Business Traveller (Middle East)
GEORGIA’S GROWTH
The Caucasus country is enjoying a renaissance, buoyed by Gulf airlines and its F& B popularity
Rows of vines stretch across the valley, grapes ready for harvest in the early autumn sun. In the distance are hills, and, beyond that, the Caucasus Mountains, still clear of snow, a shimmering painterly backdrop to an age-old agricultural scene. From this organic vineyard, free of pesticides and herbicides, these grapes will be hand-harvested and fermented in clay jars buried in the ground with minimal intervention. The result is a white wine that is, in fact, amber, the taste of which is unique, and which in each glass provides a way of understanding not only the past of the country but its possible future.
If this seems to exaggerate the significance of a glass of wine, the vineyard, or even wine production as a whole, consider first that some of the earliest archaeological evidence of wine fermentation is to be found in Georgia. It has been making wine for some 8,000 years and is still doing so today. Over the millennia, Georgians developed an understandable expertise, and had more than 500 varieties of grapes, many of them exclusive to the region. Unfortunately, during the 70 years of Soviet occupation (1921-91) the country was designated as an area for winemaking, with the emphasis being on mass production. Most grape varieties were forgotten as collective farmers’ unions focused on using a limited number of highproductivity types, and tailored their wines for the taste buds of the Russian workers who preferred semi-sweet styles (which is still the case today).
ON THE GRAPEVINE
The renaissance of the Georgian wine industry is a recent phenomenon, and is less linked to the fall of the Soviet Union than the change in relations with Russia when, from 2006 to 2013, an embargo was imposed on Georgian goods. Up until that moment, Russia was still the market for the vast majority of wine exports (about 95 per cent). With the embargo, the country had to look to new markets, initially to former Eastern Bloc countries such as Poland and the Baltic States, and then to Western Europe and the US. For that, quality had to improve, and they had to create something unique. That’s where the 8,000 years of winemaking expertise came in, and that truly special creation – natural wine.
Fortunately, during all those years of Soviet occupation, some farmers had continued making wine for their private consumption in the traditional way, and using many of those little-regarded grape varieties. This involved putting their crushed grapes into clay jars buried in the ground – called qvervi – and leaving the wine for its first
fermentation (for 20-25 days) with skins and stems. These are then removed and it is left for between six months and two years to complete the fermentation. The resulting “natural” wine – whether red or white – is peculiar to the country and increasingly prized by enthusiasts. The white wine, because of its preparation, has a distinctive, unmistakable look and taste ( it varies widely, not least because of the various terroir from which it comes, and those hundreds of varieties of grapes). And so the circle turned, and qvervi wines became a central part of the marketing of Georgia’s wine industry and tourism sector.
DELICATE BALANCE
The wine industry provides an allegory for Georgia’s position today – geographically, geopolitically and economically. Its natural major trading partner is Russia, but with the occupation of two of Georgia’s regions – South Ossetia and Abkhazia – and frequent blockades and embargoes, not just of goods but even of flights, relying on Russia is a dangerous game for both exporters and the country. Yet nor can they afford to ignore Russia, or deliberately inflame the situation.
To take wine as an example, Russia still makes up 62 per cent of exports, followed by Ukraine at 12 per cent, China (8 per cent) and Kazakhstan (4 per cent). There is growth in other markets– exports in 2017 rose by 18 per cent – but Russia is still essential, not only for the 300 million bottles produced each year, but for all trade.
There’s also the dilemma of tourism. Georgia’s 8.5 million visitors in 2018 came largely from neighbouring Armenia and Azerbaijan, but Russia is still important to much of Georgia’s tourism industry, although the country is finding success in encouraging visitors from Western Europe, Asia and the Middle East with a spike in services from Gulf airlines.
Then there is a further connection – many of the richest Georgians made their money in Russia, and have returned to finance private development in the country. These wealthy businessmen inevitably influence politics, from bankrolling parties to standing for office.
