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facebook.com/ georgiatoday

Issue no: 982/96

• SEPTEMBER 19 - 21, 2017

• PUBLISHED TWICE WEEKLY

FOCUS ON THE WORLD

World Bank-Georgia Partnership turns 25. Read our exclusive interview with Regional VP, Cyril Muller and our coverage of the Forum

BANK IN GEORGIA

PAGE 5, 7

PRICE: GEL 2.50

In this week’s issue... National Statistics Office Says Georgian Population Decreased NEWS PAGE 2

Quick & Dirty Decisions Are Not Always Smart! ISET PAGE 4

Tourism Market Watch GALT & TAGGART PAGE 8

Georgia Deserves Better: A Roadmap for Going Forward BUSINESS PAGE 11

Ambassador Beruchashvili on Expanding UK-Georgia Cooperation BUSINESS PAGE 12

Minister of Economy Visits China BY NINO GUGUNISHVILI

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iorgi Gakharia, Minister of Economy and Sustainable Development of Georgia, is currently visiting China, where on September 17 a meeting with the Fujian Province Governor, Yu Weiguo was held in order to discuss the process of deepening economic relations between China and Georgia. As the Ministry of Economy of Georgia reports, the parties also talked about 18 large trade and investment expositions to be held in Xiamen from September 18-22. Continued on page 13

Keeping the Neighborly Train Rolling: Yerevan POLITICS PAGE 14

San Diego State University Georgia Hosts Convocation Ceremony 2017 in Tbilisi SOCIETY PAGE 15 Prepared for Georgia Today Business by

Markets Asof15ͲSepͲ2017

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112.62(YTM3.11%)

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112.00(YTM4.92%)

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103.63(YTM5.27%)

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55,62

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1320,18

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3,3581

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7215,47

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1102,16

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2500,23

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0,7358

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2053,81

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MSCIEMEE MSCIEM


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NEWS

GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

Bicycle Lane Laid Georgia to Assume on Pekini Street OGP Chairmanship BY THEA MORRISON

A Photo source: Tbilisi City Hall

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ithin the Pekini Street rehabilitation project in the Saburtalo district of Tbilisi, a one kilometer, 2.80 meterwide bicycle line has been laid. City Hall reports that two-way movement will be possible on the new bicycle lane and Tbilisi City Hall Transport Service will install signs. Tbilisi Mayor, Davit Narmania, visited the site to see the works. He said that no such modern and comfortable bicycle lane had been made in Tbilisi before. Narmania added that in laying the lane, the construction works are complete on Pekini Street. “The sidewalk has been expanded and maximum comfort has been created for

both cyclists and pedestrians,” the mayor stated. The rehabilitation of one of the busiest streets in Saburtalo was launched this summer. The first stage of the project involved covering the complete underground communications system restoration, followed by the reparation of the sidewalks. Georgian Water and Power Company renovated the water supply systems in the area, together with experts from the German Company RRT Ingenieurburo Weidt. Moreover, new EU-standard blocking and regulating switches were installed and the 400-meter wastewater drainage system was renovated. Mayor Narmania says Pekini Street will be officially opened on September 21.

Georgian delegation, led by the Prime Minister Giorgi Kvirikashvili, left for New York on Sunday in order to participate in the 72nd Session of the United Nations General Assembly (UNGA) and, within the event, to assume the chairmanship of the Open Government Partnership (OGP). For the first time, Georgia has become the chair of the OGP for a year following on from France. “It is the first instance in OGP's history that Georgia chairs this organization which brings together initiatives from 75 countries,” the Prime Minister’s Press Office reported. Kvirikashvili is scheduled to deliver a speech at the 72nd Session. The Georgian delegation will stay in New York from September 18-22 and hold various high-rank meetings. The Open Government Partnership is a multilateral initiative that aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance. To become a member of the OGP, participating countries must endorse a high-

level Open Government Declaration, deliver a country action plan developed with public consultation, and commit to independent reporting on their progress going forward. The Open Government Partnership was launched on September 20, 2011, when the eight founding governments, Brazil, Indonesia, Mexico, Norway, the Philippines, South Africa, the United Kingdom and the United States, endorsed the Open Government Declaration, and announced their country action plans. Since 2011, the OGP has welcomed the commitment of 67 additional govern-

ments to join the Partnership. In total, 75 OGP participating countries and 15 subnational governments have made over 2,500 commitments to make their governments more open and accountable. UNGA 72 will address the theme, ‘Focusing on People: striving for peace and a decent life for all on a sustainable planet.’ A number of events will take place in parallel with the opening of the 72nd session of the UNGA, including Global Goals Week 2017 and Climate Week NYC 2017.

National Statistics Georgia Denounces Opening of Office Says Georgian De Facto Abkhazian Chamber Population Decreased of Commerce in Berlin BY THEA MORRISON

T Photo source: Shutterlock.inc

BY THEA MORRISON

T

he National Statistics Office of Georgia (Geostat) has released summary vital Georgian population statistics for January-July 2017, which show that the Georgian population has decreased. The Geostat data shows that at present there are 3,718,200 persons in Georgia. Specialists believe that the main reason for the reduction of the population is an increase in mortality, decrease in birth rate and migration abroad. The data of January-July 2017 shows that the mortality rate exceeded birth rate by 1.6%. The highest percentage of deaths is seen in the mountainous

regions of Georgia. However, Geostat says that birth rate increased in a few regions of Georgia, namely in Tbilisi, Kvemo Kartli and Adjara. During the first six months of the current year, 9,435 children were born in Tbilisi, 2,714 children in Adjara and 2,681 children in Kvemo Kartli. In all three regions, the birth rate significantly exceeded the death toll. The lowest birth rate was observed in the Racha-Lechkhum, Kvemo Svaneti region – 114. The highest death rate was observed in Tbilisi and the lowest in RachaLechkhum, Kvemo Svaneti. In total, during the first six months of 2017, 25,543 births, 25,954 deaths, 10,680 marriages and 5,031 divorces were observed throughout the country.

he Georgian Chamber of Commerce and Industry has responded to the news that a “Chamber of Commerce” of de-facto Abkhazia had been opened in Berlin, Germany, stating that all steps made by the Abkhazian Chamber on the occupied territories are illegitimate. The agency released a statement and stressed that throughout the territory of Georgia, within the boundaries recognized by the international community and organizations and confirmed by the Georgian Constitution, only the Chamber of Commerce and Industry of Georgia operates in accordance with the law. “Under the law, Abkhazia’s Chamber of Commerce belongs to us, the office of which is located in Tbilisi until Georgia’s jurisdiction is restored in the breakaway region,” the statement reads. “All steps made by the non-recognized agency on the occupied territory are illegitimate,” the agency added. The agency noted that German partners recognize the Georgian Chamber of Commerce and Industry and respect the territorial integrity of Georgia. The Georgian Chamber of Commerce said that they share the position of the Ministry of Foreign Affairs of Georgia regarding the issue, saying the released information was the initiative of private persons. They added that information published on the web page of the de facto Abkhazian Chamber of Commerce claiming that it is a member of various international organizations of chambers, is false. “International Partners of the Georgian Chamber of Commerce and Industry

refuse to cooperate with non-legitimate organizations operating in the occupied territories,” the statement reads. Breakaway Abkhazian information agency Apsnypress reports that the so called delegation of the Abkhazian Chamber of Commerce held meetings in Berlin on September 12-14. “The purpose of the visit was the opening of the official representation office

Photo source: Apsnypress.info

of the Abkhazian Chamber of Commerce in Berlin,” Apsnypress reports. “The opening of the representative office of the Abkhazian Chamber of Commerce was preceded by a long-term negotiation process with the state departments of the Federal Republic of Germany and the registration of the Abkhazian mission itself,” the press release reads.


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BUSINESS

GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

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.

Quick & Dirty Decisions Are Not Always Smart! BLOG BY LAURA MANUKYAN

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he choice of education is one of the most important decisions people make in their lives. Better not to rush! When my mom was my age (24), she already had a ring on her finger, a family, two kids, and a very clear idea about her life. I am not yet married, but I have already made at least one very important decision in my life: to become an economist. I made this fateful decision at 22, having tried a banking job (that I hated). Many of my friends, however, are stuck with the educational and professional choices they made very early in the lives, before knowing who they were and what they could achieve. I’ve always thought that getting married and making such important decisions early was our unique destiny in the South Caucasus (ok, maybe some other post-Soviet countries, too). I was therefore surprised to find that in other, much more developed, countries young people are also sometimes forced to “specialize” very early on. At 31, Philip is a Master’s student at Tilburg University in the Netherlands. He has spent the last 15 years of his life acquiring various specialized vocational and higher education qualification only to understand that he wants to do something else and better in his life. I learned Philip’s story when we met very recently at a summer school in St. Petersburg. Like any other Dutch kid, when he was 12 he had to take an ability test (CITO), the results of which determined what kinds of educational programs he could enroll in. Not being the brightest student, his choices were limited to lower or middle level vocational education programs (VMBO or HAVO, in the Dutch lingo). He tried HAVO for two years, but was downgraded to VMBO. At 16, with a VMBO diploma, Philip’s choices were again limited: the fourth year of HAVO or a professional com-

munity college. He chose the latter, and found himself studying how to sell cars (“sales management” was the program’s official title). Four year later, at 20, he decided to go one step up and get an undergraduate degree (in “small business and retail management”) from a university of applied sciences in the Netherlands. After four more years, and an additional investment in math skills, Philip enrolled in a research university. He started his BA at the University of Tilburg at the age of 25, and at 31 is about to graduate with a Master’s degree. The road to Philip’s educational hell may have been paved with excellent intentions from Dutch education policymakers (to help people make the right educational choices early on in their lives). His tortuous path to a career may be an exceptional case, the result of a radical mismatch between one’s ability (as measured by formal tests) and expectations. Nevertheless, educational ‘profiling’ early on in children’s lives is certainly wrought with risks.

WHAT DO WE KNOW ABOUT OUR “PREFERENCES”? In economics theory, people are supposed to know what they want when faced with any choice. In reality, individual preferences are constructed in a sequential process of soul searching and self-discovery. In other words, people can only reveal their preferences by trying and experiencing different things, making mistakes and correcting them. This is known in the economics literature as preference construction theory. Preferences are constructed at the time of choice, based on prior experience. This may be true about the choices we make when buying the next car or smartphone. Yet, it seems to be just as true in the case of complicated educational and occupational choices. What young schoolboys and girls think they want to be at the age of 15 or 16 may be radically different from what they understand they want to be at 25. It follows that education systems should be designed not to lock young people into rigid educational tracks

(“car sales”) too early in their lives, before they fully understand their educational preferences. In fact, the system should allow for a trial-and-error experimentation with different subjects and vocational skills, allowing them to move from one specialization to another over time. Luckily, it took me less than 15 years to discover my own calling in life. For some people of my generation, however, this discovery may never come, or come very late, as in Philip’s exceptional case. In both Georgia and Armenia, educational choices are made very early, at 17, when students take the Uniform National Exams. In addition to not knowing themselves, the majority are poorly informed about the quality of various educational programs on offer, as well as future labor market needs. As a result, students are often matched to the wrong educational programs and occupations, wasting many years of their life, as well as public and private resources.

