New State

Establishing a functioning state has been challenging in Georgia. After the first post-Soviet president, Zviad Gamsakhurdia, was overthrown in a 1992 coup, former first secretary of the Georgian Soviet Socialist Republic (SSR) Eduard Shevardnadze came to power. His personalistic rule undermined pluralism but pieced back together a functioning state. After the 2003 Rose Revolution, President Mikheil Saakashvili oversaw radical libertarian policies. This reduced formal state capacity in the socioeconomic sphere and outsourced key functions to nongovernmental organizations (NGOs). These policies were supported by an autocratic executive, as Saakashvili professionalized the police, military, and state bureaucracy, while overseeing a brutal mass incarceration regime. In that moment of US-led globalization, international financial institutions and extreme dollarization further undermined an already weak, deindustrializing economy. In power since 2012, Georgian Dream has expanded, reformed, and refined key state functions, while reinforcing Georgia’s neoliberal economic model.

Demarcating internationally recognized borders and building a coherent national identity has been no less difficult. Joining “the West” has driven Georgian elites’ strategic thinking for decades. At times, partnership with Washington and future NATO membership were emphasized as Georgia’s national-historical destiny. Saakashvili, his minister of economic reforms, Kakha Bendukidze, and the state-aligned libertarian NGO Liberty Institute supported joining the EU, yet critiqued EU bureaucracy and welfare states. They celebrated a “Singaporean” economic model, Turkey’s Mustafa Kemal Atatürk as inspiration for state-building, and Reaganite anti-communism. Recently, more than anything else, EU membership has come to represent Georgia’s path to Westernness.

Ukraine, Moldova, and Georgia, the “associated trio,” co-submitted EU membership applications in February-March 2022. The other two countries received EU candidacy in June 2022, and in November 2023 began accession talks. The EU initially demanded more reforms from Georgia, only extending conditional candidate status, not talks on joining. Decades of difficult domestic reforms in Georgia had long made it a leader in EU policy alignment, outperforming even Ukraine and Moldova on metrics such as anti-corruption, judicial reform, and financial transparency.

Despite a growing sense in Georgia that reforms alone could not speed up the accession process, candidacy was ultimately granted to the “associated trio” due to the EU’s “geopolitical” pivot. This turn was long in the making. Russia’s 2014 annexation of Crimea, the Syrian civil war and subsequent refugee crisis, as well as years of trickling US pressure on NATO and EU member states to pay more for security, culminated in a paradigm shift when Russia invaded Ukraine in February 2022. These new EU priorities have a key role in souring relations between Tbilisi, Brussels, and Washington.

EU representatives claim Georgia’s accession process is de facto halted and in October froze €121 million in earmarked funds for the country. In May, the United States began a comprehensive “review” of its bilateral cooperation with Georgia, followed by US Secretary of State Antony Blinken’s July 31 announcement pausing $95 million in direct government assistance. The United States sanctioned four Georgian government officials in September, “readying” but not implementing more. This drastic shift in relations is often explained as a consequence of Georgia’s “democratic backsliding,” the passing of a recent “foreign agents” or “transparency” law, anti-Western rhetoric, and deepening economic and political ties with Russia and China. In response, Georgian Dream has embraced rhetorical conflict with US and EU officials, arguing a “global war party” is undermining the country’s sovereignty, encouraging war with Russia.

Russia’s 2022 invasion of Ukraine shifted political thinking and priorities across the EU. Despite some strategic differences between member states, Brussels is pushing militarization as an assertive Russia transforms into a permanent war economy. The US-China trade war could easily spark a hot war over Taiwan, just as the relative decline of US hegemony redefines American capacity and commitments, especially in Eurasia. Georgia’s political overdependencies on the West, as neither an EU nor NATO member, are creating an untenable situation.

A growing political, yet ideologically eclectic, chasm between Atlanticists and US-skeptics is widening in Europe and beyond. Many states around the world are embracing “functional neutrality” toward great-power conflicts to avoid the shocks and uncertainties alignment brings. Tbilisi’s neutrality over Ukraine may sit uneasily with Georgian Dream’s stated goal of EU membership, but the war’s end could drastically change the EU and South Caucasus alike. Already today, tensions over the meaning of sovereignty, Europe, and the West are polarizing ideas about Georgian political identity, just as they are in the EU.

Oligarch-Backed Technocrats

Georgian Dream came to power in 2012–13, aligned with the Party of European Socialists. Always committed neoliberals, GD was “social democratic” in name only. It presented itself as a radical change from the 2004–12 government of Saakashvili and the United National Movement (UNM), yet has pushed forward its core tenets: market economics, EU and NATO integration, and building a “European Georgia.” This technocratic party pursued a policy of “strategic patience” with Moscow after the 2008 Russo-Georgian War over Abkhazia and South Ossetia, and of structural reform to align with EU accession requirements. Georgian Dream embraced strategic partnership with Washington, yet mildly deemphasized Saakashvili’s US-philia by emphatically pursuing EU membership.

