Georgia

Capital Tbilisi, Kutaisi
Population 4.93 million (2018) CIA
President Salome Zurabishvili

Introduction

Georgia—known as Sakartvelo to Georgians—is a country of crossroads and contradictions. Its 70,000 square kilometers and 3.7 million people are situated between the towering Caucasus Mountains to the north and the Black Sea to the west. It shares borders with global actors Russia and Turkey along with smaller regional players, Armenia and Azerbaijan. Physically, Georgia is divided between east and west, north and south. Politically and economically, while it has inherited the authoritarian legacies of the Soviet Union, the country is making strides to integrate with western norms.

Once a great kingdom, Georgia has a long and proud history comprising over 1,000 years, whose lore runs through the veins of Georgian tradition today. After its zenith in the 12th and early 13th centuries, Georgia was gradually squeezed into decline by the Mongols and the Persian Empire, culminating in its annexation by the Russian Empire in 1801. The country briefly gained its independence from Russia and became a republic in 1918, before being reabsorbed into the the Soviet Union in 1921. During the Soviet era, Georgia was “home” to leaders such as Stalin, Beria, and Shevardnadze. Following the collapse of the Soviet Union, Tbilisi declared independence in 1991 and turned to rebuild its political and economic culture.

With independence, Georgia inherited problems of its own doing and legacies of the Soviet Union. It dealt with fallout and infighting in its attempt to transition from authoritarian to democratic government,it struggled to address rampant corruption in business and public administration, and it faced anew the issue of minorities in Georgia, who comprised around 30% of the population. In the nearly three decades since the transition, Georgia has experienced violent and non-violent revolutions and a revolving door of politicians.

It has gradually asserted its independence to pursue closer integration with the European Union and NATO, both to bolster its own political economy and out of fear of a revanchist Russia. In response, Russia has worked to undermine Georgia, most notably in its exploitation of Abkhazian and South Ossetian separatism in the 2008 war, creating a frozen conflict and effectively dashing Georgia’s aspiration of membership in western institutions in the immediate future.

Nevertheless, reflective of Georgia’s public support for integration with the west, a visitor to Tbilisi will see more EU and NATO flags than in most European capitals. The desire remains, but the initial optimism of the mid-2000s has hardened to a weathered acceptance that Georgia is not leaping from Europe’s periphery to its core anytime soon.

Georgia is the only country in the Caucasus that has open borders with all of its neighbors. It has aggressively pursued regional projects, including transit routes from the Caspian Basin to Turkey and along the north-south trade route from Armenia to Russia. As its influence as a regional hub has grown, Georgia has moved beyond its immediate neighborhood to establish itself as a wider actor, playing host to regional diplomatic and monitoring missions, courting development from foreign investors, retrade, and natural resource holding. International organizations and businesses have placed their regional headquarters in Tbilisi, from which they manage their operations in the Caucasus.

Besides its favorable location as the regional hub, Georgia attracts investors with a business environment which facilitates economic activity with comparatively low levels of corruption and red tape. Recently, Georgia has looked beyond its traditional regional and western partners to eagerly welcome China’s One Belt, One Road Initiative by becoming the first country in Eurasia to conclude a free trade agreement with Beijing, in 2017.

After the 2003 Rose Revolution, most optimistic observers hoped that Georgia would in due course transform into a prosperous, consolidated democracy. It was expected to gain membership in the EU and NATO. Its progress in eradicating corruption and building a more welcoming business environment is impressive, but many of Georgia’s problems persist: the question of the breakaway regions of Abkhazia and South Ossetia remain unresolved; relations with Russia are strained; graft is a relentless feature of the country’s politics; and hopes of membership in the western institutions go unmet. Georgia’s growth has been sustainable, keeping the door open to potential for the country to keep diversifying its opportunities for political and economic development.

