Issue no: 878/44
• SEPTEMBER 13 - 15, 2016
• PUBLISHED TWICE WEEKLY
PRICE: GEL 2.50
In this week’s issue...
US Wine Experts Visit Georgia PAGE 2
FOCUS ON BANKING TBC Bank becomes largest Georgian PAGE bank by Loans & Deposits
New University Town to Be Built in Kutaisi BY NINO GUGUNISHVILI
new university town is planned f o r Ku t a i s i , western Georgia, set to be the largest of its kind in the Caucasus region. Equipped with modern infrastructure and new laboratories, it will be an educational-scientific center for the western part of Georgia, as well as for the wider region. The total budget for the new university town, as well as for the Tbilisi-based Technological Institute, is EUR 1 bil-
lion, fully financed by Cartu Fund. With a capacity of 60,000 students, the university town in Kutaisi will have 140 hectares of land, making it a home for future top professionals in all fields, something much needed for the fast growth of the country’s economy. The new university complex is expected to receive its first students in 2019. Cartu Fund will fully finance all works related to the construction and technical equipping of the Kutaisi University complex and the Tbilisi Technological Institute, and will hand over full ownership of both to the State.
Do Teachers Respond to Incentives? A Philanthropic Experiment in Sachkhere Reveals All ISET PAGE 4
Best Georgian Wine on Show at Prestigious Speciality & Fine Food Fair, London PAGE 5
Mozaika Holding: 8 Years in the Advertising Business PAGE 6
WHERE to Go, Stay, Eat, Drink, Buy in September PAGE 8 Prepared for Georgia Today Business by
STOCKS BankofGeorgia(BGEOLN) GHG(GHGLN) TBCBankGroup(TBCGLN)
COMMODITIES CrudeOil,Brent(US$/bbl) GoldSpot(US$/OZ)
SEPTEMBER 13 - 15, 2016
Photo: US wine experts taste Georgian wines. Source: Georgian Wine Agency
US Wine Experts Visit Georgia BY THEA MORRISON
n the frames of a one-week wine tour, a ten-member group of wine experts from the United States of America (US) visited Georgia. The group was led by international wine master Liz Granik and saw the guests visiting Georgian wine companies and small wineries in the Kartli and Kakheti regions for wine tasting. According to Granik, who is the Head of Georgia’s contractor company Tast-
inwork, the quality of Georgian wine is increasing by the year. She also noted that the quality of many commercial and non-commercial wines has reached international standards. “The quality and desire to produce very high quality wine at a world-standard level is on the up in Georgia,” she said, adding that such tours as this latest aim to raise awareness of Georgian wine in the US and help to introduce traditional Georgian wine-making methods to foreign professionals. “This will eventually contribute to the growth of export of Georgian wine, and
wine tourism in Georgia,'' she said. The Head of the National Wine Agency, Giorgi Samanishvili, noted that the presentation of Georgian wine to American wine professionals is much needed, as the US is one of the increasingly important export markets for Georgian wine. He went on to say that Georgian wine is not well-known on the US market yet but that he hopes, as a result of such visits and collaboration with American experts, Georgian wine will become better-known there. “Experts tasting wines on location is quite different from reading about it
elsewhere,” Samanishvili said. He also highlighted the first International Wine Tourism Conference organized by the UN World Tourism Organization (the UNWTO) and noted that this event not only served to promote tourism and Georgian wine, but also increased awareness of the country as a whole. “It is very significant that the first global wine conference was held in Georgia because wine tourism should start in the homeland of wine,” he said. The first International Wine Tourism Conference was held in Georgia on September 7-9 with the participation of 250
delegates from 42 countries and more than 150 organizations. According to the Georgian Wine Agency, the data of the last 8 months shows that 172 thousand bottles (0,75l) of wine have been exported from Georgia to the USA, a result 10 percent higher than last year. EDITOR'S NOTE: Within the printed version of story "Feast in Karabakh Causes International Scandal" on Sept. 9th "Nagorno-Karabakh Republic" appeared without the quotation marks. This was an editorial mistake and in no way suggests our recognition of said location.
GEORGIA TODAY SEPTEMBER 13 - 15, 2016
World Car-Free Day TBC Bank Acquires 94% in Tbilisi Announced Stake in Bank Republic,
Becomes Largest Georgian Bank by Loans & Deposits BY KATIE RUTH DAVIES
BY NINO GUGUNISHVILI
bilisi plans to participate in a World Car-Free day campaign on September 22. Georgian community group ‘Guli Tbilisisatvis’ (Heart for Tbilisi) has announced its plan to organize a Car-Free day in the capital of Georgia, and has invited citizens to join the initiative by leaving their vehicles at home and walking or using public transport throughout the day. Heart for Tbilisi addresses the environmental concerns that the city of Tbilisi is facing today, with the level of air pollution rate at three times higher than the actual norm. The community group quotes data provided by the International Energy Agency (IEA) according to which Tbilisi is on the list of most polluted cities in the world, having the highest death rate caused by air pollution, a result
of the frequent and common use of old vehicles in the city and within the country as a whole. “Let’s see what our city looks like without air-pollution and noise! Tbilisi is not a city of cars, it’s our city,” stated the organizers of Car-Free day. The Car-Free day is to be held under the aegis of European Mobility Week, the Europe-wide awareness-raising campaign on sustainable urban mobility, the objective of which is to achieve a positive behavioural change towards smarter, cleaner and more intelligent urban mobility. Participation in citizen-led initiatives at the local level during the week of 16-22 September represents the highlight of the campaign. European Mobility Week is managed by the European Commission – Directorate-General for Mobility and Transport. GEORGIA TODAY will provide more details (comments from City Hall, details of road closures, if any, and timings) on this story online. www.georgiatoday.ge
BC Bank has acquired a 93.64 percent stake in JSC Bank Republic for GEL 315 million and selected assets and liabilities of JSC Progress Bank, creating the largest Georgian bank by both loans and deposits. TBC Bank Group PLC (TBC Bank) today announced that, together with its subsidiary, JSC TBC Bank, it has entered into an agreement with Societe Generale S.A. one of the leading universal banks in Georgia. “We believe that the acquisition of Bank Republic is a critical step in delivering on TBC Bank’s strategy and represents a major step forward in TBC Bank’s ambition to build the leading banking group in Georgia and the broader Caucasus region,” said Vakhtang Butskhrikidze, Chief Executive Officer of TBC Bank. “Bank Republic is an excellent strategic fit for TBC Bank given its focus on the mortgage and consumer lending segments, complemented by an attractive product offering for large multinationals operating in Georgia.” TBC Bank has already entered into preliminary negotiations to acquire the
Vakhtang Butskhrikidze, Chief Executive Officer of TBC Bank
Antoine Gabizon, Chief Executive Officer of Bank Republic
remaining 6.36 percent, currently owned by the European Bank for Reconstruction and Development (EBRD). The transaction is expected to be completed by the end of 2016. J.P. Morgan is acting as exclusive financial adviser to TBC Bank, and Baker & McKenzie LLP as international legal adviser throughout the acquisition process. “The TBC Bank management team has extensive integration experience and expertise and we will ensure the smooth integration of the two businesses while remaining committed to delivering the highest level of service to the customers of both institutions,” said Antoine Gabi-
zon, Chief Executive Officer of Bank Republic. “We are very much looking forward to welcoming Bank Republic employees into TBC Bank and helping us successfully operate and serve the clients of the largest bank in Georgia. We share similar ambitions and together we are excited by the opportunity to grow and develop the combined entity.” TBC Bank also announced that it has reached an agreement to acquire selected assets and liabilities of JSC Progress Bank, a small local Georgian bank. The acquisition consists of GEL 108 million of assets and GEL 108 million of liabilities.
