T he level of relations between Iran and Georgia is more weakly developed compared to other countries of the South Caucasus. These two countries do not border each other, which brings forward the problem of transporting goods through transit countries. It should be noted that besides the absence of a common border, other external factors such as close ties between the United States, Turkey, Russia, Israel with one side or another have a significant impact on relations between the two countries. The US foreign policy towards Iran has a serious impact on Georgia-Iran relations. For instance, in February 2020, the Georgian Government banned the import of bitumen from Iran. As a result, according to Georgian media, the State Oil Company of Azerbaijan SOCAR get the monopoly on imports and sales in the market. A number of Georgian import companies were closed, the market price of bitumen increased by 20 percent, and the quality decreased.

It is noteworthy, that in 2020, out of 128,000 tons of bitumen imported to Georgia, 82,000 tons (more than 60%) fell on Azerbaijan, and only 9100 tons were imported from Iran. Meanwhile in 2019, out of 170,000 tons of bitumen imported into Georgia, 146,000 tons (about 86%) were imported from Iran. It should be noted that the largest share of the trade turnover between the two countries was precisely the import of bitumen. According to the Georgian service of the Voice of America, the volume of imports from Iran decreased by 21% because of the US sanctions. 

The Georgian website Studio Monitor published an extensive analytical article in January 2021, referring to the Iranian bitumen import ban and market monopoly. The article states that 72,000 tons of bitumen were imported from Iran to Georgia in 2012, and 146,000 tons in 2019. Over 100 companies were involved in imports. The quality and price of Iranian bitumen attracted Georgian road construction companies. The quality and price of the Iranian bitumen attracted Georgian road construction companies.  

As for the Azerbaijani monopoly, according to Studio Monitor, the State Oil Company of Azerbaijan SOCAR received a monopoly with a share of 91% after the ban on imports from Iran. It is noted, that the main intermediary of the Azerbaijani SOCAR in the Georgian market is the Old Line Georgia, established in 2018, the shareholders of which were the citizens of Azerbaijan Hikmat Mamadov and Emil Guliyev. In 2020, Guliyev gave 50% share to Mamadov for 50 Georgian lari, and the company changed its name. 

Based on the National Statistics Office of Georgia, $105,1 mil was imported from Iran to Georgia in 2017, $176,6 mil. in 2018, $187,1 mil. in 2019 and $45,2 mil. in 2020. After the ban of the bitumen import, the volume of imports decreased sharply from $187,1 mil. to $45,2 mil. The volume of imports increased again in 2021, and based on the data of the 10 months of 2022, exceeded $183 mil.   

It should be noted that there is no information in open sources about the possible imports of bitumen, which makes it possible to assume that the volume of import has increased due to the re-export of Georgia. Based on Georgian statistics, any goods entering the country are registered as imports, regardless of the fact whether the final country is Georgia or it should be re-exported through that country. Thus, it can be assumed that the volume of imports grew due to re-exports to Russia.  

Georgia mainly imports metal, stone, glass, plastic, rubber, chemicals, vegetables, textile products, wood, etc. from Iran. Iran imports metal and animals[1] (export of sheep has a large share), wood, pharmaceuticals, mineral fuel, organic chemicals, oils, cocoa.

Iran-Georgia cargo transportation routes are not available in open sources. However, it can be assumed that the transportation is carried out mainly by rail road, using the Astara-Astara-Baku-Tbilisi route.

Tourism

G eorgia is one of the favorite tourist destinations for Iranians, especially in March and April, when Iranians travel to this country to celebrate Novruz. The visa-free regime allows many Iranian citizens to freely travel to Georgia. In 2018, 291 thousand Iranians visited Georgia, which was a record number.  In 2019, however, the number of tourists decreased again to 142 thousand. And in the first quarter of 2020, when land and air borders were not yet closed because of the Covid-19 pandemic, about 20 thousand Iranians visited Georgia.

As for 2021 and 2022, in contrast to 2021, the number of Iranian tourists increased significantly in 2022.  Based on the 2022 quarterly preliminary data of the National Statistics Office of Georgia, tourists from Iran are in the 6-7^th place in the number of visits. 



It should also be noted, that many Iranians move to Georgia for permanent residence. Another part considers Georgia as a transit country for moving to Europe.

Iran-Georgia cooperation in transit projects

F rom the point of view of diversifying its transit routes, Iran attaches the importance of using Georgia’s transit opportunities. Georgia is an important transport hub for Iran on an alternative route to Russia and Europe. In this context, cooperation with Georgia is considered especially within the framework of international transport corridors “Persian Gulf- Black Sea” and “North-South”.

Georgia is a key link, in the Persian Gulf-Black Sea corridor, since the program envisages that the cargo from the countries of the Persian Gulf and India will be delivered through the territory of Iran, then Armenia or Azerbaijan to Georgia, from the ports of which it will be delivered to Bulgaria and Greece.

The project was put forward by Iran in 2016, with the main goal of creating an alternative Turkish route to Europe.  

