Once a key US partner in the Caucasus, Georgia should be a prime target for US sanctions.
While the United States is engaged in a war against Iran, one of Washington’s former strategic partners in the South Caucasus has become Tehran’s most sophisticated sanctions-evasion hub. Georgia, a nation that once received hundreds of millions in US security assistance before a pause in 2024, now enables the regime in Tehran. Georgia’s actions fundamentally undermine the strategic priorities of US Caucasus policy: containing Iran, countering Russian and Chinese influence, and maintaining stability.
Georgia’s Iran Sanctions-Evasion Project
The sanctions-evasion scheme in Georgia isn’t a result of negligence. Since taking power in 2012, the Georgian Dream party has facilitated the registration of nearly 13,000 Iranian companies. Nearly 700 firms share just one address in Tbilisi, and 800 companies operate from a village of barely 100 residents.
Between 2022 and 2025, 72 companies were responsible for importing Iranian oil and petroleum products, and many of these importers are linked to donors, state contractors, and even officials of the ruling party. Georgian importers pay above-market rates for Iranian oil, a threefold increase over market norms and standards, while prices from other suppliers decreased. This can serve only one purpose—to provide Iran with hard currency through boosted, overcharged payments.
These overinflated invoicing operations and the revenue they generate aren’t usually intended for commercial transactions. They may help fund the Islamic Revolutionary Guard Corps (IRGC), which, according to the estimates of the US Treasury Department, spends over $1 billion annually to fund proxies and terrorist networks. The money that flows to such organizations kills Americans. Since the United States and Israel launched Operation Epic Fury against Iran on February 28, multiple US service members have been killed by Iranian missiles and drones.
While Georgian revenues cannot be directly attributed to specific attacks by the Iranians on American military personnel, the financial architecture is clear to see: Iranian firms and companies, with ties to the Islamic regime, can freely enter Georgian markets, which are being used to access hard currency, evade sanctions, and gain revenues that fund the operations targeting Americans.
Iranian firms have also penetrated Georgia’s critical infrastructure, with certain companies linked to the Tehran regime supplying surveillance systems to Georgian state institutions. Some companies from Iran also supply goods and products to the Georgian Ministry of Defense. However, these aren’t simple commercial ventures, but deliberate intelligence operations.
The contrast between the previous years and today is stark. In 2007, Georgian authorities arrested Amir Hossein Ardebili, an Iranian arms dealer, and extradited him to the United States. In 2014, Georgia cooperated with the US Treasury to expose an Iranian financial scheme controlling 70 percent of InvestBank.
Georgia’s Support for the Iran-Russia Partnership
There’s also a Russian element to Georgia’s role in Iranian sanctions evasion. Russian military cargo passes through Georgian airspace while en route to Iran. These flights facilitate a mutual, two-way partnership that Moscow and Tehran have established in the last couple of years,especially in drone production.
This sanctions-evasion economy and procurement of such military technology undermine US efforts to broker peace between Ukraine and Russia and weaken the regime in Tehran.
The South Caucasus is at the crossroads of great-power competition among the United States, Europe, Russia, and China. Major projects, such as the Baku-Tbilisi-Ceyhan pipeline, the Southern Gas Corridor, and the Middle Corridor, enable Europe to reduce its dependence on Russian energy and provide the United States with economic leverage in Eurasia.
Iran’s Influence Game Heads to Georgia
Beyond economic and financial penetration of Georgia by Iran, there’s also an ideological element. Al-Mustafa International University, which was sanctioned by the United States in 2020 as a recruitment network of the IRGC, operates three campuses in Georgia, indoctrinating Georgian students with Iran’s so-called “resistance” ideology.
Clerics also regularly make threats directed towards the United States, Israel, and Saudi Arabia. Senior clerics from Iran, who are restricted from travelling to the West due to extremism, visit Georgia and meet its high-ranking officials freely. One such cleric, Ayatollah Reza Ramezani, is the secretary general of the Ahl al-Bayt World Assembly, an Islamic militant and propaganda organization founded by Khamenei in 1990. Georgian authorities didn’t just tolerate this activity. They enabled it through official meetings and state media coverage.
