Hello everybody I am Luisa Bojesen and welcome to this special CNBC program. I am speaking exclusively to the President of Georgia Mikheil Saakashvili.

Luisa Bojesen: Mr. president thank you very much for speaking to us today and thank you for hosting us as well, here, at your Presidential Palace. Now between you have been elected President and now a lot has happened I think it is also worth mentioning in interview again. Of course, the South Ossetia conflict as well and you called another election which you won after that in follow up to antigovernment protest that took place. Do you see similarity now between the protest taking place in the Middle East, in North Africa and some of the antigovernment protests taking place here in Georgia ?

Mikheil Saakashvili : Well, I think if you draw Georgian similarities between 2003, actually, when we had Revolution of Roses and it is not only me to see id thing of those similarities, and I was quite surprised when after that I used to travel extensively also in Middle East to see some people also coming here from Lebanon, from Northern Africa indeed, and they were fascinated by Georgia's experiments because it was the first ever televised revolution. it was televised live for days and days. It was vivid expression of people's power; the whole change happened without the single window broken. I think that it really captured the fantasies of people especially in that region that was beyond my imagination. People in 2003 revolted in Georgia against corruption, inefficiency, failure of state against cronyism, against injustice. I think these are the things that also happened and very much in replicated itself, in other places in our region like Ukraine, Kyrgyzstan, Moldova now I think more and more in northern Africa. That is where the comparison ends, because I mean if we get some antigovernment protest here, that basically will only have like antigovernment process anywhere more or less developed democracies have. What happened in 2007, though, was that people after all our reforms, there was certainly disgruntled people, and they took to the streets and the police has been strict and basically they dispersed the demonstration. We shut down one of the television stations, but after that I resigned. And that is exactly what the people done. I am resigning I am calling for fresh elections to see whether the rest of the population wants continuation of the reforms or they agree with the protesters.

Luisa Bojesen: and you won with the 52%?

Mikheil Saakashvili : And it was much less of vote, that in the previous one, but, actually, we did exactly the opposite. People usually crack down to keep power; we thought that we needed to refresh our mandate and that will be.

Luisa Bojesen: but when you look at now some of the criticism that you are getting I mean Chatom House, they put out in report where they question economic sustainability in Georgia and they say that you are cutting corners on human rights, economic growth is real but the benefits go to small portion of the population and if there is not a balance that is found between the rest of the population and where these benefits are going it could get a lot worth because you see more protests.

Mikheil Saakashvili : when I became president the poverty in Georgia was over 50 % and by all account it is less than 20 % now and in nominal terms the economy has tripled, had been redistributed and actually even if it is now around 20 % this no longer is as much desperate poverty as it used to be because this people who are below the poverty line; they have medical insurance, they have poverty assistance, they get some other benefits. So, anyway, it is a very changed situation now. Of course, we are still dealing, we are no longer absolutely poor country, we moved to mid income category but it in terms of people purchase power like proper capital power is still in a lower part of income countries. So, actually, it takes to economy much more wealth but I think in terms of how we are doing it, in terms of other credentials, Georgia has moved up. In Freedom house's civil liberty list last year we were the only country in this region that moved up actually, we have some way to go but there are some very solid credentials which other countries don't have.

Luisa Bojesen: you mentioned 20% poverty level. Some say that more than 50 percent of people are considered poor though in Georgia and simultaneously, we still have the situation that food prices have gone to something like 25 % this year alone and again critics were arguing that it is in part of the Government; they still have too much control over the pricing and how about the private business, do they do business?

Mikheil Saakashvili : Georgia is one of the most liberal countries in the World and we are getting criticism also from the countries, especially in Europe. Another thing was that there is too little regulation and too much freedom but I still believe that we can never cut enough regulation, we can never have too much freedom. That is a question of philosophy. We have one of the lowest tax burden in the World according to Forbes tax misery index we are the fourth in the least burden country in the World after UAE, Qatar and Hong Kong that is pretty high in terms that these are very developed economies. Then we have in terms of license regulations, we cut 19% of all regulations in Georgia and I think it is the easiest place to start your business as a starting position in the World. We are at the top of many other World's indices including the ease of doing business. We have been proclaimed by the World Bank as world's number one economic reformer. No country has progressed as mush for the last 5 years period as we did. So, these are all credentials. It is a question of half - full empty glass and I would argue that it is more than half full right now.

Luisa Bojesen: Sure I know. There are also many who say that you may have over glorified after you came into office , now you are under glorified. There has to be some middle ground also.

Mikheil Saakashvili : Georgia is getting lots of credit. But if you look carefully, we are getting lots of admiration from neighboring countries.