BETTER LATE! In Israel, students are usually over twenty (20-24) when they begin their university studies. Israel is exceptional in that it requires every boy and girl to go through a compulsory military service at the age of 18 (three years for boys, two for girls).

10 Galaktion Street

The median age of Israeli students obtaining an undergraduate degree is 27, according to a 2015 OECD study. Yet, Israel has one of the best-educated populations in the world (ranked fourth among all OECD countries). About 46% of all Israeli adults hold at least an undergraduate degree,

while the OECD average is 33% . Georgia and Armenia do not recruit girls into the military. Moreover, both countries allow their young male citizens to defer military service if they enroll at university or college. Thus, perhaps inadvertently, the military conscription systems in both countries are encouraging young males to make educational choices very early in their lives, at military service gunpoint. A much superior option for both South Caucasus nations may be to introduce a short mandatory civil or military service (of, say, one year) for both girls and boys. Young people could be given the choice of volunteering options ranging from helping people with disabilities and elderly, to working in socially important enterprises, to military service. A year spent in service to the community would, on the one hand, allow people more time to mature, gain experience and get to know themselves. On the other hand, it represents a great way to learn basic civic virtues that are as important as the professional skills, knowledge and information one acquires at a university.

SCHOOLING IN THE NETHERLANDS Dutch schools have only two divisions, primary and high school. Children in the Netherlands usually start attending school when they are four years old. Primary school has eight classes in total, so most students will be around 12 years old when they begin attending high school. Dutch high schools are further divided into three different levels that are decisive in terms of future occupational opportunities. Their official names are VMBO, HAVO and VWO, referred to as, respectively, the “low,” “middle,” and “high” diploma levels. At the end of their 8th year of school, Dutch children must take a CITO test, designed to evaluate their overall “intelligence“. Parents and children are ultimately the ones who decide which one of the three is the best educational track for the child. Primary schools only advise them which one would have been the most appropriate. The VMBO takes 4 years and with a VMBO diploma, a student can continue his or her studies at the Middle Vocational Education (MBO) level, obtaining professions like administration, nursing, agriculture, the arts, and other ‘bluecollar’ jobs. The second level, HAVO, takes 5 years and prepares students to go to the Higher Vocational Education (HBO) level, where they can gain knowledge in physical therapy, applied sciences, pedagogy and accounting. HBO is focused on developing practical technical skills and prepares students to enter the labor market directly after graduation. The highest level, VWO, lasts 6 years. Having completed the VWO, one can go directly to a university.

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


BUSINESS

GEORGIA TODAY SEPTEMBER 19 - 21, 2017

5

World Bank Celebrates 25th Anniversary of Partnership with Georgia lenges and constraints,” he said, noting that Georgia has to increase the quality of its labor force in order to attract more foreign direct investment. “All reforms carried out aim to make the private sector more competitive and stronger. The capital market reform is very important in this regard, as is the pension reform,” Mr. Kumsishvili commented. “We’ll be putting in place new reforms soon, with one of the priorities being installing commercial chambers within the common court system of Georgia, so that every investor and businessperson in Georgia can be confident about court litigations,” Tea Tsulukiani, Minister of Justice of Georgia, said. “Infrastructure itself is challenging enough, and the challenge is to make sure it serves the purpose in the right way and allows us to unlock the growth economic potential, and that we’re be able to couple infrastructure investments with smart regional policies in such a way that this potential starts working immediately to a full extent,” said Irakli Matkava, First Deputy Minister of Regional Development and Infrastructure.

BY NINO GUGUNISHVILI

O

n September 15, World Bank Group celebrated the 25th Anniversary of its partnership with Georgia, with a forum entitled: ‘Boosting Georgia’s Development: From Top Reformer to Top Performer’ held at the National Parliamentary Library of Tbilisi, with a panel discussion focusing on the past, present and future prospects of the economic development of the country. Present were World Bank Regional Director for the South Caucasus, Ms. Mercy Tambon; World Bank Regional Vice President Mr. Cyril Muller; World Bank Chief Economist for Europe and Central Asia, Mr. Hans Timmer; Mr. Tomasz Telma, Director Europe and Central Asia from International Finance Corporation (IFC) and members of the Georgian government. “Georgia is a success story of resiliance. From a turbulent period, through its independence, to o a vibrant, middle income country ountry today… the World Bank Group has always been en by its side through h good times and bad,” Mercy Tambon said in her opening speech, noting that the forum is an opportunity “to look back and cele-brate our joint accommplishments”. She also took the opportunity ity to thank all those without out whose commitment and dedication to develop Georgia, we “would certainly not be where we are today”. Ms. Tembon noted that Georgia is still facing challenges today, with more than 20% of the population still living on the poverty line and many unable to complete school or find employment. “We must now look into the future and reflect how we can tackle these remaining challenges”. “This celebration is particularly important to me because the country we are in today is very different from the one I visited in 1994 when I had a great honor to be one of the first group staffers to visit and work in Georgia,” Cyril Muller, said. “I’m very pleased to say that Georgia prevailed and suceeded in becoming an economy that is striving,” he added. Over the past 25 years, the World Bank’s financial commitment to Georgia amounted to $4.3 billion dollars across various sectors supporting the country’s social and economic development. “While Georgia has made remarkable progress over the last 25 years, many challenges remain,” Mr Muller said. “Specifically, we see four areas for enhancement that will help Georgia expand its achivements into the future. The first is to unlock the productivity growth potential of firms by accelerating the shift from inward-looking to export-driven growth. Second, it is about removing the constraints on social mobility by investing in people and skills creation, particularly in the rural economy. Third, managing the environment’s natural resources, and fourth, ensuring that the micro-economic environment remains supportive and builds resilliance against external shocks. With the right policies, Georgia can maintain and double its GDP per capita by 2030. It can by that time eliminate extreme poverty and build a country where the middle class is the majority of the population,” the Regional Vice President said. Dimitry Kumishvili, First Deputy Prime Minister, Minister of Finance, spoke in detail about the government’s Four Point Reform Plan which which is fully supported by the World Bank. He underlined the importance of the Georgia National

Innovation Ecosystem(GENIE), financed by the World Bank with a $40 million lloan, and emphasized the imporsiz tance of the IFC initanc tiative on issuing tiativ denominated bonds in Lari denomina for the private business sector. “The general rule is that countries are successful over a sustained period if they change consistently, adjusting to a changing environment,” Mr Timmer said, sharing his thoughts on the external environment for Georgia in a globalized economy, and the opportunities it offers. “To prepare for the future, I think it’s important to realize that the regional economy and the economy of neighboring countries has changed dramatically over the last three years; the global economy has changed over 10 years,” he said, highlighting that Georgia would have to adjust to the new opportunities in the context of new environment, making use of the skills and new technologies, and finding new markets to export. “Georgia’s biggest asset is its people, its human capital. We are now in a world where the job market is completely different from what it was five or ten years ago,” Ms. Tambon said. “By unlocking its human capital, Georgia will be able to integrate into the global economy”. Minister of Education Aleksandre Jejelava talked about the education reforms planned and the challenges of secondary, high and vocational education in Georgia. “We believe we’re mobile enough to rebuild our education system in a very short time; we believe that withinin four years, we’ll be able to achieve significant difference in all components of education. We’re in the process of changing the education plans, something we believe will drive our youth towards the right skills and towards the motivation to learn,” he said. “In private sector development, Georgia already is a success story,” Mr. Telma, said, elaborating on the business-friendly private sector environment in Georgia and the progress it has been making. However, he noted that lack of access to finance, despite the very strong banking sector, is still obvious. “From our perspective, it’s about increasing private sector participation in infrastructure development; it’s a key for many parts of the economy and it’s obviously important for the government which is experiencing some fiscal chal-


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BUSINESS

GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

An Overview: 10th Germany Reacts to Russia International Forum Sanctions, Asks to Postpone of Local Economic Nord Stream-2 Projects Development BY DAVID DRUMMERS

BY NINO GUGUNISHVILI

T

he 10th International Forum of Local Economic Development, held on September 13-14 at The Biltmore Hotel, organized by the Tbilisi Municipality, was attended by hundreds of top international speakers from USA, Austria, Germany, England, Spain, Italy, France, Moldova, Ukraine, Sweden, Netherlands, Slovakia, Poland, Belgium, Armenia, Azerbaijan, Kazakhstan, Israel and Turkey- coming together to discuss topics ranging from governance, cities for economic growth, urban resilience, smart environment, energy efficiency, entrepreneurial opportunities in global trade, international relations, city tourism, open government partnerships, integrated approaches for territorial development and many other subjects. The forum ended Thursday with a concluding panel discussion on Green City for Smart Transformation, with Tbilisi Mayor Davit Narmania; Deputy Mayor Irakli Likvinadze; First Deputy Minister of Environment and Natural Resources Protection of Georgia, Solomon Pavliashvili; Deputy Mayor of Kiev, Gennadiy Pils; Deputy Mayor of Bialystock, Rafal Rudnicki; Principal Economist, Economics, Policy and Governance EBRD, Kjetil Tvedt; and Robert Bailey, Director of ENVIROS s.r.o, EBRD consultant. “We had an extremely active two days, seeing 16 different directions covered, with almost 800 delegates from 13 countries and hundreds of presenters participating,” Likvinadze said. Gennadiy Pils, the first speaker in the panel, talked about recent developments and infrastructure projects finalized in Kiev. “Our priority is to have fewer loans and more investment,” he said. “Financial independence is very important for us, especially considering the conflict and the situation in the East of the country, and we’re doing all we can to improve financial indicators. All financial transactions of all budgetary organizations are now visible and transparent,” he added. The biggest challenge, he noted, is not having the chance to authorize a city master plan, combined with the problem of existing waiting lists for children to join municipal kindergartens and public schools. However, he said the municipality has introduced a civic budget planning initiative, which enables citizens to be actively involved in local budget planning and, according to the mayor, “the results are very positive”. “Tbilisi will soon face new challenges, challenges that arise from the expectations of the citizens, from the inhabitants of Tbilisi,” Rudnicki, Deputy Mayor of Bialystock, Poland said. “Our citizens wanted life in the city to be comfortable and easier. Good roads and communications are not enough,” he noted, highlighting that they are now focusing more on rational spatial management possibilities, and going on to talk about the major initiatives and projects carried

out, focusing on the concept of the ecological city to improve the quality of life. The next presenter, Solomon Pavliashvili, mentioned that the Ministry of Environment fully supports the Green City initiative; however, he noted that there are numerous problems on the way of bringing the Green City concept in Tbilisi to life and creating a sustainable urban environment. As Pavliashvili noted, the emissions from the energy sector make 38% of all emissions, which makes the use of alternative sources of energy vitally important. He also pointed out that, with regards to the city transport system, although some positive steps have been made, more attention needs to be paid to the development of public transport, reducing the number of private vehicles used and on choosing more electric and “clean” energies. The Deputy Minister also talked about the waste problems especially visible in the surrounding of Tbilisi, The second part of the panel discussion focused on the Green City Action Plan for the city of Tbilisi, carried out by the EBRD in partnership with Tbilisi City hall. “The EBRD has worked with many cities in supporting and implementing investment focusing on the Green Agenda,” Tvedt said, noting that the Green City Action Plan for Tbilisi is based on diagnostics and solutions to identify actions needed for policy initiatives. The document itself was then presented by EBRD consultant Robert Bailey. “Considerable work has to be done across numerous areas, from rehabilitation of buildings, renewing the bus fleet and bringing in low emission buses, to modernizing street lighting, and renewing water distribution and wastewater treatment, all according to the recommendations given,” he said, highlighting more green spaces within the city being “crucial”. In order to achieve these goals, the resources required come from city budget, national government, private sector and international institutions. The Green City Action Plan will be approved by City Hall by the end of September and will then be made publicly available. Davit Narmania, the Mayor of Tbilisi, closed the session by summarizing the 10th International Forum of Local Economic Development, highlighting the many themes presented during the conference and the initiatives that are being and need to be undertaken to make Tbilisi more sustainable to live in. He also spoke about the Mayors for Economic Growth initiative from the European Union within the Eastern Partnership framework, a special certificate of which was awarded to the Mayor himself Peter Korsby, Mayors for Economic Growth representative, in recognition of the fact that Tbilisi had also joined the initiative. The conference then ended with the signing of the declaration of the 10th International Forum of Economic Development. A closer look at the city development topic of the Forum on page 10.

