Issue #850 Business

facebook.com/ georgiatoday

Issue no: 850/30

• JUNE 7 - 9, 2016

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

China Finances Overhaul of Georgia’s Healthcare System PAGE 2

Shame on Europe!

FOCUS ON THE NEW EDUCATION MINISTER

Minister Jejelava, Chairman of the Management Academy, reaffirms priorities for the Georgian education system

PAGE 3

Microsoft Begins New Fight against Pirate Software in Georgia

BY EKA KARSAULIDZE

ISET PAGE 4

First Georgia-Made TVs to Appear in Georgian Stores PAGE 5

The Secret of Green Diamond’s Success PAGE 6

Exclusive Residential Development in Krtsanisi PAGE 7

A

study by Business Software Alliance (BSA) has shown that unlicensed software usage still remains high in Georgia.

However, the country has achieved some success in this area, with the unlicensed software usage rate falling from 90 percent to 84 percent in a year. With the aim of further reducing that number, Microsoft has signed a Memorandum of Mutual Understanding (MoU) with a number of leading Georgian retailers.

Microsoft claims that the number of people using unlicensed Microsoft products is very high, but with this new MoU it has given seven Georgian computer retailers the right to sell legitimate, licensed Microsoft products: Alta Okay, Smile, MetroMart, Elite Electronics, Aray Tomorrow, PC Shop, and CompShop.

Continued on page 2

Electricity Market Watch GALT & TAGGART PAGE 11

Georgia’s Billionaire Former PM Denies Grey Cardinal Claim PAGE 15

Prepared for Georgia Today Business by

Markets As of 03ͲJunͲ2016

STOCKS Bank of Georgia (BGEO LN) GHG (GHG LN) TBC Bank (TBCB LI)

COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)

INDICES

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GBP 25.00

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+11,2%

GEOROG 05/17

101.81 (YTM 4.88%)

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GBP 2.54

Price

+0,7%

+28,2%

GEORG 04/21

BONDS

110.59 (YTM 4.42%)

+0,1%

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US$ 12.80

Ͳ1,5%

+21,9%

GRAIL 07/22

110.63 (YTM 5.66%)

+0,6%

+2,4%

GEBGG 07/17

103.94 (YTM 3.97%)

Ͳ0,1%

Ͳ0,4%

Price

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49,64

+0,6%

+10,4%

1 244,20

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GEL / USD

2,1370

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2,4279

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+1,7%

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3,1039

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6 209,63

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2,1934

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17 067,93

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0,0327

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10 103,26

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MSCI EM EE

122,74

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GEL / UAH

0,0857

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MSCI EM

816,18

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EUR / USD

0,8798

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+1,1%

SP 500

2 099,13

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GBP / USD

0,6888

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MICEX

1 886,84

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MSCI FM

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CHF / USD

0,9759

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2 552,12

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RUB / USD

65,3047

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GT Index (GEL)

797,63

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+0,1%

TRY / USD

2,9024

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+1,9%

GT Index (USD)

735,55

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AZN / USD

1,4905

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2

BUSINESS

Microsoft Begins New Fight against Pirate Software in Georgia

GEORGIA TODAY

JUNE 7 - 9, 2016

China Finances Overhaul of Georgia’s Healthcare System

Continued from page 1 According to the BSA survey, using unlicensed software runs a high risk of resulting cyber-threats.

Data from the Microsoft Cyber Crime Center shows that up to 80 percent of Eastern European countries are affected by cyber-criminal attacks, while 97.5 percent of small and medium businesses are faced with the threat of cyberattacks at least once.

Last year, Georgia and Microsoft signed a special agreement to give the country access to legitimate licensed Microsoft products as a first step to eliminating the use of illegally pirated software in the country. According to the Nikoloz Doborjginidze, the head of Microsoft’s representation in Georgia, since that time, the use of unlicensed Microsoft software programs in Georgia has decreased by six percent.

BY EKA KARSAULIDZE

G

eorgia’s Finance Minister Nodar Khaduri and China’s International Trade Representative Zhong Shan on Friday signed

an agreement whereby China will provide Georgia with USD 9 million (19 million GEL) to upgrade the healthcare system.

The funds will be allocated to the improvement of Georgia’s medical services, including patient services, crisis prevention centers and rehabilitation facilities for both children

and adults.

The agreement was signed within the framework of the Georgia-China Economic and Technical Cooperation Program. The first phase of this program began in 2014 when China provided USD 5 million (10.7 million GEL) to develop Georgia’s agricultural sector and a comprehensive upgrade of

technical equipment used in the country’s border terminals.

The cooperation agreement also calls for the establishment of a free trade deal as well as the creation of several joint venture programs aimed at boosting trade and investment relations between the Tbilisi and Beijing.

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

3

New Minister of Education: Focus on School and Higher Education

BY EKA KARSAULIDZE

P

rime Minister of Georgia, G i o rg i Kv i r i rka s hv i l i , appointed Alexander Jejelava, the chairman of the non-profit organization Management Academy, to the post of Minister of Education and Science on Thursday, June 2.

The new minister has already managed to identify priority directions for the Ministry and has held his first meetings.

The day after taking on his new position, Minister Jejelava met with applicants of the San Diego State University in Tbilisi’s Tech Park where the Science, Technology, Engineering, Math (STEM) Academy course was being held. “I believe that the STEM program should be a key to our educational reform, as Georgia has historically been strong in areas such as mathematics, engineering and technology. The fact that today we are meeting in Tech Park- a concept unique to Georgia- once again proves that,” said the Minister.

He went on to emphasize that higher education is a priority in the educational reform which is currently being carried out in Georgia. In turn, it is one of the fundamental areas for the State’s four-

point reform plan, which also focuses on tax administration, governance and infrastructure reforms.

The new minister expressed his willingness to meet with the students of Tbilisi State University, who periodically conduct protests as they push for educational reform.

“The interests of all parties involved in the ongoing processes of the university are constructive and positive.

We all want the university to become more powerful and transparent. This problem can be solved, and we will make sure it is. I’m ready to meet with the students, if necessary, to that end,” Jejelava said.

The Minister indicated that the country has the potential to become a regional leader in quality education. “We should try to develop the education system in all directions so that it meets the needs of Georgian society and young people, and as such makes make it exemplary," he said.

