Thursday, January 17, 2013

POLITIC REVIEW: No Need to Panic Over Georgia-Iran Ties. By Michael Cecire (

(worldpoliticsreview.comOn Dec. 5, the U.S. House Foreign Affairs Subcommittee on Europe and Eurasia heard testimony from American Enterprise Institute resident scholar Michael Rubin on Iran’s influence in the South Caucasus. While Rubin detailed Iran’s close ties to Armenia and contrasted them to Iran’s uneasy relationship with Azerbaijan, he closed his testimony with unexpected warnings of a potential Georgian alignment with Iran (pdf).

“The victory of [Prime Minister] Bidzina Ivanishvili's Georgian Dream party in October 2012 elections threatens to radically reorient the Republic of Georgia, which, under President Mikheil Saakashvili, has been reliably pro-Western,” cautioned Rubin, adding that Ivanishvili’s pledge to improve ties with Moscow could be a prelude to a Russia-Iran-Georgia axis. “A reorientation of Georgia’s relationship with Iran might accompany its shift to Moscow.” Yet, despite the enormity of this allegation, Rubin provided no evidence that any such reorientation is actually imminent. 
In fact, the implication that Georgia’s recently elected government could be building a haven for Iranian anti-Western activities is unsubstantiated, and it ignores the previous government’s many overtures toward Tehran. However, there are legitimate concerns that Iranian investments in and accords with Georgia could help the Islamic Republic to evade the crippling international sanctions regime. 
The victory of Ivanishvili’s upstart Georgian Dream coalition over Saakashvili’s formerly ruling United National Movement (UNM) almost certainly does not presage any kind of Tbilisi-Tehran alignment. While relations between Georgia and Iran have improved over the past several years, it was the UNM-led government that spearheaded and eagerly pursued this improvement while it was in power. In 2010, Georgia and Iran signed accords opening a new Iranian Consulate in Batumi and eliminating visa requirements for each other’s citizens, which led to an influx of Iranian tourists to Georgia’s Black Sea resorts. The accords came only months after Saakashvili hailed the much-criticized, and soon aborted, nuclear fuel swap deal between Iran and Turkey, which he described as “diplomatic heroism, which will go down in history.” 
Under the UNM, the volume of trade between Iran and Georgia more than tripled from 2006 to 2011, according to the National Statistics Office of Georgia. In the same period, foreign direct investment from Iran increased almost 25-fold. However, Iran still represents only a modest portion of Georgian trade and FDI, at approximately $81 million and a little more than $1 million in 2011, respectively. 
For its part, the new Georgian Dream government, which won a surprise victory over the UNM in October’s parliamentary elections, has made no indication that it plans to build upon the UNM’s generous outreach to Iran. If anything, the new government’s prioritization of domestic issues is likely to keep Iran from featuring prominently on Ivanishvili’s agenda, barring any major geopolitical developments. And perhaps more importantly, even Tbilisi’s pre-existing relationship with Iran is more a function of regional dynamics than any concerted attempt to forge an alliance. 
Kornely Kakachia, a political scientist at Tbilisi State University and the executive director of the Georgian Institute of Politics, has argued that “Georgia’s current policy toward Iran is not irrational.” In analyzing Georgia-Iran relations (.pdf), Kakachia concluded that “Georgia’s shrewd game of regional realpolitik neither shifts its core foreign policy orientation nor conflicts with its primary goals of integration with the [European Union] and NATO.” 
Instead, while Georgia’s ties with Iran do serve to diversify Tbilisi’s foreign policy portfolio, the relationship is more about markets and investment. For example, when Russia suddenly closed the spigot of natural gas to the Georgian market in 2006, Iran continued to supply Georgia despite Moscow’s strong objections.
Though Georgia’s cultivation of ties with Iran might be logical -- and unlikely to bloom into anything more significant -- Georgia-Iran relations nonetheless have implications for U.S. efforts to contain Iran’s controversial nuclear program. On a visit to the South Caucasus in mid-December, Luke Bronin, the U.S. deputy assistant secretary of the treasury for terrorist financing and financial crimes, warned in particular about Iran’s attempts to bypass international sanctions through third-party states. 
“As Iran comes under increasing financial pressure, it will look for opportunities to build new relationships to evade sanctions,” he said at the time. “It is important for financial institutions and others, including here in Georgia, to recognize the serious risks of engaging with Iran.” 

George A. Lopez
, a political scientist at the University of Notre Dame and an expert on sanctions finance, notes that Bronin’s concerns could have something to do with Iran’s investments in Georgia, which it might hope to use to bypass international sanctions.
“The facilitation of sanctions evasion occurs in how the Iranians, with or without the knowledge and cooperation of Georgians, would seek to move cash, [or] use a legitimate investment as a cover for illegitimate flow of materials that are banned under the sanctions, and how the open visa relationship could permit travel of individuals on the sanctions list in ways that undercut their existing constraints under sanctions,” explains Lopez. “Thus, while building a big hotel for tourists is in and of itself legitimate, the question is whether or not the tourists from Tehran are bringing bags filled with cash that cannot be moved any other way to buyers of Iranian products that are on the sanctions list.”
Given that Georgia has gained a reputation as a regional nexus for nuclear smuggling, suspicions about ulterior motives behind Iranian investments there are all too plausible. And with the former government’s embrace of Iranian investments and tourists, there is always the possibility that legitimate enthusiasm for economic benefits could have trumped due diligence, providing Iran with avenues for sanctions evasion. 
Georgia’s relationship with Iran does deserve careful scrutiny. Given the size and pace of Iranian involvement in Georgia since 2006, there are sure to be issues and questions concerning means and ends. But dubious, politically charged conjecture directed against Georgia's new government only serves as an unhelpful distraction at a time when cooperation between Tbilisi and Western capitals should be preserved and expanded in the service of common interests.
Michael Hikari Cecire is a Black Sea/Eurasia regional analyst and associate scholar at the Foreign Policy Research Institute, where he contributes to the Project on Democratic Transitions. He is also a contributing analyst for Wikistrat.
Photo: Georgian Prime Minister Bidzina Ivanishvili, Oct. 2, 2012 (Voice of America photo).

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