In April 2022, the delegations of Armenia, Iran, Georgia, Bulgaria and Greece finally agreed on the agreement’s text on the establishment of the corridor at the 6^th meeting in Sofia. Following the April meeting, the representative of the Ministry of Territorial Administration and Infrastructure of the Republic of Armenia noted, that Armenia, Iran and Bulgaria have already signed the protocol and since Georgia and Greece were represented at the level of ambassadors, and the representative of Azerbaijan was not present at all, they were given an opportunity to sign the edited version of the text by May 31, 2022, after which the Iranian side was to set a date for signing the agreement. As of November, except for Armenia, Iran and Bulgaria, other countries have not signed the protocol (1,2).

It is noteworthy that Azerbaijan did not participate in the discussion of the agreement text for various reasons. Based on the report of the Armenian delegation, which participated in the 4^th meeting on the project in Tehran in 2019, although the Azerbaijani side once again did not participate in the negotiations, however it submitted proposals with procedural violations. The Armenian side opposed the discussion of their proposals, emphasizing that Azerbaijan is constantly taking steps to delay the agreement process of the project and to disrupt the negotiations. Bulgaria responded neutrally to the discussion of Azerbaijan’s proposals, while other parties gave a positive response.

“Efforts of the Georgian delegation aimed at protecting the interests of Azerbaijan were special.  In particular, the Georgian delegation strongly defended the right of Azerbaijan, as a party to the agreement, to express its views at the negotiations, adding that they should definitely be discussed”, the report notes.  

It can be assumed that the signing of the draft agreement is being delayed due to the efforts of Azerbaijan and the support provided by Georgia to these efforts.

In this context, it is not a coincidence, that in November 2021, it became known, that Iran, Azerbaijan and Georgia held separate negotiations on this project and agreed on a trial launch of the route. At that time, Javad Hedayati, the Director General of the Transit Office and International Transportation of the Road Organization, described the trilateral agreement as follows: “Of course, this project has been discussed for about 8 years, but because many countries were involved in it, it has not been implemented until now and the parties never reached a consensus. Georgia and Iran are the main parties to the agreement, since Iran has access to open waters through the Persian Gulf, and Georgia also has two important commercial ports in the East of the Black Sea. On the other hand, Georgia and Azerbaijan made a lot of efforts to improve and develop their transportation infrastructures, so we tried to increase convergence with these two countries. In this regard, we put the activation of the three-way transit route with these two countries on the agenda of the negotiations, and both countries welcomed it. Based on the agreement reached with the two countries, it was decided to test the route. Cargo will be transported from Astara to Azerbaijan, from where to the Georgian ports, and through there to Bulgaria or other Eastern European countries”.

Three countries tested the route from Tabriz in December 2021, calling it the “Iran-Azerbaijan-Georgia-Black Sea-Europe” route. It was also stated that based on the results, a damage assessment will be carried out and mechanisms will be created to reduce costs and time of cargo transportation during the tripartite meeting. There were no further publications on other developments in this direction. 

As for Iran’s position on the choice of routes between Armenia and Azerbaijan, although the Armenian route is preferable for Tehran from a political point of view, the Azerbaijani route is more accessible in practice. The reason is that Armenia has a problem of infrastructure development, about which Tehran also mentions. The North-South Road will be a very important link in the Persian Gulf-Black Sea corridor and will significantly increase the attractiveness of the Armenian route. It seems, that the better the route of the land corridor is, the greater will be the willingness of other countries to use this route”, the Iranian embassy in Armenia said.

It should be noted, that in the context of unblocking regional communications after the 2020 Artsakh war, Iran welcomes the possibility of restarting the Nakhichevan railway [2] and the possibility of connecting to the railway network of Armenia and Georgia, considering it as a possible route for the Persian Gulf-Black Sea corridor.  The former Foreign Minister of Iran Mohammad Javad Zarif also noted about it in Tbilisi, where we went to implement the mechanism of regional cooperation “3+3” (Iran, Turkey, Russia, Armenia, Azerbaijan, Georgia) and to which Tbilisi did not agree to participate despite the efforts of the Iranian side.

The North-South is another international transit route, which is designed to connect India with Russia and Northern Europe, replacing the Suez Canal. The corridor branches off from the territory of Iran mainly by three routes: the eastern route – by the Iran-Turkmenistan-Kazakhstan railway, the western – by the Iran-Azerbaijan railway and central or Caspian route – by the Caspian Sea.

Armenia is also part of the North-South corridor, while Georgia is not. In case of Armenia, especially for this corridor to become an attractive route, sufficient infrastructure, both rail and road is again lacking. With the construction of the North-South highway, Armenia may apply to become an active part of the corridor, which, in turn means that after Armenia the next point will be Georgia, from where the goods can be transported to Russian and Europe. In other words, although Georgia is not a member of the agreement, in case of active participation of Armenia, it will also be involved in the project.  

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[1] In 2020, animals worth $69,000 were exported to Iran.

[2] After the 2020 hostilities, the first reactions about the reopening of infrastructure in Georgia were quite disturbing.  The expert field expressed fears that if the channels are unblocked, Georgia will lose its transit significance and will be left out of further developments. On November 13, 2020, the former Minister of Defense of Georgia Tina Khidasheli noted that in the context of the functioning of the Nakhichevan Corridor, the Georgian Government should work actively with its partners so that the transit function is not revised. According to Khidasheli, it is necessary to work both with Azerbaijan and Turkey, as well as with the US and Europe.