SEPTEMBER 13 - 15, 2016
THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS
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.
Do Teachers Respond to Incentives? A Philanthropic Experiment in Sachkhere Reveals All BY ZURAB ABRAMISHVILI
hat can bring the brightest among Georgian university graduates to the country’s public schools? While money alone may not do the trick, it is difficult to see a solution that does not represent a radical departure from the current remuneration system which places teachers – who hold the keys to Georgia’s future as a nation – at the very bottom of the social ladder. Not only do teachers remain the lowest paid category of Georgian workers but the gap between the annual average wage in education and other sectors of the economy has been widening over time (see chart). Of course, money matters not only for the career choices of young university graduates. It also affects the incentives of those currently employed in the system, bringing them to appreciate (or not) their jobs, and make greater (or lesser) effort to master new skills and prepare for classes. And, if sprinkled indiscriminately at the system, money can also cause the worst teachers to delay retirement and put up a political fight for jobs they might hate and for which they have no qualifications. What we offer in this article is a glimpse into the impact of money on teachers’ incentives and performance, which can be obtained through a careful evaluation of a policy experiment conducted over several years in Sachkhere, a tiny municipality (38,000 people according to 2014 census) in northern Imereti.
THE EXPERIMENT DESCRIBED Sachkhere is the birthplace of Bidzina Ivanishvili, a well-known Georgian entrepreneur, politician and philanthropist who made his native village Chorvila a center of his charitable activities in
Source: National Statistics Office of Georgia
Sachkhere and Georgia. Ivanishvili is said to have been paying his former neighbors’ gas and electricity bills and ensuring that their homes have fridges and washing machines. More significantly for our purposes, in 2007-2011, Ivanishvili’s charitable foundation singled out Sachkhere’s public schools as a subject of its philanthropic intervention, topping up the salaries of more than 800 school personnel in all of Sachkhere’s 32 schools. Considering the dismal level of official salaries, the amounts provided were not trivial: 500 GEL/month for school principals, 400 for vice-principals, 300 for rank-and-file teachers, and 150 GEL for other (technical) staff. Using available data on the number of school personnel in the municipality, we estimate that over five years Ivanishvili’s investment totaled about 19 million GEL. The fact that the project targeted only one municipality (Sachkhere) and had no direct effect on any of the bordering districts, allows us to conduct a rigorous impact assessment of Ivanishvili’s intervention. We do so by comparing the educational achievements of school graduates in two very similar neighboring municipalities, one of which (Sachkhere) received the “money treatment” and the other (Chiatura) did not. As a proxy of educational achievement we used data on university enrollment rates – the ratio of school graduates enrolled in Georgian universities.
DOES MONEY REALLY MATTER? A visual inspection of the data (see chart) suggests that, as far as university enrollment rates are concerned, Sachkhere’s lagged behind Chiatura until 2007; it catches up by 2009 and overtakes it in 2010. (We ignore the 2008 data since this was an odd year in which almost all Georgian schools shifted to a 12-year format and most students did not sit university entrance exams). A proper difference-in-differences estimation shows that, over 4 years,
Ivanishvili’s intervention increased Sachkhere district’s schooling performance by about 10%. Importantly, this result is statistically significant at the 95% confidence level, suggesting that money does affect schools’ performance, and does so very quickly. One can, of course, question the validity of our results by claiming that other factors contributed to the relative improvement in Sachkhere’s schooling performance. For example, Sachkhere was the subject of many other interventions by Ivanishvili’s foundation, creating jobs and improving people’s livelihoods. It is quite possible that these interventions triggered a process of internal migration with many motivated people – skilled workers and entrepreneurs – moving or returning to Sachkhere from other parts of Georgia. And if a stronger population moved into Sachkhere as a result of Ivanishvili’s activity in the district, this could have positively affected university enrolments and other socioeconomic outcomes (particularly so if such “brain gain” was happening at the expense of Chiatura and other neighboring regions). Unfortunately, these interesting hypotheses cannot be tested given the absence of goof quality internal migration data. In any case, given that Ivanishvili’s general philanthropic activities in the region date back to early 2000s while improvements in university enrollment did not kick in until 2009, it does seem plausible that money spent on educators had had a tangible impact on school performance. HOW WELL WAS IVANISHVILI’S MONEY SPENT? 19 mln GEL is not a small amount of money considering the size of Sachkhere. While effective, Ivanishvili’s intervention – a near doubling of remuneration regardless of personal characteristics or performance – may be not the most efficient way to achieve improved learning outcomes and university enrollment. The question of efficiency is particularly important if we want to go beyond piloting to a full-blown national reform (according to our calculations, the cost of fully scaling up Sachkhere’s experiment amounts to about 370 million GEL per year, much more than the Georgian budget can carry at present). The first thing to note (see table) is that Sachkhere seems to have experienced a disproportionate increase in the number of technical personnel. Some of this increase may reflect opportunistic behavior and nepotism. Given the lack of monitoring and the fact that disbursements were not conditioned on the quality of performance, Ivanishvili’s intervention may have created perverse incentives for school personnel: to keep their jobs no matter what, and share the benefits with friends and relatives. A straightforward conclusion from these numbers and the informal interviews we conducted with Sachkhere’s
Sachkhere is a tiny municipality in Northern Imereti. Sitting on the historical route connecting Georgia’s East and West, Sachkhere has long lost it transport and transit significance. The region’s 38,000 inhabitants (based on the 2014 census) are mostly occupied in agriculture, sand-mining and various public sector jobs (including schools). One of Sachkhere’s most famous sons is Akaki Tsereteli, a revered poet and writer, and a major figure in Georgia’s fight for cultural revival and self-determination in the late 19th and early 20th century.
