Issue #822 Business

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Issue no: 822/16

• MARCH 1 - 3, 2016

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Georgian Government Supports Cultural Entrepreneurship PAGE 2

Azerbaijan and Iran to Resume Oil Swap Agreement

FOCUS ON BETTER CONDITIONS

The fight goes on for fair pay and fair conditions in the Tkibuli mines PAGE

7

One Week Countdown: Panorama Protesters Demand to Meet the PM

BY EKA KARSAULIDZE

R

epresentatives of Non-Government Organizations (NGOs) and civil society activists again protested against the multifunctional complex Panorama Tbilisi construction.

This time, they asked to meet with the Head of State and representatives of the Opposition. The government seems unlikely to change its mind regarding the on-going construction work.

Continued on page 2

PAGE 3

On Education and the Sacred Duty of Defending One’s Motherland ISET PAGE 4

Georgia to Sign Free Trade Agreement with European Free Trade Association PAGE 12

Financial Times Says NATO Vulnerable on Eastern Europe’s Borders PAGE 15 Prepared for Georgia Today Business by

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BUSINESS

GEORGIA TODAY

MARCH 1 - 3, 2016

Georgian Government Supports Cultural Entrepreneurship

One Week Countdown: Panorama Protesters Demand to Meet the PM Continued from page 1 The Panorama Tbilisi project consists of four major complexes with tourist and business centers, high-rise buildings and hotels. According to the plan, the complexes are to be located in Sololaki Hills, Sololaki Gardens, Liberty Square and Erekle II Square; and will be connected to each other by cable car. The project will cost USD 500 million and was created on the initiative of former Prime Minister of Georgia, Bidzina Ivanishvili. From the first day of its presentation controversy raged, but, two years later, the authorities remain fixed and the construction work has already begun.

Civil society activists and NGOs occupied the streets of Tbilisi to protest the large-scale constructions, arguing that Panorama Tbilisi will spoil the unique face of the city and worsen the ecological condition, highlighting expert opinions to support their position.

“Informed people, like archaeologists and experts in this field, always join our protests,” said Nata Peradze, representative of the ‘Together’ movement. “We have expert assessments from both local and foreign organizations which confirm the enormous environmental damage which the construction can cause the city.

In addition, the activists have expressed doubts regarding the closed process of the project, suspecting that Panorama Tbilisi was given a 5th class construction mark (of strategic importance) to make its consideration only possible at State level, and so less transparent.

Besides increasing the transparency of the project, protesters, as before, have asked for all construction works to cease- all of which are located near the historic district of Sololaki and in the centrally located Pushkin Square.

At a protest march on February 27, citizens gave the government one week to arrange a meeting with Georgia’s Prime Minister Giorgi Kvirikashvili.

In addition, they want to meet with all the politicians who will take part in the parliamentary elections in October 2016.

“We have elections this year, that is why it is so important to know the point of view of each candidate,” said Tsira Elisashvili, representative of the

BY EKA KARSAULIDZE

T

Civil society activists and NGOs argue that Panorama Tbilisi will spoil the unique face of the city and worsen the ecological condition

‘Together’ movement. “We are going to visit each politician who plans to participate in the election and ask them to sign our memorandum, which has a simple aim – to stop the Panorama Tbilisi project.

In this case, we will have a guarantee that if they come to power, the construction of the complex will cease.”

As yet, the ruling power seems to have no plans to stop the on-going works and has offered counterarguments. “Many ecological and economic studies were carried out regarding the Panorama Tbilisi project which made no mention of the risks [protesters complain about],” said Mayor of Tbilisi, Davit Narmania. “Nor is it going to bring negative social impact or damage cultural heritage. The Panorama Tbilisi project will go ahead.”

The Mayor highlighted the positive economic benefits of the project, noting that around 2,000 to 4,000 people would be employed during the construction and, following the opening of the Panorama complexes, the city as a whole will become more attractive to the business sector and tourists.

However, civil society activists insist on their demands and claim that if they will not be satisfied, the protests will become a permanent fixture.

bilisi City Hall and Tbilisi City Assembly have introduced a souvenirs catalogue ‘Gift of Tbilisi,’ as the final stage of the Cultural Entrepreneurship Festival 2015. Its creators believe that the catalogue will popularize Georgian folk arts and crafts abroad and present Tbilisi’s history in a very accessible form.

The catalogue consists of the works of 32 artists who create dolls, figurines, jewelry, bags, traditional dishes, and pictures. The works are produced using various materials – ceramic, enamel, wax, thick felt, wood, textile and more, all of which represent a part of Tbilisi’s history and show the country in the best possible light.

“I’m 100% convinced that each product in the catalogue is a unique piece of art. This is a coproduction of talent and the hard work of our masters. This catalogue serves to enliven the history of Tbilisi and says more about it than any other art work or poetry masterpiece,” said Tamar Taliashvili, the Head of the Education and Culture Commission of Tbilisi City Hall.

Taliashvili also stated that the main principle behind the idea of the local government was to support the business side of the field of art. To

The edition is designed with foreign guests in mind, making it easier for them to choose a colorful high-quality souvenir and be able to contact the artist

this aim, they launched the first Cultural Entrepreneurship Festival in 2015 and conducted various workshops, trainings, and established a Masters League and created a Business Guideline for them. The works of the masters were presented and sold during Tbilisoba 2015 (Day of the city Tbilisi). As a result, the ‘Gift of Tbilisi’ catalogue is considered as the final stage of the entrepreneurship support program for folk art masters.

The catalogue is presented in two languages, Georgian and English, and, under each product of art you can find the name of the artist and their contact details. The edition is designed with foreign guests in mind, making it easier for them to choose a colorful high-quality souvenir and be able to contact the artist.

“It’s the very least Tbilisi City Hall and the City Assembly can do to support cultural entrepreneurship in the country. Their oeuvre is directly connected with the sales of the works within, and I hope that this catalogue will serve as one component of their better realization and promotion,” said Nino Khtiskatsi, Deputy Mayor of Tbilisi.

The local government will continue to support cultural entrepreneurship and plans to futher make a special focus on the promotion of Georgian designers in the frameworks of the Cultural Entrepreneurship Festival 2016.

Georgia to Introduce ‘Innovation Strategy 2020’ from Spring

BY ANA AKHALAIA

T

his spring, Georgia is to introduce a new strategy ‘Innovative Georgia 2020 – Innovation Strategy of Georgia 20162020’, which aims to expand the innovation market in Georgia. After reviewing the strategy within different circles, it will be sent to the government for approval.

According to the Head of Georgia’s Innovation and Technology Agency, Irakli Kashibadze, the strategy includes objectives which will strengthen cooperation between the scientific and business communities.

The strategy focuses on introducing needed skills in pre-school, primary, vocational and university education. In particular, it is seen as necessary to introduce entrepreneurial and professional skills.

As Kashibadze notes, many countries, including Korea and the United States, develop similar trends from pre-school age.

