Mamuka Khazaradze: “Georgia depends on Russia for all of the strategic raw materials which it consumes.”

Verdict: FactCheck concludes that Mamuka Khazaradze’s statement is HALF TRUE.

Russia’s share in the import of wheat and flour has always been high and it was not only in these last three years that this dependency increased. Therefore, the fact that Georgia has an almost complete dependency on Russian wheat and flour is true; however, the last years are not exceptional in this regard. There is a different situation vis-à-vis petroleum products and natural gas. Russia’s share in petroleum products increased particularly in the last two years and if it previously fluctuated between 7%-26%, it increased to 46.6% in 2022 and not 97% as in Mamuka Khazaradze’s claim. Over the last years, Russia’s share in natural gas imports has been growing to a certain extent. In the first ten months of this year, the import of natural gas from Russia (monetary value) increased by 107% as compared to the same period of the previous year. In 2022, growth amounted to 46% as compared to the previous year. Russia’s share in total imports has fluctuated between 23%-25% in the last two years.

Mamuka Khazaradze provided exaggerated figures in terms of Georgia’s dependence on the import of petroleum products and gas from Russia. However, the context of the statement that Georgia is increasing its dependence on Russia vis-à-vis certain products in the last years is true despite the fact that the entire world is imposing sanctions on the country and is seeking to distance itself from it. Therefore, FactCheck concludes that Mamuka Khazaradze’s statement is HALF TRUE.

Analysis

The leader of the Lelo political party, Mamuka Khazaradze, on air on Rustavi 2’s broadcast Ghamis Kurieri, spoke about Georgia’s dependence on Russia and stated: “All strategic raw materials that Georgia consumes, this already depends on Russia. Let’s start with wheat and flour where 95% is imported from Russia. As for oil, it is 97%, 65% of Georgian wine goes to Russia and our Russian gas import increased by 75%.”

In this article, FactCheck will review the imports of the aforementioned products from Russia. The export of Georgian wine to Russia will be discussed in a separate article.

Georgia is an import-dependent country when it comes to wheat as the self-sufficiency ratio has been 15% over the years. If we take a look at statistical data, we will see that most of the imported wheat, some 75-99%, comes from Russia.

Graph 1: Wheat Imports in 2012-2023 and Russia’s Share in Imports

Source: Foreign Trade Portal

In accordance with the statistical data, Russia's share in wheat imports almost always exceeded 80% with the exception of 2012 when imports from the country were below 50% and stood at 46%. In 2016-2017, the dependence on Russia was almost 100%. This was the same in 2020. Last year, the share of Russia in the total imports exceeded 95%. This figure is more than 98% for the first ten months of the current year. These data illustrate that the dependence on Russia for wheat import has not increased in the last three years (during the Russia-Ukraine war) and this figure has always exceeded 80% over the last decade.

Since 2021 there has been a downward trend in wheat imports which was precipitated by the fact that the imposition of a floating customs duty on wheat exports in Russia made wheat imports unprofitable. Due to the zero customs duty on imported flour, local flour could not compete with imported flour given its much lower cost. If in 2020 the import of wheat amounted to 491 thousand tonnes, it decreased to 367 thousand tons in 2021 and to a further 184 thousand tonnes in 2022. The decrease in two years amounted to 307 thousand tonnes while local production increased by only 55 thousand tonnes - from 102 thousand to 157 thousand tonnes. The difference was compensated by the import of wheat flour whose volume increased from 11 thousand tonnes to 182 thousand tonnes in the same period.

In 2021, Russia’s share in wheat import amounted to 97% which increased to 99% in 2022. As of the first ten months of 2023, 96% of imported flour in Georgia originates from Russia.

In regard to petroleum products, Georgia is 100% dependent on imports. According to the foreign trade portal of the National Statistics Office of Georgia, the share of Russia in the import of petroleum products in 2012 was 7%, in 2015 - up to 10.5% and in 2018 it increased to 23%. In 2019 and 2020, it grew further to 26% and in 2021 it dropped to 16.4%. Throughout this period (2012-2021), Russia's share in total imports was not high and Russia represented only one of the supply channels.

