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Economics

Georgia: The Wine Wars

14 May 2006

Georgia: The Wine Wars

By Gwynne Dyer

It is the duty of freedom-loving people everywhere to drink Georgian wine, or at least so says Georgian President Mikheil Saakashvili. Faced with a sudden ban on Georgian wine by Russia, which normally takes almost 90 percent of Georgia’s exports, the youthful leader of the “Rose Revolution” that overthrew Communist-era despot Eduard Shevardnadze in 2003 is looking desperately for other markets. His government even offered Jennifer Lopez half a million dollars to come to Tbilisi later this month to do a celebrity endorsement of Georgian wine. (Unfortunately, J-Lo’s people didn’t think that was even close to enough money.)

More practically, Saakashvili urged the wine producers to act. “While the Agricultural Ministry is asleep, while the majority of our wine producers are asleep, Spanish, Bulgarian, Lithuanian and Czech wine producers … successfully tap markets,” he said. “Let [our wine producers] rise from their chairs, take our wine and carry it to the Baltic States, Poland and Ukraine.” But all of those countries together are not as big as the Russian market, and the chances of Georgia selling large amounts of wine in Western Europe or the United States are not good.

In the old days when Europe was divided by the Cold War, Communist countries only drank wine made in Communist countries, and Russians, in practice, only drank wine made in the Soviet Union. Most Russians like their wine sweet, and their needs were mainly met by wines from Moldova so sweet that you could feel your teeth rotting as you drank them. Moldova can actually make good wines (it’s really a part of north-eastern Romania that fell into Russian hands long ago), but the market set the standard, and the market was Russian.

For the discerning minority of Russians, however, there were Georgian wines. Most Georgian wines were also too sweet for Western tastes, but they were less syrupy than Moldovan wines — and some of them were actually dry and quite drinkable. Georgia only sold about a quarter as many bottles as Moldova to the rest of the old Soviet Union, but it got a better price for them.

Now both Georgia and Moldova are independent countries, though they still belong to the “Commonwealth of Independent States.” (The CIS includes all the countries that emerged from the former Soviet Union except the three Baltic states, and its main purpose is to maintain the free trade and visa-free travel that existed between these dozen countries in the old days.) But now neither Georgia nor Moldova can sell a drop of wine to Russia, because six weeks ago Russia’s chief sanitary inspector, Gennady Onishchenko, declared that it was unfit for human consumption.

Onishchenko subsequently ordered the closure of the border to Georgia’s famed Borjomi mineral water as well, even though Russians depend on it as the one sure-fire hangover cure. Once again, his excuse was that it contained impurities, and that much of the product on sale in Russian shops was counterfeit. But the fact that counterfeiters are ripping off the recognised brand names both in Russia and even in Georgia itself is no justification for suddenly closing the Russian border to all of Georgia’s wine and water exports, which make up a large chunk of its foreign trade.

None of Georgia’s customers elsewhere in Europe have found the high levels of pesticides and heavy metals that Moscow now claims contaminate Georgian wine. Moscow is actually punishing Georgia for refusing to support Russia’s application for membership of the World Trade Organisation, and more generally for seeking to move out of the Russian sphere of influence. Saakashvili has expressed an interest in joining both the European Union and the North Atlantic Treaty Organisation (although neither is likely to welcome Georgia any time soon), and he has insisted that all remaining Russian troops leave Georgia by the end of this year.

Moldova has similar disputes with Russia, and together with two other ex-Soviet countries that are now closer to the United States than to Moscow they make up the “awkward squad” within the CIS, the so-called GUAM group (Georgia, Ukraine, Azerbaijan, Moldova). Georgia and Moldova both have breakaway bits of territory where rebellious ethnic minorities are being protected and perhaps encouraged by Russian troops (South Ossetia and Abkhazia in Georgia, the “Trans-Dnistrian Republic” in Moldova), and they been trying to get the Russian troops out by playing hard-ball over Moscow’s application to join the WTO.

Moscow is playing hard-ball back, and both Georgia and Moldova are in trouble because they have tailored their wine output so closely to Russian tastes. Georgia has now escalated the quarrel by declaring that it will leave the CIS: Foreign Minister Gela Bezhuashvili said on 14 May that the political decision has been made, and that “discussions are now about when and how to do this.” Seven of the eleven bilateral agreements that will be needed to maintain Georgia’s current free trade and visa-free travel arrangements with other CIS countries are ready for signature, according to State Minister for Economic Reforms Kakha Benukidze, and the other four are coming along.

Ukraine is also talking about leaving the CIS, though Moldova has not yet gone that far. The United States, which backs all the GUAM states, is quietly pleased at the way events are unfolding. The great-power game has resumed, and the smaller powers seek advantage where they can. But if you want to support plucky little Georgia by drinking its wine, a word of advice: choose the red Saperavi or the white Tzinandali; they’re not too sweet.

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