“Learning professional skills should start from higher grades and if students desire they should be able to learn some prospective professions. In this regard, the training of teachers plays an important role. It is also important to involve the business community in the process, which should contribute to the process of creating specialized laboratories,” the strategy layout informs.

As for vocational education, the strategy offers

Irakli Kashibadze, Head of Georgia’s Innovation and Technology Agency

the so-called dualistic model, meaning that vocational education should be developed with the requirements of the business sector.

In terms of higher education institutions, the strategy states that mechanisms should be set up to ensure the establishment of venture funds for students in which a group of students will be able to decide itself whether to invest in a start-up.

The most important component is creating corresponding infrastructure- business incubators, technology parks and development Fab Labs, both inside and outside of the educational institutions.

The strategy also notes that limited access to financing is one of the main preventative factors in the development of enterprises in Georgia.

Therefore, there is a need for both traditional and innovative mechanisms to be introduced to finance innovation at all levels.

BUSINESS

GEORGIA TODAY MARCH 1 - 3, 2016

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Azerbaijan and Iran to Resume Oil Swap Agreement Minister Janelidze met with the Minister of Economy and Energy of Germany, Matthias Machnig, to discuss the existing economic and trade relations between the two countries

German Experts to Assess Investment Opportunity in Georgia

BY NICHOLAS WALLER

A

zerbaijan and Iran will in the coming days reinstate a bilateral oil swap agreement after a five year break due to sanctions levied against Tehran, Iran’s Deputy Oil Minister Rukneddina Javadi said Sunday.

“After a five year cessation, we will resume an oil swap with Azerbaijan. Iran will begin importing oil into our Caspian Sea ports and deliver an equivalent amount on behalf of our Azeri partners to the Gulf countries. The agreement will come into force in the coming days,” Javadi said.

The agreement was signed on February 23, during a visit to Iran by Azeri President Ilham Aliyev. During a meeting with his Iranian counterpart, Hassan Rouhani, Aliyev stressed the regional importance of joint Azeri-Iranian cooperation.

“The Caspian region is our common heritage. We must continue to cooperate in pursuit of regional safety and peace.

At present, there is excellent work being carried out in the energy field. Cooperation in this area is not limited to Iranian-Azeri cooperation. Our neighboring countries may also join, which

BY EKA KARSAULIDZE

Azeri President Ilham Aliyev and his Iranian counterpart, Hassan Rouhani. Source: AP

would turn the endeavor into a transnational, regional project.’’

Azerbaijan has repeatedly noted that Baku and Tehran now have several opportunities to expand their cooperation in the oil and gas sector after Iran actively participated in major investment projects in Azerbaijan.

The two respective governments have made significant recent moves towards closer cooperation as Iran prepares to re-enter the global market following more than a decade of international sanctions due to Tehran’s nuclear development program.

Azerbaijan’s economy has been reeling

since the country’s central bank abandoned its dollar peg in mid-December 2015. The Azeri Manat has lost more than a third of its value against the greenback, due to the collapse of oil prices.

The energy-rich economies of the former Soviet Union, which enjoyed stability and economic growth over the past decade on the back of rising hydrocarbon revenues, have been ravaged by the sharp decline in oil prices.

Azerbaijan, Kazakhstan and Russia have all seen their economies shrink in the last year and their national currencies listed as some of the worst performing on international exchange markets.

A

n expert group from Germany will visit Georgia to assess the investment opportunity for German small and medium-sized businesses. The plan was announced during a business trip of the Minister of Foreign Affairs Mikheil Janelidze to Germany.

Minister Janelidze met with the Minister of Economy and Energy of Germany, Matthias Machnig, to discuss the existing economic and trade relations between the two countries and the possibility of deepening it. Janelidze talked about preparing a new package of reforms in the field of payments, management and professional education. The reforms are being developed on the initiative of the Prime Minister of Georgia, which

should improve the business environment and make the country more attractive in this area.

Especially highlighted was the growing potential of Georgia in the fields of tourism, agriculture, energy and infrastructure. The German side named tourism as the driving force of Georgia’s economy, which is also proved by a steady increase in the number of tourists.

The Ministry of Economy and Energy of Germany is already a supporter of the Georgian economy- the program for the Professional Development of Managers in Georgian is one of them.

Minister Janelidze visited Germany last week. He also negotiated with his German counterpart Frank-Walter Steinmeier and representatives of the Bundestag. In addition, he held several meetings in different cities throughout Germany, meeting with city authorities, experts and journalists.

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BUSINESS

GEORGIA TODAY

MARCH 1 - 3, 2016

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

On Education and the Sacred Duty of Defending One’s Motherland

BY ERIC LIVNY

G

EORGIA’S ‘DEAD SOULS’?

Rati, Lasha and Irakli are first year engineering students at the Georgian Technical University (GTU). Rather unusual students, one should add.

At 22-23, all three are very much alive. Yet, they never attend classes and are not taking exams.

BSc in engineering would be their third educational degree, yet neither one of them has any intention of completing his studies at GTU. And one more interesting detail: their ‘studies’ at GTU are paid for by the Georgian taxpayers because engineering (as well as mathematics and natural sciences) is considered to be a priority subject by the Georgian government.

To avoid any misunderstanding, Rati, Lasha and Irakli are not enrolled in a distance learning program offered by Georgia Tech. The trio simply found a hassle-free way to avoid the sacred duty of serving in the Georgian military.

50 WAYS TO LEAVE YOUR LOVER, AND 21 WAYS NOT TO SERVE YOUR COUNTRY Georgia prides itself on the simplicity of its tax system. Simplicity and fairness, however, are not the most prominent features of Georgia’s “Military Duty and Military Service Law”. Nominally, all Georgian men aged 18 to 27 are “subject to performing compulsory military service” of 18 months.

As straightforward as it gets. Yet, Article 30 (Deferment of Conscription) contains no less than 21 legal excuses to defer military service: • Poor health condition (including mental health issues); • Being an only child; • Having one small child, or more than two kids of any age, • Having a dependent sibling; • Having a disabled family member • Registering for the Unified National Examinations; • Studying in a college or university (in Georgia or abroad); • Being a priest of studying in a “theological school” (does not require taking the Unified National

An excellent illustration of young men wasting their time instead of getting proper training to serve the country. Source: Wikimedia/Commons

Examination!)

• Working as a teacher/doctor in a village; • Having a doctoral degree and being engaged in academic research activities; • Registering as a candidate for membership in the Parliament of Georgia Of particular interest is clause 30(n) which allows one to buy his freedom for a fee, currently set at 2,000 GEL per 18 months (payable until one reaches the age of 27). This option practically guarantees that no kid from Vake is ever forced to wear military uniform.

Finally, if, for some reason, none of the above legal excuses are applicable, one can be set free by decree (of the Georgian Prime Minister).