school teachers, is that money should be better targeted: • At schools that exhibit improved performance (to be rigorously monitored); • At particular teaching professions (sciences, etc.) that may be in short supply in order to create incentives for new teachers to enter the market; • At the best teachers in each profession to make sure that performance in the classroom and investment in own skills is properly rewarded (and lack of effort is punished!). It goes without saying that better targeting requires investment in administrative costs (to implement a rigorous monitoring and evaluation system) beyond what was envisaged by Mr. Ivanishvili’s experiment. The challenge, however, is to keep such expenses to the minimum. Finally, to affect the career choices of young Georgians, no reform should be
conceived as a short-lived experiment. Once adjusted, teachers’ compensation should be maintained at the newly established level through an appropriate indexation mechanism. This is the only way for the Georgian teaching profession to regain (and keep) its social recognition and status. Zurab (Zura) Abramishvili was born in Tbilisi but both his parents grew up in Sachkhere’s Merjevi village. In addition to statistical data, the study is based on informal interviews with school teachers conducted by Zura in Merjevi and Sairkhe villages. A senior researcher with ISET Policy Institute’s Social Policy Research Center, Zura graduated from the prestigious Komarovi Math School in Tbilisi. He holds an MA degree in Economics from ISET and is about to defend his PhD dissertation at the Center for Economic Research and Graduate Education in Prague.
Table: The number of school personnel in Sachkhere and Chiatura, average over 2007-2011
Population Schools Sachkhere 38,000 Chiatura 45,300
Principals Vice-Prin- Teachers cipals 32 81* 792 43 52* 840
Personnel 188* 112*
Source: Ministry of Education and Science of Georgia (* refers to approximations)
GEORGIA TODAY SEPTEMBER 13 - 15, 2016
Best Georgian Wine on Show at Prestigious Speciality & Fine Food Fair, London BY NINO GUGUNISHVILI
or the first time in its history, the UK’s leading showcase of fine food and drink this year featured Georgian wine brands Badagoni and Lagvinari at London Olympia. With more than 850 exhibitors, London’s Speciality and Fine Food Fair is known as “the place to discover what’s making the news and what’s about to. From the new producers to the more established specialty brands, you’re sure to find fresh ideas and fresh new products to enhance your business offering.” London based company Cenimex, founded by Berdia Qamarauli and his business partner Dennis Muriu in August 2015, is a British import-export venture, under the Georgian Wine Club brand name, specializing in Georgian wine import and promotion in the UK. With a concept of selling only the highest quality Georgian wines to the UK market, the company is currently working with several Georgian wine companies and is planning to add more Georgian wine brands to their portfolio in the near future, “thus guaranteeing an exeptional wine experience to UK customers,” said Qamarauli. Currently a member of British Georgian Chamber of Commerce (BGCC) and of the British Wine and Spirit Trade Association (WSTA), Georgian Wine Club supplies Georgian wines made by Lagvinari to the most prestigious London restaurants and hotels, including The Ritz, and famous wine shop Hedonism Wine in Mayfair. Badagoni and Lagvinari wines were twice served at London’s reception of financial sector executives at Aston Martin’s main showroom in Mayfair. This counts the first time that Georgian wine has been served at such a high level event. Cenimex was the only company at the Speciality and Fine Food fair this year, featuring Georgian Wine products on a specially designed stand - Taste of Georgia - with the Georgian Khachapuri (cheese pie) becoming an instant hit, prepared in one of the most popular Georgian restaurants ‘Little Georgia,’ based in London. “We were pleasantly surprised to see how extremely popular Georgian food and wine was amongst the visitors to the show, 50 to 60 percent of whom were already aware that Georgia has the oldest and richest wine traditions, and that Georgia is a cradle of wine,” Qamarauli said. Qamarauli sees participation in the Speciality and Fine Food Fair, the largest tradeshow with the involvement of the top businesses in the sector, as a huge step forward in terms of finding new partnerships. “A number of agreements were made throughout the three day event,” he said. “It is also very important to emphasize the support we have from the Georgian Embassy in the UK and namely Tamar Beruchashvili, the Ambassador, who attended the show, together with Gela Dumbadze, Georgia’s State Minister for Diaspora Issues. Founder-Director of the BGCC, Mako Abashidze, needs a very special mention, too, as she’s our long-time partner and friend and together we’re planning to organize a Georgian wine evening, a black tie event, in November this year,” Qamarauli said. “The
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Photo: Gela Dumbadze [left], Georgia’s State Minister for Diaspora issues Tamar Beruchashvili [center], Ambassador of Georgia to the United Kingdom, and Berdia Qamarauli [right], founder and owner of Georgian Wine Club at the Fair
Georgian National Wine agency and it’s head of marketing Irakli Cholobargia are aways very supportive too, and with their involvement and assistance we’re look-
ing forward to bringing more top quality Georgian wine brands to the UK, introducing the best flavors and tastes our country has to offer.”
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SEPTEMBER 13 - 15, 2016
Mozaika Holding: 8 Years in the Advertising Business account manager who is fully in charge of it from start to finish. Although our prices are not at all low, our clients do know that at Mozaika they are guaranteed to receive the best service and product available.
BY NINO GUGUNISHVILI
ounded in 2008 by two childhood friends and classmates, Salome Kobaladze and Anna Chodrishvili, Mozaika is one of the leading companies in today’s advertisement sector. Mozaika Holding is celebrating its eight-year anniversary this September. GEORGIA TODAY spoke with the founders, Anna and Salome, to discover more about their experience of working in the sphere, and the story of their success.