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he Federal Network Agency of Germany (Bundesnetzagentur) has demanded changes be made to the development plan for gas networks until 2026 and that it no longer include five energy projects related to the Nord Stream-2. "Five projects related to the expansion of the Nord Stream-2", according to the Federal Network Agency, are still “too unreliable” and should be “taken into the network development plan only when there are permissions to expand Nord Stream-2,"the statement said. Agency President Jochen Homann noted that, "these changes are designed to protect German gas consumers from unnecessary costs." He added that expensive measures to expand the gas network will be implemented if deemed necessary. At present, the regulator has included 112 projects in the plan with a total investment of EUR 3.9 billion. On July 25, the House of Representatives of the US Congress overwhelmingly voted in favor (419 to 3) of a bill providing for the imposition of new sanctions against Russia, Iran and the DPRK. According to the document, the US

Photo source: gazprom-germania.de

president can impose sanctions on persons who intend to invest more than $5 million dollars p/a, or a million dollars at a time, in the construction of Russian export pipelines, or who provide services, technologies, and information support to projects. It was also reported that the document provides for counteraction to the Nord Stream-2 project. Earlier, on July 24, the head of the European Commission, Jean-Claude Juncker, announced that he would urge an urgent discussion of Brussels’ response in the

event that Washington accepts the new package of anti-Russian sanctions if they did not take into account the interests of the European Union. Juncker is concerned that the new sanctions can affect the sphere of interests of Moscow-based European energy companies. Nord Stream-2 is a gas pipeline from Russia to Germany through the Baltic Sea with a length of 1220 kilometers and a capacity of 55 billion cubic meters per year. Its construction is to begin in 2018 and end late 2019.

EU Supported Rural Development Project Launched in Khulo Municipality

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n September 15, the EU launched a new rural development project in Khulo. The project ‘Promotion of Rural Development and Diversification in Khulo Municipality” is being implemented by Caritas Czech Republic in Georgia (CCRG) and aims to improve employment and living conditions in Khulo trough diversification of the rural economy. The goal of the project is to maximize the engagement of private, civil and public sector participation in the

rural development process. At the launch, welcome speeches were delivered by Avtandil Melkhidze, Acting Minister of Agriculture of Adjara; Alvaro Ortega Aparicio, Attaché, Program Manager for Environment and Rural Development, Delegation of the European Union to Georgia; and Ekaterine Meskhrikadze, Head of Mission, CCRG, representative of project partner organization HMRR and Municipality Gamgebeli. The event was also attended by representatives of the Delegation of the European Union to Georgia, Ministry of

Agriculture of Georgia and Adjara AR, Khulo municipality, and local public and private sector business persons. Attaché Aparacio presented the European LEADER approach principles and highlighted the importance of active cooperation by private, public and CSOs for rural development. “Under the ENPARD program, the European Union supports rural and agricultural development in different regions of Georgia. This project will introduce the European model of rural development, the so called LEADER approach, and will create new economic and social opportunities in Khulo municipality,” stated Mr. Ortega. The project manager, Giorgi Murvanidze, in turn highlighted the importance of rural development in Khulo municipality, presenting project objectives, project current achievements and planned activities. The project follows the earlier EUsupported rural development actions under ENPARD in Borjomi, Lagodekhi and Kazbegi municipalities. This year, the EU launched new rural development projects in five other municipalities: Khulo, Keda, Dedoplistskaro, Akhalkalaki and Tetritskaro. Rural development has an important role to play in the sustainable development of Georgia. The key to boosting employment and improving living conditions in rural areas is diversifying the economy and moving away from an over-reliance on agriculture. The EU is supporting rural development in Georgia through its ENPARD Programme. Implemented since 2013 with a total budget of EUR 102 million, the main goal of ENPARD is to reduce rural poverty. More information on ENPARD is available at: www.enpard.ge


BUSINESS

GEORGIA TODAY SEPTEMBER 19 - 21, 2017

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Georgia: From Top Reformer to Top Performer EXCLUSIVE INTERVIEW BY NINO GUGUNISHVILI

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his year marks the 25th anniversary of partnership between the World Bank and Georgia, celebrated with the Georgia-World Bank 25th Anniversary Forum ‘Boosting Georgia’s Development: From Top Reformer to Top Performer,’ held on September 15, with the participation of the World Bank’s senior management and Georgian government officials. Cyril Muller, Vice President of the World Bank’s Europe and Central Asia Region, who until 2015 held the post of Vice President for External and Corporate Relations, has been working in Georgia since the very beginnings of the World Bank’s presence in the country. GEORGIA TODAY met with Mr. Muller to look back at the last 25 years of the Georgia - World Bank partnership, and to discuss the progress the country has made and its future perspectives in social and economic development.

THIS YEAR MARKS THE 25TH ANNIVERSARY OF WORLD BANK - GEORGIA PARTNERSHIP. WHICH OF THE ‘MILESTONES’ OF THIS EXTENSIVE COOPERATION WOULD YOU PARTICULARLY DISTINGUISH? 25 years is a long time for a partnership, as it is for any relationship. One of the characteristics of the World Bank’s partnership with Georgia is that it has been a vibrant partnership throughout all these years. Georgia became a World Bank member in 1992, but we weren’t able to really come and respond until 1994 due to civil strife in the country. Our first objective was to help build institutions: our first loan was $10 million for the Institution Building Project, designed to expand the government capacity to move Georgia to a market economy. At that time there were no institutions with a history; Georgia had to create government institutions, a real central bank, not just an agent of the central bank from the Soviet Union. So, in those years it was all about finding ways to support Georgia, to define what the functions of the state are, how to manage a transition to a market economy. But Georgia was in shock: the people’s income collapsed by more than 60%, and we worked hard from the beginning to help them overcome these shocks, to build a future. In those early years, we

supported Georgia a lot - we supported the budget of Georgia, so the state could pay the salaries, started financing basic infrastructure that needed to be funded, and invested in energy. Initially, we were helping build a country, recovering and restoring basic services, and helping Georgia on the path to what it wanted to be in future. As Georgia was successful in doing so, it enabled us to deepen our work in other areas: over time, we focused on transport, with one of the biggest projects – the East-West Highway Improvement. We’ve also been able to work on cultural heritage projects as part of further Regional Development projects in Kakheti, Imereti, Mtskheta-Mtianeti and Samtskhe- Javakheti. Georgia has fantastic people and an extraordinary culture and, there was a sense that to build a nation, it was really important to preserve cultural heritage, which was quite an unusual concept for us in the beginning. So, the World Bank planted the seeds of your future successes.

FROM A REGIONAL PERSPECTIVE, WHERE IN YOUR OPINION DOES GEORGIA STAND GIVEN ITS ECONOMIC/ FINANCIAL/INVESTMENT CLIMATE AND POTENTIAL? Georgia scores very highly when you look at the different indexes or the rankings that exist, for instance in the World Bank’s ranking of Doing Business, Georgia is among the top performers and has made great progress in the indexes of countries with low corruption. Georgia also made progress in terms of service delivery. Despite the initial severe collapse, I can say that Georgia has made a fantastic recovery. You always have to be careful when thinking against what that recovery will be measured. There are still a lot of people who think that it was easier in the past than it is today. Georgia is becoming a vibrant, open small economy and it means that it has to challenge itself more. If you look around the world, you’ll find that among the nations that are most prosperous, a lot have small, open economies, so the size of Georgia is not a disadvantage: it’s on the crossroads between East and West and the new Silk Road, and it has potential on the North-South route as there are opportunities now with increased trade with Turkey and Iran. Georgia can be a country that uses the opportunity of its location and continues to benefit from the investments it has made. For us this is very important. Georgia is doing much to improve its business climate,

to make sure that it has an open society where not only investors, but also citizens can feel safe in living and working in, where corruption is no longer rampant, and where services are delivered. These will undoubtedly turn Georgia over time into an attractive country in this challenging region. Georgia is changing today into a country that has the potential to be stable and prosperous over a sustained time.

WHAT KEY DIRECTIONS/ TRENDS IN THE COUNTRY’S OVERALL SOCIO-ECONOMIC DEVELOPMENT WOULD YOU HIGHLIGHT AS MOST PROMISING AND, ALTERNATIVELY, MOST RISKY? I’ve worked in this country for ten years; for 10-15 years I was an observer, not having the chance to visit often, but since 2015, I’ve visited many times and if I had to choose one number that for me shows Georgia is doing things right, I’d highlight tourism. The number of tourists it has per year is impressive; tourism continues to be a great opportunity. The second –agriculture, which is a continuous challenge globally, and Georgian produce is of extremely high quality, which is another opportunity. We can make the rural economy more productive by bringing in technology and being better connected, to have choices in terms of what to grow and how to export. This needs transport infrastructure, connectivity in the country and upgraded workforce skills. The third is for Georgia to be successful in attracting both domestic and foreign investment in future. There’s a real opportunity for growing new companies, technology, the digital economy; to make sure that the small firms have a chance to grow and that there is a continues competition among them, so that people with new ideas can challenge others to improve, continuing to support entrepreneurship and moving into new areas.