Funds from the party’s founder and patron — billionaire Bidzina Ivanishvili, who made his wealth in 1990s Russia — led this anti-UNM coalition to victory in post-Soviet Georgia’s first democratic transfer of power. Street mobilizations, political scandals, and mass dissatisfaction with the UNM ensured it. Over time, defections, especially by initial left-wing members, narrowed Georgian Dream into an ever-smaller circle of loyalists. Infighting within the UNM split the now main opposition force into an array of smaller, personality-driven parties. GD has won every parliamentary election since 2012.

GD’s electoral dominance relies on many factors. As a billionaire-backed ruling party, it has endless resources in preelection periods. But popular antipathy toward the mass incarceration, war, and severe inequalities of the Saakashvili years still runs deep. A segment of Shevardnadze-era elites and their families, whose wealth was expropriated or privileges lost under the now imprisoned Saakashvili, despise the UNM. Many Georgians who now oppose GD would never vote for the UNM or parties of former leading members. Yet a consistent core of UNM support prevents opposition parties from easily uniting. Despite modest but consistent protests on social, economic, and environmental issues, a combination of notable economic growth, a wide range of reforms, and relative peace since 2012 have depressed the emergence of a coherent and popular electoral alternative.

As European politics move right, so has Georgian Dream. The leading European People’s Party in EU Parliament is now more conservative than centrist, while hard-right figures have either become mainstream (Giorgia Meloni, Marine Le Pen) or become a normal part of the electoral game (Alternative für Deutschland). GD, a typical post-Soviet party allergic to ideological consistency, capitalized on this rightward lurch, effectively synthesizing traditions of Georgian conservatism with ascendent EU trends. After then prime minister Irakli Gharibashvili spoke at the Conservative Political Action Conference in Budapest in May 2023, GD formally left its observer status in the Party of European Socialists.

This explains the party’s close relationship with Hungary’s Viktor Orbán. GD has drawn deep on cultural conservatism, from weaponizing homophobia with laws against “LGBT propaganda” to instrumentalizing the influential Georgian Orthodox Church (GOC). This strategy reflects the Hungarian premier’s approach: mobilize those economically and culturally excluded by the post-communist “transition” through culture war. This strategy has not been seamless. When Ivanishvili recently recommended a constitutional amendment making GOC the state religion, the church subtly declined.

More consequential is EU and NATO member Hungary’s conciliatory approach to Russia and China. Budapest maintains close economic ties with Moscow, and openly calls for negotiations, not arms, to end the war in Ukraine. It also prioritizes relations with Beijing, opposing Washington’s “new Cold War” and push for economic decoupling. Hungary assumed its place as a node in Chinese supply chains, welcoming investment in production facilities for components of electric vehicles. At €10.7 billion out of a record €13 billion total foreign direct investment (FDI) in 2023, China is Hungary’s top investor.

Georgian Dream promotes a similar geoeconomic strategy. Neutrality has helped secure critical economic flows to and from Russia, and acted as a gesture toward potential normalization, despite no formal political ties since the 2008 Russo-Georgian War. Such a move may help eventually resolve the territorial dispute over Russia-dependent Abkhazia and South Ossetia. Strategic partnership with China facilitates smoother infrastructure investment, as Georgia has become enticing to Beijing as an alternative to trade routes through Russia.

While such realpolitik is not much different from many states, it has inflamed conflict with NGOs and Western embassies in Georgia. Since the 1990s, these institutions have been widely substituted for weak (or nonexistent) state capacity in many areas. An imported civil society developed that agitates for government accountability, but with a caveat. Georgia’s Euro-Atlantic orientation was anchored through these non-state institutions, insulating key policy debates from the ebbs and flows of changing governments. Georgian Dream initially saw no problem with this.

In alliance with major NGOs, GD enshrined pursuing EU and NATO membership in the Georgian Constitution in 2018. Article 78 gives the European Union, United States, and NATO powerful nondemocratic checks on the state. If the EU, United States, or NATO claim a domestic Georgian law is incompatible with membership, it becomes a constitutional issue. NGOs can mobilize to demand the Constitution is followed or bring the issue to the Constitutional Court. Effectively, the Georgian state is subject to institutions that directly shape policy without popular accountability. Even when NGOs or Western governments provide critical aid and services, they ultimately hinge on whether Brussels or Washington secure a political return on investment. While polls show the population widely supports joining the EU, this does not necessarily mean supporting EU or US policies that are politically contentious also in Western countries.

This arrangement limits the Georgian state’s room to develop policy not only toward the EU and United States, but China, Russia, Iran, and other states in conflict with the West. As Western countries increasingly split over Ukraine, GD shifted its own posture. Nowhere is this clearer than in its increasing nonalignment with the EU Common Foreign and Security Policy.

Foreign Influence

After failing a year earlier, this spring Georgian Dream passed a “law on transparency of foreign influence.” The controversial legislation requires NGOs and media outlets to register as “pursuing the interests of a foreign power” if they receive 20 percent or more of their funding from abroad. There are competing theories to explain the move. GD said the law was necessary for transparency, considering multiple NGOs receiving EU and US funds openly mobilized against the government. Opponents termed it a direct copy of legislation in Russia and a sign of creeping authoritarianism.