Quick Facts

Basics
Capital City Tbilisi
Country Population 3.7 million
Largest City (Population) Tbilisi (1.1 million)
2nd Largest City (Population) Batumi (150,000)
3rd Largest City (Population) Kutaisi (147,000)
4th Largest City (Population) Rustavi (125,000)
5th Largest City (Population) Gori (48,000)
President (Dates) Salome Zurabishvili (2018-Present)
Prime Minister (Dates) Mamuka Bakhtadze (2018-Present)
Currency Lari
Politics
President Salome Zurabishvili
Prime Minister Mamuka Bakhtadze
Freedom House Score (1=Free, 7=Not Free) 3
Ruling Party Georgian Dream
Past Presidents (Dates) Giorgi Margvelashvili (2013-2018)
Mikheil Saakashvili (2004-2007, 2008-2013)
Nino Burjanadze (acting) (2003-2004, 2007-2008)
Eduard Sheverdnadze (1995-2003)
Zviad Gamsakhurdia (1991-1992)
Past Prime Ministers (Dates) Giorgi Kvirikashvili (2015-2018)
Irakli Garibashvili (2013-2015)
Bidzina Ivanishvili (2012-2013)
Vano Merabishvili (2012)
Nika Gilauri (2009-2012)
Grigol Mgaloblishvili (2008-2009)
Lado Gurgenidze (2007-2008)
Giorgi Baramidze (2007)
Zurab Noghaideli (2005-2007)
Mikheil Saakashvili (2005)
Zurab Zhvania (2003-2005)
Avtandil Jorbenadze (2001-2003)
Giorgi Arsenishvili (2000-2001)
Vazaha Lortkipanidze (1998-2000)
Niko Lekishvili (1995-1998)
Otar Patsatsia (1993-1995)
Eduard Sheverdnadze (1993)
Tengiz Sigua (1992-1993)
Besarion Gugushvili (1991-1992)
Murman Omanidze (1991)
How Central Banker is Appointed Appointed by Parliament
Average Voter Turnout in Last 5 Elections
(% of Total Population)
66.04
Trade and Commerce/Economics
10 Major Import Partners
(% of Total Imports)
Exports Major
Partners (10)
Major Industries
by GDP
Top Exports Sanctioned by
(and Start Date)
Sanctioning
(and Start Date)
1. Turkey (18%)
2. Russia (9.3%)
3. China (7.7%)
4. Azerbeijan (6.6%)
5. Ukraine (5.6%)
6. Germany (5.5%)
7. Italy (3.6%)
8. United States (3.1%)
9. Netherlands (2.9%)
10. Japan (2.6%)
1. Russia (9.0%)
2. Turkey (8.5%)
3. China (6.8%)
4. Azerbaijan (6.6%)
5. Bulgaria (6.4%)
6. Armenia (5.3%)
7. Switzerland (4.9%)
8. Germany (3.8%)
9. US (3.8%)
10. Italy (3.2%)
Steel
Machine Tools
Electrical Appliances
Mining (manganese, copper, gold)
Chemicals
Vehicles
Ferro-alloys
Fertilizers
2009: Russia Russia (?)
Finance
Largest Sources of FDI by Country 1. UK
2. Azerbaijan
3. China
4. Netherlands
5. USA
Demographics
Largest Ethnic Groups
(% of Total Population)
Largest Religions
(% of Total of Population)
Population Living
Abroad
Georgian (87%)
Azerbaijani (6%)
Armenian (4.5%)
Christian Orthodox (84%)
Sunni Islam (10%)
Armenian Apostolic (4%)
1-2 million
Major International Organizations (and date of accession)
1 UN–1945
2 Council of Europe–1999
3 OSCE–1992
4 WTO–2000
5 IMF–1992
6 EBRD–1992
7 Euro-Atlantic Partnership Council–
8 GUAM–1997
9 BSEC–1992
10 EAPC–1997
11 World Bank–1992

Politics

Politics in Georgia is marked by its propensity for strong personalities and gradual but sustained progress of reform. The country’s political system is a highly centralized semi-presidential democracy, with power divided between the executive, legislature and independent judiciary. Like most three-branch government systems, it theoretically has checks and balances. In practice, the effectiveness of such checks and balances in Georgia has fluctuated based on the general party and specific leader in power. Following transition from the Soviet Union, Georgia has faced challenges rectifying its desire for democracy and freedom with its time under authoritarian rule from Moscow. After the disintegration of the Soviet Union, two of Georgia’s regions, Abkhazia and South Ossetia declared independence. A bloody civil war followed and the breakaway regions have kept their de facto independence from the Georgian central government to this day largely because of Russia’s active military engagement in the frozen conflict.

Primarily, political leaders are tasked with balancing the mutually exclusive aims of pushing forward with democratic reforms against consolidating their power base. So far, Georgia’s leaders show more interested in staying in power than advancing Georgia’s reform process, which results in a lot of backtracking; nevertheless, the country has made significant gains despite this and is considered partially free. Wrestling with its authoritarian past has resulted in several sudden and dramatic shifts in power. The Rose Revolution in 2003 was the first of the post-soviet color revolutions, which have paved the way for pro-democracy, pro-western politicians across the region. Mikhail Saakashvili, the confident and ambitious, at times bombastic president implemented sweeping reforms, which quickly boosted Georgia’s standing in international rankings that measure ease of doing business and transparency.

The population can be impatient for reform, and some reforms are implemented ineffectively or simply take a long time to take root or reverse cultural norms. Recurring issues in Georgian domestic politics are the balance between its power consideration and aspirations of democracy; corruption in business and politics; how to deal with minorities living in Georgia, particularly breakaway regions Abkhazia and South Ossetia; the split between rural and urban progress; and how to create effective policy towards outside powers. The most important issues to voters are unemployment, which is astronomically high in Georgia, and poverty.

The country’s political culture is marked by generally low levels of trust in political institutions and personification of politics. Overall, the general public distrusts the parliament and especially the political parties. Local governments and the president are viewed more favorably, but the overbearing attitudes towards national politics are marked by apathy and cynicism. Regionally, Georgians’ trust supportive political institutions (e.g., the media, NGOs, the court system) more than their neighbors, but nonetheless they still have a deeply embedded distrust of the courts, and the media mark Georgians’ view of their country’s institutions by writing with deep skepticism and wariness. The military and the church are the only two organizations trusted by an overwhelming majority of the country’s electorate.

Executive

The executive branch of the Georgian government includes the Georgian president and the cabinet of ministers, headed by the prime minister of Georgia. Formerly, the minister of defense, the minister of the interior, and the prosecutor general reported directly to the president, bypassing the prime minister. The president serves a five-year term, and may not be elected for more than two terms.

Legislative

The Georgian legislative branch comprises the unicameral parliament, with 150 members, 77 of which are proportional representatives and 73 of which are elected through district elections, held every four years. In 2017, the parliament passed an amendment to the constitution that will change the system to fully proportional representation by 2024 (though the date was amended behind closed doors by Georgian Dream in advance of the vote, from 2020).

In 2012, the parliament was relocated to Kutaisi—an attempt to decentralize the government away from the Tbilisi-centric view and boost Kutaisi. Parliament is the branch responsible for setting the policy of Georgia, including its relationship with foreign powers. Introduction of legislation rests with the president and parliamentary committees. In 2017, the constitution was amended to reflect that in 2024, the president of Georgia would be elected by an electoral college rather than by direct vote. The moves towards a more federal structure are partially motivated by attempts to facilitate the reincorporation of the breakaway regions of Abkhazia and South Ossetia back to Georgia’s control. The country’s constitution requires a switch from the current unicameral to bicameral system if/when the country reunifies, but this goal remains distant and tied to wider geopolitics of the region.

