The Eurasian Union – Risks and Benefits for the Georgian Economy
16 January, 2015
The Eurasian Union – Risks and Benefits for the Georgian Economy
Whether or not the EEU activation hurts the Georgian economy depends on whether or not free trade agreements will be canceled with the EEU member countries.

The Russian-initiated Eurasian Economic Union including important trade partners and neighbors of Georgia entered into effect on January 1st of 2015. Georgia has to weigh possible risks and benefits it may have from the emerging united economic space near its borders.

The Kremlin initiated EEU took its start three years ago as a unified
customs space of Russia, Belarus and Kazakhstan. After the Ukrainian-Russian crisis of 2014, it blended into the common economic space resembling the European Union and offered similar benefits to its member states such as a tariff-free customs zone, common labor market and infrastructure. A single currency is also a target point.

Before Georgia signed the agreement on EU association membership in June of 2014, there was a threat that Moscow might seduce Tbilisi by either economic benefits or blackmail to join the EEU space. But once Georgia inked the agreement with the EU theoretically this threat has passed. But Tbilisi may face economic challenges: Almost all its key trade partners such as Russia, Kazakhstan and Armenia [that enrolled the EEU just recently] are part of the common economic space that may cancel the free trade Georgia enjoys with the said countries and create setbacks to Georgian exports.

Kirgizstan and Tajikistan appear intent on joining. Turkmenistan is still pondering while Turkey, rejected by the EU for a long time, has already sent hints on its possible enrolment with the emerging EEU. Israel, India, China and Vietnam are also are considering this union.

So it looks like Georgia together with Azerbaijan will be closely surrounded by the EEU while statistics of the last decade show that the CIS makes up a major export market for Georgia at 50 percent, whereas the EU countries make less than 30 percent. In the meantime, out of the total imports to Georgia, roughly 30 percent comes from the EU and less than 23 percent comes from the CIS space.

Russia is the #3 trade partner of Georgia, and Russia is crucial to Georgia’s wine export market, which sends around 60-70 percent to Russia. Although Georgia is no car-producing country, car exports lead Georgia’s exports by roughly 19 percent according to the latest statistics. And one of the key markets is Armenia. Georgia already lost the Kazakh market in 2011 when Kazakhstan joined the United Customs Union [the forerunner of the EEU]. So Armenia may be next.

But Georgian analysts as well as the transit sector feels safe so long as the EEU members appear not interested in cancelation of free trade. According to Kakha Gogolashvili, Director of the European Research Center, whether or not the EEU activation hurt the Georgian economy depends on whether or not free trade agreements will be canceled with the EEU member countries. However, the EEU may give a blow to Georgia’s transit potential, as far as cargo from Central Asia may be shifted to the EEU corridor that lies as an alternative route to Georgia’s much touted Silk Road Route connecting the East with the West by the shortest way.

Lia Eliava, a financial market analyst, believes the Russian-led EEU will not allow banned countries to use Georgia as a platform for sending imports to the EEU. According to her, Russia will not create problems for exports from Georgian itself because it is too insignificant, but it will ban re-exports via Georgia. The point is that Russia created this EEU space to protect its market from imports. However, the recently activated free trade between the EU and Georgia creates a loophole for European products to sneak back into the EEU via Georgia.

“The Russian led EEU will not increase barriers on Georgian exports unless Georgia starts sending European products there. And even in this case, I think Russia will stop only the re-exported European goods. Pure Georgian exports will remain untouched because they are too small to do any harm,” she elaborated.


Print
Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
21.09.2018
22.09.2018
USD
1
USD
2.6193
2.6193
EUR
1
EUR
3.0693
3.0693
GBP
1
GBP
3.4651
3.4651
RUB
100
RUB
3.9538
3.9538
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6193
EUR
1
EUR
3.0693
GBP
1
GBP
3.4651
RUB
100
RUB
3.9538