The Republic of Georgia and the GCC: Partners for the Long-Term

Georgia is a country nestled in the Caucasus – on a highway between Europe, Anatolia, and the Middle East – thus, its location is of geo-economic significance. Today we are going to discuss the trade and tourism relations between the Republic of Georgia and the Gulf Cooperation Council (GCC) countries, primarily the UAE and Saudi Arabia, with DeFi and IT also future avenues of cooperation. With the expansion of the BRICS+ club as an alternative to the dollar-euro dominated global monetary reserves system and Georgia's neighbor Turkey joining the BRICS, Tbilisi's Georgian Dream government has seized an opportunity to pursue a more neutral, multilateral foreign policy--to the great dissatisfaction of Washington.

Above: OpenAI Art generated image of an Arab man wearing a black thawb walking through the streets of downtown Tbilisi at night

Today GCC-Georgia ties constitute a generally dynamic and growing relationship mostly vested in economics rather than politics. The Georgian position as an overland gateway between Europe and Asia is the main cause of Gulf country interest, with China's own Belt and Road (BRI) investments in the Caucasus and Turkey also attracting Emirati and Saudi investment fund interest. But Georgia is also relatively undeveloped compared to the oil-rich Gulf states, and as such it is an intriguing emerging market for investments in real estate, highway/railway/port infrastructure, and energy.

During the 1990s relations between the GCC and Georgia remained mostly diplomatic and underdeveloped. The Caucuses Mountains historically have proven to be a formidable geographic barrier, even with ideology disappearing as an issue after the collapse of the Soviet Union. The Caucuses and the Middle East, though linked by trade and religion for thousands of years with an influential Armenian Diaspora in Syria and the Levant, have significant cultural differences between them--even with many of Georgia's neighbors being Muslim. But recent events have accelerated the Gulf states efforts to bolster both economic and diplomatic ties. The 2022 outbreak of the Russian-NATO proxy war fought in Ukraine, the rise of the International North South Transport Corridors to India and China's New Silk Roads, these developments have all increased the importance of the Caucasus for the Gulf states and the wider world.

Starting in the mid-2010s, the modern ski resorts that Georgia has opened in recent years (Gudauri and Bakuriani) like those in other former Soviet states in Armenia (Tsaghkadzor near Yerevan) and Kazakhstan (Shymbulak) have also attracted more Arab tourists. We will cite some figures for the growth in Gulf tourism to Georgia:

In 2016, over 30,000 tourists from Saudi Arabia alone visited this country as tourists, representing a 116% increase from 2015. And this trend was not unique to Georgia but was demonstrable across the entire Caucases and former Soviet Union. In general, tourists from the GCC increased in numbers by 65% compared to 2015, this trend did not decline, with 106,000 people from the GCC passing at least through Georgia in 2017, a big increase from 2016. By 2022 over 120,000 Gulf nation tourists visited Georgia that year.

Outside of the framework of the GCC, separate countries made bilateral deals. For example, the UAE and Georgia signed the CEPA agreement “Comprehensive Economic Partnership” in 2023, which sees tariff-free exports from Georgia to the UAE. With Georgian agricultural exports surging, trade between the two countries is reaching the hundreds of millions per year--and these relationships are built on solid foundations. The UAE maintained control over the port of Poti for over 3 years after a purchase in 2008 and then sold its stake in 2011. But the connections were nascent before, as the UAE began investing in Georgia in 2005. Besides economic investments, there are now some 60 weekly flights between the UAE and Georgia.

Some additional figures that would be an interest to the reader:

Trade turnover between Georgia and the UAE is on the rise, in 2023, it increased by 72% with Georgian exports increasing by 80%, amounting to over $276 million, in 2022 it amounted to $314 million with exports increasing to 51% by the previous year, and so on, everything has simply been going up and up.

Besides the UAE, Georgia also has excellent economic relationships with Saudi Arabia. For example, both governments maintain regular contact on sensitive topics, mostly of an economic nature, and bilateral relations are generally about the industrial and economic sectors, an increase of 360% of mutual economic interests were recorded between Saudi Arabia and Georgia after the opening of the Georgian Embassy in Riyadh.

However, we would like to conclude discussing one important fact about why Tbilisi will continue to make expanded relations with the Gulf states a high priority.

While no GCC country is even in the top 10 countries in terms of direct foreign investment, according to the Georgian Statistics Agency, the UAE makes up 5% of all foreign direct investment, the same general numbers are also present for hydrocarbon-rich Gulf countries such as Saudi Arabia and Qatar. And while FDI has declined since 2023, owing to US/UK/EU-sponsored political unrest over the Georgian Dream government's hotly contested Foreign Agents Law, the relations between Georgia and the GCC remain solid and have not been shaken by the recent unrest of enraged Western governments-funded G-NGOs.

The Gulf states care about investment in long-term growth of the region and their citizens tourism, not about which party leads the government or whether Tbilisi is becoming more friendly with Russia and China, thus 'betraying' the Collective West's billions 'donated' to Georgia since independence. From the perspective of the Georgian Dream government, having pragmatic Gulf partners and building financial ties to carry out non-dollar and non-euro denominated transactions (including using Bitcoin), while building reserves in Emirati dirhams makes perfect sense.