YOUR COMPANY HAS AN IMPRESSIVE PORTFOLIO OF ADVERTISING SERVICES (BRANDING, DESIGN, PUBLISHING AND EVENTS) WHICH NATURALLY MEANS A DYNAMIC, SOMEWHAT STRESSFUL WORKDAY. HOW DO YOU DEAL WITH THAT STRESS? Anna: At first there were only four of us and now we have almost 30 people working for the company. We were dealing with problems more emotionally when we started, and there is still a certain amount of stress involved. But we delegate more, which doesn’t mean we’re not aware of every step of the work done. If there’s a major decision to be made, we’re there.
HOW DID YOU START OUT ON THIS SUCCESSFUL VENTURE? Salome: As childhood friends, our decision to enter the advertising business with a new venture was built on a mutual trust. We share the same values, and see things from the same perspective. Although we may seem very different, our attitude towards work and our sense of responsibility is something we have in common. Ana: Alongside trust, professionally, we had both worked in advertising. I had extensive experience in sales, and in working with clients, which I believe is essential for this industry, while Salome was skilled in management matters. Salome: Starting your own business ultimately means you have to be responsible. You have to realize that it’s not a hobby, as it’s often seen. Being in charge of your own company is tremendously demanding, needing your 24/7 full involvement and attention. We started with one credit card and a 1000 GEL loan, with which we paid our first office rent. In reality, we started our business from almost zero. We took a risk, which I think is something crucial when doing business. Of course, you have to analyze and try to foresee, but at the same time, it’s essential to take a risk.
HOW WOULD YOU DESCRIBE YOUR MANAGEMENT STYLE? Salome: I don’t think we’re tough bosses: our company is very friendly, all of us are friends, but on the other hand, when it concerns work, friendship is put aside. Anna: We’re often told that it feels very comfortable to work in Mozaika. We aim to be loyal and less bureaucratic, which is perhaps made easier by the fact that it’s still not a very big company in terms of staff. But we’re planning to expand our business in the near future and add more people to it accordingly.
WHAT IS IT THAT DISTINGUISHES MOZAIKA FROM OTHERS IN THE SECTOR? Salome: Every year we add something new, we try to introduce new services to our clients. By the end of the year we’ll have more services to offer. We’re working on it now. Anna: Last year we started event management, which turned out to be an extremely successful addition to our company’s portfolio.
TELL US ABOUT THE PROJECTS YOU’VE WORKED ON AND ANY CHANGES YOU WOULD MAKE HAD YOU THE CHANCE TO DO IT OVER AGAIN Anna: When we started out there were typical instances of incorrect time management and work overload, especially during the New Year period, which generally is very intense for advertising. Often we worked 24 hours a day without even leaving the office in order to meet our clients’ deadlines. But by the second year we were better prepared, we knew what to expect, and used additional human resources more wisely. Of our most successful projects, I’d highlight our recent four day teambuilding event that for the first time in our company’s history was held outside Georgia, in Greece. The experience of managing an event outside our country was quite new for us.
WHAT IS YOUR ADVICE TO SOMEONE PLANNING A STARTUP? Salome: If you want your business to be successful, you should be totally engaged in it, no one is going to do anything for you. Running your business and doing something simultaneously in between is unrealistic and you should be responsible for each and every step you take. Risk is a must, and even if you fail at first, you should try nevertheless. Anna: Plus, having at least some knowledge if not comprehensive one of the field you wish to start your business in, is, I think, imperative. You should also choose your business partner wisely, to avoid possible conflicts and complications. Salome: You and your partner should have the same vision of things, the same attitude towards the business you plan to do together.
WHAT DO YOU THINK THE GEORGIAN ADVERTISING INDUSTRY NEEDS FOR ITS BETTERMENT? Salome: First and foremost is the quality of product and service. There are many advertising companies in Tbilisi and almost all of them have similar services to offer, but the most important factor here is quality. Anna: What we often see is a lack of quality, dictated by low prices from certain companies. This usually results in a low quality final product. For us, quality is vital. Each project we handle and execute is supervised by an assigned
HOW DO YOU SEE YOURSELF IN 10-20 YEARS?
Salome Kobaladze and Anna Chodrishvili, founders and owners of Mozaika Holding
Salome: I see myself as an owner of a big, successful company, with more services and directions added. Anna: It may be a slightly different field, too. I would say we can see ourselves in every sphere that has service in it!
GEORGIA TODAY SEPTEMBER 13 - 15, 2016
Turning an 8000 Year Wine Tradition into Success in Georgia
BY MAIA CHITAIA
ew opportunities are opening up for Georgian winemakers and wine lovers through the EU funded program ‘East Invest 2.’ The regional investment and trade facilitation program, East Invest 2, is working to improve the SME sector across the countries of the Eastern Partnership. East Invest 2, through one of its actions, has set out to revitalize the Georgian wine industry by transferring knowledge from Bulgaria in the areas of wine marketing and standardization. The project is twinning the Georgian Wine Association (GWA), an independent non-governmental organization, with the Bulgarian Chamber of Commerce and Industry (BCCI). Through the project, an online platform is being developed that will promote Georgian wine producers and act as a one-stop-shop for key information and guidance to the wine industry, helping to spur growth and exports to the EU market. The BCCI will be bringing its experience in supporting the Bulgarian wine industry. This story shines light on one woman entrepreneur who is benefitting from the project. Baia Abuladze (22) is a young Georgian woman from the region of Imereti, western Georgia, who produces wine under the brand name ‘Baias Wine’. Traditionally, wine-making is a male dominated business and Baia is one of only a few women winemakers in Georgia. “Georgia has 8,000 years of history in wine making. With more than 500 grapevine varieties, Georgia was always known for its unique tradition in wine-making,” Baia explained. “My family also has a long tradition in vinery and my passion towards wine-making takes its roots from my childhood, when my grandfather told me a story of how, centuries ago, Georgian crusaders carried grapes in their armor, so if they fell in battle, a grapevine would grow. I decided to contribute to this rich Georgian wine-making tradition.” Baia is currently producing 5,000 bottles of wine per year under her own name. “Gender barriers are no longer a problem for me,” says Baia smiling. “Now I face another obstacle – the lack of knowledge of how to acquire quality standards and market my wine not only in Georgia but also to European coun-
tries. One of the biggest challenges is a lack of up-to-date information about innovation in agriculture, standards and marketing.” With the signing of the Association Agreement with the European Union in June 2014, new opportunities for Georgian SMEs opened as the DCFTA (Deep and Comprehensive Free Trade Agreement) brought benefits and duty-free trade with the EU. In light of these new prospects, the Georgian Wine Association conducted an assessment of the wine and grape sector and found that Georgian wine producers, like Baia, and people involved in the wine tourism sector lack the knowledge and support for innovative product development and access to finance, and have few opportunities to exchange practices with their European counterparts. There is also no professional, business and information platform about wine and grape products. This is why East Invest 2 is ‘Twinning’ the Bulgarian Chamber of Commerce and Industry and the Georgian Wine Association to implement: ‘The Competence Center for Wine, Wine Marketing and Grape Products.’ The new online platform being developed, and, in addition to providing key information and guidance on wine producers, it will also promote local vineyards. 100 companies from the Kakheti and Kartli regions have been selected and interviewed and will be featured on the site with information on their production, pricing and availability for export. In order to make the platform more sustainable, the Georgian Wine Association plans to link the site with the popular tourism portal http://georgianwine.travel/. This will generate more traffic and offer new cooperation and partnership opportunities between the wine, grape and wine tourism fields. “Small and medium entrepreneurs in Georgia are facing serious challenges in understanding the DCFTA requirements,” said Baia. “We expect that once the platform is launched, which is expected in December, all producers will be able to access the information packages and, through better knowledge of safe and quality wine production, more producers will export their products to Europe. I hope that Baia’s wine will be brought to a wider international consumer network thanks to the project and that Georgia can turn its 800 year wine tradition into a success.”
