Georgia’s European Economic Area ambitions

As the EU suffers from “enlargement fatigue”, perhaps membership of the European Economic Area will prove a useful stepping stone for Georgia in its rightful quest to join the Union, writes Fraser Cameron.

Fraser Cameron is Director of the EU-Asia Centre and recently attended the recent 16^th Batumi International Conference.

The clear message from Donald Tusk at the annual Batumi conference last week was that Georgia is by far the best pupil in the Eastern Partnership class. Tusk also took aim at Vladimir Putin stating that the downfall of the Soviet Union was not the greatest tragedy of the 20th century. It had led to freedom and independence for Georgia which was ‘a small country, but a great nation’.

Tusk is just one of the top EU leaders that have visited Georgia in the past 18 months to see the star pupil at close quarters. Jean-Claude Juncker, Angela Merkel and even Ursula von der Leyen have all been to Tbilisi. With Ursula at the helm of the Commission, Georgia will continue to have a close friend at the top of European politics.

Salome Zurabishvili, the French-speaking president of Georgia, called on the EU to allow its star pupil to join as many EU programmes as possible so that it becomes a virtual member state.

David Zalkaliani, Georgia’s minister of foreign affairs, welcomed the EU’s decision to launch a reflection process on the partnership objectives beyond 2020. For Georgia, ‘the key principles were differentiation and inclusiveness.’

One potential way forward is for Georgia to move towards the European Economic Area (EEA) as a stepping stone to EU membership. This was a theme raised by several speakers at Batumi which attracted a large number of foreign ministers and senior officials and experts from around the EU.

Both the Swedish and Polish foreign ministers praised Georgia’s achievements under the Eastern Partnership and argued that not only did Georgia (and other partners) have the right to join the EU but ‘we have moral obligation to support them.’

Meanwhile Georgia is making steady progress towards implementing the association agreement and starting to enjoy the benefits of its visa facilitation agreement with the EU.

According to the latest polls, some 80% of Georgians considers relations with the EU ‘good’ and 71% trust the EU. A surprising 74% are aware of EU financial support and 62% consider the money is spent wisely.

Georgia itself is becoming a popular tourist destination for Europeans with its mix of historical monuments, mountains, beaches and the trendy night life of Tbilisi.

Georgia is near the top of all indexes showing how easy it is to start a business. Although there have been few major investments, there have been several start ups in the technology sector. Georgia has also signed an FTA with China which is beginning to bear fruit. Trade with China jumped nearly 10% last year.

Although Georgia is progressing steadily it cannot escape its geography and history. Russia still looms large over Georgia with its continuous backing for the break-away republics of Abkhazia and South Ossetia. More recently Putin reacted to a perceived slight by stopping all flights to Georgia and imposing a ban on imports of Georgian wine. This will have significant economic consequences for Georgia as 7% of its GDP is based on tourism and the Russian exodus could result in $700 million losses this year.

With elections due next year the ruling Georgian Dream coalition is becoming nervous. The prime minister, Mamuka Bakhtadze, after a shaky start, is finding his feet as are his team of ministers. The economy is doing reasonably well with growth likely to be just under 6% this year. But even a set-back in tourism is likely to fuel discontent with voters who expect to see their standard of living gradually approach that of their European partners.

The opposition United National Movement says economic growth would be faster if they were in power. Its current focus is criticising the government for allowing a Russian MP to speak, in Russian, in the Georgian parliament during a conference for orthodox religions.

Overall, Georgia is beginning to look and feel like a normal democracy. There are anti-government protests, a lively media and party infighting. Changes to the electoral system could mean a tight race in the 2010 elections. But Georgia has already gone through two democratic changes of power and can look forward with confidence to the future.

The big question for the star pupil is how the EU will react to neighbours who share its values and are keen to join the club. Perhaps the EEA will prove a useful stepping stone for Georgia in its rightful quest to become a fully integrated member of the club of European democracies.