Jejelava mentioned that besides higher education, it is important to solve problems within the school system, particularly the development of teachers and the use of modern technology in the learning process.

Jejelava’s appointment is the first change in the cabinet by Prime Minister Kvirikashvili since he came to power last

Minister Jejelava met with applicants of the San Diego State University in Tbilisi’s Tech Park

December. Jejelava himself says he is satisfied with the work of the Ministry’s employees and does not plan to make any staff changes.

“Everyone needs professionals in a

team and we want only highly-qualified employees at the Ministry [of Science and Education]. I am pleased to say that we do have such good staff,” said the Minister.

Alexander Jejelava is known as a teacher, academic trainer and expert in banking, the public sector, higher education and IT in TBC Bank, UGT, state institutions as well as in foreign companies.

4

BUSINESS

GEORGIA TODAY

JUNE 7 - 9, 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.

Shame on Europe!

BY FLORIAN BIERMANN

W

hen half a year ago I predicted in my article “Georgia Exporting Crime” that the visa liberalization would be stalled at the last moment, I was named a grumbler and alarmist.

Unfortunately, the pessimists usually get it right.

This week, a whole bunch of European politicians, primarily from Germany, expressed their rejection of visa liberalization for Georgian citizens. As Joachim Hermann, Minster of the Interior of the province of Bavaria, stated bluntly: “I can only advise against visa liberalization with Ukraine, Georgia, and Kosovo”.

After granting visa liberalization to the Balkan states, he said, crime had soared, and there would be a need for a “mechanism to prevent the citizens of those countries from abusing political asylum in Europe” (quoted from Die Welt June 5th, 2016).

A few weeks earlier, Geert Wilders’ Partij voor de Vrijheid initiated a referendum in Holland on the question whether Ukraine should be granted visa liberalization, and the majority of the Dutch people voted against it. I foresaw this in January: “In the wake of the inflow of millions of refugees, right-wing parties are on the rise all over Europe […].

In this political climate, which is dominated by agitation and polarization on immigration issues, national parliaments are supposed to approve the removal of visa restrictions with Georgia and Ukraine. To counter the right-wing parties, which in an opportune moment will stir up a discussion about these visa liberalizations (which so far has hardly begun to set in), it will be very straightforward for the moderate parties to simply halt the liberalization process. For that to happen, one does not even have to cancel it formally. It will be enough to postpone the ratification of the new visa regime.”

"Thank you, Angela, for alienating the Georgian people once again!"

Source: Wikimedia Commons/ Sebastian Zwez

EUROPE COLLAPSING To grasp why Europe is behaving so treacherously, it is important to realize that the European Union is in an unprecedented existential crisis.

First of all, the European political elites, led by Angela Merkel, opened the borders for millions of asylum seekers from Syria, Afghanistan, Pakistan, and North Africa, without asking their populace whether they approved of this drastic step. Refugees bring lots of new problems to Europe, as shown most drastically by the 1,529 reported sexual assaults on New Year’s Eve in Cologne, carried out by up to 1,000 North African and Arabic perpetrators. Several hundred similar cases were reported from other German cities the same night, and just last week, despite increased awareness

and heavy police presence, 30 cases of sexual assault occurred at a festival near Darmstadt.

At the beginning of the year, Europe was shaken by the terrible terror attacks in Brussels, carried out, among others, by perpetrators who had entered Europe in the flow of refugees. The threat of similar or worse attacks looms constantly over Europe and, a few days ago, a plan for a major terror strike in Düsseldorf was thwarted by the police. There are severe concerns regarding the security of the European soccer championship that will start at the end of this week in France, and personally I expect the worst.

Secondly, there is the ongoing crisis in Greece. While Angela Merkel always emphasized that the European Union would not become a “transfer union”, it is now clear that the money which was lent to Greece will never be paid back.

Greek’s outstanding debt to other European countries amounts to EUR 220 billion. This hits Europe at a time when many countries, like France and Finland, are struggling with extreme economic difficulties, and even Germany, which is suffering from ailing public infrastructure and many other economic problems that are hardly seen from outside, cannot easily digest the loss of its share of the debt. And from bad to worse, even in Greece nobody is happy about how the story has evolved.

The European Union has become so

10 Galaktion Street

unpopular that anti-European forces are on the rise in all member countries. On the 23rd of June, the United Kingdom will hold a referendum about its remaining in the European Union, and currently those who want to leave lead the polls.

In this situation, a huge number of Europeans are just plain fed up with any ideas of enlarging Europe or further opening its borders. That’s why the visa liberalization process was withheld at the last moment, and, as I think, it is not going to be resumed in the foreseeable future. It is not too much to say that Georgia is a victim of the catastrophe brought over Europe by Angela Merkel and her supporters.

WHAT CAN GEORGIA DO? The problem is that Georgia has very little leverage to influence the situation.

The only issue where Georgia does have some responsibility is its failure to fight Georgian crime abroad. Georgia is extremely present in German media, not for the beauty of its nature or its delicious cuisine, but only for one single topic: burglary. The newspapers are full of reports of Georgian organized burglary gangs, some examples of which I presented in my January article. Since then, the problem has become rather worse.

As I wrote: “A small group is spoiling the reputation of the 99% of Georgians who are decent and law-abiding.” In January, I also had a message for the government:

“The matter [crimes committed by Georgians abroad] should be proactively addressed by the government of Georgia to make sure that the visa liberalization is not cancelled at the last moment. It would be an utter disappointment for the Georgian people, who enthusiastically celebrated the upcoming visa liberalization by illuminating bridges and buildings in blue with gold stars.”

In the article, I also mentioned a couple of policy measures that could have been adopted by the Government of Georgia to tackle the problem, like rewarding Georgians who turn in compatriots who they know are involved in problematic activities abroad, and having agreements that Georgians who engaged in crime abroad would be sentenced in Georgian courts by the (much harsher) Georgian laws and serve their terms in the (much tougher) Georgian prisons. They could also have tried to counter the perception that Georgians are overrepresented in European prisons – in the debate that ensued after my article it turned out that the statistics are not so clear. Apparently, some of the news about Georgian burglars seems to be based rather on perceptions than facts. However, it is unclear whether any of this would have helped.

