Georgia has abolished the visa regime with Iran. Starting February 15, citizens of Iran are able to arrive in Georgia without entrance visas.
This signifies the citizens of Iran who own ordinary passports of Iran are let enter Georgia without entrance visas and stay in the country for 45 days.
What economic benefits should Georgia expect from this decision and what economic activities are expected to take place in Georgia?
Three years ago the Georgian government introduced visa regime with Iran and the inflows of Iranian tourists shrank 4 times. The decision negatively affected both the tourism sector and investment inflows. A major part of Iranian businessmen left the country, economic experts noted.
Georgia and Iran concluded an agreement on 45-day visa-free regime introduction in November 2010. The agreement came into force in late January 2011. Besides all other aspects, the decision increased inflow of Iranian visitors to Georgia. Namely, about 21 300 citizens of Iran visited Georgia in 2010, 60 000 – in 2011. The figure reached 89 000 in 2012. In July 2012 Georgia unilaterally abolished the visa-free regime with Iran. As a result the inflows of visitors from Iran dropped to 47 900 persons in 2014 as compared to 85 700 in 2013. The figure fell to 25 200 visitors in 2015.
Assistant to the Iranian ambassador to Georgia noted that the Georgia-Iran trade turnover marked 200 million USD in 2012-2013, while today the figure is about 130 million USD. The major inflow of Iranian visitors to Georgia was recorded in 2012 – about 90 000, while the inflows halved in 2014 and in 2015 only 25 264 visitors arrived in Georgia from Iran.
The Georgia-Iran chamber of commerce and industry expects that the free visa regime will activate tourist inflows to the country, first of all. The chamber also expects inauguration of major investment projects in Georgia. After the visa regime removal, the experts forecast activation of mainly small and medium business directions.
Abbas Taleb Far, the Iranian Ambassador to Georgia, noted that Iran is ready to supply enough volume of natural gas to Georgia for both domestic consumption and international transit to Europe.
At this stage we can only make forecasts what results may be reaped from this decision of the Georgian government. We remind you that this decision was taken after the world removed economic sanctions from Iran. This decision has also influenced the global market and partly Georgia too: First of all, oil prices continue declining.
Furthermore, Iran is actively seeking oil importer countries. Major Italian oil company Total plans to purchase 160 000 barrels of oil a day from Iran. At the same time, Iran has taken a decision to sell oil in EUR to the new partners with the aim to reduce its dependence on USD. As a result, the Iran-Europe trade relations have entered a new phase and European companies plan to launch various business activities in Iran”, Abbas Taleb Far noted.
The visa regime abolition will reap serious benefits for the country, economic experts assert.
Our Cooperation with Iran should Be Commensurate with Our Western Aspirations
Gia Khukhashvili Economic expert
Visa regime abolition with Iran is very perspective for Georgia, because there is the so-called closed economy in Iran. But the time has come when Iran will activate its efforts. We can talk about investments in various fields. Removal of regulations is a positive decision, but I would remain moderate optimist.
We should realize that we live in the very complicated world, where excessive optimism may bring serious threats. Relations are fragile. The world changes every minute and if we follow the western vector, then we should permanently pass consultations with our partners around Iranian issues so as these two aspects do not contradict each other. Therefore, our cooperation with Iran should be commensurate with our western aspirations. Regretfully, potential risks are very serious and the international policy is so unforeseeable that every scenario may develop. I think Iran has accumulated huge investment capital and Georgia can draw money resources from any direction.
I do not think Iran will show special priorities in this respect. We should activate efforts, because there is capital in Iran and we should open investment channels to that capital. In the long-term perspective we should introduce the projects for transporting Iranian energy carriers, in which Georgia may be involved as one of the elements.
Iran will Show no Interest in Primitive Business
Demur Giorkhelidze Economic Expert
“This is a good decision for any country. The point is that Iran is a very strong and perspective country. Despite western pretences, the time has passed and these pretences have been removed. Iran follows its national interests. Georgia does not have complicated relations with Iran for a long period. Consequently, it is very perspective to develop economic relations with Iran. In general, besides visits of Iranian businessmen and attracting Iranian investments, it is also important that Iran in itself is a very perspective country for making investments. Iran provides very favorable environment for foreigners to do business. There is much money in Iran and Iran’s economy has been diversified in various directions.
It is difficult to preliminary determine which directions will be interesting for Iran. Anyway I do not think they will show interest in primitive business relations. The Iranian party is expected to fundamentally use this opportunity.
Georgia-Iran Trade-Economic Relations
Vano Mtvralashvili One of the founders of Iran-Georgia chamber of commerce and industry
A new era has started in the Georgia-Iran trade-economic relations. Iran was freed from international economic and financial sanctions and the country is able to return to the global economic processes. All these factors enable Georgia and Iran to launch direct bank transactions. This step will become an additional ground to increase tourist turnover. It is of vital importance that Iranian tourists face no problems with bank transactions in Georgia.
The major inflow of visitors to Georgia was recorded in 2012, when the country hosted 90 000 guests from Iran. However, visa regime restrictions decreased the figure to about 30 000 visitors. After the visa regime removal an inflow of visitors from Iran will increase and this factor will promote the tourism industry development. Moreover, direct flights should be also appointed. Regretfully, currently no direct flight is performed between Iran and Georgia.
I have talked with the Iranian party around the flights and this issue may be resolved in several weeks. This signifies Georgia-Iran direct flights will be appointed in the near future.
No specific airline is determined yet that will perform direct flights, but it is not ruled out that previously acting ATA Airline launch direct flights between Iran and Georgia. At the initial stage, we do not expect excessive inflow of tourists, but the dynamics will be positive. Besides the tourism sector, the Iranian party has many other fields of interest in Georgia, for example, Georgian seaports, agriculture. As to the bank sector, in the near future we do not expect any Iranian commercial bank to launch operation in Georgia.
Georgia Provides Good Opportunity for Iran
Beso Namchavadze, An economist of the Georgian Reforms Associates:
Abolition of these regulations was a very good decision in this situation. Iran is not a poor country and we should not be afraid that Iranian citizens will arrive and remain here. Moreover, Iran remains closed for western countries. Iranian citizens face difficulties with traveling to those countries and Georgia provides good opportunities for them to trip to our country.
We have ski and sea resorts. Iranian citizens may also arrive in Georgia to play games at casino clubs. Casinos are banned in Iran. We expect economic revival in Iran and this signifies more citizens of Iran will be able to spend vacation periods in Georgia. Moreover, trade relations and investment projects will be also expanded in various sectors.