Giorgi Kalatozishvili, Tbilisi. Exclusively to Vestnik Kavkaza
In October 2014, 123.9 million dollars were transferred to Georgia from abroad, which is 8.7 million (6.5%) less than in October 2013. This is the first such incident in contemporary history. During the years of independence, transfers from other countries have been steadily growing regardless of politics, presidents and prime ministers. The main reason for the increase in money transfers was the emigration of Georgian citizens who went abroad to earn money. According to unofficial data, since Georgia became independent in 1992 nearly a million people have left Georgia and the majority of them moved to Russia.But taking into account the specifics of the Caucasus, the more people left, the more money was transferred, because people did not break off relations with their parents, siblings, relatives, friends and even neighbors, who were also helped because, as they say in Georgia, "a good neighbor is better than a distant relative."
Russia accounted for more than half of all the transfers, but then Russia's relations with Western countries deteriorated, the EU and the US imposed sanctions, and the prices of oil have fallen. What does Georgia have to do with it? It wants to join NATO, has signed an association agreement with the EU and has little to do with Russia. Georgia, unlike its former region Abkhazia, has not signed and is not going to sign the treaty "On alliance and strategic partnership" with Russia.
But strangly enough as soon as the ruble began to decline, the lari began to decline as well. The crisis of the Georgian national currency is a much more surprising and unexpected phenomenon than the decline of the ruble. Unlike the ruble, the lari is tied to the dollar by IMF loan conditions and other intricate financial mechanisms of the West's soft power.
However, the dollar rate has increased from 1.74 to 1.83 laris per dollar. Russians might find this decline insignificant compared with the depreciation of the ruble by 30-40%. However, there has been no such rapid and substantial decline of the lari in the past 10 years. Most importantly, Georgia is dependent on food imports to a much greater extent than Russia is. Therefore, even an insignificant depreciation of the lari has had an immediate effect on prices in the stores, which was more evident than the weakening of the ruble had on prices in Russia.
Some "experts" (and there are a great number of them in Georgia now) are trying to explain the weakening of the lari by the fact that the dollar has become stronger in relation to the euro. But serious economists consider this explanation unfitting. More significantly, the national currency was affected by the decline in transfers from Russia, which was a direct consequence of the weakening of the ruble. One cannot buy anything with rubles in Georgia and lately it has become difficult to even exchange rubles at Tbilisi currency exchange offices. That is, "relatives, friends and neighbors," have been sending fewer dollars from Moscow and other Russian cities than they used to send. The inflow of dollars to the Georgian financial market has decreased, fewer dollars began to be exchanged for the Georgian national currency and it began to weaken, indicating a reality which Georgian politicians don't want to accept: the lari depends on the ruble to a much greater extent than it depends on the dollar. The root cause of this trend is the fact that in the past 25 years Russia has been sheltering more Georgians than Europe and the United States combined have. Therefore, there is much less foreign currency coming from the latter than from Russia.