In the end, all of this is a big disgrace for Europe. While the European political elites welcomed and even invited millions of Arabs and North Africans to come to Europe, many of whom harboring problematic intentions and holding values which are incompatible with Western freedom and tolerance, Europe will not keep its promise to Georgia! A Christian country, one of the West’s most loyal and reliable allies, full of citizens who are enthusiastic about freedom and who always felt that they belonged to Europe, will be turned away once again.

But nothing will help. In future, decent Georgians who want to travel to Europe will in all likelihood continue to have to undergo a humiliating visa application process, requiring the preliminary purchases of flight tickets, proof of accommodation, money, and current employment, and sometimes the necessity to provide invitation letters. Shame on you, Europe!

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

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

5

First Georgia-Made TVs to Appear in Georgian Stores GeoStat: Annual Inflation Decreased by 2.1%

BY EKA KARSAULIDZE

T

he National Statistics Office of Georgia (GeoStat) said in its reports that the monthly inflation rate amounted to -0.4 percent in Georgia in May 2016. Year on year, the Consumer Price Index (CPI) change (annual inflation rate) posted an overall 2.1 percent increase. Compared to the 2010 average, the index rose 16.6 percent.

Prices on alcoholic beverages and tobacco rose by 12.6 percent, contributing 0.77 percentage points to the overall inflation rate.

The price growth was highest in tobacco (20.7 percent) due to the increase in excise tax on such products.

Health-care prices were 5.7 percent higher, with the relevant contribution of 0.55 percentage points to the overall annual inflation. Prices rose for outpatient services (9.8 percent) and medical products, appliances and equipment (4.2 percent).

Housing, water, electricity, gas and other fuel prices went up by 5.5 percent, which had an impact of 0.46 percentage points on the overall annual CPI change, attributable to the price increase in electricity, gas and other fuels (9.3 percent).

Prices for food and non-alcoholic beverages in the 12-month period increased by 1.4 percent, with a relevant contribution of 0.40 percentage points to the overall inflation rate. The prices increased substantially in particular for fruit and grapes (20.6 percent), according to the latest GeoStat report.

BY EKA KARSAULIDZE

G

eorgian-Azerbaijanproduced LED Televisions of the AG brand are to arrive in Georgia’s technology stores in late May – early June this year. This is the first joint project between the two countries for television production. After the Georgian market is satisfied, the TVs will be sold in Azerbaijan and perhaps even sent for export.

The TV producing factory of AG Microelectronics is located in Rustavi, Georgia.

According to its director, Soso Mazmishvili, the screens themselves are made by a Hong Kong company while the remaining parts are made and assembled on-site in Georgia.

The 32 inch and 40 inch televisions are equipped with digital and cable signal support and have a three year guarantee. Their original prices are USD 180 (400 GEL) and USD 280 (600 GEL), respectively.

Although AG Microelectronics claim that the retail price will increase, as the

basic calculation is made for clients with an average income they promise the price will continue to be competitive.

After entering the Georgian and Azerbaijani market, the company will receive a European certificate and send its product to the foreign markets.

The Georgian-Azerbaijan AG Microelectronics has been operating in the Georgian market for two years, with the AG Telekom Company opening in Rustavi in 2013. The factory produces a set top box, LED-light bulbs, TV Box for MyVideo, and other equipment.

6

BUSINESS

GEORGIA TODAY

JUNE 7 - 9, 2016

The Secret of Green Diamond’s Success PREPARED BY KATIE RUTH DAVIES

F

ifty percent of apartments were sold in a week! The latest residential complex of Maqro Construction company, the USD 115 million investment project Green Diamond, was launched on 28th of May. As well as the official presentation, the successful completion of construction of the residential complex Green Budapest was celebrated.

The construction of Green Diamond is made up of three stages. The first includes 731 units. In spite of the short period, in just one week half of the apartments from the first stage were sold.

The unique residential complex is being built in an ecologically clean district of Tbilisi, near to the Olympic facilities.

Next to the Green Diamond mega project, the Technological University will be established, unique in Eastern Europe.

The residential complex comprises almost 70,000 m2 with 23,143 m2 interior green territory, offering a unique, brand new and affordable life in Tbilisi. In the complex you can find 23 living blocks and 1772 units. All your needs will be satisfied by the three swimming pools, four basketball areas, four outdoor fitness areas, four children’s playgrounds, seven pergolas, indoor sport facilities, walking and running tracks, commercial areas, social terraces, and a kindergarten and school.

Families who want to improve their living conditions and live in an ecologically clean environment with diversified infrastructure are choosing to live in the unique Green Diamond complex. There are many young couples among Green Diamond’s new residents that prefer to live both near the city center but in a different, clean and natural environment.

The complex is also perfect for investment purposes. As Green Budapest is the first residential complex, it became the business card of Maqro Constructions’ quality. Currently, Green Budapest is going through the handover period of the units, so people can be assured of the high quality, as in Green Diamond the construction and renovation materials will be exactly the same as in Green Budapest. Maqro Construction has gained the trust of the people, as the construction of Green Budapest was completed earlier than promised, again, to the best quality. Are you tempted? Visit the sales office, where five distinct showrooms present what Maqro can offer you- what you see in the showroom is what you will get in the Green Diamond complex.

Flexible and unprecedented payment conditions are one of the main reasons for the fast sales of these apartments. The average price per sq. is USD 750. The initial price for a fully renovated unit with kitchen furniture, built-in appliances and bath headset is from USD 25,000. The clients are allowed to pay USD 2,500 for the first payment and USD 250 per month thereafter. Payment terms are tailored to the customers: 10% - first payment, and 30% of the total amount distributed over 30 months, meaning that customers pay only 1% monthly. Customers need to pay the final 60% by construction completion (May, 2018), through bank loan, if they choose, allowing very easily payment of the credit- enabling them to live part rent fee and keep the other part for their own purposes.

As Deputy General Director in Project Development, PR, Sales and Marketing field, Oguz Kaan Karaer declared, the high rate of sales and success of Green Diamond is a result of the creation of the right product, as demanded by the market; people are using this opportunity very actively.

