The embargo is really made up of three parts: transportation, postal, and social. The transportation embargo became effective on October 2, and is already causing problems for both Russian and Georgian businesses that depend on Russian goods. According to Georgian news media reports, everyone from booksellers to tour companies in Georgia are already complaining about record low sales as goods, people and services are stopped at the border. Russian companies like Aeroflot are also reportedly suffering.

In the market place, prices for Russian products have increased noticeably as commerce is transported through Kiev or other third party ports. Chocolate, flour and other staples of the Russian market are all significantly more expensive than they were a mere two weeks ago. While the short term effect is hard on the pocket book, in the long term government officials believe this embargo – and shortage of traditional Russian goods – will help strengthen Georgian industry. For example, some analysts believe as much as 70 percent of flour consumed in Georgia was imported from Russia. However, Georgia itself is home to several types of different wheat plants, as well as flour manufactures. In addition, with Russian products no longer available at competitive prices, goods from other countries will have a better chance of entering the market.

The postal embargo is also affecting businesses, primarily DHL and Fed Ex in Georgia. According to reports, the last packages sent to Moscow from the DHL office in Tbilisi included a bundle of grapes Georgian Defense Minister (and Wine Czar) Irakli Okruashvili sent to officials in Moscow. No one at the defense ministry would comment on the packages.

Although the Russian Duma, the lower house of the legislation, threatened to ban money transfers from Russia to Georgia, officially that has not occurred yet. According to reports, wire transfers are still arriving in Tbilisi and some banks are offering clients alternative routes through third countries. However the embargo – and subsequent anti-Georgian policy – has already affect the ability of Georgians to send money home from Russia.

Both Georgians holding Georgian citizenship and naturalized Russian citizens who were born in Georgia are being deported and harassed in Moscow and other cities throughout Russia. On Friday, October 6 the first plane load of deported Georgians landed in Tbilisi. According to news reports, some had proper permits and visas while others did not. Regardless, already three planes have arrived with Georgians deported from Moscow. According to the Georgian government, those who return to Georgia will receive government assistance finding jobs. However, since the pay scale – not to mention the employment market – is much smaller in Tbilisi, it is likely that these people, and the family members that they used to support, will suffer financially at least in the short term.

In addition, Russian government authorities have begun aggressively shutting down Georgian-owned businesses and investigating Georgian entrepreneurs, artists, etc living in Russia, including such luminaries as the famous sculptor Zurab Tsereteli and Boris Akunin (born Giorgi Chkhartishvili). While it is impossible to say how much – if any – financial support these luminaries were providing for family back in Georgia, the Georgian National Bank reported that $219 million was transferred to Georgian families over the past eight months. While that figure is considerably lower than the $1 billion members of the Duma claim is transferred to Georgia annually, it does represent the income of many hundreds of families in Georgia and they could be adversely affected if/when their relative is deported from Russia.

In addition, the Russian immigration department declared on Thursday, October 5 that no more work permits or student visas would be issued for Georgian citizens.

The Russian embargo will harm the Georgian market in the short term because Georgia has been largely dependent on Russian goods in the past. In addition, the loss of income from relatives working in Russia will be a heavy social blow for Georgia. However, if the government continues to limit the negative rhetoric and concentrate on constructive policy and diplomacy, in the long run this embargo could be a great harbinger for a stronger, more independent Georgian market.