Luisa Bojesen: Following the European sovereign decreases day by day bases, that is for a very long time now it is huge issue - the amount of debts that the government is dealing with. They say that if you reach the 60% of GDP the country is bankrupted. you reached 40 % of GDP last year.

Mikheil Saakashvili : No, we have 27-28 % of our debt GDP in absolute figures and if you look at the extracture of this debt, it is a very healthy one. Basically, 30% of it is debt to international financial institutions and that is very little share of private debt. We are on pretty safe side. Right now, we are flooded with basic offers of borrowing also from private banks, but we are approaching this very conservatively for a number of reasons. There are big inflows of foreign direct investments. That is putting pressure in terms of pricing, national currency and all the other staff that is connected to them, so pulling extra cash into economy is not the first choice that Government has in this time, but we are pretty safe in terms of that debt pressure. We have the same thing as we had when we took over six years ago, but economy has tripled so that tells you that the ratio had not grown and I'm pretty safe about sustainability of that debt.

Luisa Bojesen: There is a lot of criticism though, that may be some of older projects that you've been spending on, that money should be going to and being filtering through to the Georgian population instead. So 2 and 60 million dollars so far in projects spent and another 2 and 50 million already booked

Mikheil Saakashvili : Most of the money has gone into infrastructure. For the next year we are expecting more than 1 billion Euros going into infrastructure. But the result is that Georgia will have the most modern infrastructure in the region. When I speak about the region I'm talking about the post Soviet, every post Soviet country and immediate neighbors and it's not only getting good roads everywhere; but we'll become an electricity hub to sell electricity to all directions and I think, once we end this road construction, railway construction and these infrastructure projects and we also in parallel are investing into education, into change the healthcare system, the next thing will be big investment into hydropower, and again, Georgia is using less than 20% of its capacity. In order to go to 10%, 15% more we can easily double our hydropower generation. You know, there are many ways I would not think that anything is not sustainable. Every investment, say in infrastructure generates development of agriculture, generates development of energy sector, both of them generate level of education. Of course it would be easier to spend whatever money we could get, spend on the present day social or other needs that is also the biggest demand of any elected government, but we've been pretty tough on keeping the balance between long term development goals and what we see is immediate need for today and based on what people would ask for immediately.

Luisa Bojesen: Just on the topic of authoritarianism and corruption again. When you came into power that was one of the things that you were fighting very much against and your critics say that there has been a wave and now there is a wave of a new type corruption and authoritarianism as once was.

Mikheil Saakashvili : Even the biggest critics of the Georgian Government would not claim that there is more corruption here, than it was six years ago and in every Gallup poll that is conducted on regular basis in Georgia. 98% of population or more, roughly, said they have encountered corruption at the first hand. Now it is less than half percent according to every recent poll which means that basically it has disappeared. When you say about this figure, critics usually say no, no, OK you know, we don't see corruption in life, but it is somewhere in the leading institutions that we do not really see, but it is there. But, come on, there is no way you can ever demand from your subordinates to be clean when the Government is not clean itself. It comes from the top. Either there is a will at the top, or there is no change. The way how Georgia changes, was, primarily, new political lead profoundly believed, that they have taken future of this country and it has to change and that's basically what keeps this country going. I think that people are very proud of it and it's mutual control, it's not only us asking from subordinates, but also subordinates are looking at superiors, are they still there or the approach has changed. And in this way Georgia's anticorruption revolution is the biggest achievement and I do not think that cracking down corruption in authoritarian way and tough hand, is enough.

Coming up after the break, I continue my exclusive Interview with the President Mikheil Saakashvili and ask him how he would describe Georgia's relationship with Russia now after the conflict in South Ossetia in 2008.

Luisa Bojesen: How would you describe your relations with Russia today?

Mikheil Saakashvili : Russia has tried everything against Georgia. They've done full blown energy embargo, economic embargo, provocations, finally war and of course, they still occupy illegally 20% of our territory and it's not my term, lots of responsible international actors call it illegal occupation. They've expelled 80% of the population from occupied areas and in the country with the population of less than 5 million people, we have almost 500 000 internally displaced persons and refugees, and despite everything Georgia has continued to grow. Despite everything Georgia has continued to grow in a way that it also torched, segmented our identity. So right now we are in position that we are almost non-dependent upon Russia. The maneuver for Russia to be further as polar in the region is pretty limited. They have done pretty much everything they could do, so actually it cannot get any worse.

Luisa Bojesen: Do you regret the South Ossetia conflict? Do you think about that you were back about the worse standing not only about NATO but also what you have got with your own developments?