More likely, it is the culmination of a simmering conflict between a Western-dependent civil society and the Georgian state’s own claims to sovereignty, in a moment when its posture dissents from the EU’s increasing push for a more unified geopolitical position. There are also economic incentives. GD wants to exert pressure on specific NGOs that might contest Georgia’s geoeconomic role as a transit country — one that increasingly relies on economic ties with countries the EU and particularly the United States are mobilizing against. Ironically, the Georgian economy’s severe overdependence on foreign capital partly encouraged GD to enact this law.

The NGO sector in Georgia is hardly uniform, and data on the number of functioning NGOs and their finances is unreliable and opaque. The line between partisan political activity, advocating governance reforms, and explicit ideological nation-building efforts is blurry for many such projects. In the abstract, legislation that oversees the sector’s financing and activities, as exists in many Western democracies, could help clarify their purpose and role.

However, the poorly written legislation “on the transparency of foreign influence” catalyzed massive protests. Its clear political and not purely technocratic intent prompted various forces to mobilize, seeing the law as a threat to Georgia’s EU membership prospects and democracy. The EU, Venice Commission, and United States stridently opposed the law, openly supporting the protests. Multiple member states said they would conditionally withdraw support for Georgia entering accession talks.

This was a major battle domestically. Hearings took place in the Georgian constitutional court. Government-backed TV and radio company Imedi interviewed GD officials on the law’s importance, while opposition stations like Formula sympathetically broadcast live from the protests. Some “independent” media outlets — though often this term refers to ones who receive Western funds — backed the demonstrations. President Zourabichvili and opposition politicians sided with the protests, more as an opportunity to unify anti-GD forces than due to political conviction alone. However, the contradictory nature of Western policy in Georgia also became painfully clear.

States who have granted themselves the power to regulate foreign-funded NGOs demanded the Georgian state not do the same. Their concern: that the law would likely strip the EU and United States of important leverage in the country’s domestic and foreign policy. Despite claims that the law was meant to consciously sabotage Georgia’s EU membership, GD publicly emphasizes joining the EU by 2030 as a primary objective, claiming no convincing technical-legal argument was made by the EU or Venice Commission against the law.
“No to the Russian law!” was a popular protest slogan. Whether or not the law was directly inspired by legislation in Russia was less important than using Russia as an evocative avatar for foreign influence and autocracy.

Political accusations of being “Russian” are not uncommon in Georgia. Government claims that NGOs are working for “foreign powers” were a clear response to years of accusations, and lobbying abroad, insisting that the ruling party is a Russian proxy in a moment of improving ties with Moscow. This picked up in 2019 after a crisis erupted when Russian MP Sergei Gavrilov, visiting Georgia to convene a session of the Interparliamentary Assembly on Orthodoxy in Tbilisi, addressed the Georgian parliament in Russian. Massive protests that followed were cracked down on violently by GD’s then interior minister, Giorgi Gakharia, who now has his own party, which is running against GD. Russia responded to the 2019 “Gavrilov’s Night” crisis by halting direct flights, exerting economic pressure on GD to push back against anti-Russian sentiment in the country.

Some EU politicians took advantage of the spring 2024 protests. Similar to the view that Ukrainians are fighting for Europe on the battlefield, Georgian protesters were held up as heroes redeeming Europe from its rightward, Euroskeptic trajectory. The protests became, however ineffectually, a feature of EU parliamentary elections. Atlanticists such as German MP Michael Roth, a dogged champion of Israel’s supposed fight for the West, even joined them.

The government used force on protesters intermittently. Water cannons, batons, and post-detainment beatings led to injuries. Police conduct during protests was comparable to that in the United States and across the EU, a point GD easily capitalized on. While polls taken during the protest period show overall trust in police has increased, Georgian sensitivities to police force run deep. Georgian Dream came to power promising not to rely on the brutality that defined the Saakashvili era. And yet, certain elements within the interior ministry condoned, if not directly ordered, extralegal methods of direct, even violent political pressure and intimidation on some opponents both during and outside of the protests.

No “leader” emerged from the protests. Even representatives from opposition parties were heckled. The majority of the overwhelmingly young participants rejected all politicians. Absent some kind of coordinated political alternative and vision of economic and social transformation, this is not yet a strength. The major shortcoming of global movements over the 2010s was the political deification of leaderlessness, often fueling reaction, as Vincent Bevins explains.

“Generation Z” was celebrated, in international and local media, as a leaderless revolutionary subject defending Georgia’s European aspirations. Their participation was natural: young people in Georgia have few opportunities and want a better future. This is something no political party can provide. Yet, opposition to the “Russian” law and Georgia’s “Russian” government in defense of an EU future defined the protests.

Rhetoric about Georgian democracy could not be separated from an implicit geopolitical stance on Russia and the West. Participants had many reasons for joining, some were even left-wing or agnostic about the EU, but it did not make a concrete political difference in the end. The EU and United States capitalized on the protests, justifying a massive increase in pressure on GD, while opposition forces could easily cohere around a tangible political goal that claimed to honor the protests — to get Georgia back on its path to EU membership.

