Swiss Institute for Global Affairs: increased bilateral trade between Georgia, Russia, transit trade through Georgia to Russia almost certainly simply caused by benign changes of trade flows

The Swiss Institute for Global Affairs last week said the often-cited increased bilateral trade between Georgia and Russia and transit trade through Georgia to Russia was almost certainly simply caused by benign changes of trade flows.

“Since soon after Russia’s full-scale invasion of Ukraine in February 2022 and the subsequent imposition of unprecedented sanctions against Russia, reports persist that such sanctions are circumvented through Georgia. However, scrutinising trade data and other detailed information indicates that often cited increases in bilateral and transit trade from / through Georgia to Russia can be explained with harmless developments and that, if some sanctions circumvention should happen, it would be on a negligibly small level”, the publication said.

“In the wake of Russia’s full-scale invasion of Ukraine in February 2022, Western countries imposed ever broader unprecedented sanctions against Russia, attempting to cut Russia off from vital supplies. Soon afterwards, numerous reports began to cite the increase of trade between Russia and some of its neighbouring states, including the small Caucasus republic Georgia, as signs for sanctions circumventions through these countries. Western officials at times even singled out Georgia and a handful of other countries as being of particular concern”, the article noted.

The Swiss Institute for Global Affairs stressed that neither the later backtracking of such accusations against Georgia by Western officials directly tasked to prevent sanctions circumventions nor reassurances by Georgian authorities that they conduct efficient controls did manage to stop the repetition of such claims.

A closer look by the Swiss Institute for Global Affairs at trade data and other detailed information suggests that such persisting accusations of sanctions circumvention were regularly caused by doubtful jumps to conclusions and that allegedly suspicious changes in trade flows can be explained by more simple and benign factors.

“Another claim is that, even if bilateral trade between Georgia and Russia is not used to circumvent sanctions, individuals and companies from other countries send sanctioned goods via Georgia to Russia. However, such assertions are also seemingly only based on doubtful general assumptions”, the Swiss Institute for Global Affairs noted.

“As even the most efficient state could not completely prevent every case of potential sanctions circumvention or smuggling of any kind, expecting this from Georgia or any state for that matter is illusionary. As such Georgian efforts to prevent sanctions circumvention appear by all accounts, including acknowledgements of Western sanctions coordinators, sincere and efficient and potentially existing smuggling is at most limited and, in the bigger picture, negligible. This is all the more the case as there are other countries that have less strict mechanisms to prevent sanctions circumvention and sanctioned goods tend to go the way of least resistance. In view of all this, the often-cited increased bilateral trade between Georgia and Russia and transit trade through Georgia to Russia is almost certainly simply caused by benign changes of trade flows”, the publication concluded.