Mikheil Saakashvili : It was not South Ossetia conflict percept. It was the conflict between Georgia and Russia and it was overcontrolled in Georgia. They come not only in South Ossetia, but also in Abkhazia. They have done pretty much, occupied part of Georgia and they certainly were counting that the government would flee from the capital and basically they would take over the country and it did not happen.

I think while the strategy goals are not met for Russia, that is to say, they do not control energy lines for Central Asia to Europe - that was one of the mere strategic goals that could not change the democratically elected government in Georgia and basically this government position has tempted and I think resolved the people around the whole democratic system, it has become much stronger. I think right now Russia has to ask a question - what is next? Are they going to further destabilize and I don't think they have much of the leverage left . I do not think they are good and are destabilizing real democracies in terms that it is much harder to figure out how to penetrate through democratic structures once you have free media, more or less developed party system. It is not kind of authoritarian thing when you just need to take out one guy and that is it. No! it is much more complicated even if it is a small country. So, how do you go from here being having these frozen relations to some kind of a foe? and I think from that point it is absolutely indispensable to start the alliance and we are ready, we have been sending signals to Russians that we don't want to restart every matter, of course we have our issues with them but to get to that discussion we need to start somewhere.

Luisa Bojesen: You have mentioned thousands of IDPs from after the conflict. Were you disappointed that none of the other global players came to the aid of the Georgian humanitarian crises?

Mikheil Saakashvili : We managed to get 1billion dollars of assistance from the US government and it was accessed by Joe Biden who was still running his election campaign, who initiated assistance.

Luisa Bojesen: I think 4.5 billion were pledged by International aid but only the third arrived . . .

Mikheil Saakashvili : No, one billion from the US, percentile arrived most of these foreign aids and I think that this money is well spent and that was really that helped us to go through these crisis pretty efficient, but right now we no longer need any assistance, we basically are on good in terms of our own attraction for investments, for our own internal and external capital flows. I think I cannot complain about international community's reaction in post conflict situations in terms of helping us economically. I think they have been very resolute at very important time.

Luisa Bojesen: The US has always been very important ally to you . Are you worried now that they have started their "reset policy" with their going close to Moscow and trying to mend old ties there. You worried that Georgia is going to be pushed down and be ignored ?

Mikheil Saakashvili : Very little signs, we have not seen any signs of tradeoffs. It is also true that we have not seen many changes for the immediate neighborhood in terms of Russia becoming more constructive that is also unfortunate. But I think we have seen this engagement work in some other directions and so that it gives hope that in some other big global issues, like disarmament or nuclear non-proliferation, there can be some tension between the present Russia's leadership and the US . Then eventually, it will broaden to other issues because the US has been pretty far on the issue of Georgia's de occupation carried towards integrity and generally not allowing this sphere of influence and basically any attempt for revision in terms of bringing back the post- Soviet sphere of influence and I think they have no move of the US on that respect and there will not be. So, eventually the hope is that once you get more constructive Russian leadership that is desparately in need of modernization, that this modernization will also involve some political warming up and liberalization in the immediate neighborhood. Now we are not there yet. There are lots of optimists who believe that it might happen, we would be the first one to welcome it and let us wait and see. We have waited for too long, maybe we can wait little more.

Luisa Bojesen: You still have not managed to become a member of NATO, which I know you have waited for a very long time now. How disappointing is that to you?

Mikheil Saakashvili : We believe that it was always like this in the past with some other perceptive members. People have been in patience and some other people have been existing members who are for a long time resisting these new expansions. Eventually, they have happened and the situation now in the region is in the state of flux and it is developing pretty fast , it is developing in all different directions. So what is around the corner is not only always immediately visible, but it might come and I am confident it will come. I think this is the same for the EU and I think we are getting closer in terms of mobilization. We are approaching the situation when we will get deep and comprehensive free trade with the EU and that will revolutionize Georgia the way the customs union revolutionize Turkey to the better and eventually will get the membership of the EU. I think there is a consensus among serious policy makers in Europe that should be a prospective left for countries like Moldova, Georgia and as you mentioned, Ukraine. But as I said it is process, people are tired of enlargement. We have seen this in the past, but it can disappear pretty fast.

Luisa Bojesen: Where do you think Europe is on a recovery from the sovereign deseases?

Mikheil Saakashvili : Well, it reflects on us as well. I think it is hard to predict, because the problem is that when we see that there is a country with very different monetary culture, generally the governance - the way how the governance is done and that is exactly where the lessons for other aspiring non EU but European neighbors of the EU, and actually that is what I am saying that there are models more like Southern Europe, more chaotic, more loose, borrowing government expenditure or indeed also on corruption, there are more cases and more developed European models. We are in the South East of Europe and in a way it is a very Mediterranean country in terms of physiology here .