But why didn’t another unifying political vision or force emerge? The framework developed by Volodymyr Ishchenko and Oleg Zhuravlev on how “deficient revolutions” reproduce a “crisis of representation” can make sense of this dynamic. Post-Soviet mass mobilizations provide political actors (both foreign and domestic) with “‘revolutionary’  legitimacy even if they cannot represent the interests of the revolution’s social bases,” while ruling elites have diminishing capacity “to successfully claim representation of the interests of broader social groups and even less so of the whole nation.”

No political actor in Georgia comfortably represents “broader social groups” or the nation as a whole. The technocratic advances toward EU membership sit uneasily with a pervasive ideology of Europe as a messianic ideal, indeed the very embodiment of progress, democracy, civilizational destiny, and social transformation. This depoliticizes those more material factors underwriting the current crisis — the state’s political sovereignty, geoeconomic ties, and interests of social classes — subsuming them into existential clashes over Georgia’s proximity to joining the EU. But the longer the accession process goes on and the Georgian state develops, EU skepticism (or agnosticism) will have more room to grow.

The EU cannot indefinitely claim to “represent” the political resolution to all domestic and regional issues, let alone to the interests of all social classes. This dynamic only intensifies polarization and reproduces deficient mass mobilizations with faintly articulated class interests that do not offer a way to radically transform society. GD’s passive, demobilized, and more conservative support base is the other side of this coin.

Political Capitalists, Historical Anti-Communists

Despite decades of pro-business policies, Georgian elites have difficulty politically expressing a unified class interest. Similar to other post-Soviet countries, political capitalists in Georgia rely on “rent-seeking” behavior. The state is the most lucrative asset, and proximity to it brings rewards. The lack of strong domestic industry, a radically open economy, fixation on FDI, and the unique political role of the United States and EU encourage elite fracture.

Many of the wealthiest Georgians (and even the middle classes) made money abroad or rely on foreign incomes. Foreign capital dominates, with little to no restrictions, so elites function more as stewards of capital inflows and managers of national assets than traditional capitalists. Mamuka Khazaradze, cofounder of Georgia’s largest bank, TBC, founded the stridently pro-West opposition party Lelo for Georgia in 2019, primarily over his failed bid to secure the tender to construct, with American participation, the Anaklia Port on Georgia’s Black Sea coast.

A recently passed “Offshore Bill” demonstrates one clear connection between elite interests and foreign policy. Meant to easily facilitate the onshoring of capital and assets held abroad without oversight or taxation, this bill intends to protect Georgian elites from possible sanctions. It was inspired by Ivanishvili’s long-running conflict with Credit Suisse, including the freezing of £2.7 billion due to its alleged Russian origins. The bill can help those elites seeking to protect Russia-connected assets or exploit new economic opportunities that Western sanctions on Russia have unleashed. Elite interests in evading exposure to EU or US sanctions, which have rapidly increased in recent years, align with a broader economic strategy of keeping Georgia open to capital, regardless of its source.

The NGO sector and direct Western funds also prop up an elite, intelligentsia, and professional class that overwhelmingly sees EU integration as aligned with its interests. However, workers and the poor in Georgia have little trust in or connections with most NGOs, while many have not seen tangible benefits from deepened EU ties. They are immiserated and have difficulties organizing for their interests. While GD exploits this working-class demobilization through culture wars, civil society’s broad focus on EU integration and democracy-building offers poorer Georgians mostly workshops and services, not a political framework to transform their conditions.

Anti-Soviet memory politics were a central feature of nation-building during Saakashvili’s presidency. They still play an intractable role in Georgian politics, utilized by all sides, GD included. More recently, the US embassy in Tbilisi has begun openly working with NGOs, academics, and aspirant (and former) opposition politicians to promote anti-Soviet historical narratives through different projects and mediums. “Soviet nostalgia” — as almost any reference to positive aspects of pre-1991 life, or even personal memories of younger days, are called — is imagined solely as the product of “Russian disinformation,” not historical or domestic factors. Article 24 of a recent EU Parliament resolution on “democratic backsliding in Georgia” claims rising public expression of Soviet nostalgia signifies Georgia’s “closer alignment with Russia.”

Here, Soviet history becomes a (geo)political instrument, as it is cast as the symbolic antithesis of democracy, Europe, and Georgian nationhood. These narratives consciously remove the nuances of Georgian agency, national consolidation, cultural production, and economic development from the complex Soviet story. This reading of history is neither new in Georgia nor the direct product of current Western support — it was central to twentieth-century Georgian émigré politics and national mobilizations during Soviet collapse, and rehabilitated after 1991.