Judiciary

The judiciary consists of local courts, the court of appeals, and the Supreme Court of Georgia. Georgia also has a Constitutional Court, which is tasked with protecting the Constitution of Georgia; its decisions do not have appeal. The judiciary in Georgia has come under criticism from domestic and international observers for its sometimes heavy-handed, zero-tolerance approach—Georgia has the largest per capita prison population in Europe. Further, the courts have been accused of being a political tool to persecute or get revenge or settle scores with political opponents.

Media, NGOs, and Civil Society

The media in Georgia is scant. There are few periodicals in circulation—either online or in print—and as a result few Georgians read daily newspapers or magazines. The television is a primary source of news and information. Georgia has three public TV channels, one of which—the First Caucasian TV—is operated in Russian. Georgia has five private channels, the two most important being Rustavi 2 and Imedi TV, owned by the same parent company.

The handling of both stations has caused controversy over the years and they have been accused of either being a mouthpiece of the United National Movement or a challenge to the current ruling party Georgian Dream, despite its private holding. There have been multiple attempts to censor Rustavi 2 and Imedi TV by shutting down the station or changing ownership, but so far these attempts have not had long-term effect. Most recently, sale of Rustavi 2 was halted by the European Court of Human Rights. In 2017, when a former employee of one of Ivanishvili's TV stations was selected as the head of the national broadcasters, many political talk shows were cancelled. Many Georgians rely on social media, such as Facebook, for lower-level communication, where fake or sensational news can circulate without censor.

Conclusion

Much of Georgia’s political strength lies in a vibrant, diverse civil society. Its future is bright in that respect, as new generations of Georgians rise up though the revamped educational system and join the public space and, for some of them, the administrative workforce. These new activists and bureaucrats take two forms—either those who remember the Georgia of the past and are trying to reach a new, more efficient, more transparent Georgia, or those who are hyper-focused on bringing Georgia on par with the west they know through social media and the Internet.

Geopolitics

Georgia’s geopolitical situation is divided into two categories: partnerships with normative goals and transactional partnership. The two categories are not mutually exclusive or binary; indeed, at times one will necessitate the other. Georgia is breaking free from its legacy of the Soviet Union and re-establishing itself, asserting itself with the former imperial lord, Russia, forming new relations with partners it seems as advantageous, such as the US and the EU, but also China and Iran, in addition to maintaining close ties with regional partners, and using each other these to keep its political gains on the domestic stage.

Within this framework, Georgia has three tiers of partners: those in its immediate neighborhood, Russia, Turkey, Armenia, and Azerbaijan; those in its periphery, Iran and Ukraine; and global partners, the U.S., the EU, and China. Georgia’s geopolitical outlook is balancing security with potential benefits; the Georgian government is under pressure from its population to bring garaunteeds of security—a tricky thing, with revanchist Russia above, and the two breakaway regions Abkhazia and South Ossetia. But the government also wants to use geopolitical maneuvering to bring short- and long-term benefits to Georgian citizens, by functioning as an intermediary between other countries and partnering with countries that can bring benefits to Georgia. Overall, the trend seems to be that Georgia increasingly going where the money is, regardless of normative goals or differences.

Its foreign policy if the recent years marks a certain discernable fatigue with its normative partners, the U.S. and EU, and favor for economic-cum-political partnerships, like China and even Iran. There are also stalemate partners, like Turkey, Armenia, and Azerbaijan. Finally, all of this should be seen in light of Russia, which has been the aggressor for Georgia in the last few decades. Despite this past, the recent Georgian governments have taken steps to normalize relationships with Russia, and it is possible Tbilisi will take a more pro-Russia stance in the years to come, especially if given the proper transactional benefits and if it feels at an impasse with western organizational memberships. It remains to be seen whether this will unfold and whether it will have positive or negative effects for Georgia.

Regional

Russia

Russia is a partner and adversary in Georgia’s immediate neighborhood. Georgia shares a border with Russia to the north, along the Caucasus mountain range. For Georgia, the border is officially 694 kilometers long; for Russia, the border is only 365 kilometers long, as Russia recognizes Abkhazia and South Ossetia as independent nations, and therefore independent of Georgia’s border with Russia. This dispute is a key to the Russian-Georgian relationship: the Russo-Georgian War in 2008 reshaped Georgia’s useable land, and the invasion by Russian troops resulted in destruction of key transport routes, such as railways and highway, throughout the country, harming one of Georgia’s key assets as a transit country. Over ten years after the conflict, Georgia still remains Russia’s only neighbor with whom it does not have diplomatic relations.

The result of the invasion and war was a stalemate, but the frozen conflict effectively prevents Georgia from joining NATO—no aspiring member country can have territory in dispute—and has created practical and symbolic problems for Georgians living in the immediately affected area and the national outlook as a whole. The return of South Ossetia and Abkhazia is very important to Georgians, but it does not look like the country will be unified any time soon.

Because of the 2008 Russo-Georgian War, the then-government, led by President Saakashvili and his United National Movement (UNM) party, took a fairly hard anti-Russia stance. The previous government under Shevardnadze had already begun courting western institutions, especially NATO, but Saakashvili’s government redoubled efforts, putting their eggs into the NATO and EU baskets. This only served to exacerbate relations with Moscow, which saw membership in NATO as a direct threat to their own immediate sphere of influence; the EU was seen as a nominal value threat.

