Page 6 - Caucasus Outlook 2024

The increasingly authoritarian government even proposed a Russian-style foreign agent law, though it eventually backtracked after a domestic outcry and Western pressure. It also unfroze the bank assets of sanctioned former Prosecutor General Otar Partskhaladze – who is closely linked to the billionaire founder of the ruling Georgian Dream party Bidzina Ivanishvili, who made his fortune in Russia – causing the International Monetary Fund to suspend its programme in the country.
The big question on Georgia this year is whether the government will finally get serious about qualifying for EU membership. Several conditions remained unfulfilled and the EU added three more.
The list now includes: deoligarchisation; depolarisation of politics; fighting disinformation and foreign (Russian) interference; improving the independence of the electoral system; removing state control from the judicial system; strengthening the independence of other government institutions, such as the police and the national bank, greater parliamentary and public oversight of the security services' work; harmonising foreign affairs with the EU; empowering anti-corruption agencies; and strengthening human rights protections.
Many of these look extremely challenging – especially with elections scheduled for October. It would be optimistic to expect the EU to decide to open negotiations at the end of the year.
In those elections Georgian Dream looks well placed, given that the United National Movement, the largest opposition party, has experienced a split, raising questions about its future. Ivanishvili, Georgian Dream’s founder, last month announced his return to frontline politics to assure his party’s victory – and also defuse EU criticism that he was pulling the strings from behind the scenes.
Sanctions rebound
For the economies of the three South Caucasus countries, 2023 was a surprisingly good year. All three countries are closely connected with Russia’s struggling economy but given that country’s resilience to sanctions, the impact of the Ukraine war and sanctions has not been as bad as expected. Moreover, the region has also benefited from the redirection of trade, as well as the influx of Russian migrants and capital flows. In the first 10 months, Armenian exports to Russia increased by 63% to approximately $2.9 billion. This has all boosted demand, labour supply, GDP growth and current accounts.
For Georgia, two thirds of whose exports go to the Commonwealth of Independent States (CIS), GDP growth in 2023 is forecast at close to 7%, though this will ease to 4.8% this year, according to the IMF.
6 Central Asia & Caucasus Outlook 2021 www.intellinews.com