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Feb 13, 2017 | 18:44 GMT

Georgia, Russia: Furthering Ties With New Trade Routes

(Stratfor)

There are new signs that trade is beginning to tie Russia and Georgia closer together. On Feb. 13, Georgia's special representative for talks with Russia said both countries had agreed Feb. 7 to establish three trade routes, which would wind through the breakaway territories of Abkhazia and South Ossetia and through the Larsi mountain pass (east of South Ossetia). Moscow also reportedly agreed to demands made by Georgia's government in Tbilisi to station international observers to monitor goods traversing the Russian-Abkhazian and Russian-South Ossetian borders. Additional observation posts will likewise be placed on demarcation lines between the breakaway territories and the rest of Georgia.

New trade along these routes would lead to better economic relations between Russia and Georgia. Currently, trade between the two stands at $800 million, making Russia Georgia's third-largest trade partner. And this is not the only development: Tbilisi and Moscow recently reached an agreement that allows Russian natural gas destined for Armenia to transit through Georgia. Many in Georgia, however, see the deal as a disadvantage for the government. In previous arrangements, Russia paid Georgia for the transit with 10 percent of the natural gas. Under the new deal, Russia pays the transit fee with cash and Georgia must buy the natural gas separately. With Georgia likely to increase its natural gas imports, Tbilisi will come to rely more on Russia to meet its future energy needs.

Moreover, Moscow's agreement to station trade observers on the borders between the breakaway territories and Russia is a notable nod to Tbilisi that at one time would have been impossible. After the short-lived Russia-Georgia War in 2008, Moscow cut diplomatic ties with Tbilisi, and they have not been restored. But now, the Kremlin seems to be sending signals to the Georgian government that it's willing to reconcile, at least economically.

There are also indications that pro-Russia sentiment is growing in the country. Recent polls show 53 percent of Georgians favor European integration — a near 10 percent drop from last year. Some 31 percent, meanwhile, support improving relations with Russia — an almost 10 percent increase over the previous year.

These changes are improving relations between Georgia and its breakaway territories as well. Abkhazian and Russian officials resumed talks with their Georgian counterparts to prevent conflict along Abkhazia's demarcation line in late 2016. At the same time, officials from South Ossetia have said the territory's leaders plan to open a new trade post on the demarcation line near Akhalgori. Overall trade with the breakaway region may even resume. Tbilisi floated the idea of changing the country's constitution, too, so that foreigners entering Abkhazia or South Ossetia without first notifying Tbilisi (most of whom are Russian) would face a fine rather than legal prosecution.

Russian-Georgian relations are clearly progressing at the time when geopolitical situation in the former Soviet periphery is in flux. Divisions in the European Union are growing. A new U.S. presidential administration appears more open to working with Russia. So for many former Soviet countries, including Georgia, rethinking the relationship with Moscow is now vital.

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