Here is the million dollar question: can the Ukrainian economy survive the Russian invasion?
Put another way, how could the Russian invasion affect Ukrainians living in the unoccupied
territories?
Will they be able to continue their businesses or will they be relegated to just living hand
to mouth?
Putin was not satisfied with invading Eastern Ukraine and launched his invasion in all parts
of the country.
How things will end, nobody knows!
We don’t have a crystal ball here at VisualPolitik BUT we do have something else: a long memory.
Because yes, my Visualpolitik community, there is a precedent very similar to Ukraine.
A country that was also invaded by Putin.
Which country are we talking about?
Exactly!
Georgia.
No, I'm not referring to the US State but to the country.
Georgia, with its capital in TBILISI Does this mean that Ukrainians are going to
meet the same fate as Georgians?
No.
But you can’t deny that there are a lot of similarities.
What’s more, Georgia can teach us a lot of lessons.
If you are a digital nomad or someone who is interested in this lifestyle, you have
probably heard this country mentioned a thousand times.
It is one of the trendiest destinations for small entrepreneurs and digital nomads.
Almost as trendy as our unique T-shirts.
T-shirts that are part of our exclusive merchandising.
Well, merchandising that is not for sale!
The only way to get one is by joining our Patreon at Level 3 or above.
Come on, these t-shirts are really exclusive.
All the designs are created by us.
In other words: if you join VisualPolitik's Patreon, you will not only help this project
to go ahead with all the independence and rigor that you like so much,
You'll also get access to exclusive merchandising... and our weekly political analysis newsletter,
which is a real treat.
But let's get back to today’s story.
The truth is that Georgia is one of the most interesting countries in the world.
Particularly due to this man you see on the screen.
Meet the former president of Georgia, MIKHAIL SAAKASHVILI.
If this man had been born in San Francisco, I assure you there would be at least three
series about him on Netflix.
I think he is the only politician in history who can boast of having held positions of
political responsibility in two different countries: one is Georgia and.... The other?
Three, Two, One...
That's right, Ukraine!
After ruling Ukraine, Sakaashvili obtained Ukrainian citizenship and became Governor
of the Odessa region.
Absolutely everything in this man's life is worthy of a movie.
No matter whether you like him or not, nobody can deny that he is a unique character in
history.
A man who arouses passion and hatred.
And who is his biggest hater?
Exactly!
Vladimir Putin.
And take note, because we are talking about true hatred.
Pay attention because this is a direct quote.
("Someday I’m going to hang Saakashvili by the balls"–Vladimir Putin in 2008)
Ouch!
If Putin says that... you’re bound to be scared already.
And why so much hatred, you may ask?
Well, the truth is that one fifth of Georgia's territory is occupied by Russia.
And it has been that way since 2008 when the Georgian war broke out.
That’s right: you could say that Georgia is a miniature Ukraine.
So the question is, why are so many digital nomads opting to live in an invaded country?
Has Georgia survived the Russian invasion?
What lessons can Ukrainians learn from this story?
What mistakes has Georgia made?
Today we are going to answer these questions but first, let's look at a bit of history.
Today, we are going to answer to these questions but before we do…
many of you have asked us how you can help Ukrainian Army.
And there is a way you can do it!
The Ukrainian National Bank is accepting donations from private individuals like you and me.
This money will go to support their troops and the resistance to the Russian invasion.
This is not a paid sponsorship, nobody is paying us to tell you this, and we are mentioning
it just for the sake of informational purposes.
This said, let’s have a look at some history!
(BORAT'S VILLAGE)
As I mentioned before: if you're a digital nomad, you've probably heard of Georgia or
maybe you’re even there right now.
Georgia is still a poor country but, at the same time, they have requested to join the
European Union.
This is quite the fairy tale outcome when you consider that twenty years ago, Georgia
was... how shall I put it?
What can I say?
Have you seen "Borat"?
Well, next to Georgia at that time, Borat's village would have looked like Manhattan.
This country was the crystallization of all the stereotypes you may have in your head
of an ex-Soviet republic: underworld gangs, corruption and poverty.
During the Cold War, Georgia was a republic within the Soviet Union.
In 1991 they declared independence and went to war with Moscow.
Much like what is currently happening in Ukraine, Georgia has two provinces whose population
feels more Russian than Ukrainian.
We are talking about SOUTH OSSETIA and ABKHAZIA.
Since 1992, they are two of those regions that appear shaded with little lines on the
maps.
So what happened in the rest of the country?
Well, to be honest, nothing good.
Many of you would think that the end of communism was good news for everyone living in the former
USSR.
However, Georgia is one of the exceptions to this rule.
To give you an idea, in just 10 years, Georgia's GDP fell to less than half.
What's more, this country continues to suffer a harsh population loss.
In 1989, Georgia had about five million inhabitants.
Now it is down to 3.7 million people.
So how could things go so wrong in this place, you may ask?
Think about it: in the 1990s, Georgia became the perfect breeding ground for organized
crime and corrupt politicians, but that’s not all!
What little industry there was in the country came from Moscow.