50 Ways To Leave Your Lover: by Paul Simon and Art Garfunkel.

Just slip out the back, Jack Make a new plan, Stan You don’t need to be coy, Roy Just get yourself free Hop on the bus, Gus You don’t need to discuss much Just drop off the key, Lee And get yourself free

With so many holes in the law it is clear that the only people unfortunate enough to serve in the Georgian military are under-educated village boys who are not quick enough to reproduce. It is also quite obvious what kind of morale these boys have when they come to perform their duties.

THE WORST LAW EVER? It is increasingly common across the OECD countries (and not only) to use the so-called Regulatory Impact Assessment (RIA) technique to critically assess laws and regulations. What one would normally do as part of a RIA exercise is analyze the costs and the distortionary effects of a regulation (say, licensing procedures for new medications) to its benefits (improved health outcomes).

A back-of-the-envelope RIA of the Georgian Law on Military Duty and Military Service would inevitably conclude that this law is extremely ineffective.

Generally, the main advantage of compulsory military service is that it enables countries to easily muster a large force (including reservists who went through military training as part of their compulsory service) in the event of a crisis. Additionally, one may argue that military service provides individuals with useful skills such as teamwork, discipline, stress management, etc.

The irony of it all is that Georgia’s Law on Military Duty and Military Service does NOT serve the very purposes for which it had been ostensibly drafted. The Georgian Armed Forces do not have much use for the vast majority of the poorly motivated village boys who end up being recruited. According to Defense Minister Tina Khidasheli, very few conscripts go through proper military training, comprising no more than 10% of total military personnel. Rather than readying for future combats or jobs, the remaining 90% are employed as free (unqualified) labor to guard Georgian prisons, military bases and government buildings.

Now, while failing to meet Georgia’s military needs, this law comes at a tremendous cost for Georgia’s national security, its human and social capital, and, ultimately, its economic development.

• First, it goes almost without saying that an army of illiterate and poorly motivated peasants is ill suited for the military and technological challenges of the 21st century: counter-terrorism, electronic warfare, drones, robots, long-range missiles and precision-guided weapons.

Continued on page 6

BUSINESS

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BUSINESS

GEORGIA TODAY

MARCH 1 - 3, 2016

On Education and the Sacred Duty of Defending One’s Motherland Continued from page 4 • Second, this law harms Georgia’s national ethos by incentivizing thousands of Georgian youth to cynically game the system (through useless studies, early reproduction, or fake suicide attempts). Horace, who thought that dying for one’s country is “sweet and beautiful”, would have never approved of a law teaching young people that civic duties are not to be taken seriously.

Yet, this is what the Georgian Law on Military Duty and Military Service does.

• Third, by segregating the Georgian people into ‘haves’ and ‘have nots’ the law misses a huge opportunity to bolster the country’s scarce social capital.

Having immigrated to Israel at 13, I started feeling a proud Israeli citizen only when I wore the military uniform of an elite paratrooper unit. Given its complicated ethnic and social mosaic, Georgia could also use its military (and/ or an obligatory civil service) as a melting pot in which people from all walks of life would learn to live with each other and form broader social and professional networks. This is not something to be taken lightly. Georgians tend to cluster in family groups and clans, and many of the country’s challenges – in business, politics and government – stem from people’s limited ability to let go of these primitive parochial bonds.

• Fourth, the purely economic costs of this law go well beyond a few lari pocketed by Georgian Technical University. Rati, Lasha and Irakli in our example are learning nothing at all, but

most Georgian students are also learning very little because Georgian universities and colleges are not facing competitive pressure to improve and deliver a good educational product. The product they happily sell (and students buy) consists of a piece of paper (“diploma”) certifying that its holder is not as bad as underprivileged village boys and girls, and a legal excuse not to serve in Georgia’s peasant army.

• Finally, the threat of military service provides young people with the wrong motive to acquire a degree (any). It occurs to me that 18 months of military service (especially of the kind that I went through in Israel) are, in fact, a very small price to be paid compared to 4 years of being lectured by Soviettrained professors pretending to teach marketing or management, and/or being stuck in the wrong profession for the rest of one’s life.

Fundamentally, Georgia faces the choice of going for a compulsory Israelistyle national military (or civic) service or opting for a small American-style professional army of volunteers. Both options have their pros and cons. One thing is clear, however: Georgia cannot afford staying with the current law, which fails to achieve its stated objectives while undermining Georgia’s great nation-building and modernization project.

ARMY AS A HOTBED OF INNOVATION As Georgia is thinking through its future strategy, it may just as well look to the

experience of other countries in using their military to jump start economic and social development.

A key point is that education and military service can go hand-in-hand.

Some of the best professional armies

LAW OF GEORGIA ON MILITARY DUTY AND MILITARY SERVICE Article 9 – Age of persons subject to compulsory military service “Citizens of Georgia aged from 18 to 27, who are registered or are obliged to be registered for conscription and who have no grounds to be released from conscription into compulsory military service, or to enjoy deferment from conscription, shall be subject to performing compulsory military service.”

Law of Georgia No 2554 of 29 July 2014.

in the world – America being a strong example in this case – require their officer corps to have an education. In the US, colonels have to have a master’s degree and the highest-ranking generals have PhDs. By funding the education of its officers, not only would the Georgian military become on the whole smarter and more capable, it would also be seen as an employment destination for some of the brightest young men and women.

Moreover, this model doesn’t have to apply only to aspiring battlefield commanders. A good military has excellent engineering, healthcare, diplomatic, and legal structures as well. For example, Israeli military’s IT and elite intelligence units have long become recognized as hotbeds of technological talent, as reflected in headlines like ”From Israeli Army Unit 8200 To Silicon Valley”. On the one hand, these units recruit the best young minds through a very competitive process (people, both men and women, compete to get in, not to get out!). On the other, they supply Israel’s Start Up Nation with whole teams of experienced developers, professional networks, and ideas.

Georgia certainly has the raw individual talent, but to make good on its promise as a nation it has to urgently fix ineffective laws and institutions, such as its military and universities.

The author is President at Tbilisi’s International School of Economics (ISET) and Advisor to Georgian Minister of Economic and Sustainable Development.

BUSINESS BUSINE ESS

GEORGIA TODAY MARCH 1 - 3, 2016

Georgian Miners’ Dig In as Protest Enters Second Week

BY NICHOLAS WALLER

G

eorgian coal miners demanding better pay and improved working conditions appear to be digging in.

Over 1,000 miners from the Dzidziguri and Mendeli coal mines near the western Georgian city Tkibuli have refused to work, saying their wages have not increased despite the rising cost of living and precipitous devaluation of the national currency, the Georgian Lari.

The Lari has lost nearly half of its value against the Dollar since late 2014, which has caused a severe spike in inflation and cut the value of the coal miners’ salaries to an average of $225 per month.

The exchange rate of the Lari against the greenback opened Monday at 2.48 Lari = $1.00, down from 1.74 Lari = $1.00 on 1 March 2014.

The protests grew violent on 24 February when hundreds of miners stormed managing company Saqnakhshiri’s headquarters in Tkibuli.

