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Russia Threatens Painful Blow to Georgia’s Economy
/ 31 Mar.'06 / 15:19
Tea Gularidze, Civil Georgia

Russia’s warning to ban the import of Georgian wines has already been condemned by Tbilisi as a political move, which will be a painful blow not only for Georgian wine producers, but for the country’s economy. Up to 90% of all Georgian wine exports go to the Russian market.
   
Russia's Chief Sanitary Inspector Gennady Onishenko has recommended that the Russian customs service ban the import of wine from Georgia and Moldova, citing “violation requirements of state sanitary-epidemiological rules and norms.”

In a letter sent to the head of the Russian customs service - Aleksandr Zherikhov - on March 25, the Chief Russian Sanitary Inspector says that inspection has revealed that “60% of the examined wines imported from these countries [Georgia and Moldova] in Moscow alone fail to meet requirements set by sanitary-epidemiological rules and norms on safety conditions.”

The letter also says that the Russia’s chief sanitary department will stop issuing “sanitary-epidemiological conclusions” for Georgian and Moldovan wines, starting on March 27.
 
This decision by Russia was preceded by talks in Geneva on March 23, during which Tbilisi and Moscow failed to find a common position on Russia’s accession into the World Trade Organization (WTO). As a member of the WTO, Georgia refuses to give its go-ahead to Russia’s WTO accession unless Moscow meets a number of Tbilisi’s requirements. One out of four major demands by Georgia is linked to the secessionist conflicts in Abkhazia and South Ossetia.
 
Chief of the Department for Foreign Economic Relations at the Georgian Foreign Ministry Davit Kereselidze speculates that Russia's threats to ban the import of Georgian wines might be linked to Tbilisi’s stance over Russia’s accession into the WTO. 
 
“I would note that this is an extremely negative step and will be catastrophic for us, as well as for those companies and people involved in this business... Georgian wine is exported to number of European states, as well as to the United States, but we have faced no problems with these countries so far,” Davit Kereselidze told Civil Georgia on March 28.
 
During a telephone conversation on March 28 Georgian Foreign Minister Gela Bezhuashvili and his Russian counterpart Sergey Lavrov discussed the issues relating to bilateral trade and customs, the Georgian Foreign Ministry reported. Reportedly, issues related with Russia’s WTO accession and wine imports were also discussed.
 
Georgian Agriculture Minister Mikheil Svimonishvili proposed that the wines be examined at “a neutral laboratory.” “We offer our products to be examined in any EU member country, or at least at any independent laboratory in Russia,” Mikheil Svimonishvili said.

In a statement issued on March 29 the Georgian Wine Producers Union said that the Chief Russian Sanitary Inspector did not give any evidence proving that the Georgian wines fail to meet sanitary-epidemiological rules and norms, “which makes us think that the decision is purely politically-motivated.”

Georgian wine producers say that Russia’s ban on Georgian wine import will be disastrous for the Georgian companies.
 
According to the Georgian Department of Statistics, in 2005 Georgian wine export to Russia amounted to USD 63 million, which is USD 27 million and USD 31 million more than in 2004 and 2003, respectively.
 
Georgian Wines & Spirits Company (GWS) exports over 2 million bottles of wines to Russia annually. Merab Japaridze, the GWS manager in charge of product quality, says that if export is banned, the company will suffer “a loss of several tens of millions of Lari.”     
 
“Banning export will directly hit us - the wine producers - but it will also indirectly hit other people working in various fields related to wine production, including those peasants from whom we buy grapes. There is an entire cycle of production and we are the last circle in this chain,” Merab Japaridze told Civil Georgia.
 
He said that besides Russia, the company exports wine to Europe and the United States; however the 13-year-old company has never received any claims regarding violations of “sanitary-epidemiological norms” from these countries.
 
Archil Gegenava, chief executive of the Teliani Valley wine producing company, says that the company exports 35% of its production to the Russian market. 
 
“This will be a huge blow for us, but it will have even graver results for the country, since 89% of Georgian [wine] export goes to Russia. It means that there are companies which sell 100% of their production in Russia and this is a catastrophe for them,” Archil Gegenava said.
 
The Georgian authorities and wine producing companies are urging the Russian side to intensify their fight against falsified Georgian products, mainly wine and mineral waters, on the Russian market.

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