Once they became independent, all the factories closed down.
To give you an idea, during the 1990s, the main Georgian export was the scrap metal left
behind by the Soviets in the iron and steel factories....
Yes, that’s right: Georgia's main export was the metal scraps left over from the factories
that had just been closed down.
With this one fact, you can imagine what the country was like.
Then again, it's not that surprising.
We are talking about the Caucasus region: all the countries and regions in this area
are the same or worse.
In this region there is Azerbaijan, Armenia, Chechnya?
Come on!
We are talking about one of the most shadowy areas of the planet.
However, Georgia's destiny changed forever in 2003.
What happened at that time?
Let’s take a look right now.
(THE ROSE REVOLUTION)
There are moments in history when one person changes everything.
This is one of those cases.
And yes, the person in question is Mikhail Sakaashvili.
Some will say that this video is no more than a puff piece and a eulogy to the figure of
this man.
But, setting aside the opinion you may have about him, no one can deny that he has seen
it ALL.
Objectively, this man completely changed the history of his country.
And I'm serious here: on VisualPolitik we have analyzed a lot of countries and political
figures: Saakashvili's life is a movie script.
In today's video we are only going to cover a small part of it and it goes like this.
Back in 2003, Mikhail Saakashvili was a lawyer who had studied in the United States.
While there, he became the greatest advocate of the West and the free market.
Yes, my dear libertarian friends watching this channel: if there is one hero of the
minimal state and libertarianism, it is none other than Saakashvili.
In 2003 he led what we could call the most successful libertarian revolution of the last
100 years: The Rose Revolution.
Okay, let's admit one thing: the way he came to power was not the most democratic in the
world.
But let's remember that Georgia was something like Borat's village but even worse.
In any case, Saakashvili came to power with one promise: to turn Georgia into a free market
paradise.
That means anti-corruption, low taxes and free trade agreements with the whole world.
To give you an idea, his reforms were so radical that even the International Monetary Fund
stopped lending money to the country.
And why would they do that, you may ask?
Because they thought that, with such low taxes, the country would be unable to pay back the
loans.
However...
Can you guess what happened?
Take a look at this graph.
Here it is: Georgia has one of the most minimalist tax systems in the world.
Do you remember our video about Estonia?
Well, Georgia follows an almost identical model.
Add to that free trade agreements and a clean up of State resources.
To give you an idea, Saakashvili even fired more than 16,000 corrupt policemen in the
first years of his leadership.
I know what you're thinking: it sounds like VisualPolitik's dream, doesn't it?
Yes, it does.
Of course, to many of you it will sound like a horrible government program.
But the truth is that the data speaks for itself.
Between 2004 and 2007, Georgia's GDP grew by 35%.
And international investment poured into the country.
For example, it was in 2007 that Ferrero, the brand that manufactures NUTELLA, opened
a plant in the country to process hazelnuts.
That’s right, one of Georgia's main exports is nuts.
Nuts and wine.
Georgia is known as the birthplace of wine.
So, within a few years, this country was exporting hazelnuts and wine like there was no tomorrow.
And I know what you're thinking!
That's the primary sector?
Where’s the industry?
Yes, you are right.
But remember that Georgia came from being Borat's village.
The important thing is that the country was on the right track.
It was the star of the Caucasus.
And then... that's when misfortune struck.
Listen up.
(PUTIN'S FIRST VICTIMS)
Another of Saakashvili's promises upon coming to power was national reunification.
Georgians were not at all happy about having two basically independent provinces.
It may sound a bit strange but, despite being such a small country, with less than four
million inhabitants, Georgia has several different languages and ethnicities.
And there are two regions where Georgian is not even wanted: SOUTH OSSETIA and ABKHAZIA.
And what do these regions have in common?
Well, apart from not having much attachment to Georgia...
they have a huge affection for....
Mother Russia!That's right!
This story is familiar to you.
It is something almost identical to the Donbass or Crimea.
But not only that!
As you can imagine, it's hard to declare your undying love for the free market and the West
without angering Russia.
Especially when Saakashvili declared his explicit interest in joining NATO.
As has happened with Ukraine, Putin's first attack came through the wallet.
In 2006, Russia ordered a trade boycott against Georgia.
And what came after the wallet?
Exactly!
The military attack.
(Russia and Georgia Clash Over Separatist Region.
NY Times)
That's right!
In 2008, a group of South Ossetian separatists bombed a group of Georgian soldiers.
Georgia had tried to negotiate a territorial solution that would allow the rebel regions
to agree to become part of Georgia.
But the negotiations had not worked.
And this attack was the final straw.
First the Georgian army invaded South Ossetia.
Then Russia supported the South Ossetians.
And that's how a war broke out between Russia and Georgia.
Like the war in Ukraine, Russia also reached the capital of Georgia.
In fact, just like what happened in Kiev, the Russians also bombed the airport of the
capital, Tbilisi.
In just 12 days Russia occupied almost the entire country, including the parts with an
anti-Russian population.
Of course, there are now several differences between Ukraine and Georgia.
First of all, the Ukrainian has had almost eight years to prepare for an invasion.