As time has passed and the government has changed, relations have risen to lukewarm temperatures: the party to replace UNM in Georgian government, Georgian Dream, has been more pragmatic in its relationship with Moscow. In 2012, while Saakashvili was still in office, Tbilisi introduced visa-free travel for Russians—resulting in a dramatic increase in Russian tourists, especially to the Black Sea resorts. Later in the year, after UNM had been defeated by Georgia Dream in parliamentary elections, Russia and Georgia had their first meeting since the war.

Most recently, in 2018, the former prime minister, Giorgi Kvirikashvili, commented that Georgia was ready to normalize relations with Russia. This is important: Russia is a vital trade partner with Georgia, and money talks louder than values. Tbilisi has maintained that its relationship with Russia is still driven by principles, and it is not abandoning its rapprochement with the west and its institutions, but it no longer treats Russia as a pariah, either, which puts both countries on a good road to normalizing relations. One risk is that Georgia would abandon its western accession altogether and forgot the values and reforms it has undertaken, or that its relationship with Russia will put a strain on its relationship with western countries, and Russia might urge Georgia to back down from its relationship with the EU, leading to an increase in tensions.

Turkey

Georgia’s relationship with Turkey is primarily based on geographic proximity and economic ties. While Turkey is a member of NATO, it has little influence in the organization, and has not used its position to advance Georgia’s cause for membership with the Alliance. Turkey is in accession discussions with the EU for membership but these, two are a nonstarter, and Turkey has lost its initial flash of eagerness, which again does little to advance Georgia’s own aspirations. Were Turkey to join the EU, there would be a land connection between the bloc and Georgia—an important symbolic and logistical note for the EU and for Georgia, but it does not seem Turkey will be a member in the short term. Further, Turkey has a rollercoaster friendship with Russia, which can work to or against Georgia’s advantage: if Georgia were to normalize relations with Russia, it would likely serve as a link between the two; if not, it further antagonizes Georgia’s relationship with Turkey, and incentivises Tbilisi to keep quiet on any controversial actions by the Turkish government.

This leads to a transactional relationship that is largely about not shaking the boat: Turkey needs Georgia for its receptions of Azeri gas and oil, transported through the vital Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines. Turkey also relies on Georgian overland rail and highway transport of goods. Georgia and Turkey have interests in the Black Sea, and both countries have looked warily at Russia’s maneuvers there. If one considers two counterfactuals: that Turkey were an active and encouraging NATO member and that Turkey were an EU member—one can see the potential for influence and cooperation with Georgia. Instead, a lack of shared normative values and relatively little power to persuade on either side has led to a general impasse and limp relationship between Ankara and Tbilisi.

Armenia

Armenia is a friend—even a puppet—of Russia, but this has not come at the expense of its relationship with Georgia. Armenia is landlocked and has locked itself away from its neighbors Azerbaijan and Turkey because of ongoing disputes. This puts Armenia at the behest of Moscow and Tbilisi. Armenia needs Georgia for its trade routes and to receive natural resources—like gas—from Russia. Georgia wants to keep things light with Armenia: there are a large number of ethnic Armenians in Georgia, and there is no reason to cause dispute with them internally or Yerevan, and by proxy Moscow, externally. For some time, Armenia was along the same EU integration track as Georgia, and its turn away is a sore spot between the two countries. As Georgia continues to build its relationship with Iran, Armenia, along with Azerbaijan, will be an increasingly important link between Iran and Georgia for tourists and trade alike.

Azerbaijan

Azerbaijan is an important regional relationship for Georgia. Azeris comprise the largest ethnic minority in Georgia, around 6.5%. Both countries are members of GUAM Organization for Democracy and Economic Development—a grouping of post-soviet states, which seek to counter Russian efforts to dominate the region. Azerbaijan is also an important transactional partner for Georgia: Azerbaijan has invested heavily in Georgia’s infrastructure to transport its natural resources from the Caspian Basin to the Black Sea and Turkey. The two countries have come together for the Baku-Supsa and the Baku-Tbilisi-Ceyhan oil pipeline, and the Baku-Tbilisi-Erzurum gas line. Recently, they completed the Baku-Tbilisi-Karsi railroad, which is part of a broader project to connect Asia to Europe for cargo and passengers.

Azerbaijan is also friendly with Russia, but not to the detriment of its relationship with Georgia. The touchiest point between the two countries is their border, which has a slice of unresolved territory, the Georgian David Gareja monastery. The monastery has cultural importance for Georgia and military importance for Azerbaijan. There have been talks of land swaps, but so far they have been unfruitful, and proposals to share the space as a joint tourist zone have been received poorly by Georgians. Nevertheless, the small border dispute is not causing excessive friction between the two countries, and does little to cool the appetite for investment Azerbaijan has for Georgia.

Beyond Local

Iran

Iran is an increasingly important partner for Georgia. Its geopolitical relationship to Georgia is predicated on both of their refusal to go along with the mainstream policy towards their respective countries: Despite having strong ties to Russia, Iran condemned Russia’s invasion of Georgia in 2008, and has not recognized Abkhazia and South Ossetia as sovereign nations, as Russia has done. Likewise, Georgia has defied the western mainstream sanctions and choice to ostricize Iran, choosing either smaller sanctions, as in response to a car bombing in 2013, or none at all.

Georgia and Iran jointly lifted visa restrictions in 2011—this was temporarily terminated one-way by Georgia in 2013 in response or Iranian-sponsored terrorism, the visa-free regime was re-established in 2016. The 45-day free entry brings swarms of Iranians to Georgia, and important soft-power cultural element between the two countries. Iran is an important trade and investment partner for Georgia. The two share deep economic ties that bolster their friendly political relationship. In May 2015, MEPCO, an Iranian energy company, announced its intention to build two power plants in Georgia. Because of its increasingly close ties with Iran, Georgia was relieved by the P5+1 agreement regarding Iran’s nuclear program; the US withdrawal from that agreement has been a cause for concern, but Georgia does not seem to be backing away from its close ties with the country. Their relationship bridges the merely transactional into a genuine partnership between less obvious allies.