50% of the apartments sold in a week

He added that optimal planning, affordable prices and flexible payment conditions also contributed. “Our residents pay USD 250 per month just as if they were renting a flat, but at the same time they are becoming eventual flat owners. The complex is located in an ecologically clean part of the town provided with full infrastructure. Residents in reality have no need to leave the territory of the complex neither for school nor to go to the supermarket,” he said.

International company Maqro Con-

struction has been investing in the Georgian economy since 2013. The company is international and operates mostly in the construction field. Maqro Construction invested up to USD 70 million in the Georgian market and plans to invest up to an additional USD 150 million.

Maqro Construction has successfully completed a number of projects: residential complex Green Budapest, French Accor Group’s 4-star hotel brand Mercure Tbilisi Old Town, Furniture store chain Bellissa, and the much-anticipated 5-star

restaurant Dinehall on Rustaveli Avenue which will be opening on June 8th.

In the near future the company plans to start construction of French Accor group’s hotel Ibis Styles. Maqro Construction owns 20,000 m2 land next to the airport highway, where it plans the construction of a shopping center for home and decorative items.

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

7

Exclusive Residential Development in Krtsanisi PREPARED BY KATIE RUTH DAVIES

C

W | VB is one of the global Real Estate consultancy firms that has been operating on the Georgian market for four years, providing its services to the largest business companies operating in Georgia. CW | VB in Georgia has worked on projects like Tbilisi Mall, Merani Mall and for companies like Axis Towers, M2, Silk Road Group properties, TBC Bank properties, and others.

In April 2016, Cushman & Wakefield | Veritas Brown and Urban Development reached an agreement and signed a longterm exclusive brokerage mandate for the upcoming Krtsanisi Residence development project spread over 26,000 square meters in the Krtsanisi Residential Area.

The address was especially selected for its incomparable combination of geographical location and climate zones.

The development comprises a limited number of exquisitely designed community areas that incorporates Town Houses, Lofts and Villas with magnificent modern exteriors. The project delivery is scheduled for May 2017.

GEORGIA TODAY met Nina Kipiani, Country Director at Cushman & Wakefield | Veritas Brown (CW|VB), to discuss

the upcoming Krtsanisi Residence development project.

WHY SHOULD ONE CHOOSE THE KRTSANISI RESIDENCE?

ited density when compered with other districts in Tbilisi. The demand on that area has been quite high from foreigners living in Tbilisi as they value the importance of its microclimate, privacy and secure atmosphere. Lately, it has also gained popularity among local citizens.

Apart from the above conveniences and benefits, owning a residence in the Krtsanisi area proves to be highly valuable.

Considering the high level of demand for rented apartments, investors are looking at it as an investment opportunity.

The development comprises a limited number of exquisitely designed community areas. Further, technologically it is above expectation in every detail and meets all the international standards, a fact guaranteed by the international and local companies contracted for this development.

Moreover, Urban Development is one among few companies that care about the environment and develop eco-friendly, resource-efficient residences. The company is oriented on minimizing the impact developments have on the environment.

Sustainable or "green" developments use land more responsibly, offer improved indoor air quality, consume less energy and water, and incorporate renewable or recycled materials.

Housing density and living conditions differ greatly between Tbilisi districts.

The Krtsanisi district benefits in its lim-

WHAT SERVICES WILL THE KRTSANISI RESIDENCE

TELL US ABOUT THE KRTSANISI RESIDENCE DEVELOPMENT PROJECT We are delighted to be bringing our indepth local and international expertise and market knowledge to this exciting residential project in the city. Considering the interest and growing demand to live in an ecologically healthy environment in close proximity to the center, we consider the Krtsanisi Residence development to be one of the most attractive projects in the city.

As well as capturing the premium, ecologically friendly, secured and private environment, the development is just a three-minute drive from the Old Town.

The Krtsanisi Residence is surrounded by diplomatic corps that additionally guarantee a high level of safety, security and privacy to the residents (Embassies of Switzerland, Japan, France, UK and Germany surround the site).

Decades ago the location was specially designated for high-level political leaders.

OFFER ITS RESIDENTS? Life in the Krtsanisi Residence will offer a truly exceptional residential and ownership experience. The residents will benefit from attentive and discreet staff that are keenly aware of their unique preferences and will perfectly anticipate their everyday needs. Residents will enjoy the services of a concierge, security 24/7, handyman, gardener and cleaning service. Project amenities will feature a meeting room, gym and outdoor fitness equipment, sauna, parking, outdoor playground, and more.

CW | VB will provide a rental service

for apartments on request. As I mentioned before, interest for the Krtsanisi area is very high and even though the completion of the project is one year away, we already have families interested in renting property there.

We believe that exclusive service belongs to an exclusive home. Your home becomes an extension of your own highly refined world, and knowing that it is professionally managed gives you comfort and keeps you relaxed.

For more information, visit: www.veritasbrown. com

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BUSINESS

GEORGIA TODAY

JUNE 7 - 9, 2016

Historic City Center in Georgia’s Dusheti to Undergo Major Renovation

MagtiCom to Be Only Quadruple Play Service Company in Georgia

BY EKA KARSAULIDZE

BY EKA KARSAULIDZE

T

he Georgian government and the World Bank are to allocate USD 5.6 million (12 million GEL) to fund a major renovation of the city center of Dusheti, a historic mountainous town of 4,600 located 54 kilometers northeast of the capital Tbilisi.

New fountains, walking paths, green areas and a recreation zone will be constructed, and the town’s numerous medieval and 19th-century architectural monuments will also be restored.

Georgian news site agenda.ge reported that Dusheti’s municipality approved the project earlier this week and planned to begin the rehabilitation process later this year.

The site said the municipality had chosen local architect Giorgi Macharashvili’s firm to carry out the project.

T

he process of handing over the corporate and retail service assets from Caucasus Online to MagtiCom shall tentatively commence on August 1, 2016 and proceed for several months, drawing to a close by the end of this year.

As a result, MagtiCom will become the first and the only operator in Georgia offering a full quadruple play service: Mobile telephone, Fixed-line

telephone (wireless and cable), Internet (mobile and cable) and Television (satellite and IPTV). A joint statement of both parties was published on May 30, 2016.

