In September of this year, a delegation headed by Georgian Prime Minister Mamuka Bakhtadze visited Armenia. This visit was promising in terms of developing economic relations: the Georgian delegation proposed that trade turnover between the two countries should reach the $1 billion mark in coming years. The proposal was naturally welcomed and approved by the new Armenian government. At the time, Prime Minister Nikol Pashinyan stated, “Our goal is to have the economic component of our relations on par with the contextual and emotional relations that exist between our people.” Following those talks, it was announced that in the near future an Armenian-Georgian intergovernmental session will take place, during which a road map will be established to develop relations, focusing specifically on trade and economic relations.

Trade Turnover

According to the Statistical Committee of the Republic of Armenia, in 2017 the trade turnover between Georgia and Armenia amounted to $250 million, 3.9 percent of Armenia’s total foreign trade. Numbers from the National Statistics Office of Georgia are quite different. According to Georgia, the trade turnover between the two countries is $491.6 million, accounting for 4.6 percent of Georgia’s foreign trade. The difference in numbers, in essence, is based on methodology. According to the methodology used by Armenia’s Statistical Committee, banknotes, monetary gold, transit of foreign cargo through the country, foreign goods sent or imported for expos and fairs are not included as indicators. Georgia’s National Statistics Office uses what is considered to be the “General Method” when calculating its foreign trade turnover. This means the import and export of goods are registered as soon as said goods cross Georgian economic territory. The director of Tbilisi State University’s Analytics and Forecasting Center, Vakhtang Jarayan, explains the difference in numbers thus: “For example, a car is being sent to Armenia from Germany. This usually happens through Georgia. Armenia registers this as an import from Germany, while Georgia registers this as a Georgian re-export.”

Moreover, according to Jarayan, there are instances when goods cross the border at a certain price, but the import is registered with a completely different price.

Additionally, Georgia is one of the few partners Armenia has with which it has a surplus in its foreign trade turnover. This means that more goods are exported from Armenia to Georgia than is being imported from Georgia to Armenia. According to data from Armenia’s Statistical Committee, $155.2 million worth of goods were exported to Georgia from Armenia and only $93.8 million worth of goods were imported from Georgia to Armenia. The amount of exported goods from Armenia to Georgia well exceeded the amount of imported goods from Georgia to Armenia in previous years as well. Armenia exports mainly ores/minerals and copper concentrates, cigarettes, glass containers, ethyl alcohol and alcoholic beverages. The main goods imported to Armenia from Georgia are alcoholic beverages, nitrogen fertilizers and electricity.

Dependence

Even though Armenia and Georgia are not each other’s number one trade and economic partner, nevertheless, there are indicators to suggest that there is economic interdependence between the countries. Economist Tatul Manaseryan states that Armenia and Georgia can complement each other taking into account that Armenia is a member of the Eurasian Economic Union (EEU) and Georgia has a free trade agreement with the European Union. Manaseryan believes that Armenia has a larger role to play in this, since it is actively negotiating with the European Union while being a member of the EEU. Manaseryan also emphasized the Iranian factor. “Armenia can be a connecting link between Georgia and the Eurasian Economic Union. I’m not mentioning the EU because Armenian is already in dynamic negotiations with the latter,” he explained. “We also have to take into consideration that the free economic zone with Iran creates favorable conditions specifically for Georgia; this would allow trading goods not only with special terms, but realizing energy projects as well.”

Jarayan essentially shares the same opinion as Manaseryan - that is, considering the present geopolitical conditions and status, Armenia is an important partner for Georgia. Jarayan also added that Georgia is vitally important for Armenia as a transit country. “Of course, this is two-sided, because Georgia is necessary for Armenia and vice versa. And that stands true even taking into account that a Russian military base exists in Armenia,” Jarayan noted. “If we look at the economic indicator alone, Georgia is vitally important for Armenia taking into consideration its importance as a transit country.”