“None of our petitions or statements has brought results. The administration simply laughed at us and they aren’t going to respond to any of our demands,” said Dmitry Khuskivadze, one of the

protester told the Western media.

Saqnakhshiri’s parent company, Tbilisibased Georgian Industrial Group (GIG) has thus far refused to meet the demands of the protesters, only conceding that they will review the possibility of revising the miners’ salaries by mid-April.

Further infuriating the miners was a government decision to revoke the socalled ‘highlander status’ that the mines’ 14 surrounding villages had previously enjoyed.

The new law suspending the Imereti region’s mountainous areas of their privileged status went into effect on 1 January. The result forced the Tkibuli miners to pay an income tax that exceeded 20 per cent.

Georgia’s Finance Minister Nodar Khaduri announced on 25 February that the government would meet the miners’ demands to cancel the law on highland status.

“We’ve prepared an amendment to the original bill that suspended tax breaks for those individuals working and living in mountainous regions. Specifically, this deals with the demands of the miners, who will keep the benefits they received before 1 January. We are already consulting with members of parliament on how to revise the law. The bill will be brought to a vote sometime in the near future,” Khaduri said at a press conference on

25 February.

Despite the federal government’s attempt to calm the situation, the protestors again stormed and briefly occupied Saqnakhshiri’s administrative offices on 26 February. They continue to demand an immediate 40 per cent increase in their salaries and direct government action Both the government and GIG have flatly rejected the miners’ demands, saying both are unrealistic and financially unattainable in the short term.

GIG’s chief financial officer Zurab Gelenidze has openly disparaged the protestors and has demanded that they need to return to work or face consequence if the company’s contractual obligations are not met.

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Over 1,000 miners from the Dzidziguri and Mendeli coal mines near the western Georgian city Tkibuli have refused to work

“We’re only talking about…a couple hundred people who are on strike. The other 1,300 that we employ need to get back to work immediately. Regarding an increase in salaries, we will review the matter in two months and do everything to optimize the wage system and provide some improvement.”

The protestors have frequently cited a 2011 agreement, endorsed by Georgia’s Labor Union Chair Irakli Petriashvili, which obligated the company to increase their salaries based on the current inflation rate.

Kakha Kozhoridze, an advisor to Georgian President Giorgi Margvelashvili and an acting emissary between the miners and GIG’s management, said Sunday the company rejects the 2011 agreement

as they claim the document is not legally binding because the signatures of GIG’s representatives were forged.

Kozhoridze has rebuffed GIG saying the company’s claim that the signatures are forgeries is ridiculous, as the management never questioned their authenticity in the five years since being signed.

He has consistently demanded that the company meet the protestors’ requests.

Local NGOs and human rights observers have also lined-up in support of the miners, saying the company’s disingenuous overtures to the protestors are meant to table the issue as they will not be subject to legally binding agreements.

“The problems that workers in Georgia experience today arose from the lack of an effective government labor policy.

No adequate standards to protect workers’ rights were ever created. Most importantly, there are no mechanisms for monitoring their implementation,” Human Rights Education and Monitoring Centre’s legal counsel Lina Gvinianidze told the Western media.

With support for the miners’ plight spilling over into a weekend protest by Tbilisi students, the current government finds itself in a position where it may need to act swiftly, with concrete legal solutions, in order to avoid further labor unrest as the economy continues to falter.

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BUSINESS

GEORGIA TODAY

MARCH 1 - 3, 2016

Georgia to Sign Free Trade Agreement with European Free Trade Association

BY ANA AKHALAIA

G

eorgia is set to sign a Free Trade Agreement (FTA) with the European Free Trade Association (EFTA) on 27 June, 2016 during the EFTA Ministerial Meeting in Bern, Switzerland.

The third and final round of negotiations on an FTA between the EFTA States (Iceland, Liechtenstein, Norway and Switzerland) and Georgia was held from 24th to 26th February, 2016 in Tbilisi, Georgia.

The Agreement will comprise the following: Trade in Goods, Rules of Origin, Trade in Services, Establishment, Intellectual Property Rights, Government

Procurement, Competition, Trade and Sustainable Development and Legal and Institutional Issues (including Dispute Settlement, General and Final Provisions).

The Georgian delegation was led by Genadi Arveladze, Deputy Minister of Economy and Sustainable Development, while the EFTA Spokesperson was Jan Farberg, Director-General of the Ministry of Trade, Industry and Fisheries of Norway.

“We have reached an agreement with the EFTA that industrial products are to be completely exempt from tariffs, which means that all kinds of industrial products will be exported to the four countries without additional customs duties,” Arveladze announced.

Arveladze added that regarding agri-

cultural products, all four countries’ markets are sensitive to the issue, but that Georgia has reached an unprecedented agreement with them by which there will be zero tariffs placed on Georgia’s most important export products.

Some of the products also have almost halved in cost and are being given minimum rates.

The first international agreement for Georgia signed with Iceland and Liechtenstein, this FTA with the EFTA will open another highly efficient market of four countries and 14 million customers for Georgia.

The positive decision on launching FTA negotiations with Georgia was made at the EFTA ministerial meeting in Geneva on November 17th, 2014.

According to the EFTA, the total value

From Left. Mr Genadi Arveladze, Deputy Minister of Economy and Sustainable Development and Mr Jan Farberg, Director-General of the Ministry of Trade, Industry and Fisheries of Norway

of commodity trade between EFTA States and Georgia has more than doubled since 2009, reaching USD 60 million in 2014.

The stock of foreign direct investment

in Georgia’s economy originating from EFTA States has also grown significantly, and stood at approximately USD 400 million in 2012.

Turkish-Romanian Company SU MARKETS to Enter Georgia The $5.1 billion Black Sea Pearl project

Foreign Investors to Carry Out $5 Bln Project in Adjara Turkish-Romanian consortium SU MARKETS plans to enter the Georgian agribusiness and logistics market in the near future

BY ANA AKHALAIA

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urkish-Romanian company SU MARKETS has expressed its interest in developing a logistics center and fruit and vegetable refrigeration industry in Georgia.

The Partnership Fund’s Executive Director, Davit Saganelidze, who is currently on an official visit to Romania, met with the heads of the Romanian logistics center and leading Romanian companies of the agricultural sector. He also inspected refrigeration facilities in Romania and met with SU MARKETS management and leading specialists in agriculture.

10 Galaktion Street

Partnership Fund representatives discussed the investment potential of developing a Tbilisi Logistics Center and refrigerator facilities. Turkish-Romanian consortium SU MARKETS plans to enter the Georgian agribusiness and logistics market in the near future.

The JSC Partnership Fund was established by the Government in 2011. The State owns 100 percent of the Fund and it has assets exceeding 5 billion GEL. The Fund holds shares of Georgian Railway, Georgian Oil and Gas Corporation, Georgian State Electric System, Electricity Commercial Operator, and Telasi, distributor of electric power in Tbilisi. One of the main objectives with investment directions is the proper corporate management of these shares.

