Irakli Kobakhidze: “Statements on Georgia being used to bypass sanctions are not confirmed by factual circumstances.”
Verdict: FactCheck concludes that Irakli Kobakhidze’s statement is TRUE.
Resume: The claim that Georgia is being used to bypass sanctions imposed against Russia needs proper grounds and the fact alone that Georgia (at the level of political statements) has not joined the sanctions is not a sufficient argument to corroborate this serious allegation. If cargo, currently under sanctions, is indeed sent to Russia via Georgia, international cargo turnover volumes should have been correspondingly increased. In particular, export, re-export, and transit should have had a tangible (surging) growth and their structure should have been altered which could have been a certain indicator and lend credibility to the assumption vis-à-vis a potential breach of the sanctions.
In January-November 2022, total export (includes re-export as well) from Georgia increased by 31.8% whilst export from Georgia to Russia only increased by 8.9% (3.5 times less as compared to the rest of the world). Therefore, Georgia’s increased export to Russia is not taken out of the general picture and does not indicate any unnatural growth in the intensity of trade with Russia. In March-November 2022, which is the period immediately after the start of the war, growth is only 5.1% as compared to the same period of 2021.
Of note is that Irakli Kobakhidze did not pay attention to the issue of transit. In this case, too, publicly available statistical data give no ground to a breach of the sanctions, although available information on transit is scarce and insufficient for a comprehensive assessment. As opposed to export (re-export) data, Georgian authorities do not publish information about transit cargo shipments proactively [1]. Therefore, analysing transit volumes is possible based on indirect indicators only. One such indicator is the number of trucks entering the Russian Federation from Georgian territory (which was highlighted in the New York Times’ article as an argument [2]). According to the information of the Ministry of Internal Affairs, the number of trucks which crossed the Kazbegi border check-point from Georgia to Russia in 2022 was 13,000 less as compared to 2021 and amounted to 130,000 trucks. Therefore, there is no indicator of any substantial growth of transit (road) cargo.
Therefore, publicly available statistical data do not indicate an intensification of Georgia’s trade with Russia to such an extent that would prove the assumption on the use of Georgian territory to bypass the sanctions imposed against Russia. Of note is that none of the official Western structures has indicated a breach of sanctions from Georgia or its participation in bypassing the sanctions and no relevant evidence has been produced by any sources. On the contrary, multiple statements made by the US Ambassador to Georgia where the actions of Georgian institutions vis-à-vis sanctions enforcement are assessed positively and are publicly available (link 1, link 2 and link 3).
Consequently, FactCheck concludes that Irakli Kobakhidze’s statement is TRUE because claims that Georgian territory is being used to bypass the sanctions imposed against Russia are not confirmed by factual circumstances.
Analysis
On 18 January 2023, Chairperson of the Georgian Dream, Irakli Kobakhidze, stated on air on TV Imedi’s Imedi LIVE broadcast: “If this (using Georgia to bypass sanctions) was true, it would naturally have been reflected in the statistics… In this case, export from Georgia to Russia should have been substantially and disproportionately increased…” After pointing out export volume, Mr Kobakhidze also underlined the export structure: “Over two-thirds [of export] are drinks and agriculture products. This is wine, these are alcoholic beverages… The rest is ferroalloys which used to be exported previously and is exported now and this is basically the whole export.”
Irakli Kobakhidze provided statistical data in response to a question that the President of the European Commission, Ursula von der Leyen, was asked on air on CNN. The host’s question, in turn, stemmed from the article published in the New York Times which says that Georgia has allegedly become a way for Russia to receive sanctioned shipments.
There are certain inaccuracies in the statistical data provided by Irakli Kobakhidze, although the main idea of his statement is that the possible use of Georgian territory to bypass the Russian sanctions is not confirmed by factual data. In particular, if we compare export to Russia for the first 11 months of 2022 to the total export (12 months) of 2021, there will be a 2% decline if we follow Mr Kobakhidze’s logic. However, if we compare the first 11 months of 2021 to the first 11 months of 2022, which would be more appropriate, the result will be an 8.9% growth of export to Russia. Therefore, export from Georgia to Russia (including re-export as well) in the first 11 months of 2022 has increased as compared to the same period of the previous year and has not contracted. However, if compared to the growth of Georgia’s total export, this figure is 3.5 times less. Georgia’s total export in the first 11 months of 2022 increased by 31.8% which means that export to other countries increased to a greater extent as compared to the Russian Federation. Of Georgia’s top ten trade partners, export growth was higher for each country as compared to Russia, except for Ukraine.
Graph 1: Growth of Export from Georgia (First 11 Months of 2021 as compared to First 11 Months of 2022)
Source: National Statistics Office of Georgia
The aim of drawing a comparison with other export partners is to underline the following situation. Logically, if Georgia had become a country that provides a way to deliver sanctions goods to Russia, then export from Georgia to Russia should have been increasing at a much higher pace as compared to other countries. However, in reality, the picture is entirely different. After the outbreak of Russia’s war against Ukraine, export to Russia increased by merely 5.1% as compared to the same period of 2021 as of the data for March-November 2022.
Of note is that export particularly increased to some of the Eurasian Economic Union member states which theoretically may be precipitated by Russia’s increased demand for certain goods [3]. However, on the one hand, these countries are not sanctioned destinations. Therefore, there is no ground to restrict export there. Even if we assume hypothetically that “goods ultimately destined for Russia” move along this route, this will be yet another item of proof that risks of sanctioned goods entering Russia from Georgia is minimised and interested parties have to “elongate” the route and use third countries.
