KAZBEGI CHECKPOINT, Georgia — Each day, a caravan of trucks stretches for miles along a mountain highway in Georgia, near the border with Russia. Each day, the line seems to get longer.
The trucks wait for days with their cargo — car parts, industrial materials, chemicals, even the paper for tea bags — to cross the frontier on a journey that usually starts in Turkey and ends in Russian towns and cities where Western goods are in high demand.
The war in Ukraine abruptly cut many of Russia’s trade links to Europe, but the country’s economy quickly made adjustments, finding alternative routes for imports. Over the past 10 months, Georgia — a former Soviet republic of 3.6 million that fought its own painful war with Moscow in 2008 — has emerged as a convenient logistics conduit between Russia and the outside world.
The surge in commerce has meant an unexpected boon for truck drivers like Murman Nakashidze, a 48-year-old Georgian who owns a small transportation company of four trucks carrying cargo from Turkey to Russia — everything from electronics to construction materials. After many European companies shut down trade with Moscow, in protest of the war or in adherence to Western sanctions, his business flourished.
His cellphone now beeps relentlessly with requests for him to ferry goods to Russia, for fees that just keep getting higher. “It’s been a war for many, but others are receiving profit,” said Mr. Nakashidze. “It is good for us, for the economy, but it is bad for others.”
Acquiring goods through Georgia and neighboring countries like Armenia and Azerbaijan has helped Russia weather the economic storm caused by its invasion of Ukraine. Though some goods are scarce and many Western companies have shuttered their operations, the government says the Russian economy contracted by only around 3 percent last year.
While growth prospects remain dim, the outright collapse that some economists had predicted in the face of Western sanctions did not come about.
Situated in the Caucasus at the southeastern extreme of Europe, Georgia offers the quickest overland route to Turkey, which has become one of Russia’s main trade links to the West. Over the first six months of 2022, cargo transit between Turkey and Russia tripled in volume and much of it traveled on Georgian roads, according to research conducted by TBC Capital, Georgia’s leading investment bank.
On average, the line of trucks backed up to cross the frontier, snaking through the picturesque slopes in northern Georgia, was more than twice as long in December as it was a year earlier, according to the Russian Federal Customs Service. The traffic is far more than the border checkpoint can handle.
The State of the War
- Russia’s Military Reshuffle: Moscow has shaken up its military command in Ukraine again, demoting its top commander after just three months and replacing him with a Kremlin insider who helped orchestrate the ill-fated invasion.
- In the East: The head of the Wagner Group, a Russian mercenary force, said that his fighters had seized the eastern town of Soledar. The claim was quickly rejected by Ukraine’s military.
- Western Escalation: A cease-fire proposal seemingly aimed at splintering Western unity has instead been met with an escalation of military involvement by Ukraine’s allies.
- New Equipment: The Western allies’ provision to Ukraine of infantry fighting vehicles signaled their support for new offensives. Now it looks likely that tanks will be added to the list of weapons being sent.
“Everyone is here now, Belarusians, Kazakhs, Uzbeks, they were never here before,” said Alik Oganesyan, 60, repairing his truck as he waited in line. Sometimes drivers have to wait so long that perishable cargo spoils, he said.
The Russian customs service is working at expanding the number of processing lanes, while Georgia is building a 5.5-mile tunnel through the most problematic part of the highway that occasionally gets blocked by avalanches.
The lines sometimes stretch all the way to Georgia’s capital, Tbilisi, about 100 miles from the border, with special parking lots along its bypass road where truckers can rest, and sleep, while they wait. (The line is not continuous. Police patrols regulate the traffic, and because of the mountainous terrain, there are stretches where trucks are prohibited from idling. Once truckers approach the border, they get a ticket with a number that secures their spot.)
The long wait prompts many drivers to take a detour and enter Russia through neighboring Azerbaijan, adding several days to the journey.
It’s impossible to tell how much of the European cargo crossing Georgia is subject to European Union sanctions.But the country’s emergence as a key link in commerce to Russia highlights a potential loophole in E.U. sanctions policy.
The Georgian government has insisted that it strictly enforces Western sanctions, and that many shipments have been denied. But opponents of the ruling party in Parliament say that goods and money are flowing through largely unhindered.
Georgia’s case highlights how third countries have enabled sanctioned states to circumvent trade restrictions, said Maria Shagina, a senior researcher at the International Institute for Strategic Studies.
“Georgia is performing a balancing act between its official pro-Western orientation and its economic dependence on Russia,” Ms. Shagina said in a telephone interview, adding that the fast-growing volume of trade might overwhelm Georgia’s ability to enforce sanctions. “It is a very narrow space that Georgia finds itself in.”
While Russia produces most of its own food and receives consumer goods from Asia, the Georgian route has helped Russia solve a troublesome shortfall in European parts and raw materials for factories, said Ivan Fedyakov, who runs InfoLine, a Russian market consultancy that advises companies on how to survive under the current restrictions.
“The main problem was with the industrial cargo,” he said.
For instance, Russia produces a lot of tea, Mr. Fedyakov said, but it imports the filter paper used in tea bags. In April, the European Union barred exports of that paper to Russia, forcing Russian factories to look for alternatives from China and Turkey. The route via Georgia helped deliver the product to Russia, said Mr. Fedyakov, helping factories stay afloat and preserving workers’ jobs.
Since May, Russia has received more than $20 billion worth of goods, through the so-called parallel imports process — when something is brought to a country without the consent of the company that owns the trademark — the head of Russian customs said in an interview with state television. Much of the cargo consists of cars and equipment for factories.
Overall, by the end of 2022, Russia had almost restored its prewar level of imports, according to the country’s Central Bank — while also adding to a major source of income: the customs duties it collects on goods entering the country.
Aleksandre Davitidze, the head of the Association of Freight Forwarders of Georgia, said that members of his group would not handle any embargoed cargo for Russia, but that smaller companies might be willing to do that.
Shortly after the invasion, Mr. Davitidze said, he started receiving email requests from Russian companies and individuals seeking help in delivering various goods to Russia.
“Now I barely get them,” he said in an interview. “That means that they have either found companies, or founded their own.”
The economic cooperation with Russia, which gained control of one-fifth of Georgia’s territory after the 2008 war, has infuriated many Georgians.
“Our government chose to be in between,” said Giorgi Oniani, deputy executive director of the Tbilisi chapter of Transparency International, the global anti-corruption group. “But at least personally some of them feel closer to Russia and the Kremlin.”
Economists said the boost to Georgia’s economy could just be too much for businesses and the government to resist.
“When you don’t have a strong political stance, in most cases business always looks for the profits,” said Giorgi Mzhavanadze, senior associate at TBC Capital, the investment-banking arm of Georgia’s biggest bank. Turkish and Russian businesses “use Georgia as a transit country and we don’t punish it.”
Georgia’s largest seaport, Poti on the Black Sea, is working on an ambitious expansion that would double its capacity and allow for bigger ships. The project, begun before the war, now “feels even the more right decision than before,” said Iain Rawlinson, Chief Commercial Officer of APM Terminals, the Netherlands-based operator of the Poti port. “Volumes through Georgia have grown dramatically.”
Following the Ukraine invasion, APM Terminals cut business ties to Russia, but once cargo is offloaded in Georgia, the company does not know or control where it goes, Mr. Rawlinson said.
“What happens with cargo after it has left us — we have no visibility on that,” he said. He said that the vast majority of trade his port is processing is destined for Central Asia, not Russia.
As for Mr. Nakashidze, the Georgian truck owner, he said he would like to expand his company, but he cannot afford more drivers, who are in high demand.
“They just want more money,” he said.