{"id":151574,"date":"2023-07-31T12:00:37","date_gmt":"2023-07-31T08:00:37","guid":{"rendered":"https:\/\/forbes.ge\/saqarthvelo-rusethis-ekonomikur-khaphangshi\/"},"modified":"2023-08-08T14:34:44","modified_gmt":"2023-08-08T10:34:44","slug":"georgia-stuck-in-the-russian-economic-trap","status":"publish","type":"post","link":"https:\/\/dev.forbes.ge\/en\/georgia-stuck-in-the-russian-economic-trap\/","title":{"rendered":"Georgia Stuck in the Russian Economic Trap"},"content":{"rendered":"

Since coming to power, \u2018Georgian Dream\u2019 has repeatedly denied that trade with Russia would increase Georgia\u2019s economic and political dependence on the \u201cenemy\u201d country. In a recent interview with Palitra News, Speaker of the Parliament Shalva Papuashvili stated, \u201cGeorgia is an open economy that does not impose trade preferences and regulations.\u201d He explained this position as follows:<\/span><\/p>\n

\u201cIn an open and free economy, businesses will always find markets where they can sell their products at a higher price or import them cheaper. That is the main principle of a market economy. If we look at the picture today, we will see that demand for Russian flour and fuel has increased. Why? Because businesses buy these products cheaper in Russia. Businesses make their own decisions; the state does not interfere in anything. If a business finds cheaper flour in Turkey, it will buy Turkish flour.\u201d<\/span><\/p>\n

Papuashvili did not say anything about the fact that the existence of a \u201cfree economy\u201d does not exclude the use of economic levers for political purposes by a hostile country. However, there are numerous such examples in the world.<\/span><\/p>\n

We do not have to look far. Russia actively exerted economic pressure on Georgia after the \u2018Rose Revolution\u2019 to achieve political goals. It seems that many of us in Georgia need to be reminded of recent history. I will, therefore, start by recalling the events of the last two decades before shifting the focus to the current alarming situation \u2013 the Russian economic trap.<\/span><\/p>\n

Unhappy about the \u2018Rose Revolution\u2019 and Georgia\u2019s exit from the CIS, the Kremlin struck the first blow against the Georgian economy by raising the price of natural gas. In 2004-2006, the cost of Russian gas in Georgia increased fivefold. By 2007, Georgia was spending $300 million, or 10% of its state budget, on gas imports.<\/span><\/p>\n

Russia went even further. On 22 January 2006, a section of the Gazprom pipeline in the North Caucasus exploded under suspicious circumstances. Several days earlier, gas deliveries to Ukraine were also halted. Fortunately, in 2008 Georgia was able to replace Russian gas with Azerbaijani gas quickly. However, the Kremlin\u2019s vindictiveness was not limited to the energy sector. Major Georgian agricultural products were placed under embargo, starting with the ban on the import of Georgian wine for \u201chealth and safety reasons\u201d in March 2006. It should be noted that wine accounted for 10% of Georgia\u2019s total exports in 2005, meaning that it was ten times more valuable to our economy than to France or Italy. A couple of months later, the Kremlin also banned the sale of two Georgian brands of mineral water in Russia.<\/span><\/p>\n

In June 2006, around 2,300 Georgians were deported from Russia. They were herded onto cargo planes and flown to Tbilisi. Three Georgians were killed because of police raids on migrant workers, while a heavily pregnant woman suffered a miscarriage. The European Court in Strasbourg would later rule that Russia had violated people\u2019s human rights during the deportations and ordered Moscow to pay compensation.<\/span><\/p>\n

In October 2006, Russian sanctions on Georgia were extended to the transport sector. This move was preceded by the arrest and deportation of four Russian officers accused of being spies. As a result, all air, rail, ground, and sea connections ceased between the two countries, together with the postal service. Thus, the Georgian economy suffered another painful blow.<\/span><\/p>\n