DESPITE THE PROGRESS ACHIEVED ACROSS DIVERSE SECTORS (AGRICULTURE, ENERGY, INFRASTRUCTURE, TOURISM) IN RECENT YEARS, UNEMPLOYMENT AND POVERTY RATES IN GEORGIA STILL REMAIN HIGH. WHAT WOULD THE BANK’S RECOMMENDATIONS BE IN THIS REGARD? Georgia is growing, but needs to sustain that growth in the long-term; growth is not all about GDP or what you produce,

it’s also about income. It’s a challenge of all economies, as the world economy is today growing at a level half what it was before the world financial crisis. Georgia has to work much harder today to grow at 5% than it did 10 years ago, which means its markets and expectations have to be adjusted. The second challenge I see is the significant emigration, especially of young people: if you are to be successful in the global economy, what matters most is the capacity and skill of your people. In that context, Georgia has a dual challenge; one, that people that can live productive lives, are skilled and can grow. Having a good education system is not enough: you have to be able to learn throughout your life. The second issue of human capital is that it’s an aging society; you have to make sure that the demographic challenge of the population is managed. Incentives are needed to help people to participate longer in life. Another part of that challenge is to find a way for Georgians abroad to return. As for the issue of poverty, when we first measured poverty in Georgia, over half the population was poor: in 2001, there was more than 50%. Today we are down to 21%. It’s amazing that Georgia is achieving one of the global goals of sustainable development to eliminate extreme poverty by 2030. On the current path, and with a bit of growth, and continuous effort, Georgia will do it.

WHICH OF THE AREAS IN GEORGIA’S ECONOMY ARE MOST IN NEED OF IMPROVEMENT? Our assessment of Georgia today, is a country that has been a strong reformer and is a strong performer, but having started from a vulnerable base. The single biggest challenge for Georgia is to be able to bring the whole country towards the project of the future in which everybody can make their contribution, with dynamic economic opportunities.

WHAT ARE THE STEPS GEORGIA HAS TO UNDERTAKE TO

ACHIEVE GREATER SOCIAL STABILITY, ECONOMIC GROWTH AND SUSTAINABILITY? Focusing on people, the one thing all countries are struggling with is lifelong learning. The Georgians are creative, dynamic; they can be argumentative, but it’s all about whether they’re able to build that energy towards the shared project which is Georgia. The second thing is, can we make sure that women can make a full contribution to the country? Could that participation in the labor force be increased? This project for the country has to be done with the involvement of all its citizens and there can be no differences between gender.

FINALLY, WHAT WOULD YOU, AS A PERSON WHO HAS WORKED ON GEORGIA SINCE THE FIRST YEARS OF THE WORLD BANK’S PRESENCE IN THE COUNTRY, NAME AS ITS BIGGEST ASSET? When I first worked on Georgia, I also worked on several other countries of the former Soviet Union, and on each visit to those countries, I asked people whether they expected their country to be independent in five, or ten years’ time. In the Baltic States, I got 99% of people telling me that they would be independent; of these countries, Georgia was the last to give positive answers, in part due to the civil strife, obviously. What touched me most was people’s passion to try to make it work, and at the same time, their doubts that it could happen. The biggest asset of Georgia for me is its people. In a world economy which increasingly becomes about whether or not you can connect and network with the rest of the world. Young entrepreneurs in high tech industries no more think about national borders. Georgia has real assets; this is a beautiful country in which increasing visitors can enrich its experience… The same thirst Georgia had for the first 25 years of our partnership is needed to keep it on that successful path in future.

Experto Announces Former CMO for TBC Bank, TeliaSonera & Magticom to Join Firm as a Partner BY KATIE RUTH DAVIES

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Tbilisi-based business consultancy which pioneered Market Entry Services in Georgia has announced that Gary W. Koeb has joined the firm as a Senior Managing Partner. Experto is a professional services consulting firm based out of Georgia with an international network of Allied Partners and Consultants primarily in the CIS, Middle East and Eurasia focused on facilitating business and trade. “Gary has a long-standing relationship with Georgia, as well as the CIS, Middle East and Eurasia,” said Ludovic Girod, Experto Founder and Managing Direc-

tor. “His equity participation with Experto is a significant vote of confidence in our Go to Market Strategy and will help significantly broaden our management team’s abilities to bring in new clients, take on new consulting assignments, and diversify the sectors which we operate”. Gary’s experience in Georgia cuts across two of the very largest and most dynamic sectors: Telecom and Retail Banking. Prior to joining Experto, Gary was the Chief Marketing Officer for TBC Bank, TeliaSonera Eurasia (Geocell), and Magticom. In the US, Gary was a founding principle of a highly successful sales and marketing consulting firm, working with such well-known American companies as, Kodak, Intel, SAS, Sprint, Sun Microsystems, Oracle and others. Gary is the author of ‘Retail Fee Income Strategies’ and the co-author of ‘Reve-

nueStorming’. In the US, he was a frequent speaker on sales and marketing topics and the developer of the highly successful ‘Marketing Alignment Lab’. More than 15,000 sales and marketing professionals have been certified worldwide in the sales and marketing methodologies which he co-authored. “What really attracted me to join Experto is the fact that the team is committed to providing professional, honest and competent services that are world class, entrepreneurial in nature and resultsoriented by design,” Koeb said. “Experto helps unlock regional markets in some of the most challenging places in the world. Our vision to promote Georgia and the Caucasus as a place to do business is highly aspirational and I’m excited to be a part of it”. “We are very excited to have someone

of Gary’s caliber join the leadership team,” said Keti Sidamonidze, Managing Partner at Experto. “We are now uniquely positioned to compete with other firms,

including international firms that tend to take a ‘cookie cutter’ approach to opportunities in the region. Gary understands the business realities of Georgia and the near-abroad region. And his thought leadership and management consulting experience is already having a big impact on how we serve clients and the results we can bring them.” Experto offers a full range of services for mid and large-sized European and American companies seeking to enter the Caucasus, the CIS and Eurasian markets, including Partner Search, Due Diligence and FullService Client Representation. The firm also has marketing research and business consulting capabilities. The firm is the recognized agent of more than 10 international companies, including several multi-billion members of the FTSE Eurofirst 300.


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GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

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.

Tourism Market Watch FOR GEORGIA TODAY BY KAKHABER SAMKURASHVILI

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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 tourism sector coverage, we produce a monthly Tourism Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch. ge.

GROWTH IN NUMBER OF INTERNATIONAL HOTEL GUESTS IN GEORGIA OUTPACED TOURISM GROWTH IN 2016 The number of tourists was up 19.2% y/y to 2.7mn in 2016, while the number of international guests at hotels and hotel-type accommodations was up 42.8% y/y to 1.7mn, according to a survey conducted by Geostat. There was also strong growth in the number of domestic visitors staying at hotels in Georgia, up 27.0% y/y to almost 870,000. The international visitor mix, in terms of source countries, is quite diversified. The three leading countries represented were Russia (13.8% of total), Turkey (12.9%), and Ukraine (7.4%), while the remaining 65.9% of visitors came from a wide variety of countries.

RECREATION AND LEISURE VISITORS CONTINUE TO BE LEADING DRIVER OF GROWTH IN NUMBER OF INTERNATIONAL HOTEL GUESTS IN GEORGIA In 2016, the number of foreign visitors in this category increased almost threefold from the 2014 figure and amounted to 1.2mn, or 74.6% of international guests. The number of international business visitors to hotels in Georgia, on the other hand, remains at approximately the same level as in 2014, with almost 270,000 visitors in 2016. Notably, despite the early-stage status of medical tourism development in Georgia, the number of hotel guests with healthcare as

The number of Israeli visitors increased 39.9% y/y to over 84,000, while the number of Indian visitors was up 98.9% y/y to over 36,000. The number of visitors from the Middle East region more than doubled their main purpose of visit was up 2.5x over 2014-2016. However, the category still accounts for an insignificant share of foreign hotel guests, with only 26,347 visitors in 2016. Kazakhstan was the leading source market for the category, with the number of medical tourists from the country up almost four-fold and accounting for 38.4% of medical tourists in 2016.

HOTEL INDUSTRY DEVELOPMENT IN GEORGIAN SEASIDE RESORTS PICKING UP PACE Notably, the development is taking place outside the previous target areas. Paragraph Resort and Spa, with 220 rooms, opened its doors in Shekvetili in September. The hotel falls under Marriott’s luxury Autograph Collection brand and is Georgian Co-Investment Fund’s first project on the Georgian seaside. The fund has two other five-star hotels in the pipeline for the seaside resorts over 2018-2019: a 190-room hotel, with an

estimated investment of US$ 60mn, in Ganmukhuri, and a 280-room Wellness and Spa Resort, with an estimated investment of US$ 110mn, in Green Cape. The first Best Western hotel, featuring 50 rooms, was also unveiled in Batumi in July 2017, but recent announcements point to investors shifting their attention to other parts of the Adjara region. In addition to the international branded hotels in the pipeline for the Goderdzi ski resort, four local hotels, with total estimated investment of GEL 20mn, are expected to open at the resort by 2019. Announcements have also been made regarding new hotels in Kobuleti, Gonio, and Tsikhisdziri.

NUMBER OF INTERNATIONAL ARRIVALS UP 27.4% Y/Y TO 1.1MN IN AUGUST 2017 Out of the top four source markets, there was strong growth from Armenia (+11.7% y/y), Azerbaijan (+18.5% y/y), and Russia (+27.8% y/y). The number of visitors from Turkey was up 42.2% y/y, but from a very low base in August 2016. Arrivals from the EU were up 29.8% y/y to over 47,000 visitors.

NUMBER OF INTERNATIONAL ARRIVALS UP 18.9% Y/Y TO 5.1MN VISITORS IN FIRST EIGHT MONTHS OF 2017 The number of visitors increased from all major source countries except Turkey (-6.6% y/y). The largest individual contributors to overall growth were Russia (+33.9% y/y) and Armenia (+16.8% y/y). The number of Iranian visitors was up 2.4x to almost 221,000 visitors and far surpassed the number of Ukrainian visitors in the first eight months of 2017.

SECONDARY SOURCE MARKETS ACCOUNTED FOR OVER 20% OF TOTAL INT’L ARRIVALS IN FIRST EIGHT MONTHS OF 2017 Arrival growth from secondary (nonEU) source markets contributed 4.3ppts to the overall growth of 18.9% y/y. The number of Israeli visitors increased 39.9% y/y to over 84,000, while the number of Indian visitors was up 98.9%

Recent announcements point to investors shifting their attention to other parts of the Adjara region [other than the coast]

The number of international business visitors to hotels in Georgia remains at approximately the same level as in 2014

y/y to over 36,000. The number of visitors from the Middle East region more than doubled to over 126,000, with Saudi Arabia driving the growth. Arrivals from the EU were up 24.2% y/y to over 221,000, with Germany, Poland, and UK accounting for almost half of that growth.

TOURIST CATEGORY CONTINUES TO DRIVE ARRIVAL GROWTH IN AUGUST 2017 The number of overnight visitors (‘tourist’ category) was up 27.2% y/y – after record growth in June and July 2017 – and accounted for 53.1% of international arrivals. Same-day arrivals and transit visitors posted high growth rates of 26.4% y/y and 28.5% y/y, respectively. The number of tourist arrivals is up 29.4% y/y to 2.4mn in first eight months of 2017.


