CNBC on the Georgian economy
CNBC has published a long article stating that the economies of the countries of the South Caucasus, especially Georgia and Armenia, have grown dramatically since the start of the war in Ukraine. But now these countries are in danger of “revenge” from the West.
The article notes that, according to the International Monetary Fund, in 2022 the economy of Georgia grew by 10.1 percent, and that of Armenia by 12.6 percent. But growth in these countries is projected to slow by about four percent and 5.5 percent, respectively, in 2023.
Undermining relations with the West
The CNBC article notes that while it is not yet clear what the new sanctions package will look like or when it will come into effect, some analysts say the very prospect of sanctions will allow countries to rethink their ambitions. This is especially true for countries that claim membership in NATO and the European Union.
The article also recalls that Georgia applied for EU membership in March 2022, a week after Russia’s full-scale invasion of Ukraine, and is working towards candidate status.
“According to a recent poll by the National Democratic Institute, public support for Georgia’s EU membership has increased in recent months, with four-fifths (81%) of the country’s population supporting EU membership,” CNBC says.
Fight against sanctions evasion
A European Commission spokesman told CNBC they are working to identify redirect trade flows from third countries that act as intermediaries for Russia. The growth of these flows forced the leaders of the European Union and partner countries to negotiate with Russia. Some measures have been taken with respect to countries involved in indirect trade.
Intermediary trade with Russia
The CNBC article notes that Western leaders have “sounded the alarm” this year that some traders are using countries such as Georgia, Kazakhstan and Turkey to evade sanctions:
“Exports from the European Union, the United Kingdom and the United States of America to Central Asia and the South Caucasus have increased dramatically, reflecting an increase in “middle trade,” in which goods pass through Central Asian countries and then are sold in Russia.”
According to preliminary data, this year Russia has become Georgia’s second largest trading partner in terms of imports and third in terms of exports. In particular, in 2022, Russian imports to the country will increase by 79 percent, and exports to Russia by seven percent.
According to CNBC, representatives of the governments of Georgia and Armenia did not comment on the issue addressed to them by the publication about increasing trade with Russia.
Although these goods are not subject to sanctions, they may have a dual purpose, Mikhail Kukava, head of economic and social policy at Georgia’s Freedom of Information Development Institute (IDFI), told CNBC. For example, parts for washing machines can be used by Russia for military purposes.
The American publication Politico writes that the US has identified five countries that help Russia evade sanctions, and one of these countries is Georgia. The publication is based on a speech by U.S. State Department sanctions coordinator Jim O’Brien at the annual meeting of the European Council on Foreign Relations (ECFR).
“The US has identified five countries in particular that are causing the circumvention problem [of sanctions]: Turkey, Kazakhstan, Georgia, the United Arab Emirates, and Armenia,” the Politico article says.
if a country has a border with Russia, there is always a risk factor [of circumventing sanctions], Giorgi Kakauridze, Deputy Finance Minister of Georgia, said in response to O’Brien’s statement.
“All goods from the sanctions list are under control, not a single dual-use product has gone to Russia,” Kakauridze says.