Irakli Kobakhidze’s statement is also true when it comes to his comment on export structure. Agricultural products and different types of beverages, which historically have always been major export products, indeed account for most of the export goods.
Table 1: Export Structure, Agricultural Products and Beverages
Source: National Statistics Office of Georgia
If the top five export products are taken separately and we look at the first 11 months of 2022, Georgia exported wine to Russia valued at USD 150 million, USD 109 million in ferroalloys, USD 65 million in cars, USD 53 million in spirits and USD 47 million in mineral and drinking water. The full list is available on the Foreign Trade Portal of the National Statistics Office of Georgia.
The only novelty in 2022 is vehicles in the top five export items. As a result of the general consequences of the sanctions and car producers leaving the Russian market, there is a significant deficit of cars in Russia. Therefore, it is expected that the demand for cars from Russia has increased precisely due to this factor. However, of note is that the sanctions only apply to luxury cars (valued over EUR 50,000). At the same time, cars are more easily identifiable in terms of border crossing (model, type, etc.) as compared to other goods, and so it is virtually impossible to hide the fact of breaching these particular sanctions in the case of direct export/re-export of cars to Russia. As a result, it is expected that cars exported from Georgia to Russia are second-hand vehicles and comparably cheaper models. According to the statistical data, the average value per exported car is USD 14,000.
Of note is that export alone does not provide us with a full picture. Sanctioned goods may end up in Russia through transit as well which is still an indirect responsibility of the transiting country. However, also in the case of transit, publicly available information does not indicate any unnatural growth of (total) transit to Russia. As reported by the Ministry of Internal Affairs of Georgia, some 143,000 trucks crossed the Kazbegi border checkpoint from Georgia in 2021 whilst this figure was 13,000 less and amounted to 130,000 in 2022. Certainly, the number of trucks (including the volume of shipments) alone is not enough of an argument, although these data are used to assess the scale to a certain extent in the absence of other information. At the same time, it would be illogical for a country not to receive profit from the export of sanctioned goods - where theoretically benefits are higher - and deliberately allow the transit of sanctioned goods where profit is much less, especially under such circumstances when the price of breaching the sanctions is identical both in the case of export or transit.
Theoretically, some transport vehicles going to Russia (or to any other country) can be possibly loaded with banned products and the lack of unnatural growth figures for total shipment volumes will not be a sufficient argument to claim that sanctions are not being breached. However, it is a fact that there has not been a single confirmed occurrence of sanctioned goods entering Russia from Georgia.
Of additional note is that none of the official Western structures has voiced such allegations and no evidence has been produced vis-à-vis the claims. A misunderstanding was caused by the 30 November 2022 statement of the Czech Ambassador to Georgia, Petr Mikiska, which was about some portion of substantially increased Czech export to Georgia finally ending up in Russia. However, the Ambassador soon clarified that his words were taken out of context. The Revenue Service also responded to the Ambassador’s statement. As clarified by the Revenue Service, import growth was mostly related to machinery and equipment imported by the Tbilisi-Baku-Ceyhan service provider companies and those goods were not intended for the Russian Federation.
In terms of efforts to prevent attempts to bypass the sanctions against Russia, Minister of Finance, Lasha Khutsishvili, stated that customs officers have prevented over 1,000 attempts at breaching the sanctions since 24 February 2022. The Minister explained that those attempts concerned both export and re-export as well as transit. Mr Khutsishvili also emphasised that it is not about military or dual-use cargo (for which the authorities are responsible and they do not issue relevant permits) but everyday commodities which are currently sanctioned. The Ministry of Finance provided information about specific facts of enforcement of the sanctions to the Institute for Development of Freedom of Information.
Georgia’s official stance vis-à-vis the sanctions against Russia can be summarised as follows: the country does not officially join the sanctions and does not impose bilateral sanctions against Russia [4], although “steadily takes into account the restrictions on trade with certain goods imposed by the USA, the UK, the European Union and other countries taking part in the imposition of the sanctions.”
As a conclusion, we may say that despite the allegations there has not been a single confirmed fact of sanctioned goods ending up in Russia from Georgia either in the form export or re-export or in the form of transit. International trade turnover statistics do not indicate an intensification of cargo turnover with Russia to such extent that would have been a sufficient argument to point out Georgia’s role in bypassing the sanctions.
Therefore, FactCheck concludes that Irakli Kobakhidze’s statement is TRUE because the claim that Georgia is being used to bypass sanctions against Russia is not confirmed by factual circumstances.
[1] Given the peculiarities of registration and control, it is impossible to collect and publish qualitatively the same information about transit as in the case of export and import. The information that is published does not allow us to further process and analyse this information (because it does not include the volume of transported cargo).
[2] This includes those vehicles which brought goods exported from Georgia to the Russian Federation. However, since export has not decreased, the number of trucks/vehicles carrying transit cargo would not be increased substantially.
[3] FactCheck does not have any evidence for this claim and only a hypothetical possibility is discussed.
[4] The Prime Minister, Irakli Gharibashvili, expressed his position on 25 February 2022 on the very next day after the outbreak of the war: “I would like to state clearly and unambiguously that Georgia is not going to take part in financial and economic sanctions [against Russia] because this will only harm our country and our population much more.” In this light, Georgia still joined the financial sanctions indirectly. In particular, VISA and MasterCard cards issued in Russia were blocked in Georgia whilst VTB Bank had to transfer most of its portfolio to Basis Bank and Liberty Bank.