Luisa Bojesen: Do you see more divide between strong North and weak South ?

Mikheil Saakashvili : It is not about weak, I don't think anybody can describe it weak and strong . This is the way how the government approaches the whole thing and it is a good lesson for us, no matter what our daily culture is. Georgia is distinctly part of wider Mediterranean culture in many ways. We should learn to be efficient as Northern Europeans.

And it is doable and Georgia has proven that it is doable. And by the way, you know because there is now this hangover from some new members or some old but not from some really performing members, EU is approaching us more strictly and it has a very disciplined improving effect on us as well. In a way, this kind of race standards aren't bad for aspiring countries alike EU and I think Georgia will only benefit from that.

Luisa Bojesen: Your term ends in 2013, you are 44 years old now? What happens when your term ends?

Mikheil Saakashvili : Well nothing happens, there will be another president. And you know Georgia will become a very different country and now we are not so much focused on what will happen after but what will happen before, because we are not what will happen now because there are two and a half more years of my presidency, with the same powers as I have now, which are considerable and which is an exceptional chance for a very strong reform agenda to be implemented in all different directions. Now we are really doing macro management of very profound reforms in education, in overall modernization of our economy. Also way of thinking, mentality has changed, it is a real mental revolution and I think it will complete at least the most of it, and this is what we are focusing on.

Luisa Bojesen: Some said that you want to become a prime minister, especially because of the constitution, there will be some changes giving more power to the PM than the President.

Mikheil Saakashvili : There have been already big changes in the constitution and actually I insisted on the President to keep considerable part of his power against the advice of some European experts, who wanted to kill presidency all together and move the whole power to the PM and the government that would be nominated by the Parliament. Now the President is elected and nominates all the others, so its much more centralized system.

Luisa Bojesen: Misha, do you have any regrets in live?

Mikheil Saakashvili : Oh, I have lots of regrets in life all the time and every night, before I go to sleep I am totally unhappy of myself on the way I performed that day and that's the rule...

Luisa Bojesen: Every night?

Mikheil Saakashvili : Almost every night and that's how it should be, you always think maybe I should have done much more things, I should have done it otherwise, I shouldn't have said that stupid thing during the afternoon interview to Luisa and you do these things, unless you are not like this then you have no potential to grow. The worst thing is that when you are self-happy, self-confident - self confident is another thing, but being full of yourself and looking in the mirror - oh, how great I have been today.

Luisa Bojesen: Who is the inspiratory of your life or who is your mentor?

Mikheil Saakashvili : Well, in my academic sphere it was Judge Thomas Burgenthal, Holocaust survivor, great Judge in International Court of Justice and the fighter for human rights - that's from Americans. I will certainly been learning from different political figures like founding father of Turkey Mustafa Kemal Ataturk, some founders of Israel, Singapore; but mainly from European democracies, like Estonia, they have been interesting aspirations to me and to my friends here.

Luisa Bojesen: If you weren't a President Misha, what would you be?

Mikheil Saakashvili : I would be an architect, but I am afraid I don't have skills to redraw things, I would be providing ideas to people I guess.

Luisa Bojesen: What are you thankful for?

Mikheil Saakashvili : For every day in life, for a chance to change things, even small things - if you can and have ability to influence these changes for better that's - an amazing chance.

Luisa Bojesen: What's one thing you don't have, but you wish you had.

Mikheil Saakashvili : Reintegration of my country and de-occupation of it.

Luisa Bojesen: What is one attribute that you admire most than others?

Mikheil Saakashvili : I admire courage, courageous people.

Luisa Bojesen: And what is one attribute you wish to have more?

Mikheil Saakashvili : Patience, I think that's the biggest thing I want.

Luisa Bojesen: How do you respond to critics that's say you are "too volatile"? You can be difficult to manage?

Mikheil Saakashvili : Well I have heard all kind of things - volatile, hotheaded, turbulent, unpredictable and mentally sick, well I can be impatient, but on the other hand I have done miracles some times. Maintaining calming untenable situations. So I can be both ways.

Luisa Bojesen: You are the third and current president of Georgia, how would you like to be remembered, what is one thing or one issue that you would like people to associate you with.

Mikheil Saakashvili : I think that the worst thing I hate in the term is the legacy. It's like somebody failing already and saying - ok I am failing already and lets consider who will come after. I say no, I am not what will happen after. If things go well as I plan - let them forget me all together - I do not care. But they should go right now.

Luisa Bojesen: Mr. President, thank you very much for being with us this afternoon, thank you for this lovely invite to this Presidential Palace and to you, thank you for watching us, I hope you have enjoyed the show.