In a country where recycling is not widely popular, Greenpack was one of the first businesses of its kind. In just a decade, the small Georgian manufacturer of sustainable packaging materials has grown from a start-up to supplier of one of the largest grocery chains operating in the Caucasus.
These days, it has become clear to company officials that regional demand for their products is nearly tapped out. “We cannot find new customers in Georgia,” business development manager Salome Kareli said in an interview at the company’s warehouse. Nor does exporting to Azerbaijan and Armenia, which started in 2020, satisfy a level of output Kareli and others at the company feel they can achieve.
So they are looking westward, attending trade shows in Europe and sending samples to potential customers there. When the European Union gave a green light last December to Georgia to pursue membership, it felt to Kareli like a confirmation they were on the right track.
Greenpack is the exact kind of small-to-medium-sized Georgian business that could see immense benefits from Georgia’s accession to the EU. The business environment in the country is now hot with excitement over the possibility of increasing Georgia’s presence in the vast European market. At the same time, many are worried that the ruling Georgian Dream government, which on April 3 reintroduced a controversial draft law on foreign agents, is tanking the country’s EU ambitions – and their hopes for expanding exports.
On a recent afternoon amid the whirr of machines in the company’s Tbilisi warehouse, production manager Archil Abramia had to speak loudly to be heard. “The market will be more open for our production,” he said, standing near a spool of woven bags bound for Azerbaijan. “When you’re in the EU, your standards are much higher.”
Like other companies, Greenpack is already thinking about how to be competitive in Europe. Last year, operations began moving into a bigger facility, and the company obtained an international certificate of quality assurance, good for three years.
Such changes are economy-wide. Despite having an association agreement with Europe since 2014, many Georgian companies until recently had been wary of pivoting from one of the main importers of their products, Russia. But that is beginning to change as Western sanctions and the risks of doing business in a country at war dim trade prospects with Russia.
Now, there is hope in business circles that Georgia can attract significant European investment and become a reliable supplier of goods. “We are not seeking to be mere beneficiaries of the EU; we aim to contribute to the EU’s success,” Economic Minister Levan Davitashvili said on December 18.
Those who believe in the benefits of joining the EU point toward some of the union’s newest members, like Hungary, Poland, and Bulgaria. The data suggests that candidacy for them was a boon. In the decade before the last two rounds of enlargement in the mid-2000s – when these countries were candidates for membership – trade between prospective and current EU members grew threefold; one study projected a far lower 2020 GDP for Poland had it not joined the EU in 2004.
Such data has many in Georgia’s business community looking at the near future with starry eyes. Akaki Saghirashvili, deputy CEO of the Business Association of Georgia, described a future EU-affiliated Georgian economy as one resting on a solid foundation. “It’s a very good ground for business to flourish,” he said of joining the EU. “But there is big competition, and business should be ready for [that].”
It is not just Georgian businesses that stand to gain. The road to membership, for instance, could create jobs by turning Georgia into a production and export hub thanks to lower overhead expenses than in other European countries. Electricity costs are far lower in Georgia than in many EU member states at present, and to the chagrin of many, the country’s minimum wage has not been updated%20per%20month.) since 1999.
For people like Soso Nibladze, manager of the Tbilisi Free Zone, those are the factors that can make Georgia stand out in the European market. Enticed by the lack of taxes, his customer base of mostly regional companies use his facility to manufacture and export their goods outside of the country. But “our ambition is not just the region,” he told Eurasianet in an interview. “We read about what benefits countries went through while being candidates to the EU.”
While largely not serving Georgian customers, he said his business and other free economic zones outside of Tbilisi attract investment. “The biggest stakeholder in this business is the country itself,” he claimed.
Many Georgians see the issue of EU membership as a matter of economic survival. The country has experienced a decades-long population drain that is often attributed to a lack of economic opportunity at home. In one 2022 survey, Georgians identified economic development as the biggest challenge in the country’s future, with the majority indicating that the main benefit of joining the EU would be strengthening the economy.
Saghirashvili, when asked if joining the EU could reverse the emigration trend, offered that the problem comes down to wages, which are often better abroad. If the holes in the economy can be plugged, he said, he believes people will return, or at least those now thinking about leaving will stay.
The promise of EU membership may seem tantalizingly near for many, but it is still a distant dream. Georgian membership is anything but assured, in no small part because of the government’s recent policy decisions. In the lead up to parliamentary elections in October, the ruling Georgian Dream party is burning bridges with Western partners and pushing an agenda that is seemingly out of step with EU values. The party’s reintroduction of a draft law labeling organizations receiving more than 20 percent of funding from abroad as foreign agents has triggered a series of rolling protests across the country.
European officials have called into question Georgia’s fitness for EU membership should the law pass. “Let me be clear: the draft Law on Transparency of Foreign Influence is not consistent with Georgia’s EU aspiration and its accession trajectory and will bring Georgia further away from the EU, and not closer,” President of the European Council Charles Michel wrote on X on April 16.
Yet the ruling party enjoys enough support to likely stay in power after elections. And there is a fear that being granted EU candidacy in December 14 may have preordained a Georgian Dream win in parliament this October, paradoxically cementing in power a party that many believe actually is working against the country’s EU ambitions.
Many in Brussels and elsewhere had hoped the green light the EU gave Georgia to proceed with its accession bid would have a moderating influence on Georgian Dream, nudging the ruling party back on to a westernizing reform path. Those expectations have not panned out, as Georgian Dream has stuck to an increasingly illiberal policy course.
For Georgians, that creates a mixture of fear and hope. Entrepreneurs and economists are clinging to a belief that, ultimately, Georgian Dream will let reason act as its policy guide, and the government will start implementing EU-mandated reforms that will keep the accession path clear for Tbilisi.
“Despite sometimes anti-European propaganda from different players, people still want to be part of the EU because they identify the EU as the only opportunity for the country to develop fast,” said Davit Keshelava, head of macroeconomic policy research at the International School of Economics in Tbilisi.
EU candidacy, he said, has opened the door a bit wider for small Georgian businesses and European investors in the country. But there is still a long way to go, starting with a laundry list of institutional reforms that are likely to be sidelined in the lead-up to the elections.
“We are all the time postponing the most painful changes, but at some point we need to do it,” he said. “Otherwise, you will not be able to become a member.”
