Russia charms Georgia with economical means

Malkhaz Tsulukiani, exclusively for Vestnik Kavkaza
Russia charms Georgia with economical means

According to the Georgian Government statistics bureau (Gruzstat), the Russian Federation firmly occupies the first place among the country's importing partners and the second place (after Turkey) in foreign trade. But since export to foreign markets is the most important factor in the economic development, currency inflows, budget replenishment and job creation, export indicators always attract special attention, making it possible to estimate the country's foreign policy priorities.

However, the specifics of the Georgian-Russian relations in the trade and economic sphere casts doubt on the versatility of this formula. The Georgian government is pursuing a clear-cut pro-Western foreign policy: Tbilisi signed up an Association Agreement with the EU and the fundamental Deep and Comprehensive Free Trade Area agreement; has repeatedly confirmed its adherence to the NATO membership policies; the large-scale military exercises are held in Georgia twice a year with the participation of the North Atlantic Alliance’s members.

But the figures are tough: according to Gruzstat, from January to July, $ 303 million worth goods were exported from Georgia to the Russian Federation, which is 26% more than in the same period last year. These figures can not be compared with export to any other country, especially in terms of annual stable exports.

Since 2014, the EU free trade zone has been attracting due to its huge, almost half-billion market, but the European Union restricts the import of the Georgian goods by a system of quantitative quotas, as well as the requirement to bring Georgian producers' products in line with the European standards, up to the definition of “the cucumber bend shape” and so forth. 

The unpopularity of Georgian wines and inability to break into European retail chains, preferring to buy products from trusted suppliers, have also become an insurmountable obstacle. Therefore, Georgian winemakers and winegrowers, fruits, vegetables and mineral water producers are striving for a market where there are no such strict standards and Georgian products are recognizable.

The strange and unusual situation is that Georgia now enjoys economic preferences in the huge Russian market almost as the CIS countries, although it is not a member of the Commonwealth. This can only be explained by the fact that Moscow is deliberately trying to charm the Georgian elites with the benefits of cooperation with the Russian Federation in order to gradually form the pro-Russian economic and political lobby in the Georgian establishment.

There are some clusters of the Georgian economy that are closely tied to Russia and do not want to break these links, since this is fraught with the loss of thousands of jobs and inability to fulfill banking obligations on loans secured by real estate, including housing. The recent events, when Moscow banned direct flights to Georgia and the tourism industry suffered immediately, especially in the coastal zone, led to the open dissatisfaction of small entrepreneurs - the social and electoral support of any government. The effectiveness of such tactics for adjusting Georgia’s foreign policy can be observed in the near future: at the decisive 2020 parliamentary elections.