The United States’ and EU’s open use of this history is primarily, though not only, meant for elite, academic, and Western consumption, plus as an avenue to fund initiatives fighting “Russian disinformation.”  Associating “Soviet nostalgia” solely with Russia reinforces among civil society a nationally tinged form of class enmity toward those, especially poorer and working-class Georgians, who lament what was lost, especially in terms of economic stability. Such memory politics may help naturalize a specific telling of Georgian history to align with EU and US geopolitical strategy, but it politically stigmatizes part of the population, excluding them from visions of a “European Georgia.” Add this to decades of sidelining all socioeconomic concerns from public debate, and we see one reason why building popular movements to defend, let alone empower, the country’s most vulnerable is so difficult.

Political campaigns focused on socioeconomic or environmental issues, in principle, defy geopolitical binaries. In January 2024, protests took place in Tbilisi against predatory lending and evictions. Villages like Shukruti and Zodi have become hot spots of local protest for a list of grievances against American-owned Georgian Manganese (a company that also has connections to Ukrainian oligarch Igor Kolomoisky). In 2021, thousands of people protested against the Norwegian/Turkish-funded construction of the Namakhvani Hydropower Plant in western Georgia’s Rioni Valley. Though the plant would have decreased Georgia’s energy dependencies on Russia, the terms of the contract and environmental implications were disastrous. With some notable exceptions and successes, these types of mobilizations often remain small and disconnected from each other, eventually dissipating. Local issues take precedence over a more universal vision, while the historical connection between environmentalism and anti-Soviet nationalism weighs heavy in the background.

Embassies in Georgia regularly defend investments, injecting a geopolitical dimension into otherwise socially focused protests. Responding to mobilizations against the Namakhvani plant, the Turkish embassy campaigned in support of the project. The Swedish embassy stressed the importance of Swedish-owned, Tbilisi-based “Evolution Games” — an online gaming and gambling company — to try and counter growing anger after weeks of worker strikes and protests for better pay and conditions. While there are many other examples, the relative weakness of the Georgian state, atop an economic model dependent on foreign capital, makes foreign intervention a systemic feature of the Georgian political economy. The US and EU states have unique leverage in this regard, given Georgia’s constitutional obligation to pursue EU and NATO membership.

As Salome Topuria and Tato Khundadze explain, “Georgia follows a consumption-led economic model, where the main driver of GDP growth is consumption, backed by foreign remittances, tourism and FDI.” Its economy is locked into “an underdevelopment equilibrium.” In 2016, the EU’s Association Agreement with Georgia came into full force, with the Deep and Comprehensive Free Trade Agreement (DCFTA) as a key component. But the arrangement has only exacerbated Georgia’s post-Soviet “neoliberal lock-in . . . characterized by a high unemployment rate, massive outward migration, persistent negative trade balance and a heavy reliance on FDI and tourism.” Georgia’s “development model is structurally inclined toward jobless growth,” made worse by population decline. Retaining and reproducing skilled workers is difficult. While receiving visa-free travel to the EU was widely celebrated, it encouraged labor emigration as a quick fix to low domestic wages and lack of employment. After years of people leaving, Georgia has begun welcoming some labor migrants from other countries — notably in the agricultural and construction sectors.

The World Bank defines Georgia as an “upper-middle-income country.” The Asian Development Bank forecasts economic growth and GDP is on the rise. But positive economic trends are neither equitably distributed nor attributable to specific Western supported reforms; indeed, according Topuria and Khundadze, “Neighboring economies also grew with similar or in some cases higher rates.”

Transit Route

As a candidate country, the EU cannot structurally solve critical issues in the Georgian economy like “high unemployment and technological underdevelopment” or overcoming the weak yet “key drivers of Georgia’s output growth” such as financial services and tourism with low job creation. Grinding poverty is still rampant.

However, civil society, academia, and some businesses already dependent on EU funds have a clear interest in joining. EU investments have stimulated certain sectors, or in areas lacking state intervention have kept some businesses afloat. Many academics are dependent on EU or member-state grants. The Georgian state has also benefited from such support. But how EU membership would improve structural economic issues, ease Georgia’s unique geopolitical context, and economically empower society at large is far from clear.

Georgia’s future in the EU would have difficulty resolving its post-Soviet peripheralization, as other economies on the EU periphery suggest. Georgian manufacturers cannot compete with those in the EU, while exclusive participation in the EU market would compromise for many a competitive advantage they have elsewhere. Georgia needs an empowered state with a radically different socioeconomic vision and popular mobilizations to support it. Despite all major political parties committing to variations of market orthodoxy, joining the EU common market would de jure reduce Georgian state capacity for future radical economic transformation, not facilitate it.

The DCFTA and ties with the EU do, however, make Georgia attractive to China and other states, as a transit route to or from the EU. Of course, this cannot provide a political framework for massive economic changes, nor directly contest Georgia’s “neoliberal lock-in.” Only strong movements, armed with clear politics that fight for economic reorganization, will. But regional and global shifts are providing the Georgian state with new forms of economic and political leverage. This may help lessen the burdens of Georgia’s post-Soviet geopolitical and underdevelopment predicament. Peace and cooperative regional economic integration are key political preconditions for stimulating more sustainable growth in Georgia. Similarly, avoiding geopolitical “proxification” by the United States or overdependence on an unpredictable Russia is critical. An empowered state with a multivector geopolitical posture and a different economic vision, such as a new industrial policy, could take advantage of these shifts in a more progressive direction.

