Russian capital and Russian connections in Georgian business

News | Research | Memory and Disinformation Studies 6 June 2023

Russian malign influence still defines the post-Soviet region’s most pressing political, economic and social challenges. While Russian hybrid strategies in the cyber war and information sphere have been much discussed and analysed, there is often a lack of up-to-date empirical evidence documenting Russian influences in different Georgian business sectors. The Kremlin has long been weaponizing corruption and money flows in both its foreign and domestic politics. Corrupt practices are being deliberately exported as a tool to weaken and destabilize democratic institutions, most especially in post-Soviet countries. Counter-disinformation efforts are increasingly moving beyond the narrow media lens and are recognizing money and business as vectors of malign influence and as key tools of nonlinear warfare. 


It is important to identify these business connections and influences, since they often transcend the boundaries of business and have spill-over effects on the media, politics, civil society, and related domains. Hence, the business sector is generally related to socio-political actors and influences public perceptions and long-term attitudes. Closely investigating such links – between political, civil and media actors and business companies owned by Russian citizens – is essential to understand not only the degree of dependence on Russian capital in Georgian business and in strategic fields that might raise security concerns, but also for a more comprehensive understanding of the country’s information environment.


Within the framework of the third stage of the study, titled "Russian Capital and Russian Connections in Georgian Business," IDFI conducted an analysis of the construction sector, significant investments in tourism/hotel services, and road transport. Additionally, medium and large companies were examined. In this context, IDFI went beyond the research methodology to explore the effects on the aforementioned sectors resulting from two waves of Russian citizens entering Georgia in 2022. These waves occurred during the onset of the war with Ukraine in March 2022 and the subsequent "partial mobilization" in October 2022. Hundreds of thousands of Russian citizens entered Georgia during this time, with some choosing to remain in the country. Consequently, these events had a significant impact on the sectors investigated in the third stage, which are elaborated upon in the study. Furthermore, the study includes updated information as of April 2023.


Summary of key findings:



-  According to the "Real Estate Development Sector Survey", from January to November 2022, the share of Russian citizens in house/apartment purchase transactions in Tbilisi increased from 0.9% to 5%, and in Batumi - from 5% to 17.6%.


-  According to the data published by the National Agency of Public Registry, in 2022 (up to September 9), Russian citizens purchased 15,164 buildings/structures (including 13,262 apartments) and 13,850 plots of land in Georgia.


-  In 2022, the share of visits of Russian citizens and the income received from them in total is ahead of the indicators from 2019, when there were direct flights between Russia and Georgia until July 8 and no restrictions caused by the pandemic were in place. 


-  In January-February 2023, the export of goods to Russia increased by 38%, and to Armenia by 197%. According to experts, the observation of trends in trade shows that a significant part of the increased exports in Central Asia and the Caucasus is going to Russia - and re-exports from Georgia to Russia are especially noteworthy in this context.


-  161,032 Russian citizens (individuals) and 55 legal entities had opened accounts in Georgian commercial banks as of December 31, 2022. As of December 2022, deposits placed by Russian citizens in commercial banks of Georgia amounted to 2.87 billion GEL, which is 2.16 billion GEL higher than the pre-war (January 2022) figure. 


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