Georgian political elites cooperate closely with several controversial Chinese companies, raising new concerns about corruption in the country, former Georgian Defense Minister Tinatin (Tina) Khidasheli told Axios in an interview.
The big picture: The small former Soviet republic is economically dependent on Russia, despite the breakdown of diplomatic relations with Moscow in 2008 in the midst of the Russo-Georgian war, and some see China as a better option.
- “The Georgian government says that we are looking for these ties with China in order to balance Russia,” Khidasheli said. “They are trying to present China as an alternative to economic and other dependence on Russia.”
What she says: Khidasheli, who was Minister of Defense of the Republic of Georgia from 2015 to 2016, now chairs a non-governmental organization called Civic Initiative for Democratic and Euro-Atlantic Choice.
- “The Georgian business scene is full of Chinese state-owned enterprises that are very famous around the world for their corruption deals,” Khidasheli said.
- This happens in part because the Georgian government has a serious revolving door issue, in which government officials award contracts to companies and then join those companies when they leave government, Khidasheli said.
- Georgia and China sign a free trade agreement in 2017, paving the way for greater investment by Chinese companies in the country.
Details: A company, CEFC China Energy, known for its opaque ties to the Chinese party-state, its participation in a corruption scandal at the UN, then its mysterious collapse – was allowed a 75% share in the key port of Poti in 2017, promising to invest heavily in transport infrastructure. But the company quickly went bankrupt and invested little in it.
- Another Chinese company, Sinohydro, has won several contracts to build the only major highway in the country of 4 million inhabitants, despite the reputation for corruption and poor quality work in countries such as Kyrgyzstan, Armenia and Botswana. Sinohydro received critical in Georgia for environmental damage.
- On January 15, the United States blacklisted Chinese airline Skyrizon, citing its efforts to acquire foreign military technology. A week later, the Georgian Defense Ministry sign an agreement for the overhaul of the country’s helicopters with jet engine maker Motor Sich, a Ukrainian company in which Skyrizon bought a majority stake in 2017. (In March 2021, a Ukrainian court blocked acquisition after the United States blacklisted Skyrizon.)
The other side: “Georgia’s economic and security position is anchored in the West. Under the current government, Georgia has signed a historic Association Agreement and a Deep and Comprehensive Free Trade Agreement with the EU,” said a statement. provided by the Georgian Embassy in Washington.
- “The United States is Georgia’s foremost strategic ally. While China and a handful of Chinese companies have engaged with Georgia on trade and investment issues, China is not even among the country’s top 10 investors.
The bottom line: “What concerns us is the work ethic and business ethics that Chinese companies bring to Georgia, which are very similar to those brought from Russia,” Khidasheli said.
- “It mainly leads to corrupt agreements, political involvement in the private sectors, no concern for workers’ rights, no concern for the environment.”