BY ANA AKHALAIA

U

AE, American and Czech investment groups plan to invest in the former military range territory of the Gonio settlement, a popular Black Sea resort in Adjara. The $5.1 billion Black Sea Pearl project was revealed by the head of the Business and Tourism International Center, Archil Dolidze, to Georgian media outlet The Business Contact, though no specific companies were named.

A brief conceptual description and urban planning were introduced at the presentation of the Black Sea Pearl project, held in Batumi on February 25th, 2016, attended

by Adjaran government members.

The project aims to develop a free

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge

industrial zone (FIZ), free information and technological zones, free tourism and high-class residential zones, as well as establishing stock exchange, insurance and leasing companies and international finance institutions on 315 hectares of land. The project also aims to create a FIZ zone on 98 hectares land in Khelvachauri, Adjara region, and an agro-industrial zone on 500 hectares in the Guria Region, in Western Georgia.

“The near future will show how real-

istic this project is. Representatives of the group have held a number of meetings not only in the (Adjara) Region, but also at the Ministry of Economy in Tbilisi. Specific activities will be revealed shortly,” Batumi City Council member, Levan Kintsurashvili stated.

The Black Sea Pearl project was first announced in 2015. The companies expected to obtain the status of ‘free industrial zone’ in September, but that agreement has yet to be signed.

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BUSINESS

GEORGIA TODAY

MARCH 1 - 3, 2016

Villages in Russia’s Dagestan McCain’s Kramer and to Receive Hi-Speed Internet Former US Ambassador Access

to Georgia Courtney Agree: the West Needs to Do More

BY ANNA KALANDADZE, VOICE OF AMERICA

BY NICHOLAS WALLER

A

t least 350 villages in Russia’s volatile North Caucasus republic of Dagestan will for the first time receive hi-speed internet access by 2018, the republic’s transport, energy and communications ministry said in an official statement on Monday.

According to the ministry, only 70 per cent of the Muslim republic’s 3 million-strong population have Internet access.

The local government’s communication expansion, dubbed ‘Bridging the Digital Divide,’ envisages providing a third of Dagestan’s population with fourth generation (4G) technology by 2018.

Russia’s main mobile companies are actively building a network to immediately expand 4G technologies beyond the capital Makhachkala to the republic’s main settlements Kizilyar, Kaspiysk,

Khasavyurt, Buinaksk and Derbent, the communications ministry said.

“High-speed Internet access will provide our schools, hospitals, postal offices, and government agencies the opportunity to carry out activities in an efficient electronic form that will cut both costs and time for the local population. It will also reduce the risk of corruption and increase our authorities’ ability to combat extremism in the republic,” Dagestan’s Interior Ministry said in a statement.

The ministry was also quoted as saying the total cost for the implementation of the project would exceed USD 14 million, or in excess of 1 billion Russian Rubles.

Dagestan is a Scotland-sized republic located in Russia’s North Caucasus, home to dozens of isolated ethnic groups. The impoverished mountainous region has been plagued by a low level Islamic insurgency that has killed hundreds since emerging in the wake of the outbreak of the Second Chechen War in 1999.

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he progress and failures of 25 years independence, as well as ongoing challenges in democratisation and rule of law spheres for former USSR countries have been discussed in Washington.

Georgia was singled out as a relative leader among the South Caucasus countries, while Armenia was viewed as a direct target of Russian influence, and Azerbaijan continues to regress in its human rights record. In Central Asia, Kyrgyzstan was said to be doing better than any other regional state. VoA Georgia spoke to two experts on the issues.

DAVID KRAMER, MCCAIN INSTITUTE FOR INTERNATIONAL LEADERSHIP AND FORMER PRESIDENT OF FREEDOM HOUSE “The US needs to pay more attention and provide more help to countries in t h e p o s t- S ov i e t space, especially in the fields of rule of law, institutional resilience, media, party building and civil society.

“Russia constantly blocks Georgia’s Euro-Atlantic aspirations and its Western integration. In this context, the US should express a Presidential-level interest towards the region and stay more active, more present in the regional developments. Georgia’s integration with the West is an important aspect. We have to make sure the upcoming NATO Summit in Warsaw does not result in similar outcomes to the NATO Summit in Bucharest in 2008

which lead to frustration among Georgians and a resurgent Russia.

“At this point, there is a need on the part of Georgians to see more recognition of its efforts by NATO. The West, including the US, at the same time need to say that Georgia’s membership in the Alliance is also within our interests. All post Soviet countries have achieved independence and maintained it to this day. Russia invaded Georgia and still occupies 20% of its territory. Georgia has long standing separatist conflicts yet it continues to develop on a Euro-Atlantic path. The US should help it more. I hope we can get talking about the Western integration of all Soviet countries in the next 25 years.”

WILLIAM COURTNEY, FORMER US AMBASSADOR TO GEORGIA “Most visibly, Georgia has achieved two main things in the last 25 years: it secured independence, maintained it and conducted democratic reforms.

Georgia and Ukraine regularly conduct elections, and have viable opposition players. However, the West should continue its engagement since the challenges are substantial. For example, Russia will remain as a threat. But I would say the major challenge is developing economic reforms and raising the standard of living for Georgians: given the per-capita quality of education of Georgians, agriculture potential and key positioning of Georgia as a transit country between East and West, this challenge should not be hard to overcome.”

Full article in Georgian: http://www.amerikiskhma. com/a/kramer-courtney-on-25-years-sinceindep/3211871.html

World Class Bankers to Head TBC Capital

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BC Bank has appointed Levan Shanidze and Avtandil Gigineishvili as managing directors to co-head TBC Capital, an investment banking arm of TBC Bank offering Corporate Advisory, Research and Brokerage solutions in Georgia.

Both, Shanidze and Gigineishvili are highly experienced professionals, each with 20 years at global investment banking institutions in London and Hong Kong.

Avtandil Gigineishvili, former Managing Director and Head of Asset Management at Jefferies International in London, initially a key member and subsequently leader of the team who build a successful business managing $3 billion assets for institutional and retail clients in Europe and US. Throughout nearly 20-year long track record navigated several critical periods in the market and was involved in every aspect of the business development and operation from the start. Before that he served at Jefferies International Limited as a Research Analyst, producing global convertible bonds research and generating trading ideas for the international equity-linked desk. Avtandil Gigineishvili has MBA from Tulane University (New Orleans, LA) and a B.Sc in Electrical Engineering from the Georgian Technical University (Tbilisi).

Levan Shanidze served as a Managing Director at Silverhorn Investment Advisors in Hong Kong before joining TBC Capital where he managed a

flagship macro fund. Prior to taking asset management responsibilities he held various capital market positions in Hong Kong at Nomura, Lehman Brothers, JP Morgan and Jardine Flemings. His roles included building equity derivative business, heading India equity trading, proprietary trading with global coverage among others. Levan holds a Master of Business Administration in Finance and Corporate Accounting from the Simon Graduate School of Business Administration, University of Rochester, USA, and a B.Sc in Biophysics from the Tbilisi State University, Georgia.

