* Russia, Georgia set to resume trade in wine, mineral water
* Relations between ex-Soviet states shattered by 2008 war
* Signs of thaw come after political shift in Georgia
By Steve Gutterman
MOSCOW, Feb 4 Wine and water from Georgia should
soon begin flowing back to Russia, after Moscow agreed in
principle on Monday to lift an embargo in a step towards
rebuilding relations shattered by their August 2008 war.
Imports of Georgian mineral water and wine could resume this
spring, officials from both countries said, seven years after
Russia banned two of its small southern neighbour's prized
products as tension mounted before the five-day war.
Prospects of a thaw in ties between the former Soviet
republics have improved since Bidzina Ivanishvili, who made his
fortune doing business in Russia, became Georgia's prime
minister after a parliamentary election last October.
The tycoon's rise to power comes at the expense of
pro-Western President Mikheil Saakashvili, who lost control of
parliament in the vote and is barred from running for a new term
later this year in the South Caucasus nation of 4.5 million.
"We have agreed to revive our commercial relations," Levan
Davitashvili, the head of Georgia's National Wine Agency, told
reporters after talks with Gennady Onishchenko, Russia's
consumer protection service chief.
Russian representatives will go to Georgia, possibly as
early as next week, to look at the quality control system. They
will also begin visiting wine and water producers that have
applied for permission to export to Russia, Onishchenko said.
There are still inspections, paperwork and permits to get
through, but Onishchenko made clear he expects Georgian wine and
water such as Borjomi, the which had been popular in Russia for
decades before the ban, would be back soon.
"I think that mineral water - I would first of all name
Borjomi and Nabeghlavi - and wines from both eastern and western
Georgia will be coming onto our market," Onishchenko told a
joint news conference after the talks.
At times in a long and intertwined history, the relationship
between Russia and Georgia has been as much about palates as
politics. Georgian wine, water and food were popular in Russia
when both were republics of the Soviet Union.
Following the 1991 Soviet collapse, tensions increased after
the election in 2004 of Saakashvili, who campaigned to bring the
country into NATO - a red line for Russia - and made noises
about reining in two rebel regions backed by Moscow.
Former U.S. President George W. Bush was a vocal supporter
of Georgia, which straddles the route of Europe-bound oil and
gas pipelines that bypass Russia, and a street in the capital
now bears his name.
Around the time of the water and wine bans were imposed in
2006, a Russian tabloid printed full-page ads advising Russians
to stay away from Georgian wine and food - a pointed play on
Soviet anti-Nazi propaganda in World War Two.
The bitter tone was missing on Monday. In a nod to Georgia's
pedigree, Onishchenko said Georgia has made wine for 8,000 years
and called the South Caucasus "the cradle of winemaking."
PALATES AND POLITICS
Kremlin critics say the quality concerns cited for the bans
by Onishchenko - an acerbic, crew-cut official who has held his
post since the 1990s - were a smokescreen.
"It was purely political," Russian economist Yevgeny Yasin
said on Ekho Moskvy radio on Monday. "They were looking for a
way to punish Saakashvili."
The effects of the bans were severe, although robust foreign
investment and state spending helped keep the country's economy
Georgia's wine exports plunged from $81.4 million in 2005 to
$29.2 million in 2007 and have not fully recovered, reaching
$64.9 million last year, according to government statistics.
Mineral water exports suffered less and rebounded robustly,
dropping a bit from $32.5 million in 2005 but reaching $59.3
million in 2012 as Borjomi looked further abroad for buyers.
Winemakers did the same, with some success, but they are
thirstily eyeing a chance to once again tap the market in
Russia, with its population of 142 million.
"Russia remains the main market - Russians know Georgian
wines, and hopefully remember them," said Davitashvili, who
estimated that Georgia could export 10 million bottles of wine
to Russia every year.
It may not be so easy. Onishchenko said South American wines
have captured much of the segment of the market in which
Georgian wines were strong before the ban.
He said Borjomi might have an easier return because of its
name recognition, despite competition among brands of Russian
mineral water from north of the two nations' Caucasus Mountain
Diplomatic ties between Georgia and Russia were severed in
2008. Russian President Vladimir Putin and Prime Minister Dmitry
Medvedev refuse to deal with Saakashvili, whom they blame for
the war that broke out when Georgia launched an offensive on
Ivanishvili's rise has brought signs of a thaw. Russia and
Georgia held direct talks about bilateral relations in Geneva in
December, and last month the Georgian Orthodox Church leader,
Ilia II, met Putin and the head of the Russian Orthodox Church
during a visit to Moscow.
But Ivanishvili has promised to leave relations with Europe
and the United States in place as priorities, and South Ossetia
and Abkhazia present a huge obstacle to a deep reconciliation.
Russia recognised the breakaway regions as independent states
after war and has made clear it will not reconsider.