Irakli Gharibashvili: “The sanctions have never once been violated.”
Verdict: FactCheck concludes that Irakli Gharibashvili’s statement is MOSTLY TRUE.
The European Union, the UK, the US, as well as Norway, Korea, Japan, Canada, New Zealand, Australia, etc. implemented international sanctions on Russia in response to the full-scale invasion of Ukraine. These sanctions have mostly affected sectors such as the military, banking and finance, aviation, and energy.
Prime Minister Irakli Gharibashvili stated that Georgia would not be joining the sanctions following the first day of the war, on 25 February 2022. The government later affirmed their stance, thus Georgia’s official stance can be summarised as follows: the country does not officially join the imposed sanctions and, further, does not impose bilateral sanctions on Russia, 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.”
While speculations regarding potential sanctions violations have circulated periodically, no conrete evidence supporting such claims has surfaced in the 22 months from 24 February 2022 to 25 December 2023.
Apart from the absence of concrete proof of sanction violations, not even indirect evidence exists to confirm the charges. In particular, transit and exports to Russia have not drastically increased; additionally, the rate of 2023 global exports (excluding Russia) from Georgia have exceeded that of 2021 five-fold compared to the analoguous data of exports to Russia.
The blocking of Russian VISA and MasterCard cards in the following few days after the beginning of the war could be considered further proof of enforcement of sanctions. Moreover, auto exports to Russia have declined steadily, practically reducing to zero since August 2023.
The resumption of direct airline flights between Russia and Georgia and restoring the access to bank accounts to the sanctioned Otar Partskhaladze are the most pressing issues during the almost two-year period. While direct flights do not necessarily imply violation of sanctions, they nevertheless go against the foreign and security policies of the European Union, of which Georgia is required adherence. Despite Partskhaladze’s case demanding intricate attention, it could nonetheless be considered an exception. There exists no factual evidence whether Partskhaladze managed to utilise the exceptional rule of citizenship, and official statements by commercial banks indicate that the latter did not, in fact, occur.
Despite occasional vague statements, Georgia has substantiated no proof of violation of sanctions. Thus, FactCheck concludes that Irakli Gharibashvili’s statement is TRUE.
Analysis:
Prime Minister Irakli Gharibashvili, during the presentation of the 2023 government performance report, stated regarding the sanctions: “A few months ago, a high-ranking delegation visited Georgia, the primary coordinator of the US sanctions, Mr. O’brien, the coordinator of the European Union sanctions, Mr. Sullivan, and a British representative, the coordinator of sanctions, who openly, publicly displayed their approval of the efficient system created by the government to regulate adherence to sanctions. The sanctions have neither once been violated or evaded to this day, nor has our country ever been used to evade said sanctions.”
Russia declared independence of the occupied and proclaimed Donetsk People’s Republic and Luhansk People’s Republic on 21 February 2022, followed by a full-scale invasion on 24 February, in response to which the European Union, the UK and the US imposed international sanctions on Russia. Several sanctions were additionally imposed by Norway, Canada, Korea, Japan, New Zealand, Australia…
Although Georgia condemned the attack on Ukraine, nevertheless, Irakli Gharibashvili stated that Georgia was not going to join the sanctions on 25 February, the second day of the war. The PM claimed that the decision was made in accordance to the interest in maintaining national security and avoiding the possible recession of the economy.
The terms “not imposing sanctions” and “violating sanctions” differ from each other. For instance, Georgia not locking its airspace to Russia should be considered as a decision to not impose sanctions, as opposed to violating sanctions. The latter would be true if Georgia began to supply Russia with military or dual-use cargo; however, no such evidence has emerged in the past 22 months.
Despite Irakli Gharibashvili’s statement, the banking sector, practically, independently joined the sanctions. VISA and MasterCard cards that had been given out in Russia were immediately blocked in the initial few days of the war; moreover, sanctioned individuals were banned from opening bank accounts in Georgia. Additionally, even the Russian VTB bank had to sell a great portion of its portfolio to BasisBank and Liberty Bank.
The scandal surrounding the National Bank of Georgia followed the decision of the Acting President Natia Turnava to alter the declaration she made on 4 August, and renew access to the now-sanctioned by the US, ex-Chief Prosecutor Otar Partskhaladze on 19 September 2023, one-and-a-half years later after the war began. Partskhaladze possessed dual citizenship in the aforementioned period (Georgian and Russian), thus allowing him to utilise the exceptional rule of Georgian citizenship. Prior to the alterations in the declaration, the ruling party Georgian Dream’s leaders changed their rhetoric, claiming that freezing Georgian citizens’ assets without the decision of the Court went against the constitution. Although the altered declaration raised a slight panic across the market, the situation stabilised in a few days as commercial banks made individual statements. Refer to FactCheck’s article for in-depth information regarding the topic.