Ukraine

Both countries that emerged to claim independence from under the thumb of the Soviet Union, Georgia and Ukraine have a legacy of cooperation and friendship that is important in Tbilisi’s support for Ukraine and Kiev’s support of Georgia. After the collapse of the Soviet Union, Georgia developed close ties with Ukraine under Shevardnadze. This continued under as Saakashvili came to power through the non-violence Rose Revolution, in 2003. In 2004, Ukraine had its own non-violent revolution in a similar setting, and the Orange Revolution brought change and reform to Ukraine’s system next.

Both countries have pursued closer integration with NATO and the EU, and they have been natural supporters for each other’s cause. The two also share a common concern over the looming shadow of Russia and have jointly pushed the west for support, lobbying for the other. They understand the security concerns faced by countries on Russia’s border, and likewise understand the importance of the Black Sea for security and commerce. These similarities bring the countries closer together, but it can also make the relationship sour more quickly.

When Saakashvili fled Georgia in disgrace, Georgians were much chagrined a few years later when, following his support of Euromaidan protests, Saakashvili was appointed by Ukraine President Poroshenko to be governor of the Odessa Oblast. Relations between the two countries were strained during that time, as Georgian leaders wanted Saakashvili returned to Georgia to stand trial. Another point of strain has been the difference in implementing the agreements with the EU: Georgia successfully signed the Deep and Comprehensive Free Trade Agreement and Association Agreement, but it caused considerable upset in Ukraine when, at the last minute, President Yanukovych backed out the deal. It was eventually signed, but it changed the implementation experience for both countries. Ukraine remains a strong partner for Georgia in trade and politics, but it is more of a kindred spirit, and their relationship has yet to develop into a truly strategic partnership, necessary for the security of either country. Ukraine is busy waging a hybrid war with Russia, and Georgia is looking to others for opportunity.

The United States

The United States has been a key strategic partner and friend for Georgia. George W. Bush was the first U.S. president to visit Georgia after its independence—the road linking Tbilisi to its international airport is named George W. Bush Avenue. U.S. support for Georgia has come in the form of tangible military and spending amounts and help through NGOs and other civil society organizations. Over the years, as Georgia has transitioned to democracy—with all its challenges and setbacks—the U.S. has been a steady observer, offering praise and critique where necessary to keep Georgia on the proper path.

Georgia wants more from the U.S., though: it is seen as the gateway to NATO, and while there are plenty of U.S. senators and congress members who lobby for Georgian entrance to the organization, Georgia has yet to achieve the holy grail of region security. As time has ground on, the Georgian people might still be optimistic about close ties with the U.S. and hopes about joining NATO, but the leaders are fatigued, something the U.S. should bear in mind. As Georgia grows weary of waiting, it might turn to other, more ready allies, with fewer hoops and less honorable norms.

Since the 2001 attack on the United States, Georgia has shown strong commitment to the U.S. operations in Afghanistan and Iraq. Bush unveiled the Georgia Train and Equip Program (GTEP), an 18-month, $64 million plan to train the Georgian military to modern standards and help their respond to internal security threats, like Pankisi Gorge, and to prepare the Georgian military to serve alongside Alliance and U.S. troops in the operations in Afghanistan and Iraq—to U.S. benefit. The program was picked up in 2004 by the Georgia Sustainment and Stability Operations Program (GSSOP), specifically shaped for deployment of Georgian troops to Iraq. These programs bring Georgian soldiers in contact with U.S. supplies, procedures, and officers, bringing the military relationship of the two countries closer and helping both to respond to security concerns.

Within the broader framework of NATO, the U.S. has lobbied for Georgia’s admittance. In 2004, Georgia signed the Individual Partnership Action Plan, which was followed in 2005 with the deployment of a Partnership for Peace liaison officer and an agreement to receive and transport NATO troops on Georgian soil. Georgian parliament has passed numerous resolutions affirming Georgia’s intent to join NATO as a fully-fledged members, and the country looks to the U.S. to spearhead this project, but without full support, the U.S. is unable to procure this result.

Apart from military aid, the U.S.-Georgian partnership is marked by a significant amount of U.S. support for soft-power programs. The United States gives several million dollars annually in grants for development projects in Georgia through USAID. They also give logistical support, training, and supplies to help NGOs functioning in Georgia. In several Georgian cities, the U.S. has built “American Corners” in local libraries, full of English language books and supplies,, board games, and tech equipment. The love of U.S. culture is strong in Georgia—for books, films, music, and places, and many Georgian express a desire to visit or move to the United States.

The relationship between Georgia and the U.S. is one of deep importance and loyalty, but it is marked by the asymmetry of power: Georgia looks to the U.S. for security supplies and guarantees but has little to offer in return. Meanwhile, the U.S. wants to support Georgia, but is often swept up in greater power games, in which Georgia does not play a significant role. As time goes on, Georgia might move away from its cozy relationship with the U.S. to pursue more regional clout, regardless of the super power’s approval.

The European Union

Georgia’s relationship with the EU has many of the same trends as that with the United States. Georgia is eager to join the bloc and has expressed its interest starting in 2006, by signing into the Eastern Neighborhood Project with the EU. From then until present, Georgia has worked to implement the norms, values, and requirements of the EU to draw closer to the club and receive the benefits of membership—or near-membership. In 2014, Georgia signed an Association Agreement with the EU, which included a Deep and Comprehensive Free Trade Agreement that opened the markets of the EU to Georgia, and Georgian markets to more EU products. Often, such agreements and signatures can seem more symbolic than tangible. But, in 2017, Georgia was granted visa-free travel to the EU, which was tangible and beneficial: Georgians were finally able to travel to the west without the cumbersome visa process and added cost. Some observed that many Georgians were too poor to make the trip, so it made little difference, but others have pointed to stories of Georgians who have saved and taken the trip, simply to take advantage of the new availability.

