russia-georgia relations - possible threats and challenges of the “normalization” process

8/18/2019 Russia-Georgia relations - possible threats and challenges of the “normalization” process.

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1. Background

In 2012, as a result of the rst democratic transfer ofpower, the Georgian Dream (GD) Coalition replaced theUnited National Movement (UNM). In contrast to theprevious government, the tense rhetoric was decreasedand the new government also initiated the “normaliza-tion” policy with Russia with the aim of restoring trade,economic, cultural and humanitarian relations.

The “normalization” process implies readiness for dia-logue, restoring trade and economic relations, and peo-ple-to-people contacts. In pursuance of this approach,the new Georgian government appointed a Special Rep-resentative for Relations with Russia, which lled thegap of absent diplomatic relations. Moreover, Georgiamuted previously assertive policy on North Caucasus:the government will no longer nance scholarships forNorth Caucasian youngsters to receive higher educationin Tbilisi, and a Russian-language TV station PIK hasstopped broadcasting. Additionally, Tbilisi’s decision to

not boycott the 2014 Sochi Winter Olympic Games hasto be viewed in this trend. This approach is partly in con-gruence with the public opinion that is quite controver-

sial: 79 percent of the Georgian population support im-proved relations with Russia whilst at the same time 78percent aspire to EU integration (NDI, 2014).

Despite eased confrontation between Georgia and Russiaand the discourse of cooperation, there are still red linesin the interactions that notably challenge the normaliza-tion process. “Borderization” or erecting physical barri-ers between the conict regions and the rest of Georgia

is one such challenge. Since the August War, Russia has been gradually advancing the occupation line from SouthOssetia towards all directions in the rest of Georgia. ByOctober, 2013, 10 percent of the whole dividing line ofShida Kartli region had been demarcated, which is about30-35 kilometers in total (Shaishmelashvili, et al, 2014).This process has been accompanied with the frequentdetention of Georgian citizens by the Russian troops with the accusation of violation of the South Ossetianso-called borders (Civil Georgia, 2013). Furthermore, with the power shift in Abkhazia and South Ossetia, newchallenges emerged. Both Sokhumi and Tskhinvali have

voiced their intention to sign association agreements with Russia. In this case, there is a threat of annexingthese territories by the Russian Federation which is suc-

Contextual analysisof Russia-Georgia relations -

possible threats and challengesof the “normalization” process

This article explores current Georgia’s rapprochement with Russia known as the “nor-malization” process and analyzes political risks of the existing Georgian economic strat-

egy against the increasing role of the Russian market.

March 2015

POLICY

BRIEF

Kornely Kakachia, TbilisiLevan Kakhishvili, Tbilisi

Salome Minesashvili, Tbilisi

EESRI

www.eesr .org

Note: This piece is based on the ndings of the research project “Contemporary Dilemmas in Georgia’sForeign and Security Policy” supported by the Norwegian Institute of International Aairs (NUPI) withinthe project “Research Beyond the Ivory Tower: Training for University Teams”, November 2014.


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EESRI

POLICY BRIEF

March 2015

www.eesr .org

cessfully used by the Russian diplomacy for realizing itsown geopolitical goals.

On the other hand, the “normalization” policy can claim

some achievements the most signicant of which, per-haps, is lifting the ban on Georgian products (wine, min-eral water, agricultural products) that was in place since2006 due to the “health concerns”. Resuming economicand trade relations has brought some signicant conse-quences. Georgian exports to Russia have increased over300 percent and as a result Moscow became Georgia’sfourth largest trade partner in 2013, while Georgia had become the third largest wine importer to Russia, out-running Spain in the rst three months of 2014 (Agenda.ge, 2014). However, this process was also accompanied with some complications. In July, 2013 Russia’s Ministry

for Economic Development drafted a decree to suspendthe Free-trade Agreement between Georgia and Russia, which was signed in February, 1994 (ITAR-TASS, 2014).This could mean that the Georgian products will nolonger be the subject of customs preferences and con-sequently some products might be priced out from theRussian market.

