Foreign Trade Problems in the Occupied Regions of Georgia

Abstract

The study of the economies of the occupied regions of Georgia (with some exceptions, most of which are of an informative nature), especially the study of their foreign economicrelations, has not yet become the subject of scientific research.

How do the occupied regions choose their trading partners? What factors determine this choice? Which countries are their official or informal trading partners? What is the commodity structure of their foreign trade? These are the questions that need to be discussed scientifically in the social sciences.

The purpose of this study is to make a modest contribution to these discussions by examining the geographic and commodity structure of foreign trade in the occupied regions of Georgia. However, it should be noted that the study provides a generalized picture of the foreign trade of these regions and will focus only on those empirical data that are suitable for the research aspect.

Why are these occupied regions? The choice of these regions as empirical cases is due to several reasons. These regions play an important role in achieving the geopolitical goals of Russia in the Caucasus region, therefore, in addition to the theoretical significance, the article also acquires practical significance. On the other hand, since these regions are de jure part of Georgia, the work acquires a certain relevance.

The study uses Temporal and spatial approaches. The main method is the Case Study method. To collect and analyze data, the study uses such specific methodological techniques as: 1. Analysis of primary sources - content analysis of official documents related to foreign trade; 2. Analysis of secondary sources - scientific literature that exists on the subject under study. This applies to both theoretical literature and research directly related to the occupied region.

The situation between Georgia and the occupied territories did not improve after the 2008 war. However, informal trade between Georgia and the occupied regions has intensified. The volume of foreign trade between Abkhazia and other countries has also increased. Despite the controversy, Georgia tried to legalize trade.

In 2017, Georgia and Russia began negotiations on the creation of a trade corridor through the so-called South Ossetia. At the same time, the European Union began to consider various options for including the Abkhazian business within the framework of the free trade agreement between Georgia and the European Union.

Although the process of implementing such initiatives is going through a crisis at this stage, it still opens up certain opportunities. In particular, the powerful economic stimulus that these regions received from the Russian Federation is gradually weakening due to the economic situation in Russia.

This process has intensified especially since 2014, when the West introduced tough sanctions against Russia and at the same time the price of oil on the world market fell sharply. That is why the governments of Abkhazia and the so-called South Ossetia, which officially oppose trade with Georgia, are at the same time considering the possibility of raising customs duties in order to increase their source of income regardless of Russia.

Informal trade continues to develop. However, it is less likely that the so-called South Ossetian corridor or the possibility of expanding the privileges of the European Union in Abkhazia will arise very soon. Trade by itself will not change the main political position of either side and will not resolve the conflict (a political settlement of which is still a distant prospect). Nevertheless, negotiations on the development of mutually beneficial trade can help launch communication channels that have been tightly closed for a long time.

This is a chance to close the so-called black holes of informal trade and turn it into a formal framework. At the same time, we need to establish a dialogue in this specific area with the active participation of our Western partners.

It is important that the benefits from the process of Georgia's European integration become available to both Abkhazia and the population of the so-called South Ossetia.