For the most obvious manifestation of this, glance up towards a large glass-faced modernist castle on a hill overlooking the capital, Tbilisi. This is the 9,290 sqm home and office of Bidzina Ivanishvili, the country’s richest man (compare his net wealth of US$5 billion with Georgia’s GDP in 2017 of US$15 billion). The symbolism of his house is obvious. He is widely considered to have a significant influence on all aspects of political life; a coalition of parties he had founded, called Georgian
The wine industry provides an allegory for Georgia’s position today
Dream, won the elections in 2012 and later that year he was appointed as prime minister by Georgia’s parliament, serving just over a year. Several people told me that nothing happens in the city without his knowledge and approval, and while that might be overstating it, for a man who is often said to enjoy keeping a low profile, it’s a rather elevated position from which to maintain it.
Georgia’s future stability and prosperity depends on it navigating a careful course between its desire for the west and its relationship with Russia. Located in the South Caucasus, along with its westerly neighbours Armenia and Azerbaijan, it has always been a crossing place. Lying between Europe and Asia, and between the Caspian and Black Seas, with a distance of only 700 miles between the two, makes it a natural transit point.
It was once on the Silk Route, but with the discovery of the oil fields around Baku in Azerbaijan, oil was transported by rail over to the Black Sea. Stalin made a name for himself organising strikes at the Rothschild refining factory in the coastal city of Batumi, and even today one of the major contributors to Georgia’s GDP (15 per cent in 2017) is transit – of goods transported by road and rail over its territory to the Black Sea ports of Poti and Batumi, and also oil and gas from the fields near Baku.
PORTS OF CALL
Even here, however, controversy reigns. The new deepsea port on the Black Sea, called Anaklia, is an important element of Georgia’s aim to become a logistical hub between Eurasia and Europe. The largest ships can easily pass into the
Black Sea, but there is currently no port at the eastern end to accommodate them. At the same time, on the Caspian Sea coast, new ports being built by Kazakhstan, Turkmenistan and Azerbaijan (Aylat, Aktau and Turkmenbashi) would allow goods from China to be disembarked and then transported across the South Caucasus to Anaklia. As the Economist described in February this year: “Currently there are three land corridors between China and Europe: a southern one, via Iran, made impractical by American sanctions; a middle one, via the Caspian Sea and then across Georgia to the Black Sea, made impractical by the lack of modern deep-sea Georgian ports; and a northern one, via Russia, on which most east-west land trade currently flows. Anaklia proposes to change that by giving the middle corridor the deep-sea port it lacks and removing the bottleneck.”
It’s an appealing prospect, but there is a problem. Since Anaklia would be a deep-sea port, it would also be able to accommodate military vessels. Speaking at the fifth Tbilisi International Conference in an interview for the Georgian Institute for Security Policy, Lieutenant General Ben Hodges, former commanding general of the US armed forces in Europe, described it as a “dream scenario” having Georgia as “a place where US Navy ships would come in… for maintenance, refurbishment [and] port visits”. It would also help to facilitate Georgia’s entry into NATO, something that has been on and off since the 2008 NATO Bucharest summit.
Logic seems to dictate that Georgia should join NATO, but this would mean a negotiation about the most famous article of membership – Article 5, which states that an attack on one member is considered an attack on all. Since Russia has maintained thousands of troops in the Georgian regions of Abkhazia and South Ossetia, it is unsurprisingly opposed to Georgia joining NATO. Former NATO secretary general Anders Fogh Rasmussen stated in March that since “Georgia fulfils almost all criteria to become a member of NATO… the way to move beyond that stalemate is to discuss in Georgia whether you will accept an arrangement where NATO’s Article 5 covers only that Georgian territory where the Georgian government has full sovereignty.” As Georgia’s president, Salome Zourabichvili, puts it, the country is both blessed and cursed by its geography. The positive side of this is that the west, whether the US, NATO or the World Bank, has a vested interest in ensuring that Georgia succeeds. The negative side is obvious with two regions of the country currently occupied.
