Back in November 2024, Georgia’s prime minister Irakli Kobakhidze announced the end of EU accession talks, bringing Georgians into the street once again to protest against the increasingly pro-Russian faction in power. Concerned by the Georgian government’s drastic change of course in recent years, and the recent heavy crackdown on protesters, both the US and UK have turned to sanctions toolkit, with many in the EU keen to follow suit. But does Donald Trump’s return to the White House presage an about turn in policy? And how have the sanctions impacted those in power in Georgia so far? Tom Boughton and Elene Janadze chart recent history and explore what may be in store.
This article was first published by World ECR in The journal of Export Controls and Sanctions and reproduced here with kind permission.
Georgia in crisis
On 28 November 2024, Georgia’s prime minister, Irakli Kobakhidze, announced the suspension of accession talks with the European Union until 2028. With over 80% of the population supporting Georgia’s EU integration, the decision ignited widespread protests across the country. In response, the Georgian government has cracked down aggressively, employing disproportionate violence in their attempts to disperse the crowds, and with many demonstrators, journalists and civil activists remaining in detention. Georgian Dream, Georgia’s ruling political party, has also dismissed civil servants en masse for speaking out against its decision to halt EU accession talks.
Bidzina Ivanishvili: The oligarch at the centre of it all
The recent protests are the latest in a series of demonstrations against Georgian Dream and democratic backsliding in the country in recent years. At the centre of the political crisis stands billionaire Bidzina Ivanishvili, who amassed his initial wealth in Russia and is now widely regarded as Georgia’s informal ruler through his substantial influence over the Georgian Dream party he founded. Ivanishvili, who is estimated to be worth around $7.6 billion, equivalent to a quarter of Georgia’s GDP, was voted into office as Prime Minister on a wave of popular discontent in 2012. Despite having only served a year in office, he has continued to hold sway over Georgian politics through the Georgian Dream party, which has ruled Georgia since this time.
Georgian civil society has accused Georgian Dream of a systematic capture of state institutions since long before the current crisis. Over the past 12 years, it has extended its influence over the judiciary and regulatory bodies, including the Central Election Commission and the National Bank of Georgia. While seemingly an internal political struggle, it has taken on a significant international dimension since Russia’s full-scale invasion of Ukraine, with Georgian Dream having taken an increasingly pro-Russian stance in recent years, leading to widespread speculation on the extent of Ivanishvili’s ties to the Russian government.
While the West has confronted the Kremlin’s invasion of Ukraine with unprecedented sanctions, Georgian Dream has propagated conspiracy theories that the West sought to drag Georgia into war with Russia and has highlighted Georgia’s vulnerability to its northern neighbour. Tensions further escalated in May 2024, when Georgian Dream adopted the Russian-inspired ‘Foreign Agents’ law, imposing various restrictions on independent media and non-governmental organisations, and posing a severe threat to Georgian civil society at large. Despite widespread protests and opposition efforts, the Georgian Dream party declared victory in the disputed October 2024 parliamentary elections, even as local observers reported ‘large- scale’ vote rigging, among various other infringements.
Sanctions strike
Georgian Dream’s increasingly authoritarian tendencies led to the European Parliament calling for sanctions on Ivanishvili as early as June 2022. But the first warning shot came from the US authorities in September 2023, when the Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) imposed sanctions on Otar Partskhaladze, the former Prosecutor General of Georgia and a reported close associate of Ivanishvili, citing his alleged links to Russian security services and alleged efforts to exert Russia’s influence in Georgia.
While the Georgian Dream initially distanced itself from Partskhaladze, it soon changed course, forcing the National Bank of Georgia to significantly change its stance on compliance with US sanctions shortly following his designation. Under new legislation, only an indictment issued by a Georgian court can now lead to the freezing of assets of a Georgian national facing international sanctions.