Sanctions due to the war in Ukraine have increased the value of Georgia’s transit position. Trade with Commonwealth of Independent States (CIS) countries has steadily risen in recent years, Central Asia in particular. Economic ties with Turkey are also important. Georgia’s few but key domestic exports, like wine, heavily rely on the Russian market. Gas pipelines from Azerbaijan go through Georgia to Turkey. US and EU trade is not negligible but does not compensate for regional economic ties.

Wartime parallel imports are a boon for the EU, Russia, and “neutral” countries alike. Many EU states dramatically increased exports to Kyrgyzstan to be reexported to Russia. In 2023, neighboring Armenia, a member of the Eurasian Economic Union (EEU) reliant on Georgia’s land border with Russia for exports, reached trade volumes with Moscow “more than $7.3 billion: a record number.” While the Georgian government observes most international sanctions, it has not initiated bilateral ones. US assistant secretary for European and Eurasian affairs James O’Brien has made regular negative reference to Georgia as a vector of sanctions circumvention. Others have blamed Tbilisi for allowing “dual use” goods to reach Russia in higher numbers. Tbilisi’s deepening relationship with China is also causing ire in Washington.

While the South Caucasus was not initially part of China’s ambitious Belt and Road Initiative, that has since changed. Georgia and China released a strategic partnership agreement on July 31, 2023, guaranteeing more infrastructural investment but without explicit political conditions. Major highway projects are being built by Chinese companies. As Georgia’s crucial neighbor in trade connectivity, Azerbaijan is now also a strategic partner with Beijing.

A deepwater port project in Anaklia on the Black Sea coast was a major flash point in Georgia-US ties because of China’s involvement. In 2016, the project’s tender was awarded to the Anaklia Development Consortium, “a joint venture between Georgian Group TBC Holding and U.S. Based Conti International.” While then US secretary of state Mike Pompeo supported the project on a 2019 visit to Georgia, Conti International withdrew shortly after. The Georgian government restarted a search for funding, assumed a 51 percent stake in the project and eventually awarded the remaining 49 percent to a Chinese-Singaporean consortium on May 29, 2024. President Zourabichvili called the move a “stab in the back” to Georgia’s Western partners. The United States condemned the decision publicly, enraged that Tbilisi ceded “critical infrastructure” to sanctioned companies affiliated with the Chinese state.

The Anaklia Port, projected to handle fifty million tons of cargo annually, is a critical piece of the much talked about Middle Corridor. By bypassing Russia and significantly decreasing transit time to the EU, the Middle Corridor is now a focus for Beijing, Central Asian countries, and the South Caucasus. Because Chinese exports and infrastructure are driving its value and potential profitability, Tbilisi has solidified its position within this key Eurasian transit route through ties with Beijing, at the expense of US geopolitical interests in the region.

Russia was initially suspicious of the United States funding the Anaklia deepwater port next to the Abkhaz border but softened its tone after China’s involvement. As Tracey German points out, China’s influence in the South Caucasus will likely be tolerated by Moscow “as long as Beijing continues to accommodate Russia’s geopolitical and security interests.” Russia’s dependence on Beijing to prop up its war effort gives Tbilisi new leverage, as Georgia’s importance to Chinese-led trade corridors grows. Western powers more or less supported Georgia-China ties as a strategic counterbalance to Russia in the region, but that was prior to Washington’s renewed effort to “contain” China.

If anything, Russia’s 2022 invasion of Ukraine proved to GD that US political and military patronage alone do not guarantee economic, political, or security concessions from an assertive Russia. Yet Georgia’s main leverage with the West — reform metrics and geopolitical alignment — are no longer paying dividends. The era of US unipolarity and uncontested economic power is over. GD is trying to mitigate this new reality by foregrounding critical trade routes and corridors as leverage in an era where other nodes of accumulation — so-called “multipolarity” — make this position profitable and in demand.

Discussions are already underway on developing a new South-North trade route from India to both Europe and Russia through Iran, Armenia, and Georgia. The advantage of this route is that goods from both Persian Gulf countries and India can make it to the EU and EEU. Not only would this evade older more difficult maritime routes, it would also diversify supply routes for Iran and India, and incorporate previously isolated Armenia into networks of global trade.

The “Zangezur Corridor” is in discussion, but contentious. Meant to connect Azerbaijan and its large exclave Nakhichevan, which borders Turkey, the corridor would cross over Southern Armenia. However, if built, questions remain on who would control the road. Iran is opposed because it could compromise direct access to its border with Armenia as a node on North-South trade routes. Although Moscow supports the idea, this disagreement is unlikely to spark a regional crisis. Russia’s relations with Iran are notoriously transactional but have become more important since 2022. A North-South trade corridor connecting Russia to Iran through Azerbaijan is already being developed. Azerbaijan has long had tensions with the Islamic Republic given Baku’s security ties with Israel, but there are signs the relationship is improving. As regional interconnectivity increases, sober accommodation of Iran’s heavily sanctioned yet large economy suggests conflict is not imminent.

