When Georgian Prime Minister Irakli Kobakhidze suggested this week that former lawmaker Giorgi Kandelaki, who co-authored a report on Iranian influence in his country, might face legal consequences, he framed it as a matter for "the relevant state agency."

John Walters, the president of the US-based Hudson Institute that published the report, had a differentframing: "The facts are not changeable by bluster and threats. You are not the 'Georgian Dream' -- you are a destroyer of Georgian Dreams."

The exchange is a small but telling window into how badly Georgia's relationship with Washington has deteriorated, and how the ruling Georgian Dream party appears either unable or unwilling to stop the slide.

The report at the center of the dispute,publishedin March, documented what it described as a systematic expansion of Iranian political, religious, and economic influence in Georgia. It argued that Tbilisi had not merely tolerated Iranian penetration but actively facilitated it to "groom the next generation of Georgian Shi'ite leaders, foster loyalty to Iran's political theology, and normalize anti-American narratives."

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"This activity directly threatens US national security interests in the South Caucasus, undermines Western influence, and strengthens a regime that is committed to exporting the ideology of the 1979 Islamic Revolution," the report states.

The report outlines data from the National Statistics Office of Georgia and other sources to back up its claim, including figures on Iran's economic expansion into the country.

A separate investigation in October 2025 by RFE/RLs Georgian Servicefoundthat nearly 13,000 Iranian companies are registered in Georgia -- many to a handful of addresses, with hundreds sharing single residential buildings and remote villages that show no physical trace of business activity. Iranian oil and petrochemical imports to Georgia nearly tripled between 2020 and 2024.

Publicly available Iranian trade consultancies openly describe strategies for rebranding Iranian goods as "Made in Georgia" before shipping them onward to Western markets, a move that avoids international sanctions against Tehran imposed over its nuclear program and human rights violations.

The sanctions evasion dimension is not new, but it has sharpened considerably as a Washington concern.

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In May 2025, President Donald Trump warned that any country trading in Iranian petroleum would face secondary sanctions. Georgia, apparently, did not blink. Iranian petroleum imports continued with no sign of a slowdown. In the meantime, Iranian-owned companies have been securing Georgian state contracts, supplying CCTV systems to the National Bank of Georgia and Tbilisi City Hall, and hygiene products to the Georgian Defense Ministry.

Instances of evasion have come into even sharper focus since US and Israeli air strikes at the end of February sparked a war with Iran, which is currently paused under a fragile cease-fire.

Tbilisi's Response

Georgian Dream's response to scrutiny has not been to contest the findings. It has been to reach for the machinery of the state.

After the Hudson report was published, Georgia's domestic intelligence service launched an investigation. Opposition figures and analysts were summoned for questioning. Now the prime minister has floated legal action.

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The pattern is familiar. Georgian Dream has spent years applying thesame pressureto domestic critics: framing dissent as foreign-directed sabotage and delegating the dirty work to nominally independent agencies.

That the same playbook is now being run against a Washington think tank and its Georgian collaborator suggests the party feels little constraint from its deteriorating relationship with the United States or is betting that Washington has other priorities.

That bet may be miscalculated since the relationship has already taken serious structural damage.

In December 2024, Washington suspended the US-Georgia Strategic Partnership Charter and sanctioned Georgian Dream's founder and de facto leader, Bidzina Ivanishvili. At a Hudson event this week, Republican congressman Joe Wilson, an outspoken critic of Georgian Dream,accusedwhat he described as the Georgian Nightmare of supporting "the terrorist regime in Tehran" -- referring to the Islamic republic.

Once Washington's closest partner in the South Caucasus, Georgia now finds itself stranded in US regional diplomacy with attention increasingly shifting toward Azerbaijan and Armenia.

Nowhere was that more evident than at the recent launch of US President Donald Trump's Board of Peace initiative. Azerbaijan and Armenia received invitations to what the American leader calls "the most consequential bodies ever created." Georgia was left out.

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Then in February, Vice President JD Vance arrived in the region -- the highest-ranking US official to visit the region since Joe Biden came as vice president in 2009 -- and Tbilisi could only look on from the outside as he visited Baku and Yerevan.

Whether or not every element of the charge Wilson leveled holds up, it reflects the terms in which Georgian Dream is now being discussed in Washington -- not as a difficult partner to be managed, but as a problem to be confronted.

For a country that once contributed troops to US-led missions in Iraq and Afghanistan and was treated as a model post-Soviet democratic transition, the distance travelled has been considerable.

Georgia's Iran Embrace Is Costing It Washington

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