Following Partskhaladze’s designation, and as Russia maintained its aggression in Ukraine, Georgian Dream continued to take an increasingly anti-Western line. Against the backdrop of the disputed October 2024 parliamentary elections and Georgian Dream’s suspension of EU integration the following month, in December 2024 the outgoing administration of President Biden sanctioned Ivanishvili for ‘undermining the democratic and Euro-Atlantic future of Georgia for the benefit of the Russian Federation’. And in a nod to the extent of Ivanishvili’s personal dominance of the Georgian economy, after his sanctioning OFAC issued a general licence that allows US persons to engage in transactions with entities in which Ivanishvili owns 50% or more (with some exceptions), while direct transactions with him remain banned.
Crucially, the OFAC licence excludes transactions related to Ivanishvili’s legal dispute with Credit Suisse, the Swiss bank which, according to the latest reporting, owes him $461 million in relation to a long- running case regarding the alleged mismanagement of his personal wealth.’’
In addition to Partskhaladze and Ivanishvili, other significant Georgian sanctions targets now include a further five senior figures in Georgian law enforcement designated jointly by the US and UK (including Georgian Minister of Interior Vakhtang Gomelauri) for their alleged role in the violent crackdown on journalists, opposition figures, and anti-government protesters. EU MEPs have also recently called for EU sanctions against Ivanishvili and other leading politicians in the country.
Timely preparations?
Ivanishvili is likely to have anticipated that he might become subject to sanctions. Critics of the Georgian government have suggested that Georgian Dream had used Partskhaladze’s case as a test run for introducing legal provisions that would help soften the blow in the event of Ivanishvili or other senior figures being designated.
Notably, on 4 June 2024, the Georgian parliament signed into law a range of amendments to the country’s tax code, dubbed the ‘Offshore Law’, exempting taxes and duties on offshore assets when brought into the country. According to the amendments, tax incentives will be provided to all offshore companies that transfer their assets to Georgia by 1 January 2028. Many have speculated that the law was pushed through in order to facilitate Ivanishvili’s transfer of assets back into Georgia in light of the growing sanctions risks. The law has also faced scrutiny as a possible conduit for the transfer of illicit funds into Georgia, including potentially sanctioned assets from Russia. Data cited by the investigative journalist network, the Organized Crime and Corruption Reporting Project, suggests that Ivanishvili has made ample use of the Offshore Law already, transferring ownership of seven of his Georgian firms from the Panamanian company Limestone Finance International SA to his Georgian company, JSC Terra, in January 2025.
What’s next?
The prospect of further sanctions against Ivanishvili and his entourage – and the fate of Georgia’s democracy – largely hinges on the shifting geopolitical dynamics globally, particularly in Washington, Brussels, and London. Donald Trump’s return to the White House has created uncertainty around the US’s future stance towards sanctions and its overall relationship with Georgia, in particular considering Trump’s transactional approach to foreign policy and increasing overtures towards Russia in his pursuit of a Ukrainian peace deal. The new US administration’s commitment to developing democracy abroad is being increasingly called into question, in particular following the recently announced cuts to the United States Agency for International Development (‘USAID’), which has been an important player in supporting, in its own words, ‘Georgia’s democratic, free-market, Western orientation’ since the country gained independence from the Soviet Union.
Meanwhile, the EU has struggled to present a united front. Despite growing concerns over democratic backsliding in Georgia, internal divisions have so far hindered the bloc from imposing coordinated sanctions. The UK may be more forthcoming. A recent motion submitted by a group of British MPs urges the UK government to follow Washington’s example by sanctioning Ivanishvili, following its earlier move to sanction five senior figures within Georgian law enforcement. Designating Ivanishvili could deliver a further powerful blow to his financial network; according to Transparency International’s Georgian chapter, 95 companies tied to Ivanishvili’s business empire are registered in British Overseas Territories and Crown Dependencies.
Ultimately, what happens next will be shaped by a complex interplay of domestic protests, diplomacy and calculations of leaders in the West. For Georgia, events in 2025 could define its political experience for decades to come.
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