Today's Deep Dive is 1,168 words and a 7-minute read.
On November 27, Georgia's ruling party, Georgian Dream, announced that the government has suspended talks on accession to the European Union (EU), triggering street protests across the country. The step is the latest in the downward spiral of Georgian relations with Western governments, as the small Caucasus nation is caught in geopolitical crosswinds unleashed by the Ukraine War. The future political orientation of the country remains disputed and will be impacted in the near term by developments on the ground in Ukraine, negotiations and terms for bringing the Ukraine conflict to an end, and the mobilization of the Georgian opposition. For businesses operating in Georgia and the South Caucasus, 2025 will bring increase political and security uncertainty, and new compliance requirements with the likelihood of expanded Western sanctions on Georgian government officials and pro-Russian agents of influence for undermining Georgian democracy.
Georgian Dream: Slide to Authoritarianism
The Georgian Dream party, in power since 2014, has transformed from a center-left pro-European party, pursuing integration, to a conservative, illiberal and Eurosceptic one over the past couple of years. The party's founder is Bidzina Ivanishvili, one of Georgia's wealthiest citizens who made his fortune in Russia following the collapse of the Soviet Union. Often characterized as an oligarch and pro-Russian, Western analysts attribute the country's turn back to Russia to Ivanishvili's renewed influence on national policies. But Georgia's links to Russia run much deeper.
Georgia, formerly part of the Russian Empire and then the Soviet Union (and birthplace of Joseph Stalin), has been a precariously-positioned independent state since 1991. From its early days of independence, Georgia's constitution required government bodies to work to ensure full integration of Georgia into the European Union and NATO. Not all Georgians, however, saw their future as linked to the West. The country has a secessionist movement, backed by Russia, which escalated into a full war including Russian troops in 2008. Russia recognized South Ossetia and Abkhazia as independent states and has since maintained a military occupation.
Georgia's uneasy relationship with its much larger and territorially aggressive neighbor led the government in Tbilisi to seek Western assurances for its independence and support for its fragile democracy by expediting its integration into Europe. In 2009, Georgia and the EU upgraded relations through an Eastern Partnership agreement and in June 2014 (just after Russia's annexation of the Ukrainian Crimea), Georgia and the EU signed an Association Agreement, reducing trade and travel barriers. Against the backdrop of continued Russian provocations in South Ossetia and Abkhazia, and Russia's full invasion of Ukraine (February 2022), Georgia applied for EU membership (March 2022) and was granted candidate status (December 2023).
Since 2022, the Tbilisi government has adopted more restrictive laws and practices, clamping down on free speech and press freedoms while championing anti-Western narratives and accusing supporters of Ukraine as being part of a conspiracy to promote war. When the government introduced legislation to "prevent foreign influence in Georgian politics," the so-called "foreign agent law," street protests by the opposition were put down violently.
Georgia held parliamentary elections in October 2024, in what was widely viewed as a referendum on Georgia's future geopolitical direction. Georgian Dream claimed to have won 54% of the vote. The opposition refused to recognize the results, alleging election irregularities including vote-buying, multi-voting, and widespread Russian disinformation. Three monitoring groups, including the Organization for Security and Co-operation in Europe OSCE, have backed allegations of irregularity, but fell short of declaring the elections as unfair or not free.
Growing Political Crisis
In a relatively short period of time, the EU and US' respective relationships with Georgia have gone from partnership to repudiation. Both the EU and the US cut off funding to Georgian government programs and suspended partnership programs while the EU halted Georgia's accession discussions. The EU also threatened Tbilisi with sanctions against those undermining Georgian democracy, while the US imposed sanctions on individuals involved in the crackdowns on peaceful protestors. While Brussels and Washington moved to impose punitive consequences to compel the Georgian Dream party to change tracks and work to build policy consensus with all Georgians rather than oppress the opposition, the pressure tactics misfired.
The Georgian Dream has orchestrated a "freeze," but what may ultimately be a full break, with the EU, accusing Brussels of using EU membership as a form of blackmail to impinge on Georgian sovereignty, seeking to organize a revolution. Tbilisi is also betting that the political context will change to its benefit once Donald Trump assumes the US presidency in January. Meanwhile, daily street protests are growing, with hundreds of anti-government protesters being detained. Pre-election polling showed that around 80% of Georgians support EU membership.
Russia does not have the spare forces to deploy to Georgia to help the ruling party quell the protest, if the current protests become a national uprising, as Moscow did in January 2022 to assist the government in Kazakhstan. Pro-democracy Georgians may be inspired to turn out in large numbers for a sustained period, inspired by the Ukrainian precedent of the Maiden Revolution, which unseated a pro-Russian government and returned pro-democracy forces to power. But the situation of Ukraine today reflects the costs of fighting for democracy, and increasingly the risks of Western support being fleeting, vulnerable to domestic politics of faraway capitals. The alternative, however, is not without costs. Georgians can yield to the power and influence of Moscow, and become the next Belarus, with no real political independence from Moscow, cut off from the West and growing more impoverished.
Trade and Compliance Risks for Business
Western businesses operating in Georgia are likely to face a more challenging operational environment. Ongoing street protests have turned violent, with police firing water cannons and tear gas at protesters, while masked men are running into the crowds and beating individuals. Protests are blocking roads and access to the country's main commercial port on the Black Sea.
Beyond the current physical security and transportation disruptions, the risk of new sanctions is high. The EU Parliament is calling on the EU to impose sanctions on Georgia's Prime Minister and senior level officials responsible for democratic backsliding, violations of electoral laws and misuse of state institutions. The Baltic states already announced plans for sanctions, including the Minister for Internal Affairs and Georgian Dream leader Ivanishvili. The EU plans to discuss the matter at the December 16 foreign affairs ministers meeting. The US has multiple sanctions tools to use, including E.O. 13818, issued during the first Trump administration, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse around the world. The White House could also issue a new executive order specific to Georgian democracy, but as the Biden administration is in its last weeks, it may defer action to the incoming Trump administration. As to whether the incoming Trump administration will throw Georgian Dream a lifeline, that remains to be seen. President Trump has a busy agenda for his first months; it is unlikely that Georgian democracy will be on it.
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