Regardless of the side taken, the EU’s soft power and normative power in Georgia is significant. The strategic power of the EU lacks a standing military, unlike the U.S., NATO, or most individual countries; their sway rests mostly in their normative power and negotiating with other countries, like Russia. Yet, given the EU’s lack of significant strategic power to secure Georgia’s borders, and the slowness to respond to Georgia’s intense desire to join the EU, the goal might seem less and less appealing to Georgians.

China

China represents a possible “third way” for Georgia; it is an alternative to the west and Russia. So far, their relationship has been largely transactional: China is Georgia’s fourth largest trade partner—the second largest market for Georgian wine. China has quietly introduced itself into the Georgian market with investment and other programs, and is is paying dividends. In 2018, the free trade agreement between China and Georgia came into effect, making Georgia the first country in the region to sign Though their relationship is chiefly economic, these ties can be deepened by political clout. Georgia supports China’s One-China policy of unification, and China has reciprocated by refusing to recognize South Ossetia and Abkhazia. This is appealing to Georgia, who, frustrated by the slowness of Euro-Atlantic integration, might see China as a potential guarantee of security and stability. China can keep both Russia and the west on their toes. Some have speculated that, while U.S. armament deals are stymied by western concern over antagonizing Russia, Georgia might be a good market for Chinese arms deals, instead, as China is unconcerned about perturbing Russia. Chinese arms are cheaper for Georgia, too, through they lack the same brand name polish as western offerings.

China has strategic interest in Georgia, too. As Georgia is not an EU country but has access to EU markets, China is not required to jump through the same logistical hoops for Georgia as it would be for other countries. The two countries have discussed Georgia’s role in China’s One Belt One Road Initiative, which gives China an economic edge in exchange for jobs, infrastructure, and FDI in Georgia. The economic exchange between the two countries is clear, but the political closeness—if any—remains to be seen. There is room for the relationship to develop and prosper as Georgia prioritizes economic closeness over normative goals.

Conclusion

Georgia is looking to bring security to its borders and citizens while reaching out into the region and beyond. It is a small country, but it has value to offer to partners who need Georgia’s geographic location or friendship. At the same time, it wants to reassert itself against Russia, part of its near past experience in the center-periphery relationship. Georgia has sought out political and military security guarantees from countries and blocs more powerful than itself—the EU, the U.S., and NATO—but the leadership’s impatience with the turnaround and lack of results compared to effort is beginning to push the country in a new direction, towards other partners, who are less interested in holding Georgia to a benchmark and put more stock in transaction relationships, beneficial to both parties, and free from strings and box-ticking. The next few years will be important for Georgia to stand with support from different trade and regional partners, who will in the end shift it away from what it once thought was the ultimate goal—membership in the west—and more towards an acceptance of being a regional leader and broker in its own right.

Economics

Georgia is an open, free-market, service-based economy, classified as an emerging market. Its GDP in 2018 was $15.5 billion, representing .02% of the world’s economy. The Georgian economy has grown at a steady rate and was not paralyzed by the global financial crisis or the 2008 war which only resulted in brief downturn in 2009. In 2018, Georgia’s economy grew by 5.5% and similar growth rates are projected to continue into the medium term future, making Georgia one of the fastest developing, even if small, markets in the region. Georgia’s economy is driven largely by foreign investment in Georgian projects—Georgia owns very little of the capital itself.

Key sectors are energy, manufacturing, and tourism. The most promising markets are the financial and re-export potential of Georgia, given its membership in both EU and Chinese free trade agreements. Georgia has put a great deal of effort into modernizing its economic structure and institutions supporting investment and the Georgian economy. It has worked to root out corruption and normalize the rule of law to encourage business. These efforts have paid off: Georgia has consistently been ranked at the top of the World Bank’s and Heritage Foundation’s business reports and has attracted increasing amounts of regional and global participation in its economy with each passing year. A pressing challenge for Georgia is the rampant unemployment and underemployment of its population, and the pressing inefficiency of the agricultural sector.

Structure of the economy and key markets

Georgia benefits from its geography, with the Caucasus mountains blocking cold streams from the north and creating tempered and humid climate conditions that are favorable for agriculture and tourism. One of the oldest wine-making regions of the world, Georgia was famous, in the communist period, as the wine and fruit basket of the Soviet Union and the number one resort destination. To this day, Georgian cuisine, wine and Borjomi mineral water remain famous in the region.

Of the country’s exports, 28% represent different types of agricultural products, such as wine, hazelnuts, walnuts, and cheeses. The natural transit hub of the South Caucasus, Georgia is at the crossroads of both north-south and east-west traffic with 60 % of the cargo traffic in the country being on transit. It is the only country in the region with open borders with all of its neighbors, so trade and energy transports between Azerbaijan and Turkey also cross through Georgia, while Armenia relies on the Georgian Military Highway that trails through the Caucasus mountain range for its trade with Russia.

The Baku–Tbilisi–Kars railway connects Turkey and Azerbaijan through Georgia, and countries like China envision using this backbone to eventually link Asia to Europe. Georgia’s seaports Poti and Batumi connect Georgia to Black Sea traffic, and several energy companies, including Azerbaijan's SOCAR and Kazakhstan’s KazMunayGas, have oil holding terminals there, under Georgian operation. This is a natural continuation of Georgia’s link in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline, running parallel to the BTC. After land and sea, Georgian air travel gravitates toward tourism and business, with airports in Tbilisi and Kutaisi, from where WizzAir operates cheap flights to and from European destinations.