Shortly after concluding the agreement, the European Bank for Reconstruction and Development (EBRD) said it would provide up to USD 100 million senior A/B Loan to MagtiCom. “The use of proceeds is to finance acquisition of retail assets of Caucasus Online. The assets include all the infrastructure, equipment and network necessary to provide internet, telephone and IPTV services to end customers,”

stated the EBRD. Last summer, Caucasus Online, which is one of the largest Internet providers of Georgia, stated that it would sell most of its assets due to financial difficulties. Besides MagtiCom, another main contender for the acquisition of assets was mobile operator Beeline (Mobitel). Many Georgian opposition politicians saw a risk in selling Georgian Internet space to Beeline as it is a subsidiary of the Russian VimpelCom. Although VimpelCom has regularly rejected the concerns, it ultimately decided not to go ahead with the purchase of Caucasus Online’s assets.

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

9

Retail FPI | Just How Competitive Is the Georgian Food Retail Market?

BY SALOME GELASHVILI AND ERIC LIVNY

G

eorgian retail food prices are up 1.1% y-o-y (May 2016 vs. May 2015) and 1.0% down m-o-m (compared to last month). Compared to mid-May, cheese, apple and carrot experienced the biggest price declines of 8.5%, 8.4 % and 7.1%, respectively. The prices of cabbage, buckwheat and peach are up by 8.3%, 8.3% and 7.1%, respectively.

WHY DOES “THE LAW OF ONE PRICE” NOT HOLD IN THE GEORGIAN FOOD RETAIL SECTOR? Looking at how different the price tags are for the exact same goods offered by Tbilisi supermarkets, one may wonder what’s going on. Why is one supermarket chain able to get away with giving imported rice or buckwheat a price more than double that of its competitors? By the same token, why aren’t Georgian consumers able to punish the pricy sellers by switching to alternative outlets?

At first sight, the Tbilisi food retail sector appears to violate the so-called “law of one price” according to which identical goods should sell for the same price in all nearby locations (this law allows for prices to be different due to transportation costs but not much else). It is based on the reasonable assumption that consumers would eventually eliminate any arbitrage opportunities by voting with their feet and wallets against unreasonably expensive sellers.

As we can see in the data, the law of one price appears to hold quite nicely when it comes to such products as butter, eggs, frozen chicken, milk, and natural yoghurt (matsoni). The price gap for these foods falls in the 3%-15% range, which may reflect normal differences in the quality of shopping experiences offered by different chains (parking, product range and variety, service quality, etc.).

The very large variation (in the 45%-77% range) in the prices of fruits and vegetables, such as apple, cabbage, eggplant, onion and garlic, one the other hand, is not surprising at all. Fresh products are anything but

identical. They are produced by many companies, and come in different size, form, taste and smell.

Some consumers may be loyal to a particular color (e.g. red onion), producer (BiuBiu) or region (Dighomi tomatoes, Kakhetian cucumbers), which is reason enough for the law of one price NOT to hold.

There is no simple way, however, to explain the huge (40-141%) range between the minimum and maximum supermarket prices for absolutely identical grocery items such as rice, buckwheat, wheat flour or Coca Cola. Several explanations come to mind. One possibility is that Georgian retailers are actively using grocery products as “loss leaders”,

i.e. selling them at below their market price to stimulate the sales of other more profitable goods.

At the same time, retailers may be overpricing certain low-cost items assuming (perhaps correctly) that consumers would not notice the difference.

Finally, it could be that some supermarket chains have to upgrade the skills of their sales personnel.

A good starting point could be our bi-weekly Food Price Index publication in Georgia Today.

Salome Gelashvili is Senior Researcher at the ISET Policy Institute’s Agricultural Policy Research Center; Eric Livny is President at the International School of Economics in Tbilisi (ISET), and ISET Policy Institute.

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BUSINESS

GEORGIA TODAY

JUNE 7 - 9, 2016

New Greenhouse Near Breakaway Abkhazia

Contact: www.edelbrand.ge Phone: 599 461908

BY EKA KARSAULIDZE

A

new greenhouse opened in Rukhi village in western Georgian near Georgia’s administrative border with breakaway Abkhazia last week. The idea to build a new greenhouse was initiated by the Government of the Autonomous Republic of Abkhazia and was implemented with the financial support of the Japanese Embassy to Georgia. The project cost USD 92,000 (196,880 GEL).

“This is one of the many examples of Japanese Embassy to Georgia and Georgian Governments in cooperation, the main aim of which is to serve the participation of Internally Displace Persons (IDPs) in the process- the majority of greenhouse

staff are people who were displaced from Abkhazia,” said Otar Danelia, Minister of Agriculture of Georgia, adding that the number of displaced people has increased from 7,400 to 13,500 in the past 18 months.

The state official claimed that the new greenhouse’s main goal is to improve the social and economic conditions of displaced families and decrease unemployment in their communities. In this project, the IDPs will be involved in growing various kinds of vegetables as well as the Kolkhuri box-tree.

Besides this project, the Japanese Government is implementing a number of other projects including the construction of kindergartens, medical centers and museums in Georgia. The two sides agreed to continue cooperation and create other joint projects that will lead to a closer relationship between them.

Make Your Office Green

BY KATIE RUTH DAVIES

E

ach day we make decisions that have an effect on the environment, create air and water pollution and affect global warming in the long run. Sometimes such negative actions are a result of unconsciousness or a simple lack of awareness of the impact they might have on our surroundings.

This is why the non-governmental organization Caucasus Environmental NGO Network (CENN) started implementation of the Green Office campaign in 2008 and invited various organizations to join them.

The phrase “Green Office” refers to the attitude and practices that help to reduce the environmental impact of our office activities. In order to make the process easier, CENN has created a special portfolio of services intended to make offices environmentally friendly places.

Have you ever thought about the fact that overheating your office uses up a lot of resources, is expensive and produces high emissions? Or that the paper waste piled up in the trash bin every day can be reused and recycled? Or printing on just one side of the paper generates a lot of unnecessary waste? The solution is simple – think green!

