EU, U.S., and UK Special Envoys Commend Georgia"s Effective Implementation of Sanctions Against Russia

Despite positive statements from EU, U.S., and UK Special Envoys concerns have not dissipated surrounding potential "black holes" in Georgian customs allowing Russia to circumvent sanctions.

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Since the Russian invasion of Ukraine on 24 February 2022, in the hope that Russia will not withstand the pressure, sanctions have been introduced both collectively and unilaterally from countries and groups such as the U.S., EU, UK, Japan, South Korea, Australia, New Zealand, Taiwan, and others. These sanctions target the financial, energy, and transport sectors, while individual sanctions have also been imposed on high-ranking officials and oligarchs.

Meanwhile, the Georgian government and Ruling Party, Georgian Dream, which has long declared its admiration for EU integration (since its establishment in 2011 by Georgian tycoon Bidzina Ivanishvili, with a pro-European foreign policy stance), announced that they will only join collective sanctions and will not impose unilateral sanctions against Russia. They believed that introducing unilateral sanctions would increase the risk of the war spilling over into Georgian territory. On 28 February 2022, Prime Minister Irakli Garibashvili expressed doubts about the effectiveness of the sanctions, stating, "The capital of Ukraine is being bombed, and we see that there is nobody to stop this. Let the U.S. say directly that sanctions are not effective."

On 10 March, during a press briefing, Ned Price, the U.S. Department of State Spokesperson, responded to Garibashvili's statement, affirming that the declining metrics of the Russian economy proves the effectiveness of the sanctions. Meanwhile, Russian Deputy Foreign Minister and the Kremlin's negotiator for informal dialogue with Tbilisi, Gregory Karasin, praised Georgian Dream for their balanced position on sanctions and added that it would not go unnoticed in Moscow.

Despite criticism from Western partners, Irakli Kobakhidze, Chairman of Georgian Dream, announced on 10 May in an interview with the pro-governmental IMEDI TV that Georgia cannot and will not impose sanctions against Russia. These statements raised concerns among Georgian society, the opposition, and Georgia's international partners. Furthermore, the leaders of the ruling party use these verbal confrontations as a demonstration of sovereignty and as part of their political campaign, showing potential supporters that they are willing to oppose even top officials from the United States and the European Union. However, they need to demonstrate the same attitude towards the leaders of the Russian government, further increasing reasonable doubts that they are either collaborating with Russian politicians or simply using this opportunity to strengthen their influence and maintain governance for another (fourth) term. Either way, these actions are damaging Georgia's European perspective.

In the meantime, rumours about Russia's attempt to evade sanctions through Georgia were further strengthened by a report from the Intelligence Service of Ukraine, which accused the South Caucasian countries (Georgia, Azerbaijan, and Armenia) of assisting the aggressor. The statement explained that Russia planned to re-export their goods to third countries through these countries. Georgian Minister of Finance, Khutsishvili, immediately denied this information and demanded specific details from the Ukrainian government to prove the allegations. Following a campaign highlighting the possibility of "black holes" in the Georgian system, on 23 January 2023, Khutsishvili stated that Georgia is a leader in implementing joint sanctions against Russia, and his institution, along with the National Bank of Georgia (Central Bank), exchanges information with EU and U.S. partners on a daily basis. He reported that the accusations lacked proper argumentation or evidence. On the other hand, he mentioned that, since the introduction of sanctions, Georgian customs have delayed or cancelled more than 1000 operations involving risks of violating sanctions.

On 10 March 2023, President Zourabichvili met with U.S. National Security Advisor Jake Sullivan, and the White House released an official readout in which Sullivan "underscored the need for Georgia to avoid becoming an avenue for evasion or backfill."

Meanwhile, the U.S. State Department expressed concerns about the resumption of direct flights between Georgia and Russia, as it would increase the risk of evading sanctions through another connection point being re-established between the two countries. The same concern was raised during a visit to Tbilisi from 26 to 28 June by EU Sanctions Envoy David O'Sullivan, Head of the Office of Sanctions Coordination at the U.S. State Department James O'Brien, and Director General, Economics, Science, and Technology at the UK Foreign Office Kumar Iyer. They met with the PM Garibashvili, Foreign Minister Ilia Darchiasvhili, Vice Prime Minister Levan Davitashvili, Prosecutor General Irakli Shotadze, and National Bank Governor Natia Turnava.