BUSINESS

GEORGIA TODAY SEPTEMBER 19 - 21, 2017

Fishing in Troubled Waters: The 4th Black Sea Stakeholder Conference BY DAVIT JINTCHARADZE

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n September 15, at the Radisson Blu Hotel in Batumi, the 4th Black Sea Stakeholder Conference took place, covering issues of blue economy, maritime careers, the role of governments in maritime integration and general marine knowledge. Participants from 20 European countries were greeted by Konstantine Megrelishvili, Minister of Finance and Economy of Adjara, and Giorgi Cherkezishvili, Minister of Economy and Sustainable Development of Georgia. Cherkezishvili recalled the national motto of Georgia, “Power is in Unity,” highlighting the importance of collaboration for developing the blue economy in the Black Sea region. “Collective action is the only effective action,” agreed Karmenu Vella, the Commissioner of Environment, Maritime Affairs and Fisheries, going on to assert that the European Union is serious about resolving current issues in the Black Sea, for which purpose it has already signed to provide EUR 1 million of financial help. Berhnard Friess, EU Commissioner of Maritime Affairs, in his talk highlighted that sustainable economic growth is directly related to environmental protection: “The more you take care of the sea, the greater benefit it gives you back,” he said. In order to provide a positive example of development, experts of maritime planning from the Baltic Sea Region were invited to speak at the conference. From Sweden, where both government and opposition agreed to pledge on protecting the marine environment together, Dr. Ingela Isaksson, the Swedish Agency of Marine and Water Management, introduced the audience to the concept of the “wedding cake” system which was developed by Sweden in order to effectively plan its marine territories. “Our wedding cake is built from the Biosphere, Society, Economy and Collaboration, which sits at the top. All the components are essential, and if you eat too much of one, the others will be damaged, and the cake will collapse,” Isaksson said with a smile. However, not all expert presentations amused the audience. A speech made by Andrei Loppo, expert on maritime planning of the Russian State Duma, raised a number of questions and concerns. “Although Russia decided to mark its water borders, the initiative was unsuccessful,” he said. “All

countries in this region have their own views regarding the state borders, so Russia faced difficulties in terms of forming connections in the Baltic”. He then told the audience that in the Baltic Region, people already realized the sea should connect, not divide, countries; and yet, “Russia-Georgia touristic routes are not as developed as those in the Baltic, and this is the fault of both Russia and Georgia”. Further to his words, the map he presented caused insurmountable concerns, showing as it did Russian ports, with the Crimean Peninsula included as the part of Russian Federation and Crimean harbors represented as Russian ones. Further, Abkhazia was excluded from other Georgian territory. None of the EU officials commented, but the Ukrainian delegation’s reaction was swift, calling for respect of Ukraine's territorial integrity. “The representative of Russia made a sad mistake while presenting his position,” the Ukrainian delegate said. “The Russian occupation of Crimea is a temporary event. Crimea is the legal territory of Ukraine and this is not just the Ukrainian position, as the whole world recognizes this. However, we will be happy to put into practice the experience introduced by Mr. Loppo after the peninsula is returned to our country”. His comment earned a round of applause. Towards the end of the ceremony, the main points were summarized, with the EU officials explaining to the stakeholders how the European grant system works for applicants who wish to develop the blue economy in the Black Sea region. The same officials also made several promises about future development. Sadly, the Georgian delegation, despite having stated their wish to cooperate with neighboring countries at the very beginning of conference, left soon after the opening remarks without further explaining any concrete plans they had in this direction.

Gazprom Signs Landmark LNG Contract in Africa BY DIMITRI DOLABERIDZE

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n the LNG (Liquefied natural gas) sector of Gazprom, a landmark event has just taken place with the signing of a contract with the Ghana National Petroleum Corp (GNPC), the national oil and gas company in Ghana, for the supply of liquefied natural gas. The news was announced on the website of the President of Ghana, Nana Akufo-Addo. The announcement does not specify the amount or timing of deliveries, but the country's leader described it as "[an agreement] that will play a very important role in the economic life of Ghana." In turn, the head of the Department for the Foreign Economic Activities of Gazprom, Pavel Oderov, said that Gazprom had signed up “the second largest supplier of the largest LNG contract from the number available in our portfolio." The amount of the agreement is indirectly evidenced by the fact that it will allow Ghana to save more than $1 billion. The contract will also help the country to implement the Tema LNG Terminal project, and its energy will receive an additional 1 GW of capacity. The Tema LNG Terminal was designed to ease Ghana’s significant energy deficit and support the government’s efforts to put a stop to Ghana’s long

drawn-out challenges with energy reliability, efficiency and cost. Ghana already had two agreements signed under the Tema LNG project under the government of the previous president of Ghana, John Mahama. Both contracts were overstated in price and volume. Gazprom has been actively working to expand its portfolio of LNG contracts. The holding recently held talks with Bahrain on the sidelines of the 22nd World Petroleum Congress, which Turkey won the bid to host in 2017. The WPC is widely recognized as the “Olympics” of the oil and gas industry. The potential of Russian LNG supplies to Bahrain is estimated at 3 million to 6 million tons per year. Earlier, in the Russian concern, it was noted that the growing markets of Asia, for example, Singapore, Thailand, Pakistan, Vietnam and other countries of the Asia-Pacific region, are also promising directions for the supply of Russian LNG.

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GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

September Retail FPI | Food Prices on the Rise

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n the middle of September, food prices increased by 12% y/y (that is, compared to September 2016). On an annual basis, the biggest price increases happened for apple (87%), potato (46%) and carrots (42%), whereas cucumber, peach and tomato, on the contrary, became cheaper by 25%, 20% and 14% respectively. The majority of food products in the basket became more expensive y/y, leading to an overall increase of 12% in food prices offered by the largest supermarkets in Tbilisi. This finding is in line with GeoStat’s data which confirms an increasing trend in food prices and shows that major drivers of i n c re a s e a re fruits, vegetables and dairy products. Since seasonality is not contrib-

uting to the yearly changes, one has to look for other reasons that can explain such a big increase in food prices. Given increasing trends in the number of tourists willing to explore Georgia, increased demand from tourists can be a possible explanation for the higher food prices.

According to the latest data from the Georgian National Tourism Administration (GNTA), in August, the number of international arrivals in Georgia amounted

to 1,080,449, representing a 27.4% increase over the same period of 2016. Of the total number of visits, 573,368 lasted longer than 24 hours which corresponds to an

annual increase of 27.2%. Prices may stabilize by the end of September as vacations are over and everybody gets back to work and school.

Going Green with City Transport: Making the Right Choice BY MATE FOLDI

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here are some records that no one wants to have. Unfortunately, Georgia has found itself in possession of precisely one of those. According to a study titled ‘Energy and Air Pollution,’ released last year by the International Energy Agency, Georgia tops the list of “highest mortality rate attributed to air pollution (household and outdoor) by country, 2012”, with close to 300 deaths per 100,000 people. Now, five years later, with the citizens of Tbilisi continuing to be choked by the city’s ever-increasing air pollution as the swathes of mostly old and unregulated cars increase and clog up the streets, it is only right that the issue made it on to the agenda of last week’s high profile 10th International Local Economic Development Forum at The Biltmore hotel. One method of relinquishing this unwanted title and tackling the slow suffocation of Tbilisi’s airways, is through the development and expansion of the public transport system linking the city. According to the research presented by

As humans, we are always going to take the journey that is the quickest and most convenient. What the City has to do is make public transport the most attractive option

Mr. Neil Chadder, Senior Urban Environmental Engineer at the Cities Development Initiative for Asia (CDIA), the modal share of commuting in Tbilisi is: 27% walking; 39% public transport; 3% taxi; 30% car. Unfortunately, due to a lack of proper infrastructure: the absence of priority bus lanes at junctions, the blocking of bus routes due to congestion, the absence of metro access to large parts of the city; etc., the average commute by public transport is 39 minutes — a full 10 minutes longer than the average car journey (29 minutes). And so Tbilisi finds itself in a Sisyphean predicament: to make up for those lost minutes sitting on the bus/metro, more residents are choosing to commute by car, increasing road traffic, deteriorating the efficiency of bus routes, and exacerbating the pollution problem. Coupled with the widespread lack of parking, Tbilisi is facing a race against time to redevelop its infrastructure and public transportation systems to manage the daily commutes of its residents in a sustainable manner. Thankfully, something is being done. As Mr. Chadder explained, the aim of CDIA is to aid Tbilisi in the translation of their strategies into real projects through the provision of key information to city officials so that the correct decisions regarding infrastructure investment are made. To combat the transportation issues afflicting Tbilisi, the detailed study of the CDIA completed “six interrelated plan components covering: (i) mechanisms for bus restructuring and bus priority; (ii) multi-criteria analysis to select a rapid transit corridor; (iii) conceptual bus rapid transit (BRT) plan; (iv) conceptual tram plan; (v) comparison between BRT and tram; and (vi) a city-wide parking strategy.” Furthermore, CDIA are mobilizing a transport advisor to assist Tbilisi City Hall with : the introduction of bus priority lanes; implementation of the parking strategy; improving the linking of bus GPS to traffic signals; the possible creation of a comprehensive Transport Authority; improved regulation of taxis and private hire cars; and a cycling strategy. The total cost of the project, excluding the continued maintenance of the metro, is estimated at $413,670,000. Mr. Chadder believes that the key to

achieving these goals is securing a shift from private (i.e. car) to public transportation. As he told GEORGIA TODAY, it is a shared responsibility: “There’s a contribution to be made by everyone in society; each time we make a journey, we decide how we’re going to travel. Do we get out our car, or do we say ‘Hang on a minute! Do I really need to drive there or can I take public transport and/or walk there?’ I think that it’s a conscious decision that everyone can make at the start of every single journey. As humans, we are always going to take the journey that is the quickest and most convenient for us. Therefore, what the City has to do, and what we at CDIA are helping the City to do, is to make the public transport the most attractive option. My vision is to flip the statistics on their head and make the buses ten minutes faster than the average journey by car, as is the case

now. If we can get this done by creating bus-lanes, establishing bus priority, and modifying our junctions to accommodate the buses, then I am sure that public transport will become the preferred option. People make individual choices, but let’s make the choice easy for the people. The responsibility lies with both the city and the individual”. As the International Energy Agency’s report revealed, Georgia clearly has to get its act together and minimize its air pollution and the threats created by it. Five years on, the country, and especially its capital, still finds itself in dire straits. Thankfully, public consciousness has taken hold and change is being demanded. Action needs to be taken at every level. The appearance of the issue at the 10th International Local Economic Development Forum is certainly a step in the right direction. Apart from developing and expanding

the existing public transport network, the government should take greater action by banning the import and use of motor vehicles produced before the new millennia and introduce strict testing measures. The utilization of the Kura river as another form of public transport in Tbilisi, via ferries, is another possibility that could be looked into, and one that, Mr. Chadder admitted, had not been thought about yet. Of course, even if the CDIA’s plans for a new, efficient, and greener public transport infrastructure are successfully implemented, the city’s problems will not be solved, for there will certainly be scores, if not hundreds, of unhappy and angry taxi drivers, fighting against their impending redundancy, to deal with. But that is a problem for a future, greener, less congested and suffocating Tbilisi to deal with. Let’s make sure the city gets there first.