After the invasion of Ukraine in 2022, the Western world began to distance itself from Russia and gradually close its own market to Russian fuel. As a result, Russia was forced to sell oil/fuel at a discount price. Georgian importers started to increase the import of fuel from Russia precisely after this period. In 2022, Georgia purchased 1.331 million tonnes of oil products from Russia valued at USD 1.337 billion, including 657 thousand tonnes at a price of USD 623 million. Russia's share in imports reached 46.6% in terms of monetary value and 49.4% in terms of volume.

The trend continued in 2023 as well. Of the 1,141,455 tonnes of petroleum products purchased for USD 929 million, 704,306 tonnes valued at USD 503 million were from Russia. Russia's share in imports reached 54.1% in terms of monetary value and even higher at 61.7% in terms of volume. In his statement, Mamuka Khazaradze does not indicate the year of the data to which he is referring. Despite this, the percentage figures that he provided are rather exaggerated and such an increase in the share of Russia in the import of petroleum products has not been recorded in any year.

Graph 2: Imports of Petroleum Product and Russia’s Share in Imports

Source: Foreign Trade Portal

Mamuka Khazaradze also discussed imports of natural gas.

Azerbaijan is the major natural gas supplier for Georgia and in line with the contracts signed with Azerbaijan’s state oil company SOCAR and the Shah-Deniz Consortium, Georgia receives gas intended for the social sector and thermal power plants at a preferential price, although Georgia also purchases Russian gas at the same time which the country receives from the North-South main gas pipeline. The aforementioned pipeline carries 2.2-2.3 billion cubic meters of gas annually and it is the main gas supply channel for Armenia. Until 2017, Georgia received the transit fee in kind of 10% of the transported gas, although the Russian Gazprom Export has been paying the transit fee to Georgia in cash since 2018 and the compensation amount is a commercial secret.

According to statistical data, Russia's share in natural gas import was 11.7% by volume and 19.3% by volume in 2015 whilst the share has been increasing since 2019 and already reached 24.5% last year in terms of monetary value. In the first ten months of this year, Russia's share in natural gas import was 28.8% whilst it was 15.5% in the same period of last year. Accordingly, the share increased by 13.3 percentage points. Since Mamuka Khazaradze indicates the quantitative increase of gas import from Russia and not the Russia’s share in his statement, let us also consider this amount. If we compare the amount of natural gas import from Russia during the first ten months of this year to the same period of the previous year, we will see that the growth amounts to 107%. Growth as compared to the previous year was 46% in 2022. None of these indicators are in line with the percentage figures named in the statement.

The aforementioned material illustrates that Russia’s share in the import of wheat and flour has always been high and it did not increase in the last three years. However, the fact that Georgia depends almost completely on Russian wheat and flour is true. There is a different situation in regard to petroleum products and natural gas. Russia’s share in petroleum products increased particularly in the last two years and if it previously had fluctuated between 7%-26%, it increased to 46.6% in 2022 but not the 97% as claimed by Mamuka Khazaradze. Moreover, this growth is largely precipitated by the fact that Russia has to sell its petroleum products at discount prices because of the sanctions. Over the last years, Russia’s share has been growing in natural gas imports. In the first ten months of this year, the import of natural gas from Russia (monetary value) increased by 107% as compared to the same period of the previous year. In 2022, the growth amounted to 46% as compared to the previous year. Russia’s share in total imports, as mentioned earlier, has fluctuated between 23%-25% in the last two years.

Mamuka Khazaradze provided exaggerated figures in terms of Georgia’s dependence on the import of petroleum products and gas from Russia. However, the context of the statement that Georgia is increasing its dependence on Russia on certain products in the last years despite the fact that the entire world is imposing sanctions on Russia and is seeking to distance from it is true. Therefore, FactCheck concludes that Mamuka Khazaradze’s statement is HALF TRUE.


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