EBRD warns Georgia ‘foreign agents’ law could hit economy, investor confidence

By Libby George

LONDON (Reuters) – Tensions around Georgia’s controversial draft “foreign agents” law could hit the country’s economy and investor confidence, the president of the European Bank for Reconstruction and Development (EBRD) warned on Tuesday.

The draft legislation, which is winding its way through the Georgian parliament, would require organisations receiving more than 20% of their funding from abroad to register as agents of foreign influence, a requirement opponents attack as authoritarian and Kremlin-inspired.

The draft legislation sparked protests in recent days while Brussels and Washington have urged Tbilisi to drop the legislation or risk harming its chances of European Union membership and a broader Euro-Atlantic future.

“We were surprised to see it coming back, and we are concerned by the dynamics of what’s involved,” EBRD President Odile Renaud-Basso told journalists during a media briefing ahead of the lender’s annual meetings kicking off in Armenia on May 14.

Georgia has benefited economically from making good reform progress, Renaud-Basso said.

“But the new trend and the tension around that (draft law) could have an impact, an economic impact, on the private sector and the willingness to invest in the country so we are in contact with our partners,” she said.

Alkis Vryenios Drakinos, EBRD’s regional director for the Caucasus, said the investment climate had not yet changed, but the draft law was a potential threat to what was otherwise likely to be a strong year for the bank’s investments in the country.

He cited work in the banking sector, two public sector projects signed this year worth 50 million euros ($53.8 million) in total and a private sector wind project investment worth just over 100 million euro it hopes to sign later this year.

The EBRD has invested 5.16 billion euro in Georgia to date, around half of that in the private sector. Its current portfolio of projects in the country stands at 1.11 billion euros, according to the lender’s web side.

($1 = 0.9297 euros)