To start off, keep track of the number of copies you make by using the counter on your machine to determine how much paper is being used. You can also calculate the weight and volume of paper used in your office each year. Tell your staff that number! Moreover, make sure all computers and other office equipment is turned off when not in

use. The same goes for electric lights- switch them off when the natural light pouring through the window is enough. Enable energy saving features on PCs, printers, and photocopiers, and install LED lights where possible.

With these small steps, you can make a big difference to your surroundings and the future of the next generation. More companies and offices need to engage in green practices. And after mastering those small changes, you can also install special bins for waste separation collection and collect paper, plastic, glass, cardboard and aluminum cans, which will be regularly picked up by established collecting company Coop Georgia, CENN’s partner in this initiative.

Join the initiative, be green and look after the environment!

Further information can be found at geenoffice.cenn.org

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

11

The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research.

For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at gt@gt.ge.

Electricity Market Watch FOR GEORGIA TODAY BY TAMARA KURDADZE

S

ector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our energy sector coverage, we produce a monthly Electricity Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch. ge.

MINISTRY OF ENERGY TO REEVALUATE PPA POLICY According to the Deputy Minister of Energy, Mr. Ilia Eloshvili, consultations are in process with the IMF on revising the Power Purchase Agreement (PPA) policy. The current PPA policy grants new investors take-or-pay agreements whereby ESCO, the electricity market operator, buys all HPP-generated electricity September through April. According to the IMF statement in November 2015, the government guarantees that backstop PPAs should be managed carefully in order to safeguard Georgia’s “hard-earned fiscal sustainability.”

SALE OF THERMAL GENERATION UNIT 9 BY INTER RAO CONFIRMED Inter Rao confirmed the sale of Mtkvari Energy (TPP unit 9) to an investor consortium that includes GIG (Georgian Industrial Group). Names of the other investors and further details of transaction are not yet public. The negotiations for the sale of the Russian company-owned, gas-fueled TPP (300 MW) started earlier this year, with GIG a likely buyer from the outset. Inter Rao maintains its stakes in hydrogeneration and grid operation.

GEORGIAN MANGANESE RESUMES MINING OPERATIONS

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Georgian Manganese, one of the largest direct consumers on the Georgian electricity market, resumed mining operations in May. Domestic electricity consumption growth slowed in 2015 on the back of lower consumption from GM, which in turn was caused by reduced production of manganese as global prices dropped. We expect domestic electricity consumption figures to rebound in June, as GM’s monthly consumption returns to previous levels.

TAP CONSTRUCTION SET TO COMMENCE THIS YEAR Inauguration of the Trans-Adriatic Pipeline (TAP) that took place on May 17th in Greece was a significant step forward in the development of the Southern Gas Corridor (SGC). Georgia is a crucial link in delivering Azerbaijani gas to the EU. Once completed, the extension of the South Caucasus Pipeline will result in increased gas deliveries from the Shah Deniz II field in Azerbaijan through Turkey to the EU. TAP is the EU part of the pipeline that will pass through northern parts of Greece, onto Albania and Italy, with construction expected to last 3.5 years.

Georgia will receive increased amounts of natural gas as an in-kind transit fee once the pipeline is operational.

DOMESTIC CONSUMPTION FLAT IN APRIL 2016 Domestic electricity consumption was flat in April and up 1.3% y/y in 4M16. A 12.5% y/y decrease in the Abkhazian Region’s consumption was the main contributor to the slower growth in April. Excluding the Abkhazian Region’s slowdown in consumption, domestic consumption was up 2.8% y/y in April 2016. Growth was concentrated in greater Tbilisi area, with a 6.6% rise in Telasi consumption.

Regional consumption was up 3.5% y/y among Energo-Pro subscribers and down 2.5% y/y among Kakheti Energy Distribution subscribers. Consumption by GM was roughly flat, but with the resumption of mining operations in the end of May, we expect GM’s consumption to rise in June. GM represents roughly 10% of domestic electricity consumption. There were no electricity exports in April 2016.

TPP GENERATION UP 36.5% Y/Y IN APRIL 2016 In April 2016, domestic generation was down 3.4% y/y on the back of lower HPP output. Electricity generation by Enguri and Vardili, the country’s largest HPPs (41% of total installed capacity), was down 31.0% y/y in April 2016 due to low precipita-

tion. The deficit was bridged by TPP-generated electricity (+36.5% y/y) and imports (-41.3% y/y).

79.0% of total TPP generation fell on Gardabani CCPP, followed by Tbilsresi (Units 3 and 4) and Tkibuli coal. 93.4% of imports came from Russia at an average price of USc 5.2/kWh. Generation by deregulated HPPs increased 18.4% y/y in April 2016 and the share of deregulated HPPs in the hydrogeneration mix was up to 16.9% in April 2016. This is a result of robust development in the hydrogeneration sector and the upward trend is expected to continue.

THE FIRST ANNUAL INCREASE IN TURKISH ELECTRICITY PRICES IN 13 MONTHS The weighted average market clearing price in Turkey increased 13.2% y/y in US$ terms, after decreasing for 13 straight months, but the increase is largely due to the low base in April 2015, when the market clearing price was down over 50% y/y.

In Georgia, balancing electricity price in April decreased 22.8% y/y to USc 4.7. 17.6% of total electricity supplied to the grid was traded on the wholesale market (via ESCO), with the rest traded via bilateral contracts. 70% of the balancing electricity price was made up of HPP generation, while TPPs and imports made up 14% and 16%, respectively.

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BUSINESS

GEORGIA TODAY

JUNE 7 - 9, 2016

Passenger Traffic in Georgian Airports Increases by 21%

BY EKA KARSAULIDZE

T

he Ministry of Economy and Sustainable Development of Georgia has published data on passenger traffic at all airports in Georgia according to which, during the first five months of 2016, the number of passengers was 831590, 21 percent more than last year. Following this announcement, United Airports of Georgia announced a tender to construct a new airport in Zugdidi, western Georgia, that in the future aims to increase the total number of tourists throughout the country.

Batumi International Airport shows the highest rates of passenger traffic – 54,429 passengers, 32 percent more since the beginning of 2016 year on year. These numbers were reached thanks to this year’s addition of several new airlines to the Georgian market which opened direct flights to Batumi, bypassing Tbilisi. Among them is Ural Airlines (from Ekaterinburg and Saint Petersburg). Air Arabia and El Al Israel Airlines, which will connect Batumi to Sharjah and Tel Aviv respectively, will start operation this summer. Taban Air also plans to launch a regular charter flight from Tehran in the near future.