TBC Capital is committed to playing an active role in the development of capital markets in Georgia and supports both institutional and strategic investors in exploring investment opportunities in Georgia while at the same time giving access to additional forms of financing to domestic companies – currently dominated by traditional bank loan financing.

TBC Capital was established in 1999 and provides services tailored for the Georgian market.

Its Parent company, TBC Bank is the leading financial institution in Georgia, listed on the London Stock Exchange (LSE: TBCB LI).

BUSINESS

GEORGIA TODAY MARCH 1 - 3, 2016

11

Top 5 Gadgets at MWC 2016

BY BEQA KIRTAVA

T

he 2016 Mobile World Congress (MWC), which took place in Barcelona from February 22-25, brought to light numerous incredible wonders of the latest hi-tech and we’ve got all you need to know about the five that got everyone talking.

SAMSUNG GALAXY S7 AND S7 EDGE Specifications • Dimensions - 142.4 x 69.6 x 7.9 mm; 150.9 x 72.6 x 7.7 mm (Edge) • Corning Gorilla Glass back panel • Single or dual SIM (Nano-SIM) • Samsung Pay (VISA, MasterCard) • Dust proof and water resistant under 1.5 meters for 30 minutes • Super AMOLED capacitive touchscreen, 16 million colors • 5.1 inch; 5.5 inch (Edge) screen with 1440 x 2560 pixels • Corning Gorilla Glass screen protection • Android 6.0 Marshmallow • Chipset - Qualcomm MSM8996 Snapdragon 820, Exynos 8890 Octa • CPU - Dual-core 2.15 GHz Kryo & dual-core 1.6 GHz Kryo, Quad-core 2.3 GHz Cortex-A53 + quadcore 1.6 GHz Cortex-A53 • GPU - Adreno 530, Mali-T880 MP12 • 32/64 GB internal storage with 4 GB RAM + expandable storage (SD card up to 200 GB) • Primary camera - 12 MP, f/1.7, 26mm, dual pixel autofocus, OIS, LED flash •Video-2160p@30fps,1080p@60fps,720p@240fps, HDR, dual-video rec.

• Secondary camera - 5 MP, f/1.7, 22mm, dual video call, Auto HDR • Non-removable Li-Ion 3000; 3600 (Edge) mAh battery It’s pretty obvious that Samsung chose quality over drastic changes. The flagship’s design is very similar to its predecessor’s, while the specs aren’t much different either. However, Samsung did make some important changes: added a micro SD slot, which users have been demanding for a very long time, provided an extra GB of RAM for more multitasking and made the phone water resistant. The primary camera has seen an MP decrease, but boasts even faster dual pixel auto-focus and a 95% increase in light capture compared to the S6.

LG G5

• CPU - Dual-core 2.15 GHz Kryo & dual-core 1.6 GHz Kryo • GPU - Adreno 530 • 32 GB internal storage with 4 GB RAM + expandable storage (SD card up to 200GB) • Primary camera - 16 MP (f/1.8) + 8 MP (f/2.4), laser autofocus, OIS, LED flash • Video - 2160p@30fps, 1080p@60fps, HDR, stereo sound rec.

• Secondary camera - 8 MP, f/2.0, 1080p@30fps • Removable Li-Ion 2800 mAh battery If you’re looking for drastic changes, look no further than the latest smartphone from LG as something you probably haven’t seen before. G5 is a modular phone, meaning you can remove the lower side of the phone and attach a new slot. For example, the LG CAM Plus expansion module adds an 1100 mAh additional battery and physical camera controls.

Although customers have been demanding a removable battery for a long time, many tech experts have expressed doubts about whether people will want a phone with so many different modules to attach and remove in different situations.

SONY XPERIA X

Specifications • Dimensions - 142.7 x 69.4 x 7.9 mm • Single or dual SIM (Nano-SIM) • IPS LCD capacitive touchscreen, 16 million colors • 5.0 inch screen with 1080 x 1920 pixels • Scratch-resistance glass with oleophobic coating • Android 6.0.1 Marshmallow • Chipset - Qualcomm MSM8956 Snapdragon 650 • CPU - Dual-core 1.8 GHz Cortex-A72 & quadcore 1.4 GHz Cortex-A53 • GPU - Adreno 510 • 32/64 GB internal storage with 3GB RAM + expandable storage (SD card up to 200GB) • Primary camera - 23 MP, f/2.0, 24mm, phase detection autofocus, LED flash • Video - 1080p@30fps • Secondary camera - 13 MP, f/2.0, 22mm, 1/3” sensor size, 1080p • Non-removable Li-Ion 2620 mAh battery Sony’s latest release is the death of the Z line. The new Xperia X, which tops the list of the three new X smartphones, is definitely a beautiful gadget with full metal body and solid display, outperforming its predecessor – the Z5. That said, the company is not planning to release it either in the US or Europe, thus Georgian customers will probably not be able to lay their hands on this device.

HTC VIVE Specifications • Dimensions - 149.4 x 73.9 x 7.7 mm • Single or dual SIM (Nano-SIM) • IPS LCD capacitive touchscreen, 16 million colors • 5.3 inch screen with 1440 x 2560 pixels • Corning Gorilla Glass screen protection • Android 6.0.1 Marshmallow • Chipset - Qualcomm MSM8996 Snapdragon 820

Specifications • Display - OLED • Resolution - 2160 x 1200 • Refresh Rate - 90 Hz • Steam VR platform • 15 x 15 feet tracking area • Accelerometer, gyroscope, laser position sensor, front-facing camera MWC is not all about phones. And this year was a clear confirmation of that fact, as HTC’s virtual reality (VR) headset stole the show. HTC and Valve’s collaboration has been lauded by critics, calling it “the future of gaming” and a “match made in heaven.”

The VR will cost around $800 and will go on sale sometime this April, competing against its main rival the Oculus Rift, which is $200 cheaper.

HUAWEI MATEBOOK Specifications • Size - 278.8 x 194.1 x 6.9 mm • 12-inch 2160 x 1440 IPS TFT LCD display

• 6th Gen Intel® Core™ m processor, dual core up to 3.1GHz • OS - Windows 10 Pro or Home • RAM - 4GB/8GB LPDDR3 • Storage SSD - 128GB/256GB/512GB • Front camera - 5 MP, fixed focus • 33.7Wh(4430mAh@7.6V) battery Huawei is not settling only for the smartphone business. Their latest release – the Huawei MateBook - is set to rival the Microsoft Surface Pro 4, as it is the company’s first 2-in- 1 Windows convertible. The MateBook is designed to be used as both a tablet and a laptop at your convenience and boasts pretty impressive specs. The company has yet to make any announcements about the price and release date.

So, which of these devices stole your heart? Or are you waiting for the iPhone 7 and HTC One M10 to arrive? Head over to our Facebook page with your comments and check out the brands’ webpages for additional details about release and availability.

