s leadership looks West to the U.S. and Europe, Ukraine’s leadership has still to break the bonds that tie it to its Soviet past.

What it either ignores or fails to grasp is the link between the rule of law and economic prosperity. It is no coincidence that 9 out of the top 10 destinations in the world for FDI are democracies underpinned by the rule of law.

Georgia took a “Field of Dreams” gamble ­– if you build it, it will come – and FDI did indeed come. In 2007 its reforms attracted $1.7 billion in FDI, bringing its total FDI stock to $5.2 billion or 51% of GDP. Not bad for a small state of roughly 4.6 million people with few natural assets.

Ukraine by comparison has an abundance of resources. Yet as we mark the 7th and 8th anniversaries of the Orange and Rose revolutions it is clear that Georgia has something more precious than all of Ukraine’s black soil, mineral wealth and energy riches. That is a vision for the country and huge reserves of political will.

Neil Pattie is managing director of Ridge Consulting Ltd, a UK-based communications consultancy that has advised clients in Ukraine including the party of opposition leader Yulia Tymoshenko.