Georgia’s Black Sea Port Batumi among Top 10 Autumn Holiday Destinations
BY TAMAR SVANIDZE
eorgia’s Black Sea region Adjara continues to gain popularity amongst foreign visitors for its sea and mountainous holiday des-
tinations. Forbes Russia named the region’s capital Batumi among the 10 most popular autumn holiday destinations alongside other cities in Italy, Greece and Spain. Forbes names the city’s beaches, historical core and traditional local cuisine as highlights of any visit. The article also noted that Batumi has a wide variety of festivals and music events planned for autumn. The latest statistics published by the Tourism and Resorts Department of Adjara said the number of tourists visiting the region from January-July had a year-on-year increase of 73.35 percent, or 21,500 people. The majority of visitors are from Russia, Poland, Ukraine and Israel according to information provided by the region’s tourist information centers. According the Adjara Tourism Department, most visitors are interested in the mountainous area and ecotourism.
SEPTEMBER 13 - 15, 2016
WHERE to Go, Stay, Eat, Drink, Buy in September Photo: Prime Minister Giorgi Kvirikashvili, Dimitry Kumsishvili, Minister of Economy and Sustainable Development, and Archil Bukia, Business House Project Manager
Business House: A Ground-breaking Model of Public-Private Partnership BY NINO GUGUNISHVILI
s part of a four-stage planned reform, the Georgian Government announced the New Business House Project, introducing a groundbreaking model of public-private partnership. Business House will be a space where individuals and private entities will have a chance to receive all services, previously spread throughout various ministries and state organizations, in one place and on one electronic platform. These services will include management of state property and privatization, issuance of natural resource licenses and state programs aimed at fostering the agriculture sector, services provided by the Entrepreneurship Development Agency within the frames of program ‘Produce in Georgia,’ as well as services provided by the Partnership Fund. “Providing 600 services offered by the state overall, this is a revolutionary pro-
ject that will significantly change the landscape of state-private partnership, bringing it to another level,” Giorgi Kvirikashvili, Prime Minsiter of Georgia, said while introducing the project. Business House will offer a better quality service faster, thus also limiting the costs of the service itself. Introducing a customer friendly concept of “everything is available everywhere,” Business House will provide every service that may be needed by a company, with a possibility to book requested services in advance and receive them later on the spot. “A company submitting information to Business House will no longer be required to resubmit it for any other services that might be needed in the future, thus bringing maximum transparency to the process and limiting corruption,” the PM said. In a long-term perspective the new Business House project is clearly seen as giant step towards stimulating the business climate in the country with a space that will bring new interaction between the state and private sectors.
ancy a trip up to the Svaneti Towers but want to know more? Tempted to try some extreme sports but don’t have the contacts? Hungry for Asian food but not sure where to go? Interested to learn how ChaCha is made and just what a Qvevri is? WHERE.ge has it all. WHERE is the latest and best tourist guide to Georgia, brought to you by the Georgia Today Group in partnership with the Georgian National Tourism Administration, now in its 3rd edition. Divided into five packed sections introduced by our special guests with their own personal recommendations, Where.ge is a must for any discerning tourist visiting Georgia. Introducing Where to GO this month is Dato Turashvili, renowned Georgian writer, taking you from the heights of Tusheti to the caves of Vardzia. Our Svaneti correspondent and guest house owner, Tony Hanmer then reveals the magical history of the region’s famed Towers, while our Editor, Katie Davies, takes you underground to explore the many caves and cave cities the country
with our feature on guest houses to be found in mountainous Tusheti. And check out the best camping spots on page 44. On to the Where to EAT section, and General Manager Of Crowne Plaza Borjomi, Vanja Desmonde, shares with us where she’d take guests with an appetite for something French, Asian or Italian, which we then complement with a full listing of Asian restaurants. Find out the Top 5 Georgian dishes Your Mother Wouldn’t Make on page 66, then head over to the Where to DRINK section, introduced by Tamuna Ghvaberidze, CoFounder of the Popiashvili Gvaberidze Window Project, where Tim Ogden takes you on a tour of the best Beer Bars in Tbilisi. Tako Johnson, Executive Director of Prospero’s Books, introduces Where to BUY, after which you can find out more about Georgia’s beloved Blue Tablecloth- a must-buy souvenir for every visitor. has to offer. Autumn is the wine harvest season, and what better way to celebrate than a luxurious Wine Spa treatment? Find out more on page 28. In the Where to STAY section, Teona Baghdavadze, Founder at Key Communications, shares her choice of hotels around the country and we extend that
Interested? Head on down to the souvenir shops in the Old Town- on Leselidze Street and in the Abanotubani and Sharden areas for your copy of WHERE. Otherwise, grab your free copy of WHERE at one of the hotels or café-bars in central Tbilisi. Feel free to call WHERE HQ anytime to order your copy of WHERE. TEL +995 032 2295919.