2. Challenges

After 2012, as a result of the “normalization” processand gradual restoration of economic interactions with

Russia, trade relations between the two countries havesignicantly increased. According to January-August2014 data, Russia is the third largest export destinationof Georgian goods after Azerbaijan and Armenia (Min-istry of Economy of Georgia, 2014). Russian marketaccounts for 10 percent share in Georgia’s total export(National Statistics Oce of Georgia). Whereas Russia was the fourth largest export destination in 2013 and in2012 was not even in the top ten country list (Ministry ofEconomy of Georgia, 2012, 2013). Data shows that 2013Georgian export to Russia increased more than fourtimes in comparison to 2012 (National Statistic Oceof Georgia). Georgia started exporting wine to Russia in

2012 rst time after 2006 embargo. The amount wineexported has been increasing since then. In 2013 Geor-gia exported twice more wine and mineral water than theprevious year. By August, 2014 Georgia has increased wine export to Russia by 69 percent in comparison tothe same period in 2013. Income from wine export was83 percent more by August, 2014 than throughout 2013(InterPressNews, 2014). Besides wine, after two roundsof inspection, exporting mineral waters agriculturalproducts to Russia was resumed. By August 2014, exportof mineral water increased by 64 percent during a year(BusinessPressNews, 2014b). Russia has respectively

become number one country by its 65 percent share inthe Georgian wine export (BusinessNewsPress, 2014a).By the rst six months of 2014, Georgia has the highest

increase in export with Russia (3 times) (Radio Liber-ty, 2014). Overall, for the rst 6 months of 2014 data,Russia was Georgia’s fourth largest trade partner afterTurkey, Azerbaijan and China (National Statistics Oce

of Georgia).

Given the fact that Georgia’s export to Russia in 2013exceeds the same gure from 2005 by almost a quarter,it can be argued that economic dependency on Russiahas been renewed and is gradually increasing. The lackof diversity in Georgia’s trade relations may render eco-nomic and later on political leverages at Russia’s dispos-al. This is especially problematic against the backgroundof Russia’s previous track record of instrumentalisingeconomic relations and punishing neighbours with embargo. Georgia as well as Moldova, Ukraine and even

Belarus have experienced the eects of Russian banon their export goods. Furthermore, against the back -ground of Georgia’s refusal to abandon its western-ori-ented foreign policy, it becomes more likely that Russia will resort to using any leverage over Georgia includingeconomic tools in order to change Tbilisi’s mind. Rec-ognising these potential problems by the government is yet another challenge as the GD coalition seems to con-centrate more on short-term benets in these relations,than threats arising from the economic dependency onRussia.

3. Economic dependency and need for mar-ket diversifcation

In this context, the Georgian government tends to em-phasize the positive aspects of the enhanced trade andeconomic relations, whilst somewhat underrating po-tential threats. Restored trade relations with Russia areprimarily assessed by the Prime Minister as “a result ofconstructive, pragmatic, right, thoughtful policy of theGeorgian government” (Government of Georgia, 2014).On the other hand, rarely but still some threats of in-creasing dependence on the Russian market are also ac-knowledged and businessmen are suggested to consider

other countries’ experience and treat the Russian marketas means for diversication, hoping that the Georgian businesses will follow this suggestion. In public sphere,Georgian government members seem quite indierentabout potential Russian moves and potential use of eco-nomic dependence as political leverage. For instance, adecree on suspending the Free-Trade Agreement is per-ceived as a minor change particularly in the context ofdeepening economic relations with the European Union:as members of the Georgian Dream and Prime Ministeramong them noted in their statements “this will is not atragedy.”

Economic dependence on Russia is not regarded as highenough to harm Georgia in case of an embargo: Accord-


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EESRI

POLICY BRIEF

March 2015

www.eesr .org

ing to Zurab Abashidze: “several businesses might havesome loss but I repeat that we have such anticipationsthat we are not expecting any tragedy” (Civil Georgia,2014a). Maybe partly true for the moment, this ap-proach, however, underestimates the threats in the long-run. Assuming that the trend of gradual increase of traderelations with Russia is maintained, the threat of abus-ing economic dependence for its own geopolitical goals will further increase that craves for more careful attitudefrom the Georgian government.

