Even before the victory of Georgian Dream coalition of billionaire Bidzina Ivanishvili in the parliamentary election last month, expert were speaking about close ties between this political forces and Russian business circles.

Thus, James Kirchick of the Foundation for Defense of Democracies believes that Ivanishvili, who made his fortune in Russia in the 1990s during the privatization of the post-Soviet economy, will almost certainly move to put Georgia back in Moscow's sphere of influence.

"Before the election, Mr. Ivanishvili wrote a threatening letter to the American ambassador in Tbilisi, demanding that he stop the U.S.-funded National Democratic Institute and International Republican Institute from conducting polls, as they were showing results not to his liking. Even more telling is what Mr. Ivanishvili doesn't say. He has never publicly criticized Mr. Putin, who isn't a particularly popular figure here. For years, the Kremlin has tried to destabilize Georgia and remove its pro-Western government from power for having the audacity to ally itself with the West. If it goes the way of Russia, it will become more like Belarus," Kirchick says in his article.

Similar conclusions have been made by specialists after Ivanishvili's first post-election statements, which mostly concerned the improvement of relations with Russia, Abkhazia and South Ossetia. A number of experts believe that in the political language such statements mean establishment of foreign policy priorities. And though the politician has declared that moving towards NATO remains the national policy, many observers admit that NATO has been mentioned as a distraction.
Moreover, soon after the victory Ivanishvilli authorized a series of politicized arrests, accused current pro-Western President Micheil Saakashvili of various crimes, including spreading panic lies about Georgian situation, and insisted that Saakashvili resign immediately.

Saakashvili's presidential term does not expire until October 2013, but from January 2013 Georgia becomes a parliamentary-presidential republic, meaning the Prime Minister, Ivanishvili himself, becomes the head of the state.  Thus, the victory of Georgian Dream can be considered the beginning of the comprehensive regime change, which may bring Georgia back in Moscow's sphere of influence, including CIS and Eurasian Union. Moreover, there already is an economic base: Georgian energy distribution networks and a part of energy generation plants belong to the Russian company "Inter RAO". Russia also controls all regional gas distribution networks of Georgia.

Numbers and facts

Realization of pro-Moscow scenario may hit economic interest of Ukraine. The matter concerns not only Russian peers, which may take on Ukrainian operators on the Georgian market. Pro-Russian policy of Georgia may put an end to the Trans-Caucasian gas and oil transit projects bypass Russia and shoot down the projects like GUAM. As a result, all Asian regions of the former USSR may be forced to turn to Russia.

Due to its small size and small-capacity internal market (with population 4.5 million people) Georgia has not taken a big part in Ukrainian foreign goods turnover. In 2011 the trade with the republic made $801.9 million, including $657.5 million of export. The main export articles are fats and oil ($77 mln or 11.7% of annual export), metals ($76.5 mln), tobacco and tobacco goods (almost $71 mln), grain ($69 mln). At the same time Georgia is an important market outlet for Ukrainian machines and equipment, including vehicles and locomotive engines. "The global crisis continues and all market outlets are important. The major part of Georgian public transport is "Bogdan" buses of Ukrainian production," economist and political scientist Vitaly Kulik told ForUm in a comment.

Former economy minister Volodymyr Lanovoy adds that until now Tbilisi has been the most promising consumer of Ukrainian railway cars. Thus, in August Georgian Railway Company announced a tender for 200 new open-freight cars for large-capacity containers costing 26.4 million lari, and in September - for 200 new low-sided cars costing 28.05 million lari ($16.9 mln). "We have the same rail gauge with Georgia, and if the political environment remained hospitable, our car building plants would have big chances to win the tender," Lanovoy believes.

In its turn, the main article of Georgian import in Ukraine is various drinks - $73.6 million or 51% of the total amount of import from Georgia to Ukraine for 2011.

What's next?

Now the mutual trade balance is threatened by the regime change in Tbilisi, and trade claims may become the first sign of the "breakup". Thus, before the elections then economy minister of Georgia Veronica Kobalia (now dismissed) unexpectedly declared that production of suluguni cheese in Ukraine violated Georgia's right for exclusive use of "Suluguni" trademark and that the issue should be considered in court. "The fact is that back then such statement was paradoxical taking into account our friendly relations with Georgia. The only explanation is that it was made spontaneously. But with the victory of the opposition, this statement about cheese may become just the first in the row of forthcoming trade claims," former minister of industrial policy of Ukraine Vasyl Gureyev believes.

Moreover, Moscow positions can now strengthen in Azerbaijan, as it will lose the access to the Black Sea and Turkey and will have to redirect its policy to Russian interests. Then there is the turn of Turkmenistan, which already now has to take into account the interests of Kremlin. The same concerns other Middle Asia countries, which may complicate the alternative supplies of petroleum.
However, specialists are indisposed to dramatize the situation. Thus, Kulik points out that Kyiv and Tbilisi have economic and trade agreements, not related to personal contacts and that the political dialogue within interstate commissions continues. Moreover, according to the expert, Ukrainian Cabinet will be more comfortable to hold the dialogue with the Cabinet of Ivanishvili, as Saakashvili has negative image on the post-Soviet space. Georgian Ambassador to Ukraine Grigol Katamadze said that after the election, relations between Georgia and Ukraine would only improve. "Each year, the trade turnover between two countries increases by 40%. For 10 months of 2012, the flow of tourists from Ukraine to Georgia has increased by 45%. We have good possibilities for cooperation, we have plenty of unrealized projects."   

Well, the next months will show the real state of affairs. In any case, Georgian example proves how the situation in a small but geopolitically strategic country can change the situation in the whole region and worldwide.

Andriy Boyarunets


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