The South Caucasus is slowly “regionalizing.” Traditionally separate geopolitical orientations of Armenia, Azerbaijan, and Georgia are shifting. Each state is reducing overdependencies and diversifying ties. Multiple large powers that are in open geopolitical confrontation have, in principle, a shared interest in the South Caucasus becoming more interconnected — especially through transit corridors. Though this has potential to create a more integrated South Caucasus, and help overcome nationalist enmities, it is not a foregone conclusion.

Following a 2020 offensive and cease-fire, in September 2023, Azerbaijan militarily took control of long-contested Nagorno-Karabakh, forcibly displacing one hundred thousand ethnic Armenians. Tacitly supported by both the United States and Russia, Azerbaijan’s operation destroyed the nominally independent Armenian statelet that economically and militarily relied on neighboring Armenia for decades and Russian peacekeepers since 2020. Paradoxically, this opened a door for political normalization between Armenia and Azerbaijan.

Difficult but direct negotiations on a peace agreement are still underway, as overcoming mutual national enmity, insecurity, and distrust, if it happens, will take time. War between the two nations was central to post-Soviet nation-building, defined by mutual ethnic cleansings, forced displacement, and competing irredentisms. Anger is palpable among some Armenians at how Prime Minister Nikol Pashinyan handled the conflict, and the painful concessions to Azerbaijan that followed. Azerbaijan’s 2023 “victory,” after being defeated in the first Karabakh War in the 1990s, has emboldened Azeri president Ilham Aliyev to humiliate and make ever greater demands of Yerevan. Yet both sides are showing unprecedented will to negotiate.

Russian peacekeepers did not intervene in the conflict, instead withdrawing from Nagorno-Karabakh after the fighting, a strategic goal of Baku. Russian border guards also left their posts at Yerevan’s main airport and Armenia’s border checkpoint with Iran, but Russian military bases have not closed and deployments along the Iran and Turkish borders in Armenia are still in force. Yet Russia’s embroilment in Ukraine is forcing it to reconsider aspects of its presence in the South Caucasus. Georgia, Armenia, and Azerbaijan, in different ways, are taking advantage. Armenia is now seeking greater political and military support from the United States and EU, while pushing forward normalization of ties with Turkey.

Pashinyan is openly calling the Russia-led Collective Security Treaty Organization (CSTO) a threat to Armenia’s sovereignty, and has “frozen” participation, while still expanding trade with Moscow and participating in a recent CIS summit. Azerbaijan is increasing energy cooperation with the EU and warmly hosting Vladimir Putin on official visits to Baku. Georgia is relitigating relations with the West and Moscow alike, despite maintaining an official commitment to the EU and NATO. As the three South Caucasus states pursue more balanced and thus similar foreign policies, it may encourage more cooperation.

Georgian elites took note of Azerbaijan’s 2023 military campaign and Russia’s noninterference. In Georgia, there is no appetite for war, and both the government and opposition have repeatedly committed to solving territorial conflicts in Abkhazia and South Ossetia peacefully. But doing so requires delicate political strategy. Tbilisi has to actively mend ties with the Abkhaz and Ossetian populations. Wars in the 1990s, marked by ethnic cleansings and forced displacement, leave deep scars on both sides. Years of diplomatic distrust and inaction have not helped. Tbilisi’s formal posture of peace and reconciliation, not militarization, is a start. But buy-in from Moscow is also necessary, as both South Ossetia and Abkhazia are militarily, economically, and politically dependent on Russia.

Georgia is still committed to a nonrecognition policy of the regions, and Russia’s recognition of them as independent is as of now not being reconsidered. However, Moscow has recently increased political and economic pressure on the statelets, withdrawing funding for Abkhazia. Abkhaz leader Aslan Bzhania claims the move was done in response to those within Abkhazia politically opposing “the implementation of the 2014 ‘treaty and alliance on strategic partnership’ with Russia and the ‘agreements’ stemming from it.” Russian foreign minister Sergei Lavrov has suggested Moscow is ready to help the three sides “normalize” ties. But creating a political arrangement that is acceptable to Georgians, Ossetians, and Abkhazes alike will require serious creativity and political will.

Russian Influx

Russia’s invasion of Ukraine was widely interpreted as part of a wider geopolitical contest between Moscow and the West, with Russia’s aggression catalyzed by decades of NATO expansion. Many countries around the world remained neutral, opposing years of Western imperial adventure and hypocrisy, or simply wanting to exploit economic opportunity. In recent years, GD has slowly but consciously tried to divorce its territorial claims from Western geopolitical interests.