Further investments in infrastructure are aiming to facilitate Georgia’s further growth as a vital transport hub, connecting not only regional markets but the Asian markets with Europe. The Anaklia Black Sea deepwater port, a megaproject on the regional scale, worth $2.5 billion, is bound to replace Poti port as the country’s largest harbor by mid-2020s with the aim of making Georgia a vital link in China’s One Belt, One Road, connecting China to European markets on land routes across Eurasia.

Georgia is also seeking to revitalize its tourism sector. With nearly 8 million international visitors in 2017, tourism generated 7 % of the country’s GDP. Georgia has remained a regional leader in the sector, continuing to attract especially Russian tourists who head for the beach resorts in Batumi and shopping opportunities of Tbilisi. Investments in the picturesque Mestia region have transformed the previously deprived valley to favorite destination for trekkers and hikers, while the Gudauri skiing resort is starting to resemble its Alpine counterparts not only in terms of the terrain but facilities. The Caucasus mountain range does not only offer great opportunities for tourism and agriculture but for hydropower. Georgia produces 40 % of its electricity with the Soviet-era Enguri Dam, situated in western region of Svanetia.

Despite the genuinely impressive reforms of the country’s economic institutions and the great potential of its natural geography, Georgia remains a relatively poor country with a GDP per capita income of only half of Bulgaria’s - the poorest country in the European Union. Especially rural poverty continues to overshadow the country’s development, creating a stark contrast between the booming Tbilisi metropolitan area and villages, where lack of economic opportunities is driving many of the young people to emigrate or move to the cities. Over half of the country’s labor force works in agriculture, which generates only around 10% of the GDP.

A large proportion of the agriculture is sustenance farming, which distorts the official unemployment statistics, according to which unemployment stands at around 12 %. The mixed picture of Georgia’s economic performance helps to understand, why in spite of the impressive institutional reforms, in the Global Competitiveness Index of the World Economic Forum, the country is ranked only the 67th - in the same category as Romania and Iran, significantly behind the region’s top performer, Azerbaijan.

Trade Snapshot

In 2016, Georgia exported $2.54 billion; the top five exported products were copper ore, nuts, ferroalloys, gold, cars. Georgia has been experiencing a negative trade deficit since 2011, decreasing at an annual rate of around 6%, and causing economic problems for the country. In 2018, its top trading partners, by total export, were Russia, Azerbaijan, Turkey, Armenia, and Bulgaria. Other countries, including those in the EU, make up 48.3% of Georgia’s total exports. By export trade, EU countries account for 23%, CIS countries account for 45.5%, and other countries account for 31.5%. Its top imports are refined petroleum, cars, petroleum gas, packaged medicaments, and copper ore. In 2018, its top trading partners by imports were Turkey, Russia, China, Azerbaijan, and Ukraine. Imports by other countries accounted for 51.3% of Georgia’s imports. When divided into country groups, Eu countries made up 29% of Georgian imports; CIS countries comprised 30.2% of imports, and other countries represented 40.8%.

Though it does not make the top five lists for exports and imports, energy, constitutes an important part of Georgia’s consumption: Georgia relies on Azerbaijan for close to 90% of its energy consumption; the remaining 10% comes from Russia’s Gazprom. There is some concern in Georgian society about receiving energy supplies from Russia: Georgians are wary of Russia using its energy heft against Georgia, particularly after the 2006 gas and electricity blockade and the 2008 Russo-Georgian War. Because of this, Georgia is keen to diversify its energy sources away from Russia, which has led to to pursue closer relations with countries like Iran, which also gives Georgia more leverage in negotiations with Azerbaijan. But Azerbaijan has been a committed energy partner—its State Oil Company of Azerbaijan Republic (SOCAR) is a top investor in Georgian infrastructure, and it has committed vast swathes of funding to projects like gas holding terminals, railways, and pipeline infrastructure. In 2017, SOCAR paid $116 million in taxes to the Georgian government.

Russia is another one of Georgia’s largest trading partners. Trade between Georgia and its former imperial overlord used to be paltry, based in deep-rooted suspicion and aggressive political posturing. But as relations between the two countries thawed, Russia removed its embargo on agricultural products imports from Georgia in 2012, and the market responded: the export of Georgian products to Russia increased by 315% to $144 million; imports from Russia rose 24% to $116 million. Top Russian imports are Georgian wine, mineral water, ferro-alloys, electricity, and citrus. Georgia primarily imports wheat, petroleum, gas, electricity, and chocolate. Georgia is also the transport corridor for Russian gas to Armenia, an arrangement that benefits all three countries.

Georgia’s entry into the free trade area with the EU—the Deep and Comprehensive Free Trade Area (DCTFA)—is expected to bring an uptick in its import-export relationship with the EU, giving the bloc a larger piece of the trading pie and downgrading Georgia’s relationship with the CIS countries, like Russia and Azerbaijan. But the EU will have to struggle against geographic proximity and regional understanding. Georgia’s access to the EU market makes it a tempting offer for trade partner China, who sees Georgia as a potential re-export hub: the two signed a free trade agreement that came into effect in 2018, and Georgia could be set to become the distribution center point for Chinese goods destined for European markets.

Foreign Money Flow

Foreign direct investment (FDI) is a cornerstone of the Georgian economy. In 2016, total FDI was $1.602 billion; projections for 2017 put the number at $1.861 billion. FDI has grown steadily over the years, dipping only in the aftermath of the Russo-Georgian War, in 2009–10. In Q1 2018, the top five investors in Georgia are the United Kingdom, with $82.1 million; Azerbaijan, with $51 million; China, with $41.6 million; the Netherlands, with $32.3 million; and the United States, with $23.6. Top sectors for investment in Q1 2018 were the financial sector, which received 39.6% of FDI; construction, with 24.7%; manufacturing, with 14.4%, and mining, with 8%; other sectors accounted for the remaining 13.3%. Other promising areas for FDI are energy, manufacturing, regional logistics, hospitality and real estate, agriculture, and business outsourcing.

