Arriving at Tbilisi airport on a transit flight from Moscow, I witnessed an enterprising act of Georgian diplomacy that brought a smile to my face. As Russian passport holders passed customs control, they were handed bottles of the country’s finest wine. It was a nice touch by the government seemingly keen to reassure the visitors that while relations with Russia may be difficult, it has nothing against its citizens.
The symbolism of the gesture will not have been lost on the Russian guests as Moscow only lifted its embargo on Georgian wine and mineral water – two of the country‘s principal exports – in 2013. It came amid a thawing of relations following the five-day war between Russia and Georgia in 2008, which ended with Tbilisi losing control over South Ossetia and Abkhazia, two autonomous regions which constitute about 20% of the Caucasian republic’s territory. Both were subsequently recognised by Moscow as independent states.
Ironically, local wine exporters now say that the embargo turned out to be a good thing as it is widely believed to have forced domestic producers to improve its quality in order to export to international markets. Russia remains Georgia’s biggest customer but locals are now also selling more to the likes of China, Poland, Britain, America and Japan.
However, agriculture is the only real bright spark in an economy that has been stagnating over the last few years, due to a combination of government mismanagement as well as economic recession in Russia and, more recently, a slowdown in Turkey, Georgia’s top two trading partners.
As a result of the downturn, the Georgian currency, the lari, has lost around 40% of its value, curbing the spending power of many citizens, especially those with dollar-denominated loans, a sizeable proportion of the population. Georgians are a spirited nation, but during my taxi rides around the city drivers’ chirpiness soon gave way to grumblings about declining living standards. “We’re struggling to pay our electricity bills, and it does not help when the price of sugar, petrol or bread goes up as well,” one told me.
You would not immediately guess that things were going wrong. Hotels – often charging western rates – and restaurants are full of tourists and businessmen – many of them Russian. New foreign embassies testify to Georgia’s emerging regional importance. But look closely and there are tell-tale signs of an economy in trouble: notably idle construction sites, where work has clearly been suspended for some time, dot the medieval capital.
The government plans to boost growth this year through a package of measures, including tax cuts and infrastructure spending. There is also hope that a free-trade agreement with China, which buys 5 million bottles of Georgian wine a year, will boost food exports.
But Georgians may be running out of patience with leaders who promised that the country’s westward shift would bring about prosperity. Successive governments have sought to expedite Georgia’s integration into the European Union and membership of NATO, but real progress has been slow. Combined with falling living standards, general frustration appears to be encouraging small populist movements who believe the country would be better off improving its ties with Russia.
There are some parallels to be drawn between Georgia and an even smaller former Soviet republic, Moldova. Moldovans have similarly felt let down by governments that have struggled to deliver on promises of closer ties with the European Union, and recently expressed this disappointment by electing a pro-Russian president. Georgians have more faith in the integration process, and will be encouraged by news that they may soon be able to travel to the European Union's Schengen zone without having to obtain visas.
Unless Moscow was to suddenly lift visa restrictions on Georgians working in Russia or ease its grip on the Georgian territories it controls – both of which seem very unlikely – most people here will, for now, continue to see their future as firmly tied to the West. But it looks like they are in for a long wait before they realise their ambition, particularly if populist forces in Europe and America manage to put a break on integration.
