Sales of Georgian cars to Russia increase despite tougher sanctions

Georgia has more than tripled its auto exports to Russia in the first months of 2023 as Tbilisi claims to be helping Moscow circumvent Western sanctions, according to business daily Kommersant reported Friday.

The former Soviet republic in the South Caucasus delivered 978 passenger vehicles to Russia between January and February, worth a total of $13.5 million. During the same period last year, Georgia exported just 209 vehicles to its northern neighbor.

Georgia’s auto exports have also surged to neighboring Armenia (2,800 this year compared to 365 between January and February 2022), Kazakhstan (2,600 compared to 935) and Kyrgyzstan (1,300 compared to 423).

The three countries are members of a Moscow-led customs union and are said to re-export Georgian vehicles to Russia.

“Professional sellers and intermediaries see an opportunity to make money from these shipments,” said automotive expert Vladimir Bespalov.

In response to Moscow’s invasion of Ukraine, Western countries imposed restrictions on the export of luxury goods to Russia, including cars.

By exporting vehicles to third countries such as Armenia and Kazakhstan, Georgia is not technically violating these sanctions, David Avalishvili, an analyst with independent news agency, told Kommersant.

But Avalishvili and an unnamed Russian car dealer cited by Kommersant said it was an open secret that Georgian cars were being re-exported to Russia.

Responding to accusations that Georgia was violating sanctions on Russia, Georgia’s finance ministry stressed that its customs agency was working closely with its Western partners to ensure compliance with the sanctions.

Re-exports of Georgian passenger cars hit a 10-year high of 13,500 vehicles between January and February, worth nearly $240 million, Kommersant said, citing government data.

Although Georgia does not have its own automotive industry, it is a major regional importer of vehicles, having received some 8,200 vehicles worth US$97 million in the first two months of this year only.

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