BUSINESS

GEORGIA TODAY SEPTEMBER 19 - 21, 2017

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Georgia Deserves Better: A Roadmap for Going Forward EXCLUSIVE INTERVIEW BY MATE FOLDI

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ary Whitehill believes humans deserve better. In a world full of so-called thought-leaders steeped in conventional wisdom, Gary architects the practical roadmaps and collaborations necessary to eradicate barriers, leapfrog constraints, and break records to accelerate the future into right now. He has earned a reputation for being driven and relentless when it comes to solving complicated and complex challenges in both the public and private sector across more than 100 countries. Gary knows that in order to create the reality which drives success, we need to look far beyond statistics, trends and “best practices.” His professional life is decorated with a series of groundbreaking successes that most people couldn’t achieve in ten lifetimes, and he’s only 34 years old: a two-time gold medalist in powerlifting, he pioneered Entrepreneur Week, which scaled to four continents in two years, and grew a company division from $1 million to $250 million in three years. Gary has contributed to multiple books and been featured in industry-leading publications, including Harvard Business Review, Globo, Inc Magazine, and The New York Times. Last week, at the invitation of the Georgian branch of Startup Grind, he came to Tbilisi. After the talk GEORGIA TODAY sat down with Gary to discuss his thoughts on Georgia.

YOU CONSTANTLY EMPHASIZE THE IMPORTANCE OF CULTURE IN YOUR TALKS. WHY? Culture properly defined encompasses the shared myths, themes and characteristics which bond families, communities and this beautiful nation. Culture can be intentionally manifested through seven ingredients which are then enhanced by supporting processes and knowledge. Culture is more powerful than any law, belief system, knowledge or process. Changing culture can be difficult as culture is heavier than the heaviest rocks, more un-moveable than the largest mountain and more elusive than the study of quantum physics. Today we live in a philosophically bankrupt world, and this is what provides Georgia a unique opportunity to develop a definitive lead, regionally and globally.

Culture anchors identity, so much so that it can be intentionally infused instead of just an undefined output. There are no laws, belief systems, wisdom or processes that can supersede culture. In today’s current paradox, humanity is being held hostage to a culture that operates like an algae bloom whereby everyone competes for dwindling resources not aware of the fact that the very things we do to save ourselves as individuals, are the very things which destroy us collectively. But the larger secret, whether it’s an individual, business or society, is that that which can kill us, also makes us stronger. Therefore, the number one strategic risk to the development of this country is the extent to which Georgians severely undervalue the opportunity provided by leveraging their culture. This absolutely must change.”

FROM WHAT YOU’VE SEEN SO FAR, WHAT’S YOUR TAKE ON GEORGIA’S EXISTING INNOVATION COMMUNITY? At the SeedStars program sponsored by USAID, I was overwhelmed by the sheer amount of raw potential. This is a direct result of the dense and diverse culture across Georgia. But what the country lacks politically is the shared mission, vision, and values which encompass 21st Century leadership.

WITH THAT IN MIND, WHAT IS THE WAY FORWARD FOR GEORGIA? Honestly, it all boils down to leadership. Without real leadership, things go downhill fast. Governments want power. What they do is kiss babies, shake hands, and pander half-truths. That’s what they do, and that is far from what leadership means in the 21st Century. This country is starving for a clear vision and mission. You just have Foreign Direct Investment (FDI) from Iranians, Turks, Russians, building hotels etc., being pandered as “progress,” money for the sake of money, instead of actual strategy and inclusive community development for Georgians. If someone does not stand up in this country to discover and design an innovation-based policy rooted in culture that informs a clear vision, this country is going to land on the wrong side of history. With just 3.5M humans in a world of 7.4B, the numbers are not on Georgia’s side, and that is the seriousness of the mission at hand.

WHAT ARE THE MAIN

WHAT ARE SOME OF THE UNDERLYING THINGS THAT NEED TO CHANGE FOR THIS 5-5-5 PLAN TO WORK?

TRAPS FACING ECONOMIC DEVELOPMENT IN GEORGIA? Without leadership, Georgians will further suffocate in the quicksand that is a tourism-first strategy. A recent statement from the Minister of Finance, that “tourism is the best export” shows a dire lack of understanding of how to develop the country for the long-term. It’s pathetically ridiculous. What the next trick politicians like to enforce is the outdated conventional wisdom of exporting services. But once again, this is not a viable long-term strategy for economic development in the 21st Century. The country needs to architect its future around pillars of value creation instead of tourism and services, which are forms of exploitation. For instance, exporting the story, culture and rich learnings of the wine industry is a perfect example of a unique value Georgians can share with the world. Today, the world associates the wine narrative with the French, while Georgia’s importance to the industry is virtually unheard of in most parts of the world. It’s these kinds of essential elements, history and culture, which must be infused and crystalized to form a strong and coherent foundation for prosperous long-term economic development.

WHAT SHOULD GEORGIA’S VISION BE? In the 21st Century, you only get one opportunity to make a first impression. These next 3-4 years are Georgia’s window of opportunity. There is no other country of this size in the world with such an important and valuable geopolitical position. Consequently, the vision for this country must become: “a socially conscious high-tech democracy standing as the beacon of hope for the 21st century Silk Road.” If the politicians

cannot distill the philosophical narrative of the Georgian culture into a deeply conscious, simple vision, then there won’t be a country within 10 years. A coherent one sentence vision is the only way to rally the nation’s passionate tribe behind a distinct mission, values, and strategies that are relevant in the 21st Century. The best practices of the 20th century, the models and statistics being served up as ‘progress’ are outdated conventional wisdom; literally irrelevant in the 21st Century. This is a country with a very strong legacy, and as part of this vision we need to not only get rid of the 20% of the country that is occupied by Russia, but we need to end the Soviet occupation that still lingers in our minds.

SO HOW DO WE GET THERE? We start by designing an easily understandable economic strategy: Georgia should focus on building five companies making $5 million in revenue over the next five years. The formula of 5-5-5. These companies should be focused within 2-3 industries familiar intuitively to Georgians based on the history of the nation. Logistics, wine and agriculture would be examples. Once again, being clear, simple, concise, and direct is imperative. Then, once the country has implemented 5-5-5, we bring in the the right strategic partners, the right investors, the right people who believe what we believe: elevating the right vision. This is where Georgia must start when designing how to move forward appropriately in the 21st Century. Remember, the vision informs the mission, and the mission informs the strategies. This is the only formula for supercharging Georgia to become the beacon of opportunity it deserves to be.

Georgia has a need, a hunger, and a thirst for action. Today the richness of its cultural heritage is once again a massive untapped opportunity. But to get there we need to address some of the dark horses from the past, specifically solving the ethnic conflicts with the Abkhazians and South Ossetians. Either this country stands up and comes together, or it will be stuck in perpetuity as a three-legged horse instead of a thoroughbred stallion. Without this crucial step of reconciliation, implementing 5-5-5 will never work. Nothing else matters at this point because there won’t be any layer of trust. Trust is ultimately what’s necessary for Georgians to stand up and come together, uniting towards a shared vision, mission and direction. For Georgia today, it is social capital which is exponentially more important than any form of monetary capital.

WHAT DO YOU MEAN BY SOCIAL VS. MONETARY CAPITAL? Correctly designed, an influx of monetary capital is a direct byproduct of a strong, cohesive, and dense network of national social capital. The future of this country relies on the unification of these distinct cultures and histories from each region of the nation. Unfortunately, what we are seeing is just transactional relationships, money for the sake of money, being transacted to make rich people richer. What Georgians are craving is the vitality of social capital becoming the epicenter of development. This will set the trigger for new emerging forms of trust, community, and new areas of business which catapult this nation into becoming the Golden Apple of the 21st Century. Simple monetary transactions that aren’t designed with community development and Georgian culture in mind eventually achieve the opposite of their intention: they separate the culture and the humanity that this country is founded on. This is precisely the reason why we see such trends as the rise in xenophobia.

ANY PARTING WORDS? This country needs to focus on community development and reconciliation instead of right or left. Always remember, service over ambition and integrity over expedience. This is something Georgians live every day in their hearts.

PASHA Bank to Partner Caspian Energy Georgia’s New Project BY KATIE RUTH DAVIES

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aspian Energy and Caspian European Club this year opened their representation in Tbilisi: Caspian Energy Georgia. The latter will be engaged in thew arrangement of business forums, CEO lunches, trainings, seminars, round tables and other business activities. Caspian Energy is an international journal spread in over 50 countries of the Eurasian continent, Near East, USA, East Asia and Asian-Pacific Region. Caspian European Club is the largest and dynamically developing regional organization that brings together over 5000 member companies and organizations from 50 countries around the world operating in

the Caspian, Black Sea and Baltic regions. PASHA Bank, a provider of corporate and investment banking services to large and medium-sized enterprises, will partner Caspian Energy Georgia’s new project. The project involves the organization of a series of meetings for CEOs of Georgia and Azerbaijani companies. This year, three meetings are planned in scope of ‘CEO Lunch Tbilisi’. The meetings will serve networking purposes and provide a comfortable space for sharing experience, updates and projections of the participating companies. PASHA Bank, operating in Azerbaijan, Georgia and Turkey, has a successful cooperation history with Caspian Energy in the scope of the Caspian Energy Forum, which was held in Tbilisi in 2014. The forum focused on all aspects of energy integration of the countries of the Caspian, Black Sea and Mediterranean regions

into global energy markets, as well as the development of the hydro and geothermal energy sector of Georgia and its prospects. It was attended by the President of Georgia, Giorgi Margvelashvili, as well as representatives of local and neighboring governments and enterprises active in the energy sector. “We highly assess the work carried out by the Caspian Energy and the events it holds,” said ”, Shahin Mammadov, Chairman of the Board of Directors and Chief Executive Officer of PASHA Bank Georgia. “We are confident that Caspian Energy Georgia will bring the cooperation of business circles of Azerbaijan and Georgia to a new level”. He also stressed the importance of the meetings, particularly those conducted in the scope of ‘CEO Lunch Tbilisi,’ and noted that this will promote the establishment of business contacts among the attendees, thus con-

tributing to the expansion of economic cooperation. “PASHA Bank Georgia has become the official sponsor of the ‘CEO Lunch Tbilisi’ events that we plan to hold this year,” said Telman Aliyev, First Deputy Chairman and Chief Executive Officer of the Caspian European Club and Caspian American Club. “By supporting the resumption of the activity of Caspian Energy Georgia, the Bank once again highlights the significance of cooperation established thus far with the Caspian Energy Club”. He

noted that Prime Minister of Georgia, Giorgi Kvirikashvili, and the Ambassador Extraordinary and Plenipotentiary of Azerbaijan to Georgia, Dursun Hasanov, are among the honorable guests expected to attend the event. The first ‘CEO Lunch Tbilisi’ will be held on September 29 at Courtyard Marriott followed by two more lunches scheduled on October 27 and November 24. Registration for participation is available at the following link: http://www.caspianenergy.org/index.php/ceo-lunch


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BUSINESS

GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

Ambassador Beruchashvili on Expanding UK-Georgia Cooperation EXCLUSIVE INTERVIEW BY KATIE RUTH DAVIES

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he major task of the Georgian Embassy to the UK, and of its ambassador, HE Tamar Beruchashvili, is to further strengthen UKGeorgia cooperation by promoting joint interests, increasing awareness of opportunities in Georgia, expanding existing institutional and strategic partnerships, and intensifying political dialogue and cooperation in the fields of defense and security, as well as economy and peopleto-people relations. GEORGIA TODAY met with Ambassador Beruchashvili for our annual catchup to summarize her past year of work and to look at what’s ahead. 2017 marks 25 years since the restoration of Diplomatic Relations between Georgia and the UK. It is a year in which the Ambassador was selected by Diplomat Magazine as a Diplomat of the Year for her achievements, something generally unknown in the first years of a diplomatic position. “The recognition of my peers in the vibrant, experienced and hard-working diplomatic community is a great honor for me,” she tells us. “It’s been a very exciting year,” she adds. “A very fruitful year with the Embassy actively contributing to the new dynamism of the UK-Georgia relations”.