Excluding the Partskhaladze case, which has yet to be proven to this day, no evidence exists to back up claims of a sanctioned individual violating or evading the sanctions (the statements by commercial banks suggest that this has not occurred).
In addition to detecting concrete events, claims regarding sanction violations may also be made utilising indirect evidence; for instance, a non-proportional, rapid jump in the volumes of exports and transit. However, the reality stands at the opposite side as exports to Russia increased by merely 10% in 2023 from January to November compared to the same period in 2021; however, exports to the rest of the world increased by 52% in total, thus reducing Russia’s share in total exports from 14.4% to 10.8%. If Russia was the second highest export partner of Georgia, it moved down to the fifth position in 2023.
Graph 1: Export in January-November (USD million)
The sanctions are periodically tightened: exporting cars worth over EUR 50 thousand to Russia was prohibited in 2022, the decision in August 2023 was that American cars must not be exported to Russia, and, finally, electric and hybrid vehicles and cars with an internal combusion engine of more than 1.9 thousand cubic centimeters produced in the European Union since 26 September. Prior to the tightened sanctions, on average, 691 cars were sold in Russia, reducing to 85 in August, and to four in November.
Graph 2: Auto-exports in Russia
Source: National Statistics Office of Georgia
The procedure of re-exporting cars has displayed its historic maximum in the current year, having reached GEL 1.9 billion – 4.7 times more than the data of 2021. Armenia, Azerbaijan, Kazakhstan, and Kyrgyzstan display rapid growth, raising concerns regarding the indirect export of cars from Georgia to Russia through third-party countries. Suppose, sanctioned cargo enters Russia from Armenia (which received said cargo from Georgia), then the noncompliant country is Armenia rather than Georgia, as the former is not a sanctioned destination, making exports viable[1]. Additionally, Central Asian countries were supplied by Russia as well, indicating a possible scenario of some consumers switching to Georgia due to the closing of the market.
Contrary to exports, while Russian imports have significantly increased from USD 900 million to USD 1.6 billion, imported products are not sanctioned. The low prices on Russian oil products (primarily car fuel and diesel) have triggered the rise in imports. European Union member countries continue to purchase Russian gas and oil even 22 months after the war began, albeit in a smaller proportion.
Finding in-depth information regarding transit cargo is challenging, however, calculating the trucks (trailers) passing through the Kazbegi customs rise no concerns. In the first three quarters of 2021, 107 thousand trucks passed through the Kazbegi customs checkpoint from Georgia towards Russia, 102 thousand in the analoguous period in 2022, and once again 107 thousand in 2023.
Graph 3: The Number of Trucks Passing through the Kazbegi Customs Checkpoint from Georgia towards Russia (January-September)
Source: Ministry of Internal Affairs
The lifting of the ban on Airline flights between Russia and Georgia and the abolition the visa regime has resulted in heightened political debate.
Russia imposed both the visa regime in 2000 and banned direct airline flights in July 2019. Regarding the abolition of the visa regime, Georgia held no apparent strategic advantage, theoretically having the ability to prohibit its population from visiting Russia but refraining from doing so. The members of the European Union merely gave recommendations.
The case regarding the resumption of direct airline flights differs from the above scenario. The European Union promptly closed its airspace Russia immediately following the invasion, extending prohibitions not only to all Russian airlines but also to any other physical or legal entity from Russia. Particularly, it is prohibited for any plane used by a Russian airline, registered in Russia, or utilised by a Russian citizen, organisation, or entity to land, take off, or fly over the EU boundaries. This applies even if the aircraft is not registered in Russia but is controlled by Russian entities in any form.
Georgia, prioritising security interests, denied only those airlines that were in the blacklist and receiving sanctioned flights, specifically, planes that were leased and not returned by Russian airlines, despite request made after the beginning of the war. Therefore, if a sanctioned plane were to land at the airport of Tbilisi, Batumi or Kutaisi, Georgia is obligated to seize and hand it over to the owner. However, no evidence of such events occurring exists as of 25 December. Despite being sanctioned by Ukraine, some airlines continue to operate in Georgia, as the country has is not legally committed to adhering to sanctions imposed by Kyiv.