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BUSINESS

GEORGIA TODAY

MARCH 1 - 3, 2016

Tbilisi to Develop JMK Consulting Wins Legal Battle to Protect Partners Bicycle Lanes

Interests in Entrepreneurs Law

BY TAMAR SVANIDZE

A

BY ANA AKHALAIA

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eorgia’s Urban Management and Development Group is working on a plan to create a network of bike lanes in Tbilisi in an attempt to curb the city’s endemic traffic problems and promote eco-friendly transportation, the group’s head Vakhtang Jokhadze said.

“The project currently exists at the conceptual level. We are working on the

project treatment documents for the inaugural routes, after which a budget and deadlines will be determined,” said Jokhadze.

According to the concept, the bike network project will be carried out in several stages to create safe biking routes, parking places, equipping above-ground public transportation with bicycle grips; and gradual reorganization of traffic in favor of bicycles.

The initial stage of the project will cover major routes in the city’s central core, focusing on both banks of Tbilisi’s Mtkvari River.

court case in the Tbilisi Court of Appeal has been won by JMK Cons u l t i n g g ro u p which aimed to change an article of the Entrepreneurs Law of Georgia which the company believes is ‘offensive’ for businesses.

According to the statement released by JMK Consulting, the court process has been ongoing since 2013, the aim of which was to cancel changes in 5/2 paragraph of Article 3 of the Entrepreneurs Law of Georgia that cancels any registered right of a Partner or assigns to such Partner any obligation that directly and immediately affects the registered rights of said Partner.

According to the Article, a share belonging to a Partner could not increase or decrease without his/her consent.

This would mean that the minority shareholder had absolute veto power over the financial issues of the enterprise, including changes in the authorized capital.

“It is difficult to imagine an investor

who will invest money in Georgia on the condition that only he carries out funds in the authorized capital, while other minority partners, without their contributions, will receive at least as much benefit as they received before entering partner into the business,” said Gia Kavtaradze, former Minister of Justice and partner of JMK Consulting.

In order to protect business interests, the company appealed to Court to cancel changes to the Entrepreneurs Law carried out in 2012.

The Tbilisi Court of Appeal decided in favour of JMK Consulting and satisf ied its requests. As a result, the company states, the development of entrepreneurship and business partnership has become reasonable once more in Georgia.

“5/2 paragraph of Article 3 of the Entrepreneurs Law was clearly contrary to the essence and principles of Commercial Law, creating a significant obstacle to the business community’s economic development and hindering investment in Georgia,” JMK Consulting said.

Regarding this issue, JMK Consulting group will have one further court case in the Supreme Court in future.

BUSINESS

GEORGIA TODAY MARCH 1 - 3, 2016

Georgian Wine Corner Opens in Marseille National Museum

BY ANA AKHALAIA

A

Georgian wine corner has been opened in the Museum of European and Mediterranean Civilisations in Marseille, France. The corner will feature as a permanent promotion of Georgian wine to the 20,000 daily museum visitors, alongside a number of traditional items historically used to make Georgian wine.

The opening of the Georgian Wine Corner in the museum was made possible with the cooperation of the national museums of Georgia and Marseille.

“Georgia is on its way to European integration, therefore it’s important to promote Georgia in Europe as a country of ancient civilization, wine culture, history and tradition. This will help to increase awareness of Georgian products in the European market,” Georgia’s Minister of Agriculture, Otar Danelia, stated at the opening ceremony.

Vice Mayor of Marseille, Jean-Francois Soigne, emphasized the importance of representing Georgia in the Museum of European and Mediterranean Civilizations “as an integral part of this civilisation.”

It was noted at the event that Georgia is one of the oldest wine-making centers in the history of Mankind and wine has been made in Georgia for more than 8,000 years. The traditional Georgian Qvevri (clay earthenware vessel) wine-making method was approved by UNESCO in 2013 to be

included in the list of Intangible Cultural Heritage.

The Museum of European and Mediterranean Civilisations is devoted to European and Mediterranean civilisations. With a permanent collection charting historical and cultural cross-fertilisation in the Mediterranean basin, it takes an interdisciplinary approach to society through the ages up to modern times.

Presented with the traditional Qvevri wine vessels, on the Georgian stand are various Georgian wine cellar attributes including historical artefacts and important information.

According to the National Statistics Office of Georgia (Geostat), France was one of the top European countries to import Georgian wine in 2015.

Georgia exported 37,956 bottles of wine to France, which was 190 percent more than in 2014.

Georgia’s Solidarity Fund Presents Project and Future Plans

BY ZVIAD ADZINBAIA

T

he Solidarity Fund, a governmental agency for socially vulnerable people in Georgia, has provided resources worth 7.9 million GEL to cover the healthcare costs of 215 children and adolescents, the Fund’s head Marian Jashi said at a meeting of Georgian government officials and European representatives.

Jashi presented a list of activities and priorities for 2016 at the Fund’s fifth session of its supervisory board last week.

Since July 2014, 5.7 million GEL has been raised as contributions from the private sector, particu-

larly the banking industry. More than 55,000 civil servants, 24 private companies and 53 student organizations have joined the Fund.

Georgian Prime Minister Giorgi Kvirikashvili, who serves as the Funds’ Chair, spoke glowingly of the project as successful and said the government should expect the Fund’s activities to expand in the coming years.

Jashi also emphasized the critical role the Fund plays concerning innovative financing and cooperation with the United Nations.

The Solidarity Fund of Georgia was launched as a common platform for philanthropy, innovative financing and corporate social responsibility initiatives to support individual patients and the most vulnerable families in need of high-cost life-saving treatment or social assistance.

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BUSINESS

Asian Development Bank Expands Cooperation in Georgia

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MARCH 1 - 3, 2016

Tbilisi to Open Cheese Museum Naturally, this gives us a reason to take an honorable place among the world’s cheese museums,” said Mikadze-Chikvaidze.

Cheese production in Georgia dates back nearly 3,000 years. Mikadze-Chikvaidze has gone to great length to preserve various artifacts, including 2,800 year old ceramic milk vessels from Georgia’s ancient capital, Mtskheta.

The Ministry of Culture, Tbilisi City Hall and the Tourism Department are currently taking part in developing the Museum.

BY ANA AKHALAIA

A

cheese museum is to open in Tbilisi later this year, according to cheese researcher and museum curator, Ana Mikadze-Chikvaidze.

“I travelled all over Georgia and started collecting information on different types of indigenous cheese from different parts of the country. I looked for information in the museum stores.

Ses And Panasonic Avionics Sign Milestone High Throughput Capacity Agreements

The Asian Development Bank’s (ADB) Director General for Central and Western Asia Department, Sean O’Sullivan and Prime Minister Giorgi Kvirikashvili

he Asian Development Bank’s (ADB) Director General for Central and Western Asia Department, Sean O’Sullivan, met with officials from the Government of Georgia last week to discuss ADB’s operations in the country.

ADB commended the government’s efforts to utilize the country’s borrowing capacity in the most strategic and impactoriented manner. ADB will continue to support those efforts through its country program, which focuses on water supply and sanitation, roads, urban transport and energy.