POLITICS The issue of territorial integrity and continuous Russian occupation is high on the UK- Georgia political dialogue on bilateral as well as multilateral formats. Thanks to the work of the Georgian Embassy, the human rights situation in Georgia’s occupied regions was for the first time included in the UK FCO’s annual Human Rights and Democracy Report for 2016, published on July 20. In its section on the Russian Federation, the document speaks of grave violation of the human rights situation in Georgia’s occupied Abkhazia and Tskhinvali regions. On defense cooperation, the UK continues assistance to improve Georgia’s military resilience within the framework of the Action Plan that will be signed during forthcoming visit of Minister Ixoria to London. The partners will also continue to build on the success of Exercise Noble Partner 17, which increased the scope of cooperation and improved interoperability. With Brexit ever in the background, the teams of both countries are already planning to explore potential changes to the bilateral agreement framework, though nothing can be confirmed until 2019. Until then, the Strategic cooperation goes on.

The Wardrop Strategic Dialogue will be held in October this year, its first time in London since being upgraded to a Strategic level. “We expect a big delegation from various ministries and agencies in Lancaster House,” Beruchashvili tells us. "Georgia needs strong support and the engagement of the UK today in all our directions of cooperation". The Georgian high-level delegation will be headed by the Minister of Foreign Affairs, Mikheil Janelidze, while the head of the UK delegation will be Foreign Secretary Boris Johnson. Within the framework of the Dialogue, four panel discussions are planned: Political, Defense and Security, Economics and Trade, People-to-People contacts and Culture.

CULTURE & SOCIETY The Ambassador tells us that opening up the Embassy premises for book presentations, talks by filmmakers, and lectures by students and other members of the Diaspora, has made her workplace a more open and attractive meeting spot for those with an interest in Georgia. “We try to generate this interest among various layers of society, to promote Georgian culture among the British people and make them familiar with our centuries’ long cultural heritage. We also persist with our popular ‘Wine Table’ meeting format- wine and khajapuri enjoyed over talks about business, politics, the economy, security and culture. It’s important to have regular meetings, not only for stock-taking but to discuss new approaches and to make use of the opportunities of our strategic partnership to activate different dimensions of our cooperation at all levels, from parliamentary, to business and experiencesharing,” she says. One year ago, the Embassy and British Library teamed up to plan an event which will take place this September 30 in the British Library, an event for some 350 attendees which will open the Sound Festival. Georgia will be represented there by the Rustavi Ensemble, singing not only songs from its own polyphonic repertoire, but also a number of those recorded over a century ago by Gramophone. “The British Library shelters not only Georgian books and unique manuscripts but also such recordings,” Beruchashvili says. “Before the concert, a seminar will be held by British musicologists, the rector of the Georgian conservatoire, singer Katie Melua, and representatives of the supporting Georgian Chanting Foundation. Georgian polyphony past and present will be the theme of the seminar, with a presentation of the audio archives. Georgian wine, of course, will also be served,” she says. “I’m delighted to see the number of articles being written on Georgian foodalmost weekly, and the number of books being printed on the theme,” Beruchashvili says. “It has become quite trendy to

The Wardrop Strategic Dialogue 2017 will be held in October, its first time in London since being upgraded to a Strategic level

speak about Georgian cuisine, culture and values!” Her efforts in this direction led to the opening this week of Georgian Food Week at the UK Parliament, with the canteen chef at Westminster offering traditional Georgian food to parliamentarians in ‘A Taste Adventure to Georgia’. Ambassador Beruchashvili and Jonathan Djanogly, MP, Chairman of the AllParty Parliamentary Group on Georgia, met last Tuesday to open the Feast. "Currently there is serious excitement in the UK media about Georgian wine, food, tourism and culture. Georgia is better known to the British citizens and I am proud to note that the Georgian embassy made its contribution to that success through organizing a series of talks, roundtables, exhibitions, various promotional events." On June 15, the Ambassador participated in Georgian Wine Tasting for importers by masters of wine Sarah Abbott and Robert Joseph in cooperation with the National Wine Agency of Georgia and the Embassy of Georgia. Over 100 types of Georgian wine were presented at the Masterclass on Saperavi, called WhatSap. The wine documentary ‘Prime Meridian of Wine,’ dedicated to 8000 years of winemaking in Georgia, will be screened at the EBRD Headquarters on October 5, presented by director Nana Jorjadze, one of Georgia’s leading filmmakers and a Cannes’ laureate. Famous British wine experts Hugh Jonson and Steven Spurrier, who featured in the movie, will also speak at the event, followed by a Georgian wine tasting and reception. “We want to promote Georgian wine, and Georgia itself as an ancient winemaking country, to a wider audience in London, including representatives of the UK government agencies, parliament, diplomatic corps and the Georgian community. In November, the Embassy, in cooperation with Asia House, is planning an evening dedicated to celebration of the 125th birthday anniversary of Georgian poet Galaktion Tabidze. “Professor, translator and Head of the Byron Society Georgia, Innes Merabishvili, will give a talk on his life and poetry,” the Ambassador tells us. Her translation of Galaktion’s poetry from Georgian into English has been published several times in the UK and a new edition will be launched at the event.

visit Scotland for the same reason. Last week also brought the visit to Tbilisi of Alderman Derek Pickup, Honorary Consul of Georgia for South West England (the Honorary Consulate will be officially opened soon), First Guardian of Tbilisi and Chair of the Bristol -Tbilisi Association. He is joined by Stephen Fear, Founder and Chairman of the Fear Group to explore investment opportunities in the field of tourism, infrastructure, housing and agriculture. Paul Hinchcliffe of the Bristol Business School, University of West England, also joined the group, looking into establishing new university connections, with meetings planned at the Ilia and Tbilisi State universities. Twin Cities are something else the Ambassador has her eye on. In May, together with the Newport- Kutaisi Association, the Embassy organized the visit of the Mayor of Kutaisi and his team to Newport to further develop partnership in different fields in renewed interest of cooperation between universities, supporting sports teams, experience-sharing at the level of local government on urban planning, financial management and education. Ahead is the jubilee event of the annual Georgian Studies Day in Westminster University established 30 years ago by Dr. Tamar Dragadze, "a very active member of the Georgian community”. This year's theme will be ‘Georgia’s European Way, Challenges & Opportunities’ that will bring together practitioners, scholars, diplomats and many friends of Georgia.

BUSINESS “We aim to do much more in the fields of trade, business and investment, working with various chambers, business associations, the European Bank of Reconstruction and Development (EBRD),” the Ambassador tells us. On November 20, the ‘Outlook Georgia’

conference, a “full-scale presentation of Georgia’s economic reforms and investment opportunities” will be held at the EBRD Headquarters in partnership with ‘Emerging Europe’ for the London-based business community. “Georgia having such an extensive reform agenda and as a genuine success story with more than 200 EBRD projects amounting to almost €3 billion investment, is an excellent message for other investors," the Ambassador says. Tourism is one of the most important and fastest-growing sectors in Georgia. The number of visitors from the UK to Georgia is growing steadily each year, with a 30% increase this year alone. “We do our best to promote Georgia as a tourist destination,” the Ambassador says. Georgia annually participates in the World Travel Market of London, one of the biggest international travel markets of the world. This year, the event will take place on November 6-8 and the National Tourism Agency of Georgia, together with the Department of Tourism and resorts of Adjara. The Embassy of Georgia, Georgian Airways and British Georgian Chamber of Commerce also celebrated the new direct flights from Tbilisi to London that are expected to facilitate “more trade, more tourism and more business”. It is clear the Ambassador works tirelessly for the interests of Georgia in the UK, covering all sectors, and is deservedly recognized by the diplomatic corps for doing so. Her sleeves are still rolled up for the ever-rewarding task of broadening UK-Georgia cooperation. As she says, "The deep-rooted bond of friendship and Strategic Partnership between Georgia and the United Kingdom can draw its strength from shared values of democracy, freedom and peace as well as from our joint efforts towards global security. I am honored to contribute and build further upon this solid foundation".

BEYOND LONDON

Georgian Food Week at the UK Parliament, with the canteen chef at Westminster offering traditional Georgian food to parliamentarians

“This year we further explored opportunities to take Georgia’s message beyond London,” the Ambassador says. A visit to Wales saw the Embassy delegation meeting Welsh government representatives, chambers of commerce and universities, the latter being the Ambassador’s "special focus” for cooperation with Georgia. This week she is set to

The Ambassador was selected by Diplomat Magazine as a Diplomat of the Year for her achievements


BUSINESS

GEORGIA TODAY SEPTEMBER 19 - 21, 2017

UK Appoints Trade Envoy to Georgia, Armenia BY KATIE RUTH DAVIES

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n September 12, the UK Prime Minister Theresa May appointed Mark Pritchard, MP, as a British Trade Envoy to Georgia and Armenia. Trade envoys are a network of parliamentarians appointed by the Prime Minister, drawn from across the political spectrum. Trade envoys engage with one or more emerging markets where substantial trade and investment opportunities have been identified by the UK government. They support the drive for economic growth by building on the UK’s existing relations with these markets and maximizing bilateral trade. "I’m honored to have been asked by the Prime Minister to be the UK's first Trade Envoy to Georgia and Armenia,” Mr Pritchard said. “My appointment underscores the importance of increasing the UK's trade and investment in Georgia and Armenia and Her Majesty's Government's commitment to a policy of commercial and business success between our respective countries. There are very many trade and investment opportunities to be realised". Mark Pritchard MP has spent over 12 years in Parliament and was appointed by the UK Prime Minister to the Council of Europe and the UK Parliament’s Joint Human Rights Committee in

2015. Holding two Masters degrees: International Diplomacy (Buckingham) and Marketing Management (London Guildhall), Pritchard is a member of the Migration, Refugees & Displaced Persons Committee and the British-Irish Parliamentary Assembly (BIPA), serves as ViceChairman of the Conservative Foreign Affairs and Defense Committee and Chairman of the Latvia Parliamentary Group, and is the Founding Chairman of the Parliamentary Group on Cyber-Security. He is an elected member of the British-American Parliamentary Group (BAPG) Executive Committee and, until 2015, was a member of the Joint National Security Strategy Committee (20112015) and a UK delegate to the NATO Parliamentary Assembly (2010-2015).

