Georgian economist – China and Asia are interested in us only because of our relationship with EU

EU Enlargement Commissioner Marta Kos has not ruled out the revision of the Deep and Comprehensive Free Trade Area agreement (DCFTA) with Georgia. She also stated that Georgia’s candidate status may be frozen, and visa liberalization may be revoked.

The Georgian Dream (GD) government, on the other hand, claims the opposition is creating artificial panic over an economic crisis, while the reality is different. Experts say the crisis is not yet visible, but in case of sanctions, it will be inevitable by autumn. Economist Oto Abesadze discusses these and other issues with Front News.

- If the MEGOBARI Act passes in the US House of Representatives within a week and sanctions are imposed from the US, EU countries, and the UK, what kind of damage will the country face? What happens if the statement about reviewing the trade agreement (DCFTA) becomes a reality and the EU suspends it?

- When Georgian Dream says that the US and EU are not a panacea and that the alternative is China and Asia, everyone should understand one thing – both are interested in us only because of our relationship with the EU. China has a very good and ideal trade relationship with Russia. It continues that ideally to this day. China needs us only to transfer goods to the EU through us.

Without the EU, Georgia is a dead-end. That means it’s functionless and sterile. Remember the case with Prime Minister Bakhtadze, when there was a big announcement about building a factory for the Chinese car giant Chery in Kutaisi, but they ended up installing a capsule. That project wasn’t realized because the EU refused to accept Chinese transfers. The same is happening now – no Chinese port will be built, and not a single Chinese lari will enter Georgia unless it normalizes relations with the EU and the US

- So the agreements reached with the EU gave the country political advantages. That means Georgia became the key state connecting the region to the EU. The rapprochement with the EU also gave our country an important role for Central Asian countries, and this role will be lost immediately if the EU imposes these severe sanctions?

- Of course, we are a convenient land, sea, and railway transfer route for trading with the EU. Otherwise, our 3.5 million market is of no interest to them. They don’t need us to trade with Russia or Turkey – they trade directly without us. China trades with Russia through their shared border, and Iran trades with Turkey through Syria. So, we’re completely irrelevant without the EU. Therefore, the goodwill of the EU is vital for us. Our development without them is unimaginable.

If the EU actually carries out its threat, imposes sanctions, revokes visa-free travel, adopts the MEGOBARI Act etc., Georgia will fall into economic collapse. This won’t happen because money from the EU stops flowing – we weren’t getting much from them anyway. It will happen because the prospect of receiving Chinese money will disappear.

However, there’s a great chance that global brands will open logistics hubs in Georgia if you allow them to do so through the DCFTA. That’s why Georgia is currently shiny and attractive to them. I’ll tell you more – AliExpress and Alibaba can build at least a 25-hectare warehouse in Kutaisi. All of this is currently under negotiation, which I also attended. That’s if the inventory and goods stored here will be shipped to the EU.

- According to the Ministry of Economy and Sustainable Development, 2025 started with high economic growth. Specifically, in January 2025 economic growth was 11.1%, in February 7.7%, and in March 9.0%. The average economic growth for January–March 2025 was determined to be 9.3%. What caused this growth, how did it benefit our country, and did it impact the population?

- That narrative is also false – there was no economic growth. There are two definitions: growth and growth rate. So the country had a growth rate, not actual growth. Let me explain so the public understands what growth rate means. Let’s say today I give you 100 lari, tomorrow 200, the day after 400, then 800, and so on – finally 1600. That means your daily income growth rate is 100%. By growth rate, you’re richer than Elon Musk. But in total, you have 3,500 lari in hand, not 300 billion like Musk. That’s the difference between growth and growth rate. Georgia is ahead in growth rate, but what kind of growth rate? That’s the key. Shalva Papuashvili said we have a higher growth rate than the EU.

Our 10% of 3 billion is compared to their 1% of 25 trillion. There’s no real difference. We haven’t had real economic growth. What we have is inertial growth. This inertial growth is created by the existing economic wealth, which follows the unwritten rules of economics whether you like it or not. What drives economic growth is foreign direct investment. 72% comes from remittances from emigrants. 22% is reinvestment of existing foreign investment, and only 6% is new economic money. So what created the new economy if no new money came into Georgia? Did businessmen sprout like mushrooms and bring in capital? Nothing like that happened. In the last 7 years, no major brand has entered Georgia with significant investment. What we have is an inertial economy that is currently moving on its own. However, we have a unique opportunity to really receive Asian money. Not just us – the whole world is chasing that. Germany and other European countries are also hunting for Chinese investment.

- The founder of Georgian Dream and businessman Bidzina Ivanishvili is no longer listed on Bloomberg’s billionaire index. There is no longer a single Georgian among the 500 richest people on the planet. Why do you think the businessman and honorary chairman of Georgian Dream disappeared from the list, when at the beginning of April his fortune was $6.8 billion, ranking 418th in the world? Many believe he simply hid his money; others say he lost part of it due to sanctions. Which of these reflects reality?

- Sanctioning a businessman on a personal level is just self-deception. Sanctioning with personal accounts is a lie. I see no real support or real factor from the West against Ivanishvili. Except for his travel restrictions – which he doesn’t even care about because he doesn’t go anywhere. He doesn’t travel at all, so these sanctions don’t create any discomfort. The other claim, that his wealth is no longer visible and he supposedly went bankrupt, is absurd. Ivanishvili moved his money from legal funds, where tracking was possible, to elsewhere. That’s it – his money is no longer counted in stocks, so Bloomberg and other public platforms can’t count it anymore. Any billionaire can do this. If you were that rich and didn’t want Bloomberg to track your wealth, they wouldn’t. There are at least twice as many billionaires in reality than appear on public lists – many are hidden. Where’s the sanction? What sanction? A visa restriction isn’t a serious sanction that could harm Ivanishvili.

- What type of sanction would be the most severe for the country or the government, so that Western pressure would be genuinely felt?

- Today Georgia is part of the modern global economy. In our case, there are three main factors. First is SWIFT – the system for receiving financial transfers. Second is the DCFTA – Deep and Comprehensive Free Trade Agreement with the EU. Third is visa-free travel. We got that visa-free travel because of the DCFTA so people could move freely under the trade agreement. If these three platforms are halted in relation to Georgia, and Chinese money can’t leave the country via SWIFT, then who the hell needs us?! In the end, on the one hand, we have a unique opportunity to receive the dreamlike Arab and Chinese money. On the other hand, we are idiotically wasting all of this due to unhealthy political relations with the West.

By Elza Paposhvili