The head of Georgia’s largest bank insists “a middle ground” approach that keeps the country on a broadly western trajectory remains possible, hours after the passing of a new foreign agents law saw its share price plummet.
The new law, which has widespread condemnation from the US and the EU, requires organisations that receive more than 20 per cent of their funding from abroad to register as “agents of foreign influence”, bears a strong resemblance to a law in Russia used by the Kremlin to crack down on political opponents.
Speaking to The Banker on the sidelines of the European Bank for Reconstruction and Development's annual meeting in Yerevan, Armenia, Bank of Georgia CEO Archil Gachechiladze said that the Georgian Dream government has indicated it is willing to consider changes so the law is more compliant with the standards of Georgia’s US and European partners.
“That could be a window of opportunity between the two radically different positions of one being completely unacceptable [and another] being completely acceptable,” he said. “There is a middle ground that should be found and the prime minister has opened the door.”
Georgia’s two main banks, Bank of Georgia and TBC Bank saw their stock prices fall by more than 15 per cent in late afternoon trading on Wednesday on the London Stock Exchange.
Gachechiladze described the impact on the bank’s share price as “harsh”, but he hoped the falls would be reversed as the noise subsides and it becomes clear that Georgia remains on a western trajectory.
The country’s deputy finance minister, Ekaterine Guntsadze, who also attended the EBRD’s annual meeting, told The Banker the law is still “very fresh” and that it was hard to comment on its impact at this early stage.
“We all need to sit down and discuss it,” she said, having just come from Brussels earlier in the day.
The EU urged Georgia on Wednesday to withdraw the new law, warning the measure “would set back the country's ambitions to join the bloc”.
In the run up to the annual meeting in Yerevan, EBRD president Odile Renaud-Basso said the bill could negatively impact private sector willingness to invest in the country, and that clients of the development bank had expressed some concerns around developments in Georgia.
But during a panel discussion on unlocking investment opportunities in Georgia on Wednesday at the EBRD’s annual meeting no mention was made of the controversial law or its likely impact on investment appetite for Georgia which is positioning itself as a bridge between Europe and Asia.
Instead, Guntsadze and other panellists were keen to emphasise the resiliency of Georgia’s “small and open economy”, and “vibrant and active society” to economic and geopolitical shocks.
