Briefing Note (part of the Perspectives on the Georgia Conflict series)

Professor Philip Hanson

The recent war in Georgia will have both positive and negative consequences for Russia's economy. Doubts over the future viability of energy transit routes through Georgia should assist Russia's market power in Europe, and strengthen its bargaining power vis-à-vis neighbouring oil and gas suppliers. In the longer term, however, the conflict may increase the perceived risk of conducting business in Russia and deter foreign investment. A best guess at the overall economic impact has a long-run net negative effect, superimposed on other factors slowing Russian growth.

This briefing note forms part of the series - 'Six Perspectives on the Georgia Conflict'.