GEORGIA TODAY SEPTEMBER 13 - 15, 2016
Impresico: Challenging the Way We Do Job Interviews BY NINO GUGUNISHVILI
Candidates interviewed through the Impresico platform are given questions to be answered in a specific time frame. When a candidate has finished the interview, the interviewers access the answers and give them scores
nterviewing, and being interviewed, can be a time-consuming process. Impresico, an online interviewing platform by Omicronsoft, aims to facilitate the process of candidate selection and candidate short listing by offering a mechanism that saves companies time and allows them to work more efficiently in the process of recruitment. GEORGIA TODAY met Irakli Svanidze, Head of Omicronsoft, Former Graduate of ESM Georgia, to find out more.
TELL US A LITTLE ABOUT THE COMPANY BEGINNINGS Omicronsoft was founded in 2009 on a home computer as a web development service that slowly gained more and more clients and saw us hiring more web developers and expanding our office. 2012 was our breakthrough year when we managed to reach out to the international market, with the help of our British partners. We realized several high profile projects that gave us a possibility to export all of our resources outside Georgia. As the company started to grow, it became clear we needed further investment to help us offer a top quality product that fully answered the needs and requirements of a hugely competitive international market. With the investment of one of the leading Georgian companies, CBG (Caucasus Business Group), we got additional funds. Today, CBG is our full partner. This gave us a chance to develop our company further, and realize projects in the US and Europe. At the same time, we decided to make our own product- an online auction web portal named ‘Centorio’ and in January 2016 we introduced online interviewing platform ‘Impresico.’
HOW DID THE IDEA FOR IMPRESICO COME ABOUT? The idea of its creation was rather spontaneous, based on our own experience, coming from the problems we encountered while recruiting staff for our own company. The uniqueness of this platform primarily lies in the fact that it’s not a faceto-face type of interviewing experience. There is no need for an interviewer and applicant to be in the same room simultaneously: it’s enough for an interviewer to create and upload an interview on a cloud platform, giving a certain deadline to a potential candidate, so that the applicant can be interviewed online (with a webcam or smartphone), in any location in the world. The process then goes to an assessment stage by the company that posted the actual vacancy. Impresico facilitated the process of candidate selection and candidate short-listing for us. With this online interviewing platform, we’ve created a mechanism that enabled us to save time and work more efficiently in the process of recruitment. We tested the product within our own company first and were stunned with the results. With Impresico it became much easier to recruit people, and the process of selection also became less time-consuming.
HOW DOES IT WORK? Candidates interviewed through our platform are given a certain number of questions to be answered in a specific given time frame, after which, when a candidate has finished the interview, the interviewers (either one or several) access the answers and give them scores. The system then automat-
ically calculates the cumulative score for each candidate.
WHY DO YOU THINK IT IS NEEDED AND WHY IS IT INNOVATIVE? WHAT UNIQUE FEATURES DOES IT HAVE? Impresico is interesting for companies which have regional offices. For example, one of our top clients in Great Britain is an old auction house, Spink and Sons, founded in the 17th century, with offices in Europe, Singapore and the US, and a centralized HR department in their head office. With Impresico they now have the possibility to considerably save their time during the recruitment process since the platform makes it possible to interview potential candidates online and only conduct a further face-to-face interview with the successful applicants afterwards.
YOUR SLOGAN FOR IMPRESICO IS A “BETTER WAY TO HIRE.” TELL US MORE We recently updated our product with a keyword matching system. When a vacancy is created it also has special keywords, more frequently used for technical vacancies such as IT Manager’s Assistant, first line, or second line technical assistant etc. When an applicant’s CV is uploaded, it’s scanned for the keyword match. Technically, a company registers on our platform, acquiring one of the packages we offer, and can design the platform’s control panel according to their brand. The platform has its own dashboard where you can see a snapshot of the ongoing recruiting process. Every vacancy has a public URL or an embedded code that is incorporated both on social media and on job-listing sites.
YOU’VE BEEN REGISTERED AS A CONTESTANT FOR THE TBC BUSINESS AWARDS. WHAT DO YOU THINK ARE THE BENEFITS OF PARTICIPATING IN SUCH PROJECTS AND WHAT DO YOU PLAN TO DO IF YOU WIN? I think this is a very important initiative and the team that’s organizing the TBC Business Awards
is a top professional one. Our decision to participate came spontaneously and we were pleasantly surprised with the exposure it gave our company. We’re now in the process of signing a deal with one of the biggest companies in Georgia and all of it happened because Impresico is taking part in the Awards.
ANY LAST COMMENTS? I’d like to say a special thanks to all the people
who worked on the Impresico project. Their dedication, passion and enthusiasm made it all possible. Their work fosters financial investments to our country, since Impresico is a totally exportable service. Impresico is gaining popularity fast, and we’re planning to expand it by creating a larger HR platform for the future. I hope that with the same team we’ll develop our products, services and company further.
