Issue 1, 2016. February-March

   

WILL SOURING RUSSIAN-TURKISH RELATIONS BE A BOON FOR GEORGIA?

Russia announced sanctions against Turkey in November, and called on its citizens not to visit Turkish resorts after the Turkish military shot down a Russian jet. Investor.ge spoke to Georgian government officials and economists to see if the Georgian economy could benefit from the crisis.

Nino Bakradze

More tourists, more trade, more problems for the Georgian economy? There are a lot of questions about what increased tensions between former allies Russia and Turkey could mean for Georgia.

Economists are divided over any potential positive impact for the Georgian economy, while government officials and tour operators are scrambling to attract as many Russian tourists as possible.

"Catching" Russian Tourists

The Georgian government should work quickly and get as many advantages from the situation as it can, according to Lasha Lanchava, a researcher at the Policy Institute at the International School of Economics at Tbilisi State University (ISET).

"One average Russian tourist spends approximately $1,000 per tour. About 7 million tourists previously visited Turkey and Egypt each year from Russia. If we will catch 1 or 2 million tourists from this amount additionally next year, it would be a positive shock to our economy," he said.

"We have some advantages: we are geographically closer, our prices are lower and the Georgian brand is well known in Russia. But the government and private sector should work quickly now, as the Israeli government is doing. They have already started negotiations with Russian tourist agencies, air companies and to run an information campaign there."

The Georgian government is already working to attract as many Russian tourists as possible, according to the Georgian National Tourism Administration (GNTA).

GNTA told Investor.ge that it started negotiations with Russian tourism agencies after Russian-Turkish relations soured.

Giorgi Chogovadze, the head of GNTA, says they expect Georgia to have over 108,000 additional Russian tourists this year.

"We want to run an active marketing campaign in the Russian market to attract more tourists. We plan to organize press and familiarization tours for Russian journalists and tourist agencies in 2016, as well as make TV advertisements and programs about Georgia's tourism potential. We are conducting negotiations with particular airline companies to start charter flights from Russia to Georgia," he said.

Georgian tourism agencies are also working to attract more Russian tourists.

Over 866,000 Russian tourists visited Georgia in 2015 -- 14% more than in 2014, according to GNTA's statistics.

Caucasus Travel brought 400 Russian tourists to Georgia last year. The company's deputy director, Gvantsa Razmadze, told Investor.ge that they are gearing up to engage with the Russian market even more intensely this year.

"The Georgian tourism industry is preparing to receive more tourists from Russia and to host them. We are going to activate our online marketing and information campaign in this direction. There is a chance to plan familiarization tours for Russian tour agencies," Razmadze said.

Russian tour operators also appear to be optimistic about Georgia as an alternative destination: the Omsk region website reported that managers of Russian tourism companies are recommending consumers visit Batumi instead of Abu-Dhabi.

"Exaggerated" Expectations

But some economists, like the Chancellor of the Free University of Tbilisi, Vato Lezhava, are doubtful that Russian tourists will flock to Georgia, however.

"The belief that we can catch Russian tourists who will not visit Turkey next year is exaggerated. Why would they not go to Greece, which has a good relationship with Russia and lower prices due to their financial crisis? Greece has enough resources to host this many tourists and we do not," he said.

Export Opportunities?

In addition to tourism, there is an expectation that Russian-Turkish tensions could bolster Georgians exports.

Lanchava noted how trout exports noticeably increased after Russian banned some goods from the EU. "As we found out during our research, trout is imported into Georgia from EU countries, like Norway, then they repackage it and export to Russia. The same might will happen now, since Turkey exports fruits and vegetables to Russia," he said.

"Our government should study the Russian market very carefully, start negotiations to get some quota and then attract foreign investments or support local farmers to produce more goods."

But Lezhava warns that while some individual business owners might benefit from the Russian sanctions against Turkey, in general the heightened tension in the region is bad for the Georgian economy.

"Above all, trading requires peace," he said.

"Nothing will be done without peace in our region."

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