September 18, 2019

On Sept. 8, the ruling Georgian Dream (GD) coalition’s nominee Giorgi Gakharia was confirmed as Georgia’s new prime minister following the unexpected resignation of Mamuka Bakhtadze. Gakharia’s appointment was championed by GD’s chairman, Bidzina Ivanishvili, himself a former prime minister (and the country’s wealthiest man). The new leader is a controversial figure in Georgian politics, particularly as he is widely believed to have ordered a major police crackdown on opposition protesters in the capital, Tbilisi, in late June. A demonstration specifically aimed at Gakharia is slated for Sept. 20, which will test his approach to dissent now that he has taken the helm. While it appears that Georgia may be on the cusp of a new round of political unrest, economic realities will likely force the ruling coalition, despite the elevation of Gakharia, to pursue de-escalation.


Background of Protests in Georgia

Hundreds of people were injured June 20 when protesters clashed with riot police in Tbilisi. Under the auspices of the Interparliamentary Assembly on Orthodoxy (IAO), a multilateral body that promotes solidarity between predominantly Orthodox Christian counties, the Georgian government hosted a Russian member of parliament, Sergei Gavrilov, earlier that evening. Protesters began to gather after Gavrilov, a vocal supporter of the breakaway Abkhazia and South Ossetia territories, was allowed to sit in the speaker’s chair and hold an assembly meeting in the Russian language.

The initially peaceful crowd turned violent as the evening progressed, attempting to storm the Parliament building. Riot police responded with rubber bullets and tear gas. Authorities detained over 300 people and at least 240 were treated in nearby hospitals. The Russian delegation was evacuated, prompting Moscow to suspend all flights to Georgia and advise its citizens not to visit the country. Travel disruptions remain ongoing.


Political Impact

Georgian Parliament Speaker Irakli Kobakhidze

Georgian Parliament Speaker Irakli Kobakhidze resigned in response to the June protests and police crackdown. The head of the Georgian delegation to the IAO, Zakaria Kutsnashvili, followed suit shortly afterward. Despite this, sporadic protests continue, including demonstrations outside Ivanishvili’s home in central Tbilisi. Ivanishvili may have nominated Gakharia, who is widely regarded as a pro-Ivanishvili hardliner, as a means of shoring up support for the government.

Georgian Dream supporters have become more organized since the June clashes. Demonstrators gathered outside the offices of the opposition Rustavi 2 television channel on the evening of July 7, following an obscenity-laced Russian-language rant by journalist Giorgi Gabunia aimed at Russian President Vladimir Putin. President Salome Zurabishvili, then-Prime Minister Bakhtadze, and Tbilisi Mayor Kakha Kaladze derided the speech as a “provocation.” Rustavi 2 suspended Gabunia for two months and dismissed Director General Nika Gvaramia. Financial authorities later seized Rustavi 2 and transferred ownership to a previous proprietor.


Economic Impact

Political disputes notwithstanding, Russia has long been one of Georgia’s largest trading partners; Russia is the largest destination for Georgian exports and the second-largest source of imports across all economic sectors. This relationship is most pronounced in the tourism sector; by nationality, Russians represent the second-highest number of international visitors to the country, according to the Georgian National Tourism Administration (GNTA).

The GNTA also estimates that the Russian travel embargo will cost Georgia approximately 1 million tourists in 2019 alone, representing an economic loss of about GEL 2 billion (USD 675 million). It is unlikely that Georgia will be able to attract enough European tourists to make up this difference, despite government-sponsored efforts to do so.

Russian President Vladimir Putin announced July 9 that he opposes imposing more comprehensive sanctions on Georgia, though it is unclear to what extent this will reassure investors. Russian members of parliament continue to call for sanctions against key Georgian exports such as wine and mineral water.


Looking Ahead

The Georgian Dream-led government still enjoys significant support outside the capital and is likely to weather this storm and remain in power, though with some political concessions. Foremost among these is a switch to a proportional system for future parliamentary elections, long called for by the opposition United National Movement party.

It is unlikely that the current unrest and political changes will negatively impact non-Russian business operations and travel in the country beyond sporadic protests, particularly in the capital. Both the ruling coalition and the opposition are eager for foreign investment and have pledged to support policies favorable to that end.


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