Georgia is not part of the European Union, thus is not legally committed to adhering to any decision made in Brussels; however, the constitution obliges the country to take all measures to ensure integration into European structures (Article 78). Although the association agreement requires Georgia to maintain compatibility of foreign policy with the standards of the EU, the restoration of direct airline flights contradicted the aforementioned standard.
The EU did not conceal its discontent with the decision. The Lead Spokesperson for foreign affairs and security policy Peter Stano openly emphasised the importance of political commitments, stating: [Regarding the restoration of direct flights] this latest decision by Georgian authorities raises concerns in terms of Georgia’s EU path and Georgia’s commitment to align with EU’s decisions in foreign policy as foreseen in the EU-Georgia association agreement… Regrettably, Georgia’s alignment with EU’s foreign and security policy decisions and declarations has gone down from already a low 44% last year to only 31% so far this year.”
The European Union Ambassador to Georgia Paweł Herczyński, along with the ambassadors of other countries currently residing in Tbilisi, delivered a démarche to the Minister of Economy and Vice Prime Minister Levan Davitasvhili.
Government’s decisions are usually evaluated both politically and legally. Despite Brussel’s outright declaration of political discontent, Georgia was never accused of legally violating the sanctions. Thus, Georgia’s conditional response to whether the country violated the sancitons with the resumption of direct flights is negative.
Additionally, credible international media periodically published information regarding Georgia’s potential violation of sanctions. New York Times, in the article titled How Western Goods Reach Russia: A Long Line of Trucks Through Georgia, stated allegations regarding the long line of trucks at the Kazbegi customs checkpoint in January 2023. The chairman of Georgian Dream Irakli Kobakhidze then denied the claims and stated that no factual circumstance confirmed Georgia’s violation of any sanctions. FactCheck evaluated Irakli Kobakhidze’s statement and concluded it to be true.
In June, Politico disseminated misinterpreted information attributed to James O’Brien, the Sanctions Coordinator at the State Department, claiming that Georgia was making enforcement of the sanctions more challenging. O’Brien, during his visit to Tbilisi three weeks later, identified Georgia’s efforts and stated that observations were continually made. He further asserted that due to periodically tightened sanctions, certain products, such as electrical goods, not sanctioned initially, soon became subject to sanctions.
The Ambassador of the European Union David O’Sullivan and the Director General of Economics, Science and Technology at the Foreign, Commonwealth & Development Office in Britain Kumar Iyer also accompanied O’Brien in his visit to Tbilisi.
O’Sullivan expressed disappointment on behalf of the European Union regarding Georgia’s decision not to join the sanctions; however, he underscored the understanding of Tbilisi’s strategic position due to the country’s economic and geographic context. He then asserted the willingness of the government to prevent Georgia from becoming a channel for sanction evasion.
Kumar Iyer expressed gratitude for comprehensive measures undertaken by the Georgian government to ensure the prevention of sanction evasion attempts.
The statements by O’Brien, O’Sullivan and Iyer can be summarised as follows: “Partner countries and alliances (the USA, Britain, the EU) are disappointed with Georgia for not joining the sanctions. However, they acknowledge the economic context behind Tbilisi’s decision. These nations also assert the fact that Georgia is not in violation of the sanctions and, furthermore, does not permit third partes to exploit the country as a means of evading the sanctions. Moreover, the country conveys willingness to collaborate.”
Additionally, the United States Ambassador, Kelly Degnan, acknowledged Georgia’s commitment to enforcing the sanctions on multiple occasions (refer to article 1, article 2).
It is challenging to determine whether sanctioned products have entered Russia from Georgia following the onset of the war, as in-depth examinations of over 10,000 trucks, on average, per month are logistically impossible to conduct. Theoretically, a portion of sanctioned products, such as microchips, could have also been carried over via buses and cars. Evaluating airline transit adds another layer of difficulty. However, on the one hand, such circumstances may be periodic, but on the other hand, identifying its systemic nature is crucial. The minister of finance Lasha Khutsishvili stated that over 1000 instances of attempts to violate the sanctions had been prevented as of March 2023.
There is an absence of concrete evidence supporting the claim that Georgia has been supplying Russia with sanctioned products withouth explicit detention. Considering the lack of legally identified circumstances of sanctions violation, statements by the ambassadors of partner nations, as well as a statistical analysis of foreign trade and transit, FactCheck concludes that Irakli Gharibashvili’s statement is TRUE.
