The FINANCIAL -- Did you know that almost 90% of products being purchased daily at supermarkets across Georgia are Russian-made? From a total of 2,975 foreign trademarks registered in Georgia, 2,442 are Russian ones owned by residents of the Russian Federation, according to Sakpatenti, National Intellectual Property Center.
Among the well known and daily-consumed brands imported from Russia are Jubileinoe, Baltica Beer, Chistaia Linia, Cherni Zhemchug, Dacha, Winston, Picnic, Chudo, Alpen Gold, Sloboda, Greenfield and Prichuda.
A total of 4,516 Russian brand products are sold at Carrefour, the largest hypermarket in Georgia. That means that at least half of the products imported from Russia are not registered.
Products worth a combined total of USD 589,419.5 thousand were imported from Russia to Georgia in 2013, according to GeoStat. Wheat is the product which is imported from Russia in the highest quantity - 492,346.0 tonnes, followed by oil products (118,026.4 tonnes) and petroleum gas (144,238.9 tonnes).
94,550 tonnes of products, with a total value of USD 190.2 million, was exported to Russia from Georgia, according to the Ministry of Economy.
In 2006 Russia imposed a ban on Georgian wines and other beverages creating a diplomatic conflict. Later, in 2008, Russia invaded Georgia and officially recognized its breakaway regions of Abkhazia and South Ossetia (Samachablo). In 2013 Russia partly lifted its ban on the import of Georgian wine, leaving its limitation on other products.
In response to Russia’s invasion of Ukraine, a group of people in Ukraine and Georgia started a campaign to boycott Russian-made products. Some businesses in both countries ceased cooperation with Russian suppliers and partners. In addition to sanctions imposed by western countries towards Russia, the boycott of consumer products in Georgia and Ukraine could be harmful for the Russian economy, while it will not damage the economies of Georgia and Ukraine, initiators believe.
“After the recent events in Ukraine, we decided to express our protest against Russia in the form of boycotting its products,” said Koba Naroushvili, one of the activists of the Boycott Russian Goods campaign. “Such activities have already started in Ukraine. If other countries follow this initiative, it will prove harmful for the Russian economy. The boycott may be finished for Russia at least by losing the Georgian market. This is a civil protest and the state cannot be involved in it. But the state should have other forms of protest against an aggressor country. Georgian citizens should not be willing to buy the products of such a country that has occupied 20 percent of Georgia’s territory. There are alternative products on the Georgian market, for example Ukrainian products. It is better to contribute currency to Ukraine’s economy than Russia’s,” he added.
The page on Facebook, Boycott Russian Goods, had 20,000 visitors in three days and has more than 900 ‘Likes’ already.
Europe began to prepare for a possible trade war with Russia over Ukraine on Friday, with the EU executive in Brussels ordered to draft plans for much more substantive sanctions against Moscow if Vladimir Putin presses ahead with Russian territorial expansion.
But the bigger EU countries - Germany, France and Britain, all with major but very different interests at stake in Russia - split over the tactics of a new campaign with fears that a trade war would be highly risky and potentially ruinous, according to The Guardian newspaper.
“It’s easy to find Russian-made products on the shelves of supermarkets. Pay attention to the ‘QR code’ of the product. If the first three numbers of the QR code start with 460, it means that it is a Russian-made product,” said Naroushvili.
“People say that Georgia can trade with Russia because the standards in Russia are low,” said David Lee, President of Magticom and Vice President of the EU-Georgia Business Council. “Of course it is easier for Georgia to trade with Russia but it is a mistake and a step back at the same time. For example, Georgia has very fertile lands, many rivers, a good climate. But the agriculture and heritage is bad. Why? Because Georgia does not have experience and knowledge in modern agriculture. I think that Georgia needs new, foreign partners, who have knowledge, money and experience and have international experts and customers. In my opinion, economic growth in Russia will not be good soon. So Georgia should go to the West and become a member of the EU, which is a way out for Georgia today. Georgia is not a rich country. If there is not an ideal situation for investors, they will not come to Georgia. And if there are no new foreign investments in the country, the economy will not grow fast,” he added.
In 2011, encouraged by the new policy of the United States as an element of the reset in relations between the U.S. and Russia, Georgia reached an agreement with Moscow that cleared the path for Russia to join the World Trade Organization after 18 years of delay.
“Georgia has an open trade policy. Georgia went through a war with Russia and we did not stop import from Russia even then,” said Mikheil Janelidze, Deputy Minister at the Ministry of Economy. “If customers decide not to buy a specific product, then the state cannot prohibit them from doing that. Georgia is not dependent on import from Russia. So this or that decision of customers cannot damage the economy,” he said.
“It’s the fault of Georgian business that import has been allowed to overcome local production,” one of the consumers told The FINANCIAL. Entrepreneurs who make money from import are neglecting their social responsibility towards Georgian society. They are not investing in production, just taking money from people and thereby helping the Russian economy,” the consumer said.
Besides Georgia, other countries are also boycotting Russian products. A number of small alcohol retailers in the U.S. have taken Russian vodka off their shelves amid worldwide controversy over Russia’s move to occupy Ukraine’s Crimean peninsula. Big Johnson Liquor & Beer, in Abilene, Texas, has removed various Russian vodka brands from its shelves in opposition to Russian action, according to The Spirits Business, international spirits magazine.
Russia’s English-speaking channel Russia Today is blocked on Youtube. “Our YouTube channel has been banned. I would like to remind you that this is the most popular news channel on global YouTube with over a billion views. Two years ago, on the same day, 18 March, we were also banned.” “We hope this was a technical issue, not a ‘technical issue’,” Editor in Chief of Russia Today Margarita Simonyan wrote on Twitter.
In the wake of the Kremlin’s annexation of Crimea, a group of Ukrainian women on Facebook are calling for a sex embargo against Russians. The sex boycott already has its own line of t-shirts, all carrying the official logo of two hands clasped together, creating a rather suggestive shape.
Russia remains the leading country in terms of remittances to Georgia. According to National Bank of Georgia in 2013, USD 801 mln was transferred from Russia to Georgia.
Russia is the eighth biggest economy in the world, with GDP of more than USD 2 trillion. Its economy, which is heavily reliant on commodities, particularly oil and gas, was growing just 1.3 percent in 2013 compared to 2012. With the Ukraine crisis taking its toll, Russia’s economy may not grow at all in 2014, some analysts have warned.
The EU is Russia’s largest trading partner, and there are deep economic links between the two. Almost half of Russia’s exports, USD 292 billion worth, end up in EU countries. 15 percent of Russia’s GDP comes directly from the country’s exports to the EU. Russia, in turn, is the third biggest trading partner for the EU, with USD 169 billion in imports. As the eurozone itself has only just emerged from its own crisis, it may be wary of cutting ties with a powerful economic partner.
Efforts to diversify away from Russia are most evident in Georgia’s wine and mineral water, which suffered the largest loss of market share through the embargo. Exports of mineral water to Ukraine increased from 15% of the total in 2005, to nearly 50% in 2012.
In terms of wine exports, Georgia has significantly diversified its markets since 2006. Exports to neighbouring countries such as Ukraine, Kazakhstan, Belarus, and Azerbaijan have leapt by 270% in nominal terms and 180% in volume terms. Ukraine, for instance, now accounts for more than 40% of Georgia’s wine exports, while China accounts for 10%.