Swiss Institute report rejects allegations of Russia sanctions circumvention through Georgia

A report published last week by the Swiss Institute for Global Affairs has rejected allegations of Georgia being used to bypass international sanctions imposed on Russia for its invasion of Ukraine, saying the perceived increase in trade between Russia and Georgia was “often misconstrued” and did not necessarily indicate sanctions circumvention.

Scrutinising trade data and other detailed information indicates that often cited increases in bilateral and transit trade from and through Georgia to Russia can be explained with harmless developments and that, if some sanctions circumvention should happen, it would be on a negligibly small level”, the report reads.

Contrary to the allegations, the report says the observed trade escalation between the two countries could be attributed to “benign factors”, with any potential sanctions circumvention being of insignificant scale.

Addressing the aftermath of Russia's hostilities against Ukraine, the report acknowledges a surge in trade between the two nations. However, it clarifies that this primarily pertains to Georgia's imports from Russia rather than its exports to the country.

The report points out the “harmless” nature of the goods transiting from Georgia to Russia, citing food products and beverages as the primary commodities.

The only category of goods that Georgia has been exporting in high amounts to Russia and that could theoretically be of concern is ferroalloys. However, as the mentioned study and a review of trade data for the full year of 2023 and the first five months of 2024 shows, the export of ferroalloys from Georgia to Russia has drastically decreased since Russia’s full-scale invasion of Ukraine, contradicting the notion of a booming business of sanctions circumvention”, the report says.

In this context, it has to also be kept in mind that the Georgian Government, while promising to make sure that Western sanctions are not circumvented through Georgia, has not imposed bilateral sanctions against Russia, arguing that this would hurt the Georgian economy more than the Russian one. As such, the export of Georgian-made goods is in any event not affected by sanctions”, it adds.

The document also addressed shipments of dual-purpose cargo - goods that are meant for civilian purposes, but can also be employed militarily - and asserted the volume of the deliveries from Georgia to Russia was incapable of undermining the imposed sanctions.

The cited study as well as later trade data shows, the worth and amount of such goods is so low that they would, even if they would end up for military and not civilian purposes, not be able to undermine sanctions in any meaningful way”, the report reads.

Concerns raised about western imports to Georgia potentially being rerouted to Russia to evade sanctions were dispelled after an analysis of the data failed to reveal any suspicious indications, it said.

Also in such cases, scrutinising data did not show any smoking gun. For example, there have been allegations that increased Georgian imports [from the] United States [of] electronic circuits and microchips suggest that they are re-exported to Russia in circumvention of sanctions. However, digging deeper into trade data actually revealed that recent increases of Georgian imports of such circuits and chips are most likely explained by a lagging recovery of such Georgian imports to pre-pandemic levels”, it said.

The Institute conducts interdisciplinary research on geo- and security policy issues.