TOPIC OF THE WEEK: Georgian elections—the calm before the storm

CAUCASUS / CENTRAL ASIA - Report 18 Oct 2024 by Ivan Tchakarov

The Georgian Parliamentary elections are attracting a great deal of attention, and the CEC announced that international observer organizations are already at a record high. With the geopolitical stakes so high, the elections have been described by the ruling Georgian Dream as a choice between war and peace, echoing Lev Tolstoy's monumental opus.

We have analyzed in previous reports the political spectrum that has formed in the run-up to the October 26th vote, but in this report we speculate on how events may unfold following the elections. In short, in our view there will be a four-step process, including: 1) a simple majority win for Georgian Dream; 2) the opposition's claims that the elections have been rigged, with calls for massive public protests against the winner; 3) a resolute, but smart, response by law enforcement to violence; and 4) a gradual reduction in tensions as Georgia sets itself on a path of perceived isolation from the West, at least for the time being.

The economy would continue to benefit from trading with Russia and welcoming Russian tourists. At the same time, there could be some minimal impact on arrivals from the West. To be sure, this has not happened as of now, and the data for the second and third quarter of this year demonstrates YoY growth of tourist visits from the EU, for example. FDI may also suffer in the medium term, while the lari is very likely to go through some wild gyrations similar to those seen in May-June.

In any case, none of this should be very detrimental to the Georgian economy if this whole election is ultimately (and correctly, in our view) seen not as a struggle between pro-Russian (GD) and anti-Russian forces (rest), but between moderately pro-Western and radically pro-Western ones. The former want to integrate into the West, avoiding direct conflict with Russia, while the latter seek also to integrate into the West, but with the anti-Russian extras of joining sanctions and fully breaking off ties with Moscow.

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