Nearly two thousand Georgian businesses have signed a petition calling for new elections, and more are expected to join as the political crisis fueled by Georgian Dream’s foreign policy U-turn and police repression continues to disrupt the economy.
Over 1,800 companies, including leading supermarket chains such as SPAR, local branches of Big Four accounting firms such as EY, PwC, and KPMG, communications and transport giants such as MagtiCom, and other top brands, are registered on the Free Business online platform. The platform was launched in December as discontent over Georgian Dream’s foreign policy moves and repression peaked.
“The crisis has transcended the boundaries of party politics and put the country in social and political danger,” the platform’s joint statement said. Coming weeks after the widely disputed October parliamentary elections, the statement says “the most pragmatic way” to de-escalate tensions is to “schedule new elections and release those arrested during the recent developments.”
Some companies have taken a different route to show solidarity with the ongoing protests. Georgia’s two major commercial banks, TBC Bank and the Bank of Georgia, announced on December 19 that they had jointly allocated GEL 5 million (USD 1.8 million) to support citizens and small and micro-businesses affected by the ongoing events.
In a separate announcement, TBC Bank and TKT.ge, Georgia’s leading events portal, also said that they will buy out tickets for theater, opera, and conservatory events until January 1, 2025, to financially back artists, some of whom went on strike.
Solidarity Funds Popping Up
The moves come as nationwide protests enter their fourth week and businesses, artists, and other citizens face financial disruptions, including numerous cancellations of Christmas/New Year’s events as the year draws to a close. Various solidarity funds have been set up to help those who have incurred damages due to the crisis.
These include a fund set up by ex-Prime Minister Nika Gilauri to support those injured or fined during protests and civil servants dismissed for political reasons. The University of Georgia has also set up a fund to support civil servants who quit or were fired because of their political views, and there is a strike fund run by the Gildia, the trade union for cultural and media workers, to help gig workers. Other initiatives, such as the fund run by journalist Nanuka Zhorzholiani, have been operating since the spring protests against the Foreign Agents Law.
A protest march was also held on December 20, calling banks to freeze loan payments to workers who decide to strike. Earlier, up to two hundred small and large companies that usually participate in the annual municipal Christmas markets refused to be represented at this year’s celebrations in protest to Mayor Kakha Kaladze, who is also Georgian Dream Secretary-General.
There are signs of pressure and boycotts impeding the government business as usual: the Ministry of the Interior had to buy lunch for police officers on its own amid protests after its USD 100,000-thousand call for services collapsed since no company responded. Previously, citizens called for boycotting the restaurants that supplied lunch-boxes to riot police.
Fearing Broader Economic Implications
The initiatives come amid fears of more profound economic effects if the crisis remains unresolved.
“The country’s economy is in a pretty serious crisis, and we have fewer tools at our disposal,” Goga Melikidze, former chief investment officer of the Georgian Pension Fund who recently moved into private consulting, told Business Media Georgia on December 20. “We are holding the [Georgian] Lari rate like crazy, and we don’t know what effect it will have tomorrow.”
The Georgian national currency has slipped recently, with the USD/GEL rate falling from 2.74 on November 28, when the protests began, to 2.81 on December 20. The currency has fluctuated sharply during this period, which many attribute to heavy intervention by the Georgian central bank (NBG), whose independence is believed to have been compromised since it was headed by Georgian Dream loyalist Natia Turnava.
The bank has yet to publish the current state of its international reserves. Georgian Dream Prime Minister Irakli Kobakhidze assured on December 17 that there had been only “minor interventions” recently.
But the alarm bells started ringing before November 28. The drastic drop in Georgia’s international reserves in the run-up to October elections, to their lowest level since early 2021, was cited as one of the reasons for Fitch Ratings, the international credit rating agency, revising Georgia’s outlook to “negative” on December 6, while affirming its long-term foreign currency issuer default rating (IDR) at BB (elevated vulnerability to default). Other reasons cited for the outlook revision were the protracted political crisis following the October parliamentary and December presidential elections and Tbilisi’s strained relations with Western partners.
Foreign Direct Investments already showed a sharp year-on-year drop in the third quarter of 2024. The decision of the donor government and agencies to stop direct funding to the Georgian government projects also affects the financial credibility.
Such changes, Melikidze fears, could ultimately lead to “an inflationary climate, pressure on the GEL exchange rate, and higher interest rates.”
“We are on the slope of the economic crisis, where we can slip quickly, and it will be hard to get out of later,” the expert asserted, noting that, unlike past economic crises, this one stands out for its domestic origins.
The outlook appears even bleaker as key Western powers move to impose sanctions, including economic restrictions, on Georgian officials.
Georgian commercial banks routinely implemented Western sanctions. However, when the U.S. decided to sanction ex-prosecutor Otar Partskhaladze, the National Bank of Georgia moved to shield Partskhaladze, a crony of Georgian Dream patron Bidzina Ivanishvili, by introducing a rule to allow implementation only after a local court order. Several National Bank board members quit in protest, and the commercial banks affirmed that they would still implement the sanctions regime.
It remains to be seen whether their determination to do so will last as the circle of sanctioned officials widens and may, at some point, include billionaire Bidzina Ivanishvili, patron of the Georgian Dream. The failure to implement a sanctions regime may expose the commercial banks to knock-on sanctions, which may prove disastrous, especially for the publicly traded ones.
Nini Gabritchidze