What do you know about the wealth of a country torn apart by the war between Russia and Ukraine?

As a result of the war between Russia and Ukraine, Georgia, a small state of the former Soviet Union, has a silver lining that even the country's authorities did not expect. The country of Georgia with around 3.7 million inhabitants is located on the southern border of Russia. Thousands of Russian citizens have immigrated to Georgia since the beginning of the war. And these Russian immigrants brought with them extraordinary sums of money.

The result was that the same country that had a growth rate of 5% before the war now grows at 10%. Yaroslavl Bibach is the Director of the Research Center for Macroeconomics at the International School of Economics at Tbilisi State University, Georgia. "A lot of money came to Georgia from Russia," he says.

According to his estimates, between January and October up to 1.4 billion dollars entered Georgia, 3.6 percent more than in the same period in 2021. Georgia's currency, the lari, has strengthened as much as 15 percent against the US dollar, thanks to the same reintroduction of money.

A flood of Russian citizens.

According to estimates, between 70,000 and 100,000 Russian citizens have moved to Georgia since the start of the Russo-Ukrainian war.

It is difficult to estimate the exact number because people from Russia, Ukraine, and Belarus are not asked if they come to Georgia for vacation or permanent residence. Even citizens of these countries who come to Georgia can legally stay and work for a year.

They can leave the country whenever they want and settle in Georgia again for a year, and thus thousands of people from Russia, Ukraine, and Belarus live in Georgia without restrictions. Speaking to the BBC, Yaroslavl Bibach says that this is a very friendly policy.

Although the influx of Russian citizens has been constant since the war, two distinct waves can be identified. The first wave came in May and the second wave came in September when Russian President Vladimir Putin announced a policy of conscription.

In cities like Tbilisi, after the influx of Russian citizens, queues began to form in front of banks and the demand for rental housing increased to the point where locals could no longer pay the rent.

Russian companies in Georgia.

It is very easy for a foreigner to open a company in Georgia.

Yaroslavl Bibach explains that, unlike other countries in the world, a company can be registered here in just a few days. And Russian citizens have taken full advantage of this convenience. This year 10 times more companies have registered than in 2021.

From January to September, Russian citizens played 9500 companies. Most of them were opening companies for personal business purposes, but it is difficult to say anything about their true nature.

On the other hand, bank accounts are also being opened.

Concerns.

Georgia's relationship with Russia is complicated. There was also a brief war between Russia and Georgia in 2008. Some locals fear that the migration of Russian citizens will have a negative social and economic impact on Georgia.

Mikhail Kukawa says that this development could turn into an explosion. The explosion is because they believe that in the future Russia can attack Georgia in the same way that it attacked Ukraine.

"If Russia invades Georgia, the recent economic development will turn into a conflict."

However, the country's economy, which currently depends on agricultural, mining, and steel production, has had a significant impact. Located at the crossroads of Eastern Europe and Western Asia, Georgia has also seen a significant increase in tourism in recent times, which has further benefited the country's economy.

How long will this growth last?

The Georgian government expects economic growth to slow by 2023, while the International Monetary Fund estimates that economic growth will return to pre-war levels.

But the main question is, how long will Russian citizens stay in Georgia? No one has an answer to this question. For those looking for work here, it will be difficult for them to establish themselves permanently.

Yaroslavl Bibach says that this economic boom will not last long. "It will depend on the mood of the battle." However, he says, "It’s hard to turn a temporary money transfer into a long-term investment."

He warned that the controversial history of Georgia and Russia could lead to an increase in social tensions. As the local population is affected by the increase in rents, which is temporary but due to lack of financial resources, it is definitely a great challenge.