Since 2014, Georgia has been part of the European Union’s Free Trade Area, with the EU continuing to
be the country’s largest trading partner, accounting for more than a quarter of
Georgia’s total trade turnover. Zourabichvili is firm that Georgia is aiming for eventual EU membership as well, even in the face of the reluctance of the EU to expand further. As an example of “thinking outside the box”, he said that Georgia would
“knock on every door… open every door, and by the time we are finishing opening all the doors, you will discover that Georgia has become an EU member”. Natalie Sabanadze,
Georgia’s ambassador in Brussels, says: “We know the EU is not ready to offer us membership… but we want to be prepared for when they are.”
In the meantime, more money needs to be spent on infrastructure. The World Bank’s new Country Partnership Framework (CPF) for 2019-22 ( in collaboration with the government of Georgia) involves 11 investment projects with total commitments of US$699 million, of which about 60 per cent is concentrated on the ongoing East-West Highway and secondary roads projects.
Still, Georgia’s economy is more than transit and transport. The mountains and their rivers provide the raw materials for hydropower, with electricity exported to Turkey in the summers. Agriculture also plays a part. The whole of the South Caucasus is a wonderful place for food production, as anyone who has tried Armenian or Georgian cuisine will tell you (the tomatoes are the best I have ever tasted). The Black Sea coast is perfect for hazelnut production, with Ferrero buying a large part for its Nutella and Ferrero Rocher production.
And then there is tourism, which is growing quickly but will present challenges for a country where the infrastructure is poor. The only useful railway goes between Tbilisi and Batumi, and the generally poor roads are congested by minivans and taxis ferrying workers around, as well as huge trucks coming across the border to and from Russia.
The growth rate of the economy is about 5 per cent, which sounds good until you consider that if it were to continue at that rate, it would take Georgia 20 years to reach the level of Bulgaria, the poorest country in the EU, and that’s only if Bulgaria stopped developing. Tourists will tell you what good value Georgia is, but that’s because 80 per cent of people earn less than US$370 a month and a fifth live in poverty. Unemployment is officially around 15 per cent, and education suffers from a lack of investment.
As with the wine industry, Georgia is trying to position itself as a high-end destination, with its lack of big factories and industrial production, unspoiled nature (37 per cent of the country is forest), and organic fruit and vegetables all fitting the bill for eco-tourism. The Caucasus Mountains are great for trekking, and you can stay with local communities in home stays while visiting monasteries and local winemakers. For special interest holidays, there’s horse riding and rafting. The aim is for high-spending tourists to be attracted by these remote areas as much as by a city break in Tbilisi. But as for getting around, far from having the network for charging electric cars, the country still runs on poor-quality diesel and petrol, increasing pollution.
Georgia is business-friendly, however. In the centre of many towns you will find a large, out-of-place modern building – the public service hall – that, in the words of Lonely Planet, is a “one-stop shop for citizens to deal quickly with government bureaucracy in an open, corruption-deterring environment”. It’s also where you would go to set up a business, which is a quick, efficient thing to do, a legacy of the policies of previous president Mikheil Saakashvili. The largest example of one of these halls in Tbilisi was designed by Italian architects Massimiliano and Doriana Fuksas (also responsible for Terminal 3 of Shenzhen Bao’an International airport), and looks like white mushrooms growing by the Mtkvari river, but the examples in Telavi and Tianeti are also worth noting as you tour the country.
Widespread language skills among the young population in Tbilisi will obviously help, but then many of these people are mobile and are willing to look outside their borders if the country does not offer opportunities.
It’s an example of how trying to predict the future for Georgia is impossible, but given how far it has come since 1991, despite significant setbacks, there are grounds for optimism. I’ll be raising a glass when I pop open the bottles I brought back with me.
For information visit the Georgia National Tourism Administration site: gnta.ge
For tours visit traffictravel.ge
Georgia aims to become a logistical hub between Eurasia and Europe