4. New challenges of trade relations

Georgian government, convinced of the possibility ofcombining Georgia’s trade relations with Russia, on theone hand, and with the EU, on the other, does not expect

any “dramatic changes” in the Russo-Georgian economicrelations (Civil Georgia, 2014b). According to the specialrepresentative of the Prime Minister of Georgia for Rus-sia, Zurab Abashidze, “Russian side is trying to nd out whether this new reality - Ukraine, Moldova and Geor-gia’s signing the association agreements - will threatenRussian economy and market in any way. Our position isclear. We do not see any barriers.” (Civil Georgia, 2014b).However, Moscow has reintroduced embargo on Moldo- van goods after the latter’s signing the association agree-ment with the EU but Kremlin has not made up its mindregarding Georgia. A draft about cancelling the 1994 free

trade agreement with Georgia was prepared but the naldecision has not been made to date.

Unlike the Georgian government, however, Russian of -cials tend to be more careful in their statements. Greg-ory Karasin emphasised the need for studying this issuethoroughly (Civil Georgia, 2014b). The FM Lavrov hassuggested that Russia will observe the developments(Liberali, 2014), while the PM Medvedev underlinedthe need for protecting Russian economy (ITAR-TASS,2014).

The main reason why Moscow may try to limit the access

of Georgian products to the Russian market, is the fear ofre-export: that after the DCFTA’s coming into force Eu-ropean goods will start arriving in Russia through Geor-gia as Russia and Georgia belong to the free trade areaof the CIS (Expert Online, 2014). However, this argu-ment is awed due to the fact that Georgian market wasopened to the European goods even prior to signing the Association Agreement. Therefore, in line with this logic,the threat of re-export should have arisen before. There-fore, we can assume that Moscow is mainly irritated bypolitical factors, for instance, such as that the EU nego-tiated the association agreements with the three East-

ern Partnership countries in a bilateral format, whilstRussia was excluded from this process and as a resultcould not ensure protection of its own interests by en-

gaging itself in the negotiation process. Therefore, it can be argued that Russia’s political insecurities are wrappedup in economic arguments and presented in a way that would make them more legitimate. Consequently, when

Russian politics intervenes in the realm of economy, se-curity concerns naturally arise. The need for examiningpolitical and security dimension of Georgian-Russianeconomic relations, thus, becomes apparent.

5. Political risks of economic relations

Considering all of the above-mentioned, there are seriesof factors that could threaten Tbilisi’s “reset politics” with Russia. Despite the new Georgian leadership’s at-tempt to only restore trade, cultural, and humanitarianties with Russia, distinct challenges in diplomatic rela-

tions will remain as long as Russia occupies parts of theinternationally recognized Georgian territory. Tbilisi hasan additional non-negotiable red line: the freedom to in-dependently lead its foreign policy and sovereign rightsto choose its own alliances. Meanwhile, Moscow hasdrawn a red line of its own: Russian politicians and highocials have several times conrmed that Russia doesnot intend to revoke its recognition of the independenceof Abkhazia and South Ossetia. Moreover, as Tbilisi’s Western trajectory so far remains unchallenged, con-cerns persist that Russia’s proxy war in Ukraine couldhave long-term eects on security dynamics in the region

and conict zones there, as well as on the political land-

scape in Georgia. Furthermore, there are clearly clashesof national interests between Georgia and Russia, andhow they see the prospect of bilateral relations and theirrespective roles in regional security arrangements. Asnew Russian-Georgian dialogue toned down the heatedrhetoric in bilateral relations, it is unlikely to produce a wholesale change in the posturing of Tbilisi and Mos-cow. Whatever the result of this political irtation withMoscow, nding the middle path between confrontationand capitulation will be one of the toughest tasks for theGeorgian political class.

Bibliography

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EESRI

POLICY BRIEF

March 2015

www.eesr .org

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russia-georgia relations - possible threats and challenges of the “normalization” process

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