China is a rapidly growing investor, jumping from $9.6 million in 2011 to nearly $200 million in 2014, representing nearly a fifth of Georgia’s FDI in 2014. China wants to invest in energy, transportation, healthcare and infrastructure, areas where Georgia could use investment and that will benefit other investors as well. Georgia quickly signed on to China’s Asian Infrastructure Investment Bank (AIIB) and is a member of the One Belt, One Road (OBOR).

Tax and tariff law

Georgia has amended its tax regime to be liberal and business-friendly. Its new tax code, introduced in 2011, combined its old tax and customs codes, slashing the number of taxes from 21 to 6. It also streamlined the filing system, introducing an easy-to-use e-portal. Income tax is a flat rate of 20%; corporate profit tax is 15%; value added tax is 18%; and there is no social security tax. The excise tax varies, but there are numerous free-industrial zones in Tbilisi, Poti, Kutaisi. Further, companies producing products for export in these special zones are exempt from all tax except personal income tax.

In addition to lowering the number of taxes, Georgia also cut its import tariff rates from 16 to 3 available rates of 0%, 5%, and 12%, chiefly for agricultural and manufactured goods. Georgia has removed any quantitative restrictions on imports and exports, keeping the door open to re-export. Finally, Georgia has worked to make its administrative information open and understandable to all, and has invested in multi-language websites and customer service, ready to answer questions of potential investors and businesses.

Conclusion

Georgia has proved itself to be a investor-friendly market, and companies looking for opportunity in this small Caucasian nation will find a hospitable environment. Georgia’s economy has steadily grown and politics has worked to foster and support this growth. The potential for benefits from FDI and re-export in Georgia are notable, and there are plentiful markets to explore, from energy to manufacturing to agriculture. Georgia’s open relationship with a variety of countries and trading blocs—including the EU, China, and Russia—portend a competitive strategy, focused on bringing benefits to the host country’s economy and its partners.

Culture & Society

Georgia is a small country with an important heritage that is integral to understanding how the country and its people operate. Georgia’s culture can be understood through the legacy and lore of its kingdom, the variety of its regions, the importance of religion, and the pride in food, wine, and music.

Georgia was once a medieval kingdom. The mountains of the Caucasus and geography of the country still bear the marks of its own ancient kingdom and its dominance by other empires. There are ancient forts and towers high in the north of Georgia, with remnants trickling down through its rivers and lakes. One aspect of this heritage is Georgia’s strong legacy of oral tradition, perhaps best exemplified in its polyphonic singing, recognized as a site on UNESCO’s Intangible Cultural Heritage list. Georgians are proud of their lore, and will take take to explain to a guest great stories of their family, their descent, and the heritage of all of Georgia.

In such a physically beautiful country, Georgians are famed for their hospitality. The country has become an increasingly popular tourist destination over the years. The population, especially millennials and younger, have a high rate of English literacy. The country has much to offer to tourists—lush, green forests, beaches on the coast of the Black Sea, vineyards in the east, and fresh lakes and rivers that run down from tall, majestic mountains to the north. There are cultural centers in Tbilisi, Kutaisi, Batumi, and Telavi for artistic and cultural ventures.

Georgians are extraordinarily proud about the pleasure of experience through their culinary and audiority experiences. Georgians claim to be the origin of wine, and the Georgian system of wine fermentation is different from that in countries like France. The grapes first are harvested, primarily in the Kakheti region—though wine is made in essentially every Georgian locality, and most Georgian households. The grapes are then placed to ferment in large clay vats that are stored underground. Georgian wine comes in white and red in a spectrum of tastes, dryness, and flavor: a store-bought bottle of Saperavi will be a different experience from house-made red poured from a plastic jug by one’s host.

Another drink lauded over by locals is cha cha—a moonshine whose mouthfeel ranges from harsh and acerbic to pleasant and fruity. Cha cha can be made from honey, grapes, pears, apples or other fruits. Like wine, there are official manufacturers from cha cha, but most a visitor will encounter will come from a local producer, possible house-made, and a point of pride for the host to pour and toast.

Toasts in Georgia begin, always, with peace—“mishvidoba,” and then for country, for God, for the guests, on down. It is an important ritual in Georgian culture, and not to be overlooked. Stalin, a Georgian himself, was known to make long, quintessentially Georgian, toasts during his time in the Kremlin. Drinking is a central part of Georgian identity, and a measure of endurance and strength. Toastmasters for Georgian events are reputed to eat fat—lard or sticks of butter—before taking up toasts in order to preserve their sobriety to last the evening of wine and cha cha.

Georgian food is dominated by the classic khachapuri, a cheesy bread. Such is its notoriety that one Georgian economic forecaster uses a “Khachapuri Index” to measure the life of day-to-day Georgians by tracking the cost of the ingredients needed to make the khachapuri. Each region has its own version, and the locals take great pride in making it “their” way.

Georgia is charming, and its vibrant society offers a visiting guest the opportunity to step into a slightly exotic feel outside the west, but still aligned with the west.

Grigol Vashadze

Grigol Vashadze a native of Tbilisi, Georgia, is an engaged international citizen, but his most pressing political ambitions are in Georgia. He is a member of the Saakashvili-founded United National Movement (UNM) party, a close ally of Saakashvili, and currently the UNM candidate pick for the Georgian presidential elections

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