Tens of thousands of ordinary Georgians continue to protest the reintroduction of the controversial “foreign influence” bill. Backed by the governing Georgian Dream party, the legislation requires media and non-governmental organizations receiving more than 20% funding from abroad to register as an organization "pursuing the interests of a foreign power". Critics have branded the bill the “Russian law”, warning that similar legislation has been used there to quieten free speech and crackdown on dissent.

Passed by Georgia’s unicameral parliament, President Salome Zurabishvili has refused to sign the bill into law, despite her opposition likely to be overruled by Georgian Dream. Following passage, protestors gathered outside Georgia’s parliament building and engaged in skirmishes with police. A further intensification of protests and violence cannot be ruled out in a country with a rich history of political instability. It would therefore be wise for the Gulf Cooperation Council (GCC) states to pay close attention to what might happen next.

Doing so reflects that the GCC’s economic interests in Georgia have grown exponentially in recent years, particularly in its tourism sector. Statistics suggest that by the end of 2022 the country welcomed almost 210000 tourists from Gulf states, 15 times more than a decade ago. With a 60% increase in visitors between 2019 and 2022, Saudi Arabia arguably provides the most intriguing rise. Irrespective of where they come from, many GCC tourists enjoy visiting Georgia for its acceptance of Halal and other Islamic practices, temperate summer climate, and increasing opportunities to indulge in winter sports at its mountain resorts.

As things stand, the United Arab Emirates (UAE) leads the GCC’s investment into Georgia’s tourist economy. Tourism is also one of the focus areas of the UAE-Georgia Comprehensive Economic Partnership Agreement (CEPA). Signed October 2023, the agreement not only reinforces the UAE’s status as Georgia’s sixth largest investor but also seeks to double non-oil trade from $481 million to $1.5 billion in five years. Beyond tourism, target sectors include agriculture, renewables, and technology.

The UAE’s foothold in Georgia’s infrastructure is also growing following AD Ports Group’s recent acquisition of a 60% stake in Tbilisi’s dry port. This inland terminal is situated along the Middle Corridor, a trade lane linking manufacturing hubs in Asia with consumer markets in Eastern Europe. Other significant players in Georgia’s infrastructural development include China, which recently completed a 9000-meter-long tunnel along the country’s Kvesheti-Kobi road. Improved infrastructure is also integral to Georgia’s currently imperiled candidacy for membership of the European Union (EU).

Economists will tell you that the ideal conditions for economic development include infrastructure investment, open trade and investment regimes, and political stability. There can be no denying that Georgia’s steady economic growthin recent years has benefitted from having all three pillars in place, even if political stability is perceived by some to have come at the cost of bona fide democracy. Conversely, expert-level knowledge is not required to make the connection between political unrest and faltering economic conditions, particularly in key sectors such as tourism.

While Tbilisi remains the main focus of protests and international coverage, opponents of the “foreign influence” bill have made their presence felt in other parts of Georgia including Batumi, the country’s third city and Black Sea resort. This effectively places Georgia’s two leading tourist destinations and associated logistics – most notably Shota Rustaveli Tbilisi International Airport – on the frontline of current and any future instability. The same can also be said of many of the GCC’s investments and business interests in Georgia’s tourist sector.

Next month’s Eid al-Adha will provide valuable insights into how Georgia’s political turmoil is starting to influence choices made by GCC residents and impacting regional economic objectives. Islam’s second major holiday is regularly accompanied by a getaway from the region to cooler climes. With a two-hour flying time and regular flights from Doha, Dubai, Riyadh, among others, Georgia represented a convenient, relatively safe, and value-for-money tourist destination. That is until the country’s latest round of political protests and volatility.

Unlike tourists, those GCC companies and investors with a long-term stake in Georgia’s economy and infrastructure have little option but to watch how political events unfold. Some of the worst-case scenarios are as obvious as they are unpalatable. Real estate in tourist locations underutilized during peak seasons; logistics hubs losing business as manufacturers divert products to safer trading routes; missed opportunities to bolster regional food security through the export of cheaper agricultural products.

The GCC, and especially the UAE, is by no means the only regional grouping or country that is keeping an eye on Georgia’s uncertain political situation. With growing interest in developing the Middle Corridor and Black Sea port of Anaklia, China particularly stands to benefit from the country’s return to stability. The same is also true of the United States and EU, both concerned about Russia’s rising influence over a region that was once part of the Soviet Union. Accordingly, the GCC has options regarding who it can possibly work with to apply pressure on Georgia to resolve its political crisis. The challenge facing the bloc is making the most politically and economically expedient choice of partner(s) at just the right time.

This piece was first published by MEED, Middle East business intelligence.