A Friend in Need, a Friend indeed

Members of the U.S. Congress have initiated two bills with the power to change US-Georgia relations fundamentally—if Tbilisi takes advantage of the opportunities presented.

On May 23, 2024, U.S. Rep. Joe Wilson (R-S.C.) introduced the Mobilizing and Enhancing Georgia’s Options for Building Accountability, Resilience, and Independence (MEGOBARI) Act in the House (megobari means ‘friend’ in Georgian). On the same day, U.S. Senators Jeanne Shaheen (D-N.H.), James Risch (R-Idaho), Ben Cardin (D-MD), and Pete Rickets (R-Neb.) introduced the Georgia People’s Act in the Senate. At the time of writing neither of these have been passed—though the U.S. government is already taking some of the steps outlined in these Acts.

The MEGOBARI Act details a series of actions the US government will take, depending on the Georgian government ‘s behavior before and during the upcoming Georgian parliamentary election.

As Rep Joe Wilson said after the bill was introduced, “The MEGOBARI Act clearly and simply demonstrates the seriousness with which we take our obligations to the Georgian people…This legislation will highlight the high costs of further attacks on Georgia’s democracy, but also demonstrate our commitment to revitalizing the bilateral partnership.”

The act is basically a set of carrots and sticks. Much has been made of the stick and there has been intense speculation in Georgia regarding the circumstances under which the U.S. government may be willing to implement sanctions against key individuals, to withhold funding or even military support

Less has been said about the carrots. While there are sanctions suggested for transgression of democratic principles or evasion of the Russia sanctions, the act also has positive provisions. According to the Act, the Secretary of State, USAID and other agencies have 60 days to “establish a democracy monitoring task force with, as practicable, a significant presence within Georgia, to publicly assess, monitor, and promote the pre-election democratic environment in Georgia.”

If Georgia is found to have made “significant and sustained progress toward reinvigorating its democracy, evidenced at a minimum by substantially fair and free elections and a balanced pre-election environment,” the U.S. Trade Representative can start working on the carrots.

These include:

• preferential trade regime between the two countries
• improved visa liberalization between the U.S. and Georgia
• an economic development and modernization package for Georgia to be developed by the U.S. and international partners
• a policy package to be developed to enhance people-to-people contacts and academic exchanges.
• Separately, the Secretary of Defense would be tasked with preparing a new defense assistance package for Georgia that would include:
• security and defense equipment ideally suited for territorial defense against Russian aggression
• training, maintenance, and operations support for the equipment.

As Representative Wilson has pointed out, this package of expanded engagement could constitute a roadmap for future relations with the United States, which would provide opportunities for economic, social and democratic progress to match the support being offered by the EU under EU membership talks.

For a start, preferential trade access could be a game changer. While Georgian exports to the US have been modest, generally between $100 million and $250 million over the last 10 years, the US remains significantly the biggest economy in the world and one that is increasingly using trade barriers as a tool of its foreign policy. This creates an opportunity.

As AmCham Georgia President Irakli Baidashvili notes, “A preferential trade regime has been a request of the American Chamber of Commerce in Georgia, since it was founded 26 years ago. This would represent an unparalleled opportunity, because it would allow Georgia access to the US-market at a time when this access is particularly valuable.”

Georgia’s two biggest export growth categories in recent year have been agricultural products and apparel. Both offer huge opportunities if they could gain access to the U.S. market. Large producers in Georgia already produce under contract for U.S. companies like Nike, but not for the U.S. market because of high import tariffs. If these tariffs were removed, production in Georgia could expand and the employment generation opportunities would be huge.

A visa liberalization regime would also be transformative. Obviously, it is already the case that high-level Georgian business people can travel back-and-forth to the US. However, due to high demand, gaining a US visa can be an expensive and difficult process and due to high levels of Georgian visa violations, the number of rejections is also high.

However, efforts to improve this situation could make it easier and cheaper for mid-level company representatives to gain visas for study, travel and work in the United States.

In addition to making the lives of many people easier, this can have material business benefits. Companies that want to outsource elements of their business abroad often demand ease of travel with the partner company to allow employees to come to the company headquarters for major meetings or trainings.

As many companies in the region continue to reorganize in the context of Russian sanctions and China’s worsening relations, this could also be a huge opportunity and drive relocations to Georgia for business process outsourcing like IT development, architectural services and accounting services.

Other elements of the law are also important. An economic modernization package from the US would have the dual benefits of pushing forward greater opportunities for better paid jobs with greater opportunities. At the same time, it would work to reinforce Georgia’s EU aspirations. This could create extremely positive multipliers for the country.

As Ketti Kvartskhava, Managing Partner of BLC Law Firm and Member of the AmCham Georgia Board, said, “The best part is that we are not going to be alone on the path to the European Union, which is going to take time. On the way, we will have a very powerful—the strongest country in the world—supporting our economy, supporting our society and everything that is important for this country.”

Building people-to-people ties through academia, culture and education have also always been a vital part of the puzzle. Historically, Georgia was a huge recipient of FLEX, Global Undergraduate Exchange Program, and Muskie grants. These took some of Georgia’s best and brightest and enhanced their skill-sets while helping them build relationships in the West. This allowed them to thrive when they returned. Redoubling efforts to build relationships in this way would help Georgia create its next generation of leaders.

Finally, US relations have been the cornerstone of Georgia’s defense preparedness for a generation. Georgian troops have been trained and equipped by the US under numerous NATO programs and through defense exercises and have built strong fraternal relations with Western partners in the battlefields of Afghanistan and Iraq. Georgia’s defensive capability has been positively transformed by this relationship, and, in the context of Russia’s invasion of Ukraine, this becomes even more important. Altogether, the series of positive measures included in the acts highlights the preparedness of Georgia’s friends in the US to creatively build on the existing strong relationship and move forward to enhance Georgia’s future.

As AmCham Georgia board member Kvartskhava notes, “When reading the MEGOBARI Act, the impression is that it reminds me of the actions the US took to rebuild, for example, Germany after the Second World War. That scale of support—I don’t think I have seen any other declarations for any other country, regardless of whether the countries are members of the European Union or not. So it is a very unprecedented gesture, which requires also the adequate reaction from us and the government as well.”

Along with EU membership, this could represent a once in a generation opportunity. As AmCham Georgia President Baidashvili explains, “On the one side, we have the EU prepared to consider Georgia for EU membership. On the other side, we have the USA offering unparalleled opportunities for support and partnership. These are the most economically powerful groups in the world—as well as the greatest proponents of democracy and human rights. There can be no question that this is opportunity of a lifetime, and our children will not forgive us if we miss it.”