“ADB’s partnership with the government has been robust since Georgia joined ADB in 2007, with USD 1.9 billion in approved support to date and an active project portfolio of over USD 925 million,” O’Sullivan stated. “ADB is ready to further deepen our partnership to

GEORGIA TODAY

support Georgia’s development.”

ADB also works closely with the government to implement second-generation structural reforms, such as pension reforms, capital market development, and the establishment of an effective framework for public-private partnerships.

O’Sullivan met Prime Minister Giorgi Kvirikashvili; Minister of Finance and ADB Governor, Nodar Khaduri; Minister of Regional Development and Infrastructure, Nodar Javakhishvili; and Deputy Minister of Energy, Mariam Valishvili, to discuss the current and future partnership.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.

O

ne of the world’s leading satellite operators, S.A. (NYSE Euronext Paris and Luxembourg Stock Exchange: SESG) and Panasonic Avionics have announced two major, multi-year, High Throughput Satellite (HTS) capacity agreements serving aeronautical, maritime, and oil and gas markets across the Americas.

Panasonic Avionics is a leading provider of inflight entertainment and connectivity systems. These contracts, for SES14 and SES-15, represent their highest bandwidth commitment to date of highpowered HTS spot beam and wide beam Ku-band capacity.

SES’ HTS coverage will enable airlines to offer next-generation inflight Wi-Fi and live television services to passengers travelling on air routes throughout the Continental U.S., Alaska, Hawaii, Canada, Mexico, and the Caribbean.

Panasonic Avionics will also utilize the

HTS capacity to serve growing maritime markets and oil and gas operations throughout the region.

“These major agreements are another step-change in the highly dynamic and buoyant aeronautical connectivity market,” said Ferdinand Kayser, Chief Commercial Officer of SES. “Our new high throughput satellites, SES-14 and SES-15, are poised to dramatically change the airline passenger experience and introduce a new era of inflight connectivity.

SES-14 and SES-15 are designed for mobility; they are able to dynamically tailor power allocation and bandwidth to maximize capacity. This enables delivery to aircraft across different geographies and time zones. The design allows for easy transition from one region to another, from one gateway to another, and from one satellite to the other. The unique designs of both satellites include video broadcast beams which complement the spot beams,

maximizing throughput for Internet and video streaming traffic. Both satellites will be launched in 2017.”

David Bruner, Vice President of Global Communications Services at Panasonic Avionics said, “With our communications service expanding rapidly across several vertical markets, we are always looking for innovative high throughput satellite designs that help us deliver the best connectivity service to our customers. Working with SES, it was clear that their SES-14 and SES-15 satellites were the best option for us to supplement our existing HTS capabilities and ensure a true broadband experience over the US, Canada, Mexico and the Caribbean.

Given their vision and conviction, Panasonic is very excited to collaborate with SES, and we look forward to offering these ultra-high throughput services to our air transport, business aviation, oil and gas, energy and maritime markets in 2017.”

BUSINESS

GEORGIA TODAY MARCH 1 - 3, 2016

15

Financial Times Says NATO Vulnerable on Eastern Europe’s Borders

BY ZVIAD ADZINBAIA

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he Financial Times Friday reported that the US-based Atlantic Council stated that there are continuous warnings to NATO that the alliance cannot defend Europe’s eastern border against an increasingly aggressive Russia.

The FT publication says six defense experts — including former SecretaryGeneral Jaap de Hoop Scheffer, Deputy Supreme Commander, Sir Richard

Russia’s forces would overrun NATO in the Baltics and capture Tallinn and Riga in a maximum of 60 hours, with a ‘catastrophic’ defeat for defending Alliance forces

Shirreff, and former Italian Defense Minister and NATO Military Committee Chair, Giampaolo di Paola, contributed

to the AC report, warning of a grave “lack of progress” in the Alliance’s plans to reinforce itself in the wake of Mos-

cow’s invasion of Ukraine in 2013.

It is the third serious caution for NATO from members of the western defense

establishment in a month.

“A RAND corporation paper modelling dozens of war game scenarios in consultation with the Pentagon and published in late January, found that Russia’s forces would overrun NATO in the Baltics and capture Tallinn and Riga in a maximum of 60 hours, with a ‘catastrophic’ defeat for defending Alliance forces,” the article reads.

Non-credible defense efforts will not impress Putin,” said François Heisbourg, former French government Defense Adviser and now Chairman of the International Institute for Strategic Studies.

“Putin only takes symbolic moves seriously if the symbolism has a weight of its own,” NATO’s current plans, Mr Heisbourg said, do not appear to have any such gravity.

According to the publication, NATO’s greatly increased range and pace of military war-games, for example, still pales in comparison to Russia’s now routine “snap” and sprawling, planned military drills. Last year’s center-piece for NATO, dubbed Noble Jump — the alliance’s largest war game in years — involved a core of 5,000 men, with 10,000 involved in affiliated exercises elsewhere and 300 or so tanks. Russia’s “centre 2015” drill in September mobilised 95,000 troops and 7,000 tanks and artillery.

The FT cites Heisbourg that the danger of a strategic miscalculation by Moscow are higher so long as NATO’s posture is seen to be uncertain. “It has to be about soldiers being permanently present there and rather more equipment than is currently planned . . . we need a tripwire force like we had in West Germany during the Cold War.” It is still unclear just how far the alliance will go in its package of measures due this year.”

New Reservoir to Be Built for Kulevi Oil Terminal

BY TAMAR SVANIDZE

T

o expand the storage capacities of the terminal, a new reservoir is to be built at the Kulevi Oil Terminal, located in the Khobi District, on the eastern Black Sea coast in Georgia.

The Kulevi Oil terminal management announced that the Institute of Azerbaijan’s State Oil Company SOCAR has prepared a project for the construction of an additional storage tank which will create opportunities for a more flexible response to the requirements of the current petroleum market.

Construction work will begin as soon as the company receives an environmental permit for the construction of the new reservoir.

On February 29th, a public discussion over the environmental impact of the Black Sea Terminal’s new project was held at the administrative building in Khobi Municipality.

“All environmental risks associated with the construction and operation process of a facility should be assessed and controlled. One of the steps to obtaining an environmental permit is through the public discussion of Environmental Impact Assessment,” Kulevi Oil Terminal administration said.

The idea to build Kulevi Oil Terminal began in 1998. According to special survey forecasts, between 2010-2015 Georgian ports would become unable to handle the expected volumes of oil and oil products. Thus, in 1999, under the late Georgian President Eduard Shevardnadze, the Georgian government signed an order to construct Kuveli Oil Terminal and port.

Construction began near the village of Kulevi in 2000 by Terminal 2000 Ltd. Two years later, the project was interrupted due to environmental concerns raised by the local community, as well as due to insufficient funds, but in 2004 it was resumed under an international consortium of investors led by late Georgian tycoon Badri Patarkatsishvili.

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