Georgia deepens trade relations with Russia despite Ukraine war

Georgia deepens trade relations with Russia despite Ukraine war
Russia is the second largest trade partner of Georgia after Turkey. / bne IntelliNews
By Tornike Mandaria in Tbilisi April 21, 2023

Georgia is expanding its trade relations with Russia, despite the efforts of its Western allies to isolate Russia economically for the invasion of Ukraine.

According to official statistics, in the first quarter of 2023, Russian imports to Georgia increased by 79% compared to the previous year, reaching a total of $490 million.

The primary imports from Russia to Georgia are  petroleum and petroleum oils, an increase of 273%, valued at $169 million, and natural gas, an increase of 114%, valued at $75 million.

In the first quarter of this year, Georgia imported petroleum worth $251 million, with an increase of $6 million and 27,000 tonnes in quantity compared to last year. The market structure has dramatically changed, with Russia being the primary supplier of fuel imports, accounting for 67% of the total sector, followed by Romania and Bulgaria.

Georgia's import of natural gas from Russia has also increased, reaching $71 million in the first quarter of 2023, up from $32 million the previous year.

On the export side, Georgia's export of goods to Russia has increased by 61%, amounting to $177 million. The primary exports were ferroalloys worth $45 million, which increased by 41%, and wine worth $38 million, which increased by 52%.

In total, the trade turnover between Georgia and Russia amounted to $667 million, making Russia the second largest trade partner of Georgia after Turkey, with China in third place at $376 million.

Since gaining independence from the Soviet Union, Georgia and Russia's relationship has been fraught with tension, culminating in 2008 when Russia invaded Georgia, citing the need to protect the Ossetian ethnic minority from Tbilisi. As a result of the conflict, Russia has maintained effective control over 20% of Georgia's internationally recognized territory and has recognised the breakaway regions of South Ossetia and Abkhazia as independent countries.

However, in recent years, the Georgian government has slowly been cosying up to Moscow, leading some to argue that Georgia is quietly being drawn into Russia's orbit. Critics point to Georgia's leaders' failure to support Ukraine, increased anti-Western propaganda, and attempts to pass a law designating pro-Western and pro-democratic civil society organisations as "agents of foreign influence".