ISET working paper No 1 [June 14, 2007]
Impact of Russian Sanctions on the Georgian Economy by Eric Livny, Mack Ott, and Karine Torosyan

The objective of this study is to analyze the economic impact of continued sanctions on Georgia by Russia. We estimate the total losses for the Georgian economy at the level of up to 600 million current USD for the period 2006-2007.I. We find that the drop in exports to Russia for the same period is quite large - 175 million current USD; there may have also been some collateral damage to exports to other important trade partners. We do not observe any sizeable decrease in the inflow of remittances from Russia. This suggests that economic activity by Georgian migrants in Russia has not gone down. We see a sharp drop in the outflow of remittances to Russia, which is indicative of a slowdown in outmigration of Georgian citizens to Russia. The major finding of the study is quite encouraging: Georgia has clearly survived the Russian bear. In addition, Georgia is being weaned of its overly dependence on the Russian market through diversification of industry and trade.
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  ISET working paper No 2 [June 14, 2007]
A Phased Strategy for Opening Armenia’s Western Border by Karine Torosyan

This paper outlines a plan to open Armenia’s borders in a way that is economically beneficial and preserves and enhances security for Turkey and Armenia.  Likely changes in trade flows between the two nations are examined, with a particular emphasis on trade between Armenia and eastern Turkey.  Importantly, we argue that the impact of the closed border on trade is larger the closer the origin and/or destination is to the border and the further south the origin and/or destination point is relative to the northwest corner of Armenia.   The authors also concern themselves with the question how to maximize the gains from opening the border between Turkey and Armenia for all countries in and around the region, including: Azerbaijan, Georgia, Iran, and Russia.  This is important both for the sake of fully exploiting the economic benefits of cross-border cooperation and also to promote concurrent reduction in border-related barriers to trade throughout the whole region.
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