Tamaz Datunashvili: “Georgia’s trade turnover with Russia in 2022 increased by 52% to USD 2.5 billion.”
Verdict: FactCheck concludes that Tamaz Datunashvili’s statement is TRUE.
Resume: In 2021 Georgia’s foreign trade turnover with Russia amounted to USD 1.639 billion (USD 610 million export and USD 1.029 billion import) whilst the total turnover with Russia increased by 51.7% to USD 2.487 billion (export USD 652 million and import USD 1.835 billion) in 2022. Tamaz Datunashvili’s statement is true both in regard to the trade turnover volume and the trade turnover growth rate.
A member of the Lelo political party, Tamaz Datunashvili, uploaded a short video (a so-called reel) in social networks where he was speaking about the growth of Georgia’s trade and economic relations with Russia. In particular, Mr Datunashvili stated: “Georgia’s Prime Minister said today that the trade turnover with Russia did not exceed USD 1 billion in 2022 whilst the truth is absolutely the opposite. This figure reached USD 2.5 billion and is 52% more as compared to the same figure of the previous year.”
From 1995 to the trade ban in 2006, Russia occupied the first place in Georgia's export market in nine out of 11 cases (Turkey overtook it in 2000 and 2004). Similar to export, it was in the leading positions in import and Russia's share in the total turnover was steadily exceeding 15% which contracted to 5% after the embargo announced by Russia itself.
The embargo has been gradually lifted from 2013. In the first year, export to Russia increased by 307% from USD 47 million to USD 191 million. In 2013-2021, total export increased by 46% from USD 2.910 billion to USD 4.243 billion and exports to Russia grew much rapidly by 220% from USD 191 million to USD 610 million. At the initial stage, this was obviously explained by the base effect and the recent opening of the closed market.
In 2022, the trade turnover with Russia increased by leaps and bounds again but this time at the expense of import. Export rose by merely 6.8% and import by 79.4% which increased the total trade turnover by 52%. Russia's share in the trade turnover was 11.4% in 2021 and 13.1% in 2022.
Graph 1: Trade Turnover with Russia (USD Million)
Source: National Statistics Office of Georgia
Before Russia’s invasion of Ukraine in January-February 2022, import from Russia increased by 38% as compared to the same period of the previous year whilst import increased by 86% in the first ten months following the outbreak of the war.
Import from Russia increased by USD 812 million during the course of the year. Of this USD 812 million, petroleum products, mostly in the form of car fuel, account for USD 488 million.
As a result of the international sanctions, Russia was forced to sell oil and oil products at a significant discount which gave an opportunity to Georgian importers to make higher profits. The share of Russia in the import of petroleum products was 16% in 2021 and it increased to 47% in 2022 and to a further 66% in January-May 2023.
In 2022, the average cost of petroleum products imported from Russia was USD 948 per tonne and USD 1,059 from the rest of the world. The increase in fuel imports from Russia was mainly precipitated by this fact.
Imports of other products did not increase significantly in 2022 but the almost 100% dependence on wheat and flour import still remains. In January-May 2023, the import of natural gas from Russia increased by 112% from USD 39 million to USD 82 million, although Azerbaijan still remains the main supplier.
After Russia's invasion of Ukraine, Georgia's dependence on the Russian market for certain goods has increased further. Mainly, this concerns wine. In 2021, Russia's share in Georgia’s wine export was 55% (USD 131 million of USD 239 million), the share increased to 64% in 2022 (USD 161 million from USD 53 million) and to 66% in January-May 2023 (69 million dollars from 104 million dollars).
In addition to the high dependency ratio, the second problem is the price. The export value of Georgian wine is one of the lowest in Russia. As of 2022, the average export value of one litre of Georgian wine to Russia was USD 2.26, to the EU USD 2.67, to China USD 3.25 and to the United States USD 5.32.
Similar to wine, export dependency on Russia is also very high in the component of mineral waters and spirits. Russia’s additional 21.5%-24.5% tax which it imposed on Georgia’s ferro-alloys which came into effect from 23 January 2023 gave rise to additional problems to the already suffering industry.
In the full video, Tamaz Datunashvili addresses several issues, including the fact that the EU has reduced trade turnover with Russia since the war began, something which is true (some numbers are not absolutely accurate but the trend is correct) and that Georgia is helping Russia avoid sanctions. However, on the other hand, sanctions, their enforcement/violation and, in particular, what kind of action can be assessed as sanctions evasion or facilitation of evasion are not clear-cut, especially when it comes to political and not legal assessments. Discussing this issue is beyond the scope of this article. Accordingly, FactCheck does not evaluate this part of the statement. At the same time, FactCheck has already prepared an article highlighting that there is no confirmation that Georgia has violated sanctions and we are actively continuing to observe this issue.
In regard to Tamaz Datunashvili’s statement where he speaks about turnover with Russia, the politician’s statement is true. As compared to 2021, Georgia’s foreign trade turnover with Russia indeed increased by 52% from USD 1.639 billion to USD 2.487 billion.