Georgia: How to break the curse of Russian dependence?
A new travel embargo gives Georgia a new sense of urgency to break Russian dependence.
Being a neighbor to Russia can be a liability, and the small country of Georgia knows this all too well. With beautiful mountains, beaches, and forests and a population of 3.7 million in an area the size of West Virginia, the country attracted 8.7 million international tourists in 2018, 1.4 million of whom came from Russia.
Georgia’s relationship with Russia is strained, to put it mildly, especially after Russia seized control of 20% of the country’s land during a five day conflict in August, 2008. On June 20, 2019, thousands of protestors attempted to storm Georgia’s parliament building in response to presumptive behavior by Sergey Gavrilov, an official of the Russian Communist party, during a diplomatic visit.
Interpreting the protests as a russophobic populist uprising, Vladimir Putin announced a travel embargo on Georgia, banning flights between the countries beginning Monday, July 8. State-run media began spreading anti-Georgian propaganda, and Russian travel agents have been strongly encouraged to cancel travel packages to the country.
While the embargo could take a bite out of tourism, its long-term impacts might prove to be a blessing in disguise by creating new impetus for Georgian leadership to reduce their economic dependency on Russia, and to strengthen their ties with wealthier countries in Western Europe, Asia, and the Americas.
The loss of direct air travel to and from Russia will be damaging, but 70% of Russian tourists enter Georgia not by air but by vehicle at the Lars border crossing, and they can still enter through indirect flights from other countries. 84% of Georgia’s tourists come from other countries, including its immediate neighbors Turkey, Armenia, and oil-rich Azerbaijan.
Georgia has many more untapped sources of tourism as well. Direct air links with North America, greater Asia, the Arabian Peninsula, and European budget airlines like Ryanair could be developed to capitalize on Georgia’s rising reputation as a world-class travel destination. While Russian tourists typically spend about $402 during their stays, visitors from more distant and wealthier countries are likely to stay longer and spend far more.
Most importantly, detrimental effects of the embargo can be minimized by decreasing dependency on tourism — not by reducing tourism, but by increase productivity in agriculture, industry, and knowledge-based economies. Georgia has already set the stage for rapid economic development: its economy is ranked as the 16th freest in the world according to The Heritage Foundation’s Index of Economic Freedom
More than half of Georgians remain employed in low-paying and small-scale, inefficient industries like subsistence and semi-subsistence farming. Larger commercial agricultural ventures could increase Georgia’s competitiveness by increases productivity at lower costs.
Farmers could enter new, wealthier markets in Europe, North America, and Asia if they increased their production standards, which tend to be higher in those markets than in Russia.
Vladimir Putin declined to escalate the conflict on Tuesday despite calls to do so by the Russian Parliament. Further economic sanctions from Russia on Georgian wine, bottled water, and remittances would be even more devastating to Georgia’s economy.
But there’s no telling how Russia’s mood will shift in the future. Georgia would do well to diversify its economy away from Russian dependence.