SEPTEMBER 13 - 15, 2016
Powering Afghanistan: the Controversial TUTAP BY DIMITRI DOLABERIDZE
fghanistan has been rocked by disputes over power project TUTAP- electricity power cables planned to be laid from Turkmenistan through Uzbekistan, Tajikistan and Afghanistan to Pakistan. In terms of power energy and international business, this project is another complement of CASA-1000, as only through it does a source of energy come from Turkmenistan, with a number of large gas turbine power plants under construction there. By 2020, 14 such power plants are expected to be in operation, some of which are to meet domestic demands, and some, such as the power station ‘Watan,’ in Lebap province, with an electricity capacity of 254 MW, to transmit electricity to Afghanistan. The Afghan LEP area will pass approximately the same route as the CASA-1000 power transmission line. In Afghanistan, this issue took ethnic overtones when the idea to change the planned TUTAP route was raised by a group of MPs of the lower house representing Hazara. The Hazaras are a Persian-speaking people who mainly live in central Afghanistan, Hazara Town, in Balochistan. At their request, power lines would pass not through the Salang Pass, but through the province of Bamiyan, which meant a deviation to the west of the route proposed by the government. When this proposal was not supported by the President of Afghanistan, conflict broke out. From a purely technical point of view, the President of Afghanistan, Ashraf Ghani, is right. Changing the route of power transmission line would require additional costs for research and construction for the high-altitude conditions. This would entail an overall increase in cost of the project and the term of its implementation. Building power lines in mountainous areas is difficult and takes time- in some cases, electric poles are set into place by helicopter. However, it is possible to understand the position of the Hazara MPs, as setting up a major transmission line through Bamiyan province would give a powerful boost to the local economy and significantly raise the well-being of residents. Failure to take up this suggestion was quickly lauded as an expression of a policy of suppression of Afghan national minorities: what was a purely technical and economic issue went far beyond the theme of Afghanistan's energy sector and quickly became a
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pretext to setting old tensions. Currently, the parties are more or less agreed. The leaders of the Hazara have substantially alleviated their rhetoric. The threat of large-scale riots has apparently passed. Ashraf Ghani promised Hazara that they would get spin-off power lines to give the province of Bamiyan 300 MW instead of 30 MW as per the initial draft. This is a very serious concession. This capacity allows, for example, development in the province of a mining industry. Nevertheless, the question remains as to whether further such conflicts may break out, for example, over the distribution of gas, which is to arrive in Afghanistan through the TAPI gas pipeline. In economic terms, many provinces of Afghanistan have the urgent need for economic development and, as a result, strengthening of the economy basis energy. In the political aspect of the dispute over TUTAP, it showed how fragile Afghan national unity is, and how easy it is to ignite inter-ethnic tensions and conflicts. What could be done in this situation? From my point of view, the main means for preventing acute international conflicts on an economic basis is a long-term plan for economic development in Afghanistan. For the purpose of economic development of the country, electricity should run through all provinces of the country, in all districts, in every village. In other countries, such as Russia, the development of the electric power industry has developed and continues to develop on the basis of long-term plans or strategies, set out 20-30 years ahead, which take into account future needs for sources of energy and plan for the con-
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Setting up a major transmission line through Bamiyan province would give a powerful boost to the local economy and significantly raise the wellbeing of residents
struction of power plants and power lines. In Afghanistan, it is also necessary to highlight the fact that the country does not have enough of its own energy sources, and that network construction is difficult due to mountainous terrain. Developers must first plan the most rational routes for the main transmission lines, taking into account all the difficulties of the terrain, from which point it is rational to place the substation and dilute to the local distribution network
in each locality. Electricity in the early stages can be imported, but then it is necessary to strengthen and build the country’s own sources, particularly hydroelectric power stations. If such a plan was drawn up, in this case the chance of conflict would be much lower, as the representatives of each province would know how much power they are entitled to and when the power line is to be installed in a particular area. Also, the welfare of each individual province depends on the implementation of the entire plan as a whole. The plan of the electrification of Afghanistan requires, at this stage, coordination with neighboring countries, at the very least with Turkmenistan, Uzbekistan and Tajikistan. There are other countries interested, such as China, but Chinese companies in Afghanistan state that there is clearly not enough power for large mining projects. At the same time, Russia has an interest as an elecStation Asadabad Gerishk Istalif Kajaki Mahipar Naghlu Pol-e Khomri-1 Sarobi
Town Kunar Helmand Kabul Helmand Kabul Kabul Baghlan Kabul
trical equipment or building materials supplier and as a possible investor in the construction of large power plants in Afghanistan. In my opinion, it would be better to develop a future Afghanistan Electrification Plan in the framework of the SCO. The Shanghai Cooperation Organization (SCO), or Shanghai Pact is a Eurasian political, economic, and military organization which was founded in 2001 in Shanghai by the leaders of the People's Republic of China, Kazakhstan, Kyrgyz Republic, Russian Federation, Tajikistan, Uzbekistan, India and Pakistan. Its aim is to conduct scientific and research works, prepare investment plans, and establish coordination on security matters, since power lines must be protected from possible attacks by militants. Such inclusion would better enable Afghanistan, with international cooperation, to deal with arising issues much faster and more easily. Capacity (MW) 0.7 2.4 0.2 33 66 100 4.8 22
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Statistics: "Hydroelectric Power Plants in Afghanistan." Source: Power Plants around The World, 12 April 2014
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GEORGIA TODAY SEPTEMBER 13 - 15, 2016
Georgia & Its Importance for the US BY MAIA KAY KVARTSKHAVA, VOICE OF AMERICA GEORGIAN SERVICE
e spoke with Dr. Ariel Cohen, non-resident Senior Fellow, Atlantic Council, on current US- GeorgiaRussia relations and his prediction for the up-coming parliamentary elections.
IN A HUFFINGTON POST ARTICLE YOU NAMED GEORGIA A “KEY ALLY” FOR THE US. WHY DO YOU THINK GEORGIA IS SO IMPORTANT TO THE US? Look, what’s going on: we just had a summit between President Putin, the presidents of Azerbaijan and Iran, Aliyev and Rouhani. Clearly, Russia is trying to put its stamp once again on the South Caucasus and on the Caspian area. Georgia occupies a strategic position East to West but also North to South. Without Georgian cooperation, Russia cannot resupply its main satellite and its main agent in the South Caucasus – Armenia. At the same time, we have Iran breaking out of sanctions which President Obama lifted. And you have vast instability in Turkey. So all that makes the countries of the South Caucasus, especially Georgia, very important; as the most pro-western, most democratic, and most reformed country in comparison to its neighbors. It’s also a country with a clear agenda to becoming a part of the Euro-Atlantic space, despite what Russia wants, despite what Iran wants and some may say, despite
what Turkey wants. So Georgia, historically and geopolitically is the most important piece. Azerbaijan is rich in hydrocarbons, Armenia is Armenia, but Georgia is very important and my concern after being in Washington for almost 25 years, is that the new generation of politicians, of congressional staff, of young diplomats, also one of the presidential candidates, may not fully understand what Georgia is and how important it is.
