Georgia’s Shift in Foreign Policy and Its Economic Provision

Georgia’s Shift in Foreign Policy and Its Economic Provision

By Vakhtang Maisaia, Professor, Caucasus International University

While the Georgian government has condemned the Russian invasion of Ukraine, it has not joined international sanctions over fears of negative economic consequences for Georgia. Russia is one of the country’s major trading partners. Having considered as how “Big Game” is been played for the Georgia among three great powers: the USA, Russia and China (the EU is a bit stayed beyond the scene and more concentrated on relations with Armenia and Azerbaijan). The game from geoeconomic and trade-financial considerations are being won by the Russia and after China. Here is concrete evidence of the fact. A trade turnout between Russia and Georgia only in two quarters of 2023 reached up to date $670 million and at the end of the year overarch even $1 billion. Below two Charts (Chart#2 and Chart#3 perfectly indicated the reality and how strongly Georgia is being interdependent on Russia’s market and Russia economy considering the below statistics):

Chart#2: Georgia’s Export to Russia Main Five Goods Categories in period of January-April 2023

GoodsVolume, $millionRise/Down, %
Automobiles (cars)30.6+732.4
Mineral Waters22.3+40.6
Spring water, including with gas17.0+172.6

Chart#3: From Russia’s Imported in Georgia Five Main Good Categories in period of January-April 2023

GoodsVolume, $millionRise/Down, %
Oil products212.4+186.6
Natural Gas80.4+118.5
Wheat flour17.2+6.2
Glass dishes15.0+183.5

On April 20, the National Statistics Service of Georgia published preliminary data indicating that in January-March 2023, Georgia’s foreign trade increased by 22.1% compared to the corresponding period of the previous year, totaling $4.8 billion in value. During the same period, exports from Georgia increased by 24.7% to $1.5 billion, while imports rose by 21% to $3.3 billion. As a result, the country’s negative trade balance was $1.9 billion, representing 38.9% of its foreign trade turnover.

In January-March 2023, Turkey was Georgia’s largest trade partner with $673.7 million in trade volume, followed by Russia with $666.9 million, China with $376.0 million, and Azerbaijan with $373.9 million, and Armenia with $321.4 million. During the same period, Armenia was Georgia’s largest trade partner in exports with $216.9 million, followed by Azerbaijan with $180.7 million, Russia with $176.9 million, and China with $133.3 million, and Kazakhstan with $122.2 million.

In terms of imports, Georgia’s largest trading partners were Turkey with $568.7 million, Russia with $490 million, United Stated with $261.8 million, China with $242.7 million, and Germany with $205.3 million. This is official statistics from state government sources.

The economic rise interdependence even exceeds the 60% of the national GDP that is causing real threat from economic security provision. The tourist business from Russia is being flourished compare to 2019 (before the COVID-19 pandemic virus) raised in three times. As for the EU relations the statistics is the following: The key EU imports from Georgia include mineral products, chemical products, and vegetables. The EU imported goods to the value of €812 million from Georgia in 2021. EU exports to Georgia amounted to €2 billion in 2021. The key export products are chemical products, mineral products, and machinery and appliances. EU trade with Georgia accounts for 0.1% of its total trade, with a turnover of €2.8 billion in 2021.

The economic privilege conditions in sake for Russia and China against to USA and EU has confirmed by the Georgian incumbent Prime-minister Irakli Garibashvili. He attended the Qatar Economic Forum. There are his key speech statement points where shine and perfectly reflected new Georgie’s foreign policy priorities and principles in real life and not formally declared that are not implemented by the ruling party “Georgian Dream” party and government:

  • Georgia’s economy will be ruined and we are getting suffered to Georgian people if we (means Georgian government) join the sanctions against Russia;
  • Ukraine wants open so-called “the Second Frontline” against Russia, we are against Ukraine’s desire and keeping stability and peace in our country and our goal are pursuing Georgia’s true national interests;
  • Restoration of direct flights with Russia is only part of economic and trade relations with Russia that are to be boosting up and promoting;
  • Georgia has strategic partner of China as we have free trade agreement with China that is actively worked and China is one of the main and key trade strategic partner to Georgia. We are fully supporting China’s peaceful plan for Ukraine and the country’s mediation mission is to be successful and as I am peaceful person welcome warmly such initiatives.

In addition he critical described the USA’s economic engagement with Georgia and mentioned that in 2017 the USA then Administration (meant Donald Trump one) rejected completely at level of discussion, any proposal to sign up Free Trade Agreement opportunity between two nations and hinted that USA is not Georgia’s key strategic trade partner. The same rhetoric’s promoted by the ruling party leadership, like Chairman of ruling party “Georgian Dream” and co-Chairman of the Parliamentary Majority Fraction in the Parliament, Irakli Kobakhidze.