Russia Cuts Off Georgian Water and Wine

Tbilisi accuses Moscow of deliberate campaign to undermine Georgian economy.

By Sofo Bukia in Tbilisi (CRS No. 336, 20-Apr-06)

Moscow has moved from banning wine to obstructing deliveries of mineral water and other goods in a potentially devastating blow to Georgian producers.

In what Tbilisi says is a deliberate political campaign, up to 10,000 bottles of Georgian Nabeglavi mineral water have been detained by the Russian customs authorities outside Moscow. In a addition, seventy lorries carrying Georgian fruit and vegetables, now beginning to go rotten, have been stuck for five days at the North Ossetian section of the Georgian-Russian border.

This latest downturn in Georgian-Russian relations began in late March after Russia banned the import of Georgian and Moldovan wines, citing expert reports that said the wines were subject to counterfeiting and contained impurities.

The developments look to be catastrophic for the Georgian wine industry, which has been exporting up to 90 per cent of its produce to Russia since Soviet times.

Since then the list of Georgian imports which Russia wants to outlaw has grown and includes the famous Georgian mineral waters Borzhomi and Nabeglavi and agricultural products, the bulk of which traditionally went to the Russian market.

On April 20, Russia’s main sanitary inspector, Gennady Onishchenko, told Interfax news agency that the Nabeglavi shipment had been detained because it lacked the necessary documentation confirming its authenticity and quality.

The government in Tbilisi says the Russian measures are an organised political campaign and a response to Georgian threats to veto Russian membership of the World Trade Organisation, because of Moscow’s economic support for the breakaway territory of Abkhazia.

"Moldova is being punished for Transdniestria [Russian-backed breakaway territory] and Georgia - for the withdrawal of the Russian military bases," said Kote Gabashvili, who chairs the Georgian parliament's international relations committee.

"Russian-Georgian relations have reached the breaking point," said Gabashvili.

Tension has steadily grown between Georgia and Russia throughout 2006. The Tbilisi government blamed Moscow for the January explosion on the main gas pipeline - which left Georgia cold and blacked out - and says that Russia is stepping up its support for the separatist territories of Abkhazia and South Ossetia.

The blacklisting of Georgian products is likely to hurt the Georgian agriculture sector very badly.

Archil Gegenava, director of the Teliani Veli winery, told IWPR that 89 per cent of his company's exports went to Russia and that some well-known wine-making companies exported all of their produce to Russia.

"The restrictions imposed by the Russian side mean bankruptcy for many [Georgian wine-producers]," said Gegenava.

Badri Japaridze, vice-president of Georgian Glass and Mineral Water, which produces the famous Borzhomi mineral water confirmed that his company supplied Russia with 110 million bottles last year.

“Borzhomi meets all international standards,” said David Bakradze, head of the Georgian parliament’s committee on European integration. “It is sold in the countries of the European Union and the USA and I do not think that Russia has tougher standards than they do.”

However, questions have been asked in Georgia about the prevalence of counterfeit wine. The agriculture ministry revealed last year that the country had exported 17 million bottles of Khvanchkara and Kindzmarauli, two famous wines, when their wine factories had bought grapes for only 2.4 million bottles. (See CRS 307, “Move to Revive Georgian Wine Industry,” October 6, 2005)

Nonetheless, both the timing and scope of the ban have led most commentators and politicians in Georgia to regard it as politically driven. Georgia’s speaker of parliament, Nino Burjanadze, has said that there is now little point in her country being part of the Commonwealth of Independent States, the CIS.

"If we are the only country, on which Russia has imposed a visa regime, if we are the only country, whose citruses, tea and now wine too have been placed under a ban, then what's the point of Georgia being member of this?” she asked.

Former foreign minister Salome Zurabishvili, now an opposition politician, went further, saying the row might lead to a break in diplomatic relations between Tbilisi and Moscow.

Georgian president Mikheil Saakashvili called Moscow's ban "cynical". "It's a fact that we're being driven out of the Russian market, but I'm sure we'll get back there...Our aim now is to find a way into other markets of the world, to diversify Georgian wine supplies. Actually, we should have done this before", he said.

Saakashvili said that the fact that he had discovered Georgian wines in a store in China during his recent visit to the country was a positive sign.

In an unexpected move, Saakashvili named Defence Minister Irakly Okruashvili to lead a new campaign to popularise Georgian wine in Eastern Europe, the Baltic states and Ukraine.

The appointment has led to speculation that Saakashvili is preparing a reshuffle in which Okruashvili will be made prime minister.

According to official information, Georgia exported more than 36 million litres of wine to Russia last year, worth around 63 million dollars, equal to one per cent of the country’s GDP.

Georgian ministers say they are confident that the ban will not hurt the Georgian economy. However, the affected industries are now in a state bordering on panic and calling for the government to cut a deal with Moscow.

"It's too late already to look for alternative markets," said Merab Japaridze, head of the Georgian Wines and Spirits management department, told IWPR. "We'll go bankrupt before we can win over China and America."

In a bid to settle the issue, a Georgian delegation led by Agriculture Minister Mikheil Svimonishvili visited Moscow last week and proposed at least a partial lifting of the ban. "The assessment by the Russian side says that more than a half of Georgian wines fall short of the norms, which means the remaining 50 per cent are wines of good quality," said Svimonishvili.

The two sides decided to set up an expert group to study the "wine issue”. Meanwhile, a Georgian Wine Week has begun in the famous eastern Georgian wine-making region of Kakheti, with several dozen journalists, as well as the Russian Alcohol Produce Market Participants' Union taking part. The guests will visit famous wine cellars and taste well-known Georgian wines.

Sofo Bukia is a reporter for 24 Hours newspaper in Tbilisi.