Georgia and Azerbaijan forge new economic axis with Gulf and Israeli partners

The South Caucasus is emerging as a strategic hub for Gulf and Israeli investment, with Georgia and Azerbaijan leveraging their geographical positioning and open economies to attract billions in capital. 

As Eurasian trade routes shift and Russia’s role as a transit corridor diminishes, both countries have become key players in new connectivity and investment corridors linking the Middle East, Central Asia, and Europe.

The Gulf Cooperation Council (GCC) states—especially the United Arab Emirates (UAE)—are leading a wave of investment across infrastructure, energy, logistics, and digital transformation in the South Caucasus. 

In Georgia, the UAE now accounts for 63% of the country’s trade with the Arab world. The 2023 Comprehensive Economic Partnership Agreement (CEPA), which took effect in 2024, eliminated tariffs on nearly all Georgian exports to the UAE and is expected to generate $4 billion in added value for the Gulf nation’s economy by 2031.

The UAE’s AD Ports Group has acquired a 60% stake in the soon-to-open Tbilisi Dry Port, part of a larger strategy to control key nodes along the Middle Corridor—a trade route increasingly favored over Russia for East-West connectivity. 

In the renewable sector, Masdar is building Georgia’s largest solar plant, and Emaar Properties has committed $6 billion in real estate development—marking the largest single investment in Georgia’s history.

This dynamism is underpinned by strong private sector coordination, notably through the Business Association of Georgia (BAG), which represents more than 75% of local businesses. 

BAG has played a critical role in advocating for reforms, improving the business environment, and facilitating investor access, helping make Georgia one of the most competitive economies in the region.

Azerbaijan: Green Energy and Digital Connectivity

In Azerbaijan, the UAE's ADNOC took a 30% stake in the Absheron gas field, while green energy is gaining ground through ACWA Power’s $300 million wind project and Masdar’s investments in solar energy. Digital infrastructure is also a rising priority: a bilateral deal signed in December 2023 includes cooperation on data centers and digital corridor development.

Abu Dhabi’s ADQ and Azerbaijan Investment Holding launched a $1 billion joint venture in late 2023 to expand multi-sector cooperation, from logistics to tech.

Israel Becomes a Rising Partner

Israel is also becoming a key economic partner for Georgia, especially in tourism. Visitor numbers from Israel soared by 72% in the first quarter of 2024, placing it among Georgia’s top five source markets. Direct air connectivity has expanded rapidly, with 70 weekly flights planned in 2025.

This tourism boom complements growing economic collaboration in areas like civil aviation and real estate, further diversifying Georgia’s foreign partnerships.

Both Georgia and Azerbaijan are using ties with the GCC and Israel to hedge against volatility from larger regional powers. 

For Georgia, in particular, deeper ties with non-Russian actors are a strategic necessity. 

For the Gulf and Israel, the South Caucasus offers investment opportunities aligned with their own global ambitions.

Through targeted foreign investment, local institutional strength like the BAG, and a clear pivot to global markets, Georgia is positioning itself not only as a gateway between continents—but as a regional economic leader in its own right.