In general, Batumi International Airport plans to receive 11 airlines from 12 different directions throughout the 2016 summer season.

The David Agmashenebeli International Airport of Kutaisi also showed high indicators, with passenger traffic increasing by 20 percent and amounting to 73,851 persons. Ukraine International Airlines in late May increased the number of flights between Kiev and Kutaisi from three to four, and then started flying

every day from June 4. A further increase in passenger traffic is expected after the opening of WizzAir’s new flights to Berlin, Dortmund, Munich, Milan, Thessaloniki, Sofia and Larnaca from September.

The Shota Rustaveli International Airport of Tbilisi has also seen a 20 percent increase in passenger traffic, with 703310 passengers. During the summer season, the airport expects to receive 30 airlines flying to 27 different destinations.

Capital Airport has been offering flights to Tehran via Ata Airlines and Keshm Air since March this year. Moreover, El Al Israel Airlines and Taban Airlines will connect Tel Aviv and Tehran as well as Isfahan with Tbilisi from June 2016.

Queen Tamar Airport in Mestia town, Georgia’s smallest airport located in the Svaneti region of Samegrelo-Zemo Svaneti province, which is only used for local transportation, showed a 17 percent increase in passenger traffic with 1,197 passengers.

The United Airports of Georgia announcement of a tender for the construction of an airport in Georgia's western town Zugdidi, to become the fifth in the country, reveals an expected investment of around USD 257,255 (550,000 GEL) with the aim of having the airport operational within two years.

The tender is open for all interested companies who should contact United Airports of Georgia by June 21, 2016.

The winning company should build and operate a new airport in Zugdidi, which includes new aerodrome, runway, aircraft parking spaces, a terminal and other necessary infrastructure construction, as well as it taking on responsibility for operating local and international flights. It should also accommodate at least 50 passengers, including people with disabilities, and there must be car parking spaces for at least 30 vehicles.

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

13

Visa Provides Athletes Advanced Payment Experiences to Enjoy the 2016 Olympic Games PREPARED BY KATIE RUTH DAVIES

V

isa Inc. (NYSE:V), the exclusive payment provider at the Olympic and Paralympic Games, has introduced a new innovation for use at the Rio 2016 Games – the first payment wearable ring backed by a Visa account. The Visa payment ring will be given to all Team Visa athletes in Rio, a group of 45 Olympic hopefuls from around the world who embody Visa’s values of acceptance, partnership and innovation. The Visa payment ring is NFC-enabled, allowing Team Visa athletes to make purchases by simply tapping their ring at any NFC-capable payment terminal.

The key features of the ring make this a unique payment experience. The ring uses the patented NFC Ring® design of McLear & Co. that includes a secure microchip made by Gemalto, with an embedded NFC-enabled antenna, enabling contactless payment capabilities.

Unlike many other payment wearables, the ring does not require use of a battery or recharging. It is also water resistant to a depth of 50 meters, meaning

Team Visa athlete and Olympic gold medalist Missy Franklin can go from the pool to payment all with the tap of her ring.

In addition, at a recent event in New York City, Visa demonstrated an advanced prototype version of the Visa payment ring which uses token technology provided through Visa Token Service, making it the first tokenized payment ring. Visa’s token technology replaces sensitive payment information, such as the 16-digit account number, with a unique digital identifier that can be used to process payments without exposing actual account details.

“Visa’s first payment ring puts smart payment technology right on the hands of our athletes for convenient and easy payments,” said Jim McCarthy, Executive Vice President of Innovation and Strategic Partnerships at Visa Inc. “This ring is the latest example of how Visa is continuously innovating to deliver on its goal of universal acceptance at the games and around the world.”

Athletes and fans will also be able to use their Visa accounts leading up to, and at the Rio Games, using various new form factors. From booking and planning their trip using Visa Checkout or making purchases at the games on

their mobile phone, both experiences are first-time offerings for Rio 2016, enabling athletes and fans to swipe, tap, dip or click to pay during their Olympic experience.

“As an Olympian, rings have a special meaning to me,” said Missy Franklin, four-time Olympic gold medalist and Team Visa athlete. “The Visa ring is a great innovation that I know all the athletes competing in Rio will enjoy as

it will be great to go from a competition to purchase without having to carry a wallet or card.”

As the exclusive payment provider of the Olympic Games, Visa is creating and managing the entire payment system infrastructure and network throughout all venues including in stadiums, press centers, points-of-sale (POS), the Olympic Village and Olympic Superstores. In Rio, Visa will implement

approximately 4,000 NFC-enabled POS terminals capable of accepting mobile and wearable payments across key Olympic venues, the US Olympic Committee’s USA House and Copacabana Megastore.

As the payments industry increasingly shifts from plastic to digital, new technology advances from Visa and its partners are bringing consumers a simple and more secure purchasing experience.

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BUSINESS

GEORGIA TODAY

JUNE 7 - 9, 2016

CoE Report Commends Georgia on Anti-Trafficking Legislation & Policy Progress, Expects More PREPARED BY VAZHA TAVBERIDZE

S

ince 2012, Georgia has made progress in further developing data collection, assisting vulnerable groups and improving the legal framework to combat the trafficking of human beings. However, more needs to be done to ensure the timely identification of victims of trafficking, assist them and guarantee effective investigation and prosecution - these are the key conclusions of the Council of Europe’s (CoE) anti-trafficking expert group (GRETA).

Georgia remains a country of origin of

victims of trafficking in human beings.

Over the past five years, some 80 people were officially identified as victims; the vast majority of them Georgian nationals. Most of the victims were trafficked for the purpose of labor exploitation, with trafficking for the purpose of sexual exploitation, both abroad and within Georgia, coming in second place. Turkey is the main country of destination of Georgian victims of human trafficking.

Unemployed women, people from socially unprotected groups, such as internally displaced persons (IDPs), and children living and working on the streets, are the most vulnerable to trafficking.