While Georgian citizens gathered at the Iranian embassy, declaring “Khamenei, I am ready to carry out your orders,” Georgian authorities target researchers and academic representatives who document Georgian-Iranian collusion, networks, and dynamics. After theHudson Institute published its report titled “Georgia’s Iranian Turn: Tehran’s Rapid Expansion of Influence in a Once-Committed US Ally,” the State Security Service of Georgia summoned one of the authors, Giorgi Kandelaki, a former Georgian MP, as well as former Minister of Defense Tina Khidasheli and former Chief of General Staff Vakhtang Kapanadze. Ruling party officials stated that exposing Iran’s infiltration of Georgia will be considered “treason” and threatened researchers and experts with prosecution.
How to Sanction Georgia’s Regime
The Trump administration’s approach to the South Caucasus demonstrates Georgia’s isolation. Recently, Vice President JD Vance made a historic visit to Armenia and Azerbaijan, while refusing to include Georgia on the agenda. This shows that while Washington will deepen its strategic partnership with Yerevan and Baku, it will not reward Tbilisi as long as it continues on its pro-Iran, pro-Russia trajectory.
This may antagonize the current authorities in Georgia, who may choose to deepen cooperation with Moscow, Beijing, and Tehran. Still, Washington must act and use its tools to prevent coordinated sanctions evasion.
Congress has already provided the legislative framework for this. The MEGOBARI Act imposes sanctions against officials in Georgia who facilitate foreign influence operations and undermine US interests in the Caucasus. HR 7668, titled “To require a report on Russian and Chinese intelligence assets in Georgia, and for other purposes,” introduced in February 2026, will oblige the secretary of state, secretary of defense, and director of national intelligence to submit a classified report to congressional committees on the penetration of Georgia by the adversaries of United States not later than 180 days after the enactment of this act.
The executive branch, on the other hand, could act on several fronts. The Treasury should designate Georgian companies that have been importing Iranian oil since 2022 and prohibit them from conducting transactions in US dollars.
The US State Department should make clear that the resumption of US defense aid would be contingent on Georgia’s suspension of cooperation with Iran and the proper enforcement of Iran sanctions. Military aid should only resume once Georgia has demonstrated that they aren’t willing to host Iranian companies, investigate, expel, or perhaps extradite entities that are tied to the IRGC, and cease prosecution of opponents.
The Treasury should also consider imposing Magnitsky Act sanctions on specific Georgian officials, as it did in 2024. Potential targets could include the informal ruler of Georgia, Bidzina Ivanishvili, Prime Minister Irakli Kobakhidze, and SSSG Director Mamuka Mdinaradze for facilitating Iranian sanctions evasion, jailing political opponents, and undermining US interests in the Caucasus.
The United States can also coordinate with its allies in the European Union and the United Kingdom on parallel sanctions, as well as publicly linking Georgia’s collaboration with US adversaries to any future prospects of joining NATO or the EU. Georgia, just like any other country, should not be able to join Western institutions while undermining their foundations.
These measures will fundamentally uphold US interests in the region. Imposing costs on a third-country sanctions-evasion platform will send a message that partnership with the United States entails certain obligations and that undermining US policy in Iran has consequences.
Georgia is now an obstacle to American strategy, whose authorities require isolation and pressure. As Secretary Marco Rubio noted on the Senate Foreign Relations Committee last year, “The goal of the United States is our national interest. So, we will look at that and say: Is it in our national interest to have an anti-American government governing an important part of the world? And if not, we’ll take appropriate actions to impose costs on that government.”
The secretary of state is right, the United States should act. The window to do so is now.
About the Author: Nicholas Chkhaidze
Nicholas Chkhaidze is a national security and strategic communications expert, research fellow at the Topchubashov Center, and international political consultant based in Tbilisi, Georgia. His work focuses on Eurasian geopolitics, security, sanctions evasion, sanctions enforcement, and Russian influence operations. He previously served with the Henry Jackson Society’s Russia and Eurasia Studies Centre and NATO’s Public Diplomacy Division. His analysis has been featured in the Atlantic Council, National Defense University (US), the Foundation for Defense of Democracies, the Jamestown Foundation, France 24, The Times, E-International Relations, The Kyiv Independent, and other publications.