Despite the sanctions on Georgian citizens and the country\u2019s economy, \u2018Georgian Dream\u2019 expressed its desire to restore economic relations with Russia soon after coming to power in 2012. Indeed, Moscow reopened the Russian market to our goods in 2013. Since then, Russian-Georgian economic ties have been developing steadily (except for the Russian ban on direct flights to Georgia in 2019).<\/span><\/p>\n

As of 2023, the trend of Georgia\u2019s economic dependence on Russia can be described as alarming. Based on data from GeoStat, the National Tourism Administration and the National Bank of Georgia, Irakli Svanidze, a graduate student at the Caucasus University School of Management, analyzed the growing economic dependence of Georgia on Russia. I will briefly summarize the results of the study below.<\/span><\/p>\n

The data shows that by the end of 2022, the share of Georgian exports to Russia was 11.7% of total Georgian exports. Before the pandemic, this figure was closer to 14%. As for imports, based on last year\u2019s data, goods imported from Russia accounted for about 14% of total imports. Russia is now second on the list of Georgia\u2019s largest importers, behind Turkey.<\/span><\/p>\n

Dependence on Russia is particularly evident in the case of certain products that are critically important for the economy. According to 2022 GeoStat data, approximately 95% of Georgia\u2019s wheat imports and 98% of its wheat flour imports are from Russia. As for Russian oil, it accounts for about 55% of all oil imports. In light of these figures, it is easy to imagine what would happen if Russia were to place a wheat and oil embargo on us in the future.<\/span><\/p>\n

On top of everything else, the dependence of Georgia\u2019s tourism sector on Russia is also growing. According to the 2022 Georgian National Tourism Administration statistics, Russia tops the list of visitor countries, accounting for 20% of all visitors to Georgia. It is worth noting that this figure was also substantial before the invasion of Ukraine. For example, in 2018-2019, Russians accounted for 16% of all foreign visitors to Georgia.<\/span><\/p>\n

We have no reason to believe that Georgia\u2019s economic dependence on Russia will decrease in the future. On the contrary, following the imposition of sanctions by Western countries, the Kremlin is likely to expand its economic relations with developing countries. Thus, Georgia\u2019s economic dependence on Russia will increase even more in the coming years.<\/span><\/p>\n

Georgia\u2019s growing economic dependence on Russia will complicate any peaceful change of government in our country. Moreover, even if an anti-Russian government were to come to power, it would be difficult to break the strong economic ties with Russia immediately. The Kremlin knows this very well. It is also understood by the government of Georgia, which prefers to act within its own narrow interests, harming the country\u2019s and the population\u2019s interests as a result.<\/span><\/p>\n

Considering the above, Papuashvili\u2019s rhetoric about a \u201cfree economy\u201d only serves to achieve the opposite goal, encouraging a non-free economy and non-democratic processes. If we take this bait, we will fall increasingly into the Russian trap.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Since coming to power, \u2018Georgian Dream\u2019 has repeatedly denied that trade with Russia would increase Georgia\u2019s economic and political dependence on the \u201cenemy\u201d country. In a recent interview with Palitra News, Speaker of the Parliament Shalva Papuashvili stated, \u201cGeorgia is an open economy that does not impose trade preferences and regulations.\u201d He explained this position […]<\/p>\n","protected":false},"author":675,"featured_media":151579,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1747,1750,1753,1770,1768,1752,1754],"tags":[],"class_list":["post-151574","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economics-en","category-georgia","category-op-ed","category-opinions","category-politics-en","category-region-en","has-thumb"],"yoast_head":"\nGeorgia Stuck in the Russian Economic Trap • Forbes Georgia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dev.forbes.ge\/en\/georgia-stuck-in-the-russian-economic-trap\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Georgia Stuck in the Russian Economic Trap • Forbes Georgia\" \/>\n<meta property=\"og:description\" content=\"Since coming to power, \u2018Georgian Dream\u2019 has repeatedly denied that trade with Russia would increase Georgia\u2019s economic and political dependence on the \u201cenemy\u201d country. 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