We have already talked about this in many VisualPolitik videos.
However, Georgia is a much smaller country, with a smaller army making it ultimately easier
to conquer.
Invading all of Ukraine would take much longer than 12 days.
The second difference is that the Ukrainian war has been much more deadly.
Unlike Georgia, a big share of Ukraine territory is already devastated and… it’s only getting
worse and worse.
This said, there are still some parallelism between these two stories.
In any case, what happened in Georgia in the end?
Well, in this case, France mediated to negotiate a cease-fire.
Russia got what it wanted: control of ABKHAZIA and NORTH OSSETIA.
In exchange, they withdrew troops from the rest of Georgia.
Conclusion: What is the situation in Georgia today?Well, when you look at a map: on Russian
world maps, Abkhazia and South Ossetia are two independent republics.
However, no other country recognizes them as such.
So, on the world maps drawn up by the rest of the world, they are two territories shaded
with dashes.
And, for practical purposes, these two republics act like two Russian provinces.
They even use the ruble as legal tender.
In other words: it seems very reasonable to think that DONETSK and LUHANSK will meet a
similar fate.
And, believe me, you wouldn't want to live in these areas.
The question is, what has happened in the rest of Georgia, have they managed to get
on with their lives despite the war with Russia?
Well, we are going to look into that right now.
(BETWEEN RUSSIA AND THE WEST)
In 2013, Sakaashvili lost the elections and who would you guess succeeded him?
Well, pay attention, because this story has a lot of colorful characters to say the least.
Saakashvili's successor was this other gentleman you see on the screen.
We are talking about BIDZINA IVANISHVILI, also known by the nickname "BORIS".
This nice gentleman made a tidy fortune selling computers in Russia during the 90s.
And how big was his fortune, you may ask?
Well, it is estimated that this man had a sum of money equivalent to one third of the
entire GDP of Georgia.
Yes, that’s right.
And after making so much money in Russia, he returned to his native Georgia to try his
luck in politics.
In 2012, he created his own party which he called "GEORGIAN DREAM".
And, as you can imagine, with so much money for election campaigning, the Georgian Dream
party swept the elections the following year.
But as if that weren’t enough!
After being defeated in the elections, Saakashvili was exiled and lost his citizenship.
– Side note: Saakashvili is one of the few examples of a person who has become, technically,
stateless: that is, for a couple of years he had no nationality at all... but that's
another story for another video.
In any case, since 2013, Ivanishvili's party has dominated Georgian politics.
And what ideology does this party have?
Well, as you can imagine, Georgian Dream is as pro-Russian as a party can be in Georgia.
That is, not much.
As you might expect, most Georgians don't want to see Russia have even the slightest
presence.
It is the country they are still at war with.
However, Ivanishvili is pro-Russian enough to pull off things like this.
(Russia set to resume imports of Georgian wine and water.
Reuters)
But make no mistake!
Georgia is still far away from the Russian sphere of influence.
Yes, it is true, since 2013, Georgia has returned to trade with Russia.
But that is not its only trading partner.
Listen up.
(European Union Signs Free Trade Deal With Georgia.
VoA News)
Exactly!
Georgia trades with both Russia and the European Union.
This explains not only the take-off of its wines, which are increasingly exported.
It also explains the creation of a new economic sector that was unthinkable in this country
just a few decades ago.
Tourism.
And I know what you're thinking – tourism?
Who would go on vacation to a country that is at war?
Well, look at this graph:
The truth is that, before the pandemic, Georgia had almost eight million visitors a year.
The growth of tourism has been almost miraculous.
Yes, it is true that the occupied areas are dangerous.
But cities like Batumi have filled up with waterfront hotels: many of them financed by
foreign capital.
Georgia has become a relatively cheap destination for Russian and Turkish tourists.
However, all that glitters is not gold.
Yes, it is true: Georgia today is much better off than it was 20 years ago.
However, the country still maintains a 17% unemployment rate.
In the last decade, they have hardly invested in education and, as a result, it is difficult
for high value-added companies to emerge: there is no well-trained workforce!
Not to mention that the system is increasingly authoritarian.
In fact, in 2021 they put Saakashvili in jail for rather obscure reasons.
And Russia is still pushing to bring Georgia back into its sphere of influence… then
again, the Russian invasion of Ukraine might change this trend.
Just some days before making these video, Georgia has made an official request to enter
both EU and NATO.
Shall they go through?
At this time is impossible to tell.
However, one thing is certain: there are many lessons to be learned from Georgia.
Sure, the Ukrainian economy will have a much longer path to recover because, as we said,
a big share of the country is already devastated.
Then again, Georgia proofs that even under a Russian invasion, you can restore your economics.
The question is: What can Ukraine learn from Georgia?
Is it possible for the Western part of Ukraine to become a model economy attracting investments?
Will we see a tourism boom in Kiev?
Could innovative industries emerge in Ukraine... despite the country being at war with Russia?
You can leave me your answer in the comments.
As always, don't forget that here, at VisualPolitik, we release new videos every week so subscribe
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