On 8 June 2023, prior to his visit to Georgia, Jim O'Brien, the Head of the Office of Sanctions Coordination at the U.S. State Department, addressed the issue of sanctions against Russia and identified Georgia as one of the five countries contributing to the problem of circumvention.

During an event organized by the European Council on Foreign Relations (ECFR), O'Brien responded to a question about the countries involved in this circumvention and mentioned Turkey, Kazakhstan, Georgia, the United Arab Emirates, and Armenia.

The visit aimed to identify the so-called "black holes" in Georgian customs through which Russia could potentially evade sanctions. After comprehensive discussions, Georgian authorities successfully demonstrated that the relevant services are effectively implementing EU sanctions on Russia. During the joint press conference, they highlighted the proactive efforts of the Georgian government in establishing a comprehensive system to identify prohibited items traded with Russia.

Kumar Iyer emphasized the specific focus of their visit on 38 electrical equipment items, which had been a topic of discussion since the EU adopted the 11th package of sanctions against Russia. He mentioned that their mission extended beyond Georgia and included visits to other countries.

Regarding the connection between the resumption of flights with Russia and sanctions circumvention, Iyer highlighted that most violations occur through land routes. He stressed the importance of implementing additional mechanisms to address this issue and acknowledged the significance of thorough inspections during flights. The UK official also expressed his country's readiness to offer expertise in assisting Georgian colleagues in enhancing control mechanisms.

Ambassador O'Brien emphasized that certain electronic brands were legally traded at the beginning of the year but became illegal for specific denominations by the end of February. Consequently, there has been a gradual shift in the trading dynamics of Russia's neighbouring countries.

On 30 June 2023, PM Garibashvili discussed the issue of sanctions during his annual performance report in the Georgian parliament. He confirmed that Georgia would not unilaterally introduce sanctions, stating, "I once again wish to say that so-called sanctions and some restrictions on trade and deadlocks on the economy, etc., would be utterly irresponsible. Furthermore, it may even be called treason against one's own country and the interests of one's own people. If anyone would be hurt by this, it would be our country and the interests of our people. We would not have been able to speak so boldly about economic growth, advancement, and jobs. 250,000 new jobs were created in the last 2 years."

These statements indicate that the ruling party and the head of the government are more focused on maintaining economic growth rather than independently imposing sanctions. Consequently, these statements have become a further indicator for Western countries that there might be "black holes" in Georgian customs. 

Meanwhile, exports to Russia from Georgia have increased by approximately 47%, according to data from the national statistics office of Georgia (GEOSTAT), amounting to 437,749 thousand USD and 642,439 thousand USD, respectively. On the other hand, despite the increased trade and export data, the export of sections that might include prohibited products has either decreased compared to 2018 or shown slight changes.

Despite the supportive statements from EU, U.S., and UK special envoys for monitoring sanctions against Russia, concerns have not dissipated. This is because representatives of the Georgian Dream party often link the increasing trade data with Russia as a major driver of the country's economic growth. The issue of sanctions continues to play a significant role in the internal political agenda, with the opposition criticizing the government and authorities for the heightened economic dependence on the Russian market, including trade and tourism. The special envoys have also highlighted the resumption of direct flights as a potential route for Russia to evade sanctions, and they have offered assistance to Georgia in addressing this concern.

A major concern among society and potentially Georgia's strategic partners is, once again, the role of the ruling party. The confrontational messages conveyed by the ruling party towards its European partner politicians, the maintenance of friendly relations with illiberal-democratic governments such as Hungary, the introduction of a draft law on 'Foreign Agents', and the use of homophobic, xenophobic, and hate speech have raised questions about the trustworthiness of Georgia's ruling political elite.

^{The opinions expressed in this publication are of the author and do not necessarily reflect those of the organizations and institutions listed in the credentials.}