On a positive note, GRETA says that Georgia has implemented a number of

Over the past five years, some 80 Georgian nationals were trafficked for the purpose of labor exploitation, with trafficking for the purpose of sexual exploitation, both abroad and within Georgia, coming in second place

its previous recommendations. The Criminal Code was amended and a new chapter on child victims was introduced into the Law on Combating Trafficking.

Further, foreign victims of human trafficking can now receive temporary residence permits both on the grounds of their co-operation in criminal proceedings and for humanitarian reasons.

Special mobile groups were set up to detect and assist children living on the streets, including in their acquiring identity documents. GRETA also commends the setting up of a unified database on human trafficking and the efforts made to train a variety of professionals and to raise general awareness on trafficking.

However, despite the progress achieved, some issues give rise to concern and require urgent action. GRETA notably urges the Georgian authorities to take further steps to ensure the timely identification of victims of trafficking, with a special focus on assisting child victims.

GRETA also calls on the Georgian authorities to specifically define in the legislation the recovery and reflection period that should be granted to all possible victims of trafficking, regardless of

their co-operation with the police.

GRETA welcomes the increase in compensation granted to victims of trafficking from the State, but remains concerned by the absence of compensation from the perpetrators and urges the authorities to review the criminal and civil procedures regarding compensation and to ensure that traffickers’ assets are frozen and confiscated to secure compensation.

The low number of prosecutions and convictions in trafficking cases is another cause for concern for GRETA. The report stresses that it is important to ensure, where possible, that human trafficking charges are not re-qualified into other offences which carry lighter penalties.

Other recommendations concern the specialization of investigators, prosecutors and judges to deal with human trafficking cases and the exclusion of human trafficking from the plea bargaining procedure.

GRETA also recommends introducing a mechanism of effective monitoring of private employment agencies and other intermediaries to ensure the authenticity of the job offers they promote and so prevent trafficking for the purpose of labor exploitation.

BUSINESS

GEORGIA TODAY JUNE 7 - 9, 2016

15

Georgia’s Billionaire Former PM Denies Grey Cardinal Claim

BY TAMAR SVANIDZE

G

eorgia’s eccentric billionaire former Prime Minister Bidzina Ivanishvili said in a Thursday interview with Radio Liberty’s Georgia’s service that he wields no influence over any of the members of the current government.

Ivanishvili, the founder of the ruling Georgian Dream coalition, did admit to having frequent consultations with certain sitting government members but said none of the meetings could be described as his ability to influence policy.

“I have no special status. I am just an ordinary citizen that poses no threat to the country…As for the question of power, my power rests in the fact that people trust me and appreciate my words,” Ivanishvili said.

Despite his leaving politics in 2013, most in Georgia still believe he holds enormous influence over the current government. Ivanishvili flatly rejected the rumors but confirmed that he took part in former Prime Minister Irakli Garibashvili’s decision to resign abruptly in December 2015.

“Garibashvili asked, and I gave him my opinion. He came to me more than once and I told him it wouldn’t be a bad idea to go,’ Ivanishvili said.

When the conversation turned to Georgia’s relations with Russia, Ivanishvili said the country must have constructive relations with Moscow, despite the fact Russia’s armed forces occupy more than 20 percent of Georgia’s territory.

Unlike his predecessor, staunchly proWestern former President Mikheil Saakashvili, Ivanishvili has taken a far friendlier and conciliatory tone toward Russia since Georgian Dream took power.

The move towards warmer relations with Moscow has drawn sharp criticism from many sectors of Georgian society, particularly after the Georgian government entered into negotiations with Russian gas giant Gazprom over

energy supplies.

The recent influx of Kremlin-controlled news agencies in Georgia have heightened the fears of many Georgian citizens who worry that Ivanishvili and the Georgian Dream have allowed Russia to exert its form of soft power over the country through the media and energy-related coercion.

He was quick to emphasize that Georgia would eventually join both NATO and the European Union but seemed to suggest that Georgia would have to acquiesce to Russia’s objections until Moscow no longer felt threatened by Georgia’s Western aspirations.

"We must patiently strengthen our democratic institutions, we must make our economy flourish and wait for the right time when Russia realizes, and when our allies see, that it's time for Georgia to become a member of NATO and the EU," Ivanishvili said in the televised interview.

“Georgia’s ambitions do not contradict

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Russia's interests, although the current Russian leadership considers our move towards the West to be a threat."

Ivanishvili, who rarely grants interviews and is known for temperamental outbursts towards those who publicly criticize him, seemed to grow angry and impatient at the journalist’s critical questions.

Dogged by accusations that he harbors pro-Russian sympathies, Ivanishvili continually chastised the journalist for not having thoroughly read through his recently published 25-page letter to the public that gave an exhaustive and excessively positive account of the Georgian

Journalists: Tony Hanmer, Tamar Svanidze, Zviad Adzinbaia, Beqa Kirtava, Meri Taliashvili, Eka Karsaulidze, Zaza Jgharkava, Maka Bibilashvili, Karen Tovmasyan, Dimitri Dolaberidze, Maka Lomadze, Tim Ogden, Ana Akhalaia, Robert Isaf, Joseph Larsen, Will Cathcart, Vazha Tavberidze, Nugzar B. Ruhadze

Dream’s accomplishments since they came to power four years.

The 60-year old billionaire oligarch was born into poverty in Georgia’s western Imereti region but spent most of his life in Moscow. Following the collapse of the Soviet Union in the early 1990s, he accumulated vast amounts of wealth in the banking and mining industries.

After returning to Georgia in the mid2000s, Ivanishvili later transformed his wealth into political clout when he founded the ruling Georgian Dream party in 2011. A year later, the party unseated the country’s pro-Western former president Mikheil Saakashvili.

Photographer: Zviad Nikolaishvili Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

Following the Georgian Dream’s victory at the polls, Ivanishvili briefly served as the country’s prime minister in 20122013, before stepping down and retiring from politics.

Now worth USD 5.5 billion, his fortune amounts to half of Georgia’s gross domestic product. He has consistently drawn the ire of Georgian citizens for his extravagant lifestyle. Ivanishvili’s USD 60 million glass and steel Tbilisi palace that houses a USD 1 billion private art collection contrasts sharply with the realities of most Georgians who struggle to make ends meet on as little as USD 100 per month.

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