YOU ALSO SAID THAT THE US SHOULD EXPAND ITS SUPPORT TO GEORGIA. HOW CAN WASHINGTON INFLUENCE GEORGIA’S EUROATLANTIC INTEGRATION? First of all, the US is still, despite all the problems and stumbling blocks of the last 8 years, the most important country in the NATO alliance, it is the most important country in the Euro-Atlantic sphere; I would say the most important country in the world. And what the US thinks or does goes a long way. Therefore, the US, in my opinion, has to work with our European allies- it cannot run the alliance singlehandedly. For example, Mr. Trump talks about the importance of burden sharing. That’s a legitimate concern. My question is how he articulates it and what is happening when he articulates it. But that aside, the US should put its foot down, so to speak, and maintain a clear idea of how Georgia is integrated in NATO and the EU. We have a major step now with the visa free travel, so with the US committed, the Europeans will most probably get on board. And I would add another thing: the
Dr. Ariel Cohen, non-resident Senior Fellow, Atlantic Council
Europeans are looking for ways to signal to Russia their displeasure about its behavior, about Russian foreign and domestic policies, including Ukraine. One way to signal this displeasure is to work more closely with Georgia, but also with other countries: Ukraine, Kazakhstan, Uzbekistan, especially after the transition there, to remain involved in the former Soviet space – a very important strategic priority in my view.
WHAT ABOUT RUSSIA? A BROKEN ECONOMY AND INTERNAL PROBLEMS HAVE LITTLE EFFECT AND PRESIDENT PUTIN COMPENSATES THEM
WITH EVEN MORE FOREIGN INFLUENCE AND EXPANSION. HOW SERIOUS MIGHT THIS THREAT BE TO GEORGIA? For now I do not see immediate signs that Russia is about to invade. What is happening is more integration of Abkhazia and South Ossetia into the Russian space. I think it is very difficult to start rolling it back right now, but I do not lose hope. I hope one day the Abkhaz, and possibly the Ossetians, will understand that Russia is not a good partner for them. But it also takes Georgian good will, Georgian commitment to have good relations, not to blame, not to punish, but to keep the door open for Abkhazia to come back to Georgia.
WHAT ABOUT USING SOFT POWER? Georgia is not a rich country. Soft power costs money, though military power, hard power costs even more money. This is where a soft power may be a good solution. But I am not of the school that existed in Washington in the last 8 years, including Secretary Clinton, which says that the solution to Georgian security problems is more democracy. Democracy is very important and I think Georgia should be proud that both elections of 2012 and the elections now seem to show that Georgia has made great achievements. Outside the Baltic States, Georgia has the strongest democracy. Maybe Ukraine is in the same ballpark, but Ukraine had Maidan, Ukraine had the rapacious, very greedy presidency of Yanukovych and his family. Georgia doesn’t have that. So Georgia has a lot to be proud of in terms of democracy. But both military power and soft power are indispensible elements of independence for Georgia. And I think this government is doing a pretty good job. In my view, the previous government did a descent job with the exception of the catastrophe of 2008. This
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SPEAKING OF THE UPCOMING ELECTIONS, HOW WOULD YOU ACCESS THE PRE-ELECTION SITUATION IN GEORGIA? It’s a big challenge. Georgia, despite a short period of democracy in 1920s and since independence, is still a young democracy. It’s an old country, but it’s a young democracy. I think Georgia is doing a pretty good job and the main thing in my view is to have what we call in America an “even playing field:” everybody gets a chance; everybody gets access to the media and that the budgets are reasonably transparent. The the more transparent and more controlled by public institutions the cash is, the better off everybody is. Also as few dirty tricks as possible, and no violence. Violence is one thing that turns off Western support, American and European. As long as Georgia walks in that corridor, it gets good grades. It got good grades in 2012 and it will get them now, too. I think it’s an election with a very high level of uncertainty. I also follow politics in Israel. Israel has also many parties, it is easy to get into politics and set up a new party. Therefore, it’s very difficult to predict what the outcome is going to be. I don’t know what the outcome will be in Georgia. And also, in every election campaigns there are always surprises: the surprises that people plan and there are surprises that people don’t. And these surprises always shift the outcomes. Looking at Georgia, I think it will come down to a very serious horse-trading in the coalition in the parliament: who will get the majority if the two main parties do not get the absolute majority. Again: it has to be open, clean and transparent for the next government to have legitimacy.
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SEPTEMBER 13 - 15, 2016
TV Show Exposes Dead Fish at “Patriarchy” Lakes, Government responds BY VAZHA TAVBERIDZE
f online presence is anything to go by while judging a TV program’s popularity and quality, last week’s episode of the environment-themed outdoor ‘Rati’s Blog’ program of the Iberia TV channel was a resounding success – the horror-inducing footage of massive amounts of dead fish floating in the so-called “Patriarchy Lakes” (allegedly owned by Georgian Orthodox Church) was viewed by more than 200,000 people online. The three lakes and the park surrounding them have been known as a popular fishing / camping spot for Tbilisi and Rustavi dwellers alike. As if the fact that around a million fish had perished because of rampant pollution in the lakes (sewage is actually poured into two out of the three lakes) was not disastrous enough, the situation is further aggravated by the fact that the local popu-
lation is taking some of those contaminated fish home as a means to a free meal. Yet another problem is the lush grassland that is steadily turning some of the lake water into swamp. Water pollution, on the other hand, is “complimented” by a large amount of trash strewn across the area, a gift from previous campers fortunate enough to find a reasonably clean spot. Despite what the name suggests, however, the lakes are the property of the government, specifically, Tbilisi City hall. “We implore the government, the sanitation services, the city hall – whoever is responsible – to address this issue, as this might turn into an even bigger problem if not solved soon enough – the risks of epidemic outbursts are here for all to see,” said Tengo Beniashvili, President of Georgia’s Sport and Fishing Federation and one of the first to sound alarm bells when he witnessed what was taking place at the lakes. “When we arrived to shoot the program, the pungent stench of rotting fish was unbearable,” says Rati Dolidze, the host of Rati’s Blog. “I used to visit these lakes in my early childhood and I remember how rich it was, with all kinds of fish. The territory was very clean and it was a pure joy being here. But what we’ve got now is this catastrophic picture. I was really emotional, it was a gruesome sight for me, but I think things like this need to be shown to people.” And the decision proved right as, in what was nothing less of a commendable display of responsiveness, the government deployed task units to clean out the dead fish and the surrounding waste just two days after the show was aired. Though the “Patriarchy” lakes still need much improvement before reaching a semblance of what they used to be, this is a positive development and we can only hope to see it built on further.
"When we arrived to shoot the program, the pungent stench of rotting fish was unbearable," says Rati Dolidze, the host of Rati’s Blog