Despite maintaining that Russia is occupying Georgian territory, it has more actively shifted blame for the 2008 war onto former president Saakashvili. A domestic preelection political maneuver this may be, but Russia’s forced reconsideration of some commitments in the South Caucasus suggest Tbilisi’s strategy of aligning closer with Moscow’s narrative of the war — that it was caused by Saakashvili with Western backing, instead of an unprovoked Russian invasion — could be a starting point for dialogue. In 2022, Russia moved two thousand troops from Abkhazia and South Ossetia to Ukraine. Given Moscow’s inconsistent and instrumental use of territorial control to exert political leverage, negotiating a Russian pull back from Abkhazia and South Ossetia is not outside the realm of possibility. However, Georgia’s pursuit of NATO membership may be a final sticking point in resolving territorial disputes and normalizing ties.

Georgia was recognized as a candidate at the 2008 NATO summit, but did not receive a Membership Action Plan. As many observers point out, the relationship has been practically “on hold” since. Yet the geopolitical environment has drastically changed. Despite a stated commitment to join and years of collaboration with the alliance, GD has recently deemphasized the country’s NATO ambitions.

At the 2023 Bratislava Security Conference, then prime minister Gharibashvili publicly stated, to the dismay of Western officials, that NATO expansion caused Russia’s invasion of Ukraine. A July 2024 NATO summit declaration omitted reference to Georgia’s future membership, for the first time since 2008. But Georgia’s NATO ambitions have been rife with roadblocks from the start. Russia’s 2008 recognition of South Ossetia and Abkhazia as independent states created an insurmountable hurdle in the process and was done partly as a response to Georgia’s promised NATO membership. Multiple member states have long opposed Georgia’s admission. Despite the war in Ukraine, fractures on how to deal with Russia and the US reassessment of its role muddy NATO’s sense of longer-term purpose.

Member states Turkey and Hungary are skeptical of mobilizing against Moscow, a position similar to Georgia’s. If GD’s policy of “strategic patience” with Russia inches closer to eventual normalization, and makes progress on the territorial issue, then Georgia’s NATO membership loses the crux of its initial stated intention: to insure Georgian security, territorial integrity, and sovereignty from Russia. While Russia is far from predictable, its position on NATO is obvious. For a prospective member state like Georgia, the war in Ukraine turned the pursuit of NATO membership from a path to guarantee security into a strategic liability.

Abysmal relations after the 2008 war prevented Georgia from fully taking advantage of Russian economic growth. The United States and EU themselves deepened economic and political relations with Russia after a Washington-led 2009 diplomatic “reset.” But since 2022, Georgia has tried to make up for lost time, and money. Economic ties have significantly deepened.

In 2022, tens of thousands of Russian citizens went to Georgia. Some did so for political reasons, opposing the war or evading conscription, while others wanted to protect their incomes as the specter of sanctions loomed. Many have since returned to Russia or gone on to other countries. Moscow welcomed the exodus, as the more politically minded would not be capable of opposing the war effort at home.

Georgian Dream also welcomed the influx, as thousands of people spending money made elsewhere was a much needed post-COVID economic stimulus. Many worked remotely in the tech sector. Daily direct flights now go from Georgia to cities across Russia. Tourism became a year-round enterprise. Many new businesses opened. A certain class of Georgian citizens, concentrated in Tbilisi and Batumi especially, benefitted. Rent prices skyrocketed, and construction boomed.

Yet this also exacerbated already stark inequalities. New avenues for profit may have opened for business owners and landlords, but a cost-of-living crisis and high inflation squeezed the paltry incomes of most Georgian citizens. Relative to average Georgian salaries, Russian incomes were much higher, and this had consequences. To make matters worse, years of market orthodoxy meant minimum wage and rent control — basic policies that could have mitigated the shock of the Russian influx — not only did not exist but were politically impossible to argue for.

Despite notable ups, downs, and crises, Russian citizens have enjoyed years of economic growth. Russia’s expanding middle and upper-middle classes, especially in Moscow and St Petersburg, have no corollary in Georgia. The Russian economy is far larger, home to many crucial raw materials, and is not entirely deindustrialized. Added to that are the effects of Russia’s economic transformation since 2022, embracing a form of “war Keynesianism” that has increased incomes overall. As historically, close economic ties with Russia stimulated, however unequally, growth in Georgia. Yet capital comes with caveats — many Russians could easily open businesses and enjoy a more expensive lifestyle out of reach of most Georgians. This sowed understandable resentment.

Some protested the influx, demanding the government impose a visa regime. Others castigated the more frequent use of the Russian language in public places. The government claimed such views were xenophobic. But at its core, the Russian influx is emblematic of Georgia’s difficult position. Russia, a deeply neoliberal economy, had still become a globalized and wealthier country with a sizable middle class, despite not being a liberal democracy. The implicit economic argument of EU integration — that Western supported democratization is a precondition to economic growth — starkly confronted Georgian reality. Years of political submission to the West could not guarantee Georgia a tangible exit from its post-Soviet peripheralization. This has left the country searching for answers.

What crises lay ahead for Georgia is anyone’s guess. The country will remain a small — if surely not insignificant — player in rapidly shifting regional and global conditions. But to ensure these shifts work in the service of the majority requires facing them head-on, as they are. Mobilizations for an EU dream cannot substitute for what the majority of Georgians actually need: the transformation of their deeper economic reality.