Economic Relations between Iran and Georgia: Background, Characteristics, Impediments, and Solutions

Mohammad Javad Ranjkesh
November 2018

Caucasus is a region connecting Asia and Europe and, for this reason, it is considered a strategic region. For some reasons, Iran and Georgia are very similar. Iran has marine borders with Russia on the southern rim of the Caspian Sea, but Georgia has a land border with Russia and this neighborhood with Russia has made changes in both countries’ foreign policies. Georgia is more inclined toward the West due to the pressure exerted on it by Russia, which considers Georgia as its backyard, and this issue has left its mark on Iran’s foreign policy as well.
Most recently, Iran has decided to change its policy of closeness to Georgia due to a host of reasons, including Tbilisi’s alignment with Russia's policy, Russia's pressures, and also because of the presence of NATO, the United States and especially the Zionist regime of Israel in this country. Of course, both countries have at times taken steps to get closer to each other, but due to certain reasons, such measures have not been adequate and Tehran and Tbilisi need to show a more powerful resolve to this effect.
Background of Iran’s relations with Georgia
Georgia was under Iran’s rule up to 1813. However, it was separated from Iran in line with the Golestan Treaty and was then governed by the former Soviet Union until it gained independence in 1991. Iran was among the first countries to recognize independence of Georgia. The two countries established full diplomatic relations in 1993 and exchanged ambassadors to promote the level of bilateral relations. After Georgia’s embassy was opened in Iran in 1994, those relations became stronger. However, relations between the two countries have been marked with many ups and downs between 1991 and 2017.
Under former Iranian president, Akbar Hashemi Rafsanjani, and his counterpart in Georgia, Eduard Shevardnadze, relations between the two countries were relatively good. Under Iran’s reformist administration, Iran pursued a policy of détente and dialogue of civilizations toward its neighbors as a result of which, relations between the two countries were cordial at that time. Under Iran’s former president, Mahmoud Ahmadinejad, in whose time Russia attacked Georgia, Tbilisi became more inclined toward Tehran. As a result, the two countries enforced a visa waiver program in 2010 as a result of which many Iranians traveled to Georgia.
However, Georgia’s foreign policy became more West-oriented in 2013 due to its alignment with the Western countries’ sanctions regime against Iran. As a result, it annulled the aforementioned visa waiver unilaterally. Under Iran’s President Hassan Rouhani, Iran signed the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA) with the West, especially the United States, as a result of which the visa waiver was reinforced in 2016. After that, more Iranians traveled to Georgia. In view of the fact that political and economic relations between countries are closely related, Iran and Georgia have never experienced strong economic ties as a result of vacillations in their political relations.
Iran’s trade with Georgia Characteristics
Geopolitics plays an important role in relations between Iran and Georgia; however, geoeconomics plays an even more important role as a result of Iran’s geographical position and economic specifications. Geoeconomics is made up of three elements of geography, power and economy, and it seems that politics, which is an important component of geopolitics, has been replaced here with economy. Therefore, attention to Caucasus is part of the policy that aims to protect Iran’s national security and diversify its economy, because Georgia is the sole country in Caucasus with access to free waters and is considered as the West’s gateway into Caucasus. In view of the current insecurity in Ukraine and West Asia, Georgia can be even used as a route for transferring energy to Europe. It is important for Iran to pay attention to this issue that due to the crisis in Karabakh region, Georgia is a route through which energy transfer pipelines cross from Central Asian countries – such as Turkmenistan and Kazakhstan – as well as oil fields in Azerbaijan toward Turkey and Europe. At the present time, there are many energy transfer pipelines, which take energy resources to Europe through this country.
Iran's foreign trade with Georgia from 2010 to 2016
Value: million dollars
Trade balance43527380566538
Foreign trade7175131192164101108
Source: Iran’s Customs Administration
Impediments to expansion of Iran’s relations with Georgia
It must be noted that not only Iran, but also Georgia needs foreign markets in order to help its domestic markets grow. However, there have been impediments to further expansion of economic and political relations between the two countries. It is a duty for politicians in both countries to make a serious effort to do away with these hurdles and pave the way for a new win-win relationship. The most important factors affecting Iran's relations with Georgia, especially Georgia’s relations with Iran, include Tbilisi’s alignment with the policies of NATO, the United States and the Zionist regime of Israel and, on the other hand, Iran's alignment with Russia’s policies.
NATO: The Islamic Republic of Iran considers countries in Caucasus as part of its security perimeter. Without a doubt, expansion of NATO toward Iran's borders has caused many security concerns for the Islamic Republic. Since 1999, when NATO started to boost its activities in Georgia, Iran has frequently expressed concern about expansion of NATO toward its neighboring regions.
The United States: The goal pursued by the United States though presence in Georgia is, above all, enhanced supervision and control over Russia, Iran, and Islamist groups. Washington also seeks to control the Caspian Sea’s oil reserves as well as energy transit routes to Europe. The United States has been increasing its military presence in Georgia despite the fact that this issue has been a major concern, and also a big hurdle, on the way of the establishment of a strong relationship between Tehran and Tbilisi.
The Zionist regime: Without a doubt, the Zionist regime is an important factor affecting Iran's relations with Georgia. Following remarks by some Iranian officials that the Zionist regime must be annihilated, Tel Aviv embarked on constructing a strong military base in Georgia, announcing that its goal is to prevent any “preemptive attack” by Iran against its nuclear facilities. On the other hand, the Zionist regime seeks to consolidate its intelligence control over regions north of Iran, and this issue has served as a factor, which has caused Iran to drift away from Georgia in its foreign policy.
Turkey: Since Turkey is a member of NATO and its foreign policy is in line with the European foreign policy, it is considered as a very powerful rival for Iran in Georgia. Although Ankara’s foreign policy, which seeks to isolate Georgia and bolster ties with the Republic of Azerbaijan, is not in line with the interests of Turkey’s Western allies, Ankara has been able to achieve a successful balance in its policies toward Caucasus. Azerbaijan and Georgia are of unique importance to Turkey in this regard. Pursuit of this goal by Turkey has directly prevented Iran's foreign policy potential from being fully activated in Georgia, in particular, and in Caucasus, in general. The economic power and technological advances of Turkey have further limited Iran's latitude in that region, because Iran, for a variety of reasons, is not capable of offering the same incentives that Turkey offers.
In view of the lack of progress in relations between Iran and Georgia, the following solutions are suggested for the improvement of these relations:
1.Solving the problems in Iran's foreign policy with the West at international level;
2.Adopting a two-dimensional policy for getting close to both Russia and the European Union in a bid to establish effective relations with Georgia;
3.Activating Iran's public diplomacy, including scientific, cultural, sport, media and urban exchanges between the two countries;
4.Establishment of mutual offices by the two countries in cities that can meet their bilateral interests;
5.Investment in economic fields and presence of Iranian businesspeople in this country;
6.Creating suitable conditions for cultural dialogue in view of age-old relations between the two countries; and
7.Not insisting on ideological goals on the part of Iran and instead, putting the highest emphasis on economic and cultural goals.
Those factors, which were named as causing divergence between Iran and Georgia, are mostly rooted in presence of foreign actors in the latter country. Iran can also make coherent plans to bolster its presence in that country to promote economic as well as political and security relations. Such a presence can benefit the two countries’ relations more than anything else and prevent jeopardy to Iran's national interests and security.

* Associate Professor of Political Science; Ferdowsi University of Mashhad