Minister of Economy Visits China Continued from page 1 “2017 is an extremely important year for ChinaGeorgia relations, seeing us sign a free trade agreement with China. Today, we’re here at the world’s largest trade expo,” Giorgi Gakharia said. The Minister noted that Georgia is to host the Silk Road Forum in November. The trade exhibition in Xiamen, which was organized with the participation of the Produce in Georgia Agency, and Ministries of Agriculture, Energy, Foreign Affairs and Regional Development and Infrastructure of Georgia, aims to introduce Georgia’s business climate as well as its trade and investment potential. High profile government meetings and bilateral sessions with private sector representatives of the two countries partici-

pating, are also to be held during the expo. While visiting China, Gakharia participated in the International Investment Forum where he talked about Georgia’s transit role in the region, pointing to the fact that the strategic location of the country enables Georgia to become the main platform for the One Belt, One Road initiative, acting as a throughway connecting East and West. “Georgia has already signed free trade agreements with the EU, Turkey, and China, and negotiations on signing a free trade agreement with Hong Kong have now also been finalized,” Gakharia said. “The Georgian government pays very special attention to strengthening the transit function of the country and to Georgia becoming the trade and logistical hub of the region,” he added.

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POLITICS

GEORGIA TODAY

SEPTEMBER 19 - 21, 2017

Armenia’s Difficult Position OP-ED BY EMIL AVDALIANI

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n November 8, the Yelk Coalition, a pro-Western group in Armenia's parliament, submitted a proposal for the country to leave the Eurasian Union. This spurred public debate about the Eurasian Union's strengths and weaknesses even as abandoning the Russia-led union remains unlikely. Nothing substantial came out of this proposition. It could have been a clever strategy on the government’s part to show to Moscow that not everything goes well with Russia’s closest ally in the South Caucasus, or simply a parliamentary motion. In both cases, it nevertheless sparked some sort of debate in international analytical circles. The growth of anti-Russian sentiment has been present in the country for the last several years. Armenians are worried that their military and economic over-dependence on Russia makes their strategic position vulnerable. Now and then, we encounter news from the Armenian defense ministry stating that Yerevan wants to establish deeper military ties with other major regional countries such as Iran. There were even statements about Armenia planning to increase gas supplies from Iran. Still, these initiatives are dwarfed by the real power Russia holds within Armenia: its control over Armenia’s vital infrastructure and the role Russia plays in the Nagorno-Karabakh conflict. Moscow’s indirect involvement in the conflict falls neatly within the Russian overall strategy of fostering and managing separatist conflicts across the Soviet Union. The Russia-influenced separatist “statelets” of Abkhazia, South Ossetia and Transnistria have remained a cor-

nerstone of the Kremlin’s foreign policy against the western military and economic encroachment. From Moscow’s perspective, Moldova, Georgia and Ukraine’s pro-western aspirations would be stopped, if not permanently then at least significantly hampered, if these conflicts continue to exist. Although Moscow does not have its troops in Nagorno-Karabakh, it does have a military base, the 201st, in Armenia. Moreover, Russia’s influence in Armenia has increased over the past decade or so when the Kremlin-backed businessmen and companies such as Gazprom and others bought up vital electricity, communication and gas infra-

structure in Armenia. Yerevan has also joined Moscow-led integration projects such as the Eurasian Union and Collective Security Treaty Organization (CSTO). Russia is also supporting Yerevan militarily through providing separate multimillion loans to buy Russian military hardware. Thus, Armenia’s overall dependence on Russia’s economic and military potential gives the Kremlin the ability not only to navigate Yerevan’s foreign policy vector and keep it strictly within the Russian sphere of influence, but also to impact the Nagorno-Karabakh conflict. Moscow also needs to be involved in the conflict as it fears Azerbaijan, with

its rich energy resources and strong military capabilities, would be able to limit Russian influence on its foreign and internal political developments, while Azerbaijan-Georgia-Turkey cooperation would only grow. Losing any levers of influence to impact Azerbaijan’s foreign policy will be tantamount to the near collapse of Russia’s South Caucasus strategy, which includes not only denying Armenia, Azerbaijan and Georgia possibilities to join western integration projects, but also successfully limiting the export of rich deposits of oil and gas from the Caspian Sea through Georgian territory. Any moves around the Nagorno-Kara-

bakh conflict that may harm Russian interests will in turn strengthen Russia’s geopolitical contenders Turkey and Iran. Turkey could further solidify its cooperation with Azerbaijan (through Georgia, and I wrote on the positive sides of the Trilateral Format in the past), while Iran could potentially become more vocal about its broader interests in the South Caucasus. For that reason, Moscow is increasing military hardware sales to both Armenia and Azerbaijan and thus trying to remain a major arbiter. For example, when in April 2016 a near full-scale war broke out in Nagorno-Karabakh, Russia was the power which stopped the fighting by brokering a ceasefire in Moscow between the Armenian and Azerbaijani military officials. Russia is also very careful not to let any of the competing sides gain ultimate military preponderance. It is true that statistically, Russia sells more armaments to Azerbaijan than to Armenia (and Yerevan is very much worried about that), but this deficiency is more to accentuate the Armenian weakness and the need to have Russia as its supporter. In other words, Armenia’s military dominance would negate any logic of needing Moscow as a military factor around the Nagorno-Karabakh conflict. Armenia’s strategic position remains vulnerable and whatever the talks are regarding Armenia’s membership in Russia-led integration projects, Yerevan is unable to unilaterally change the course of its foreign policy: Russia simply has too many tools to strike back. Emil Avdaliani teaches history and international relations at Tbilisi State University and Ilia State University. He has worked for various international consulting companies and currently publishes articles focused on military and political developments across the former Soviet space.

Keeping the Neighborly Train Rolling: Yerevan OP-ED BY ZAZA JGARKAVA

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nteresting processes have been developing in our geographical neighborhood, while Georgian politics is busy with the Ukrainian “Blitzkrieg” of the third president of Georgia. After the first train passed on the Baku-Tbilisi-Kars rail link, and the Foreign Affairs ministers from Azerbaijan, Georgia and Turkey agreed on the mutual three-year action plan, the Kremlin was quick to start the discussions about political isolation of our neighboring county, Armenia. Armenian media published articles where authors argue that plans agreed on at the meeting of ministers in Baku are critically against Armenian interests; some in Yerevan are positive that the alliance signed in Baku, which also carries a military component together with economic, is directed towards isolating Armenia and ‘torpedoing’ GeorgianArmenian friendship. “One of the goals of cooperation of Azerbaijan and Turkey with Georgia is torpedoing ArmenianGeorgian relationships,” wrote the Armenian publication Lragir. Last week’s meeting in Baku was preceded with a Batumi ministerial held in May, where the Georgia-TurkeyAzerbaijani military partnership memorandum was signed. Announcements about the alleged new coalition were actively made at the time. Armenian media was especially irritated about the part of the mutual announcement where the discussion referred to peaceful resolution of conflicts in Abkhazia, South Ossetia and Nagorno-Karabakh within the territorial integrity. This

issue was once again raised by the parties this time in Baku, and was perceived as an ominous signal in Yerevan. Apart from the Karabakh factor, Armenian media and political circles actively discussed the fact that the Turkish-Georgia-Azerbaijani alliance directly opposes the Russia-Armenia-Iran coalition and that these processes will place Armenia into isolation. Official Yerevan prefers to keep silent for the moment, however, we all clearly remember the position that the Armenian delegation stuck to during the voting in the UN, where the issue of returning Abkhazian and South Ossetia IDPs was discussed. Armenia was the one among those 14 countries who did not support the return of Georgian IDPs. Notably, the voting in the UN took place in May, after the Batumi ministerial. Armenian-Georgian relations are an issue of concern in Yerevan, and nowhere can this be more clearly felt than in the article published by Akop Badalyani in Lragir. The author believes that Baku and Ankara are attempting to instigate opinion that Armenia is supporting Russia in preparation of the alleged blow against Georgia, which “lacks logical grounds”. “On the contrary, Russia believes that closer Georgian-Armenian relations are a challenge and tries to support this process. But the problem is Georgia’s Euro Atlantic orientation, which makes Tbilisi a convenient platzdarm for NATO’s military blockage in the Caucasus,” writes Badalyan. Well, honestly, are our neighbors to be blamed for the fact that the Kremlin is irritated by the number of NATO military trainings in Georgia? NATO invites Official Yerevan to its circles, but our Armenian neighbors are cate-

gorically against it and prefer a military alliance with the Kremlin. Simple logic suggests that Armenia is the one responsible for its own isolation and Turkey, Azerbaijan and especially Georgia have nothing to do with it. Georgian political analysts also responded to the debates around Armenian isolation raised in the Armenian media. They believe that the current situation is a logical development of a process which started long ago between

Turkey, Azerbaijan and Georgia. Brigadier General Amiran Salukvadze told newspaper Resonansi that Georgia has its own policies which are certainly not against our neighbors: “We should react calmly to the analytical publications and I call on the government to activate all kinds of informational relationships, to issue explanations about its activities, so that these will not be perceived as threats,” he said, also suggesting that “political analysts also hold certain

responsibility for their statements!” The meeting that was held in Baku is very far from the creation of a new military alliance. The irritation of Official Yerevan, as well as the campaign raised in the media, might be connected to economic alliances rather than political. The former has already been demonstrated on the Baku-Tbilisi–Kars rail link: the train is already on the move, this is a fact, and nothing can stop the train from moving on its way.


SOCIETY

GEORGIA TODAY SEPTEMBER 19 - 21, 2017

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San Diego State University Georgia Hosts Convocation Ceremony 2017 in Tbilisi

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n September 11, the San Diego State University in Georgia hosted its official Convocation Ceremony to mark the start of the new academic year and to accept new students onto its programs. The event was attended by the Minister of Education and Science of Georgia, Vice Prime Minister, Aleksandre Jejelava; US Ambassador to Georgia, Ian C. Kelly; Millennium Challenge Corporation (MCC) Deputy Regional Vice President, Fatema Sumar; and MCA Georgia’s CEO, Magda Magradze. San Diego State University Provost Chukuka Enwemeka and a delegation of SDSU Deans were special guests of the event. The Provost addressed freshmen

and congratulated them upon the beginning a new academic year. “I’m glad that students’ interest towards STEM and our programs continues to dramatically increase. The number of students accepted this year onto SDSU programs in Georgia almost doubled once again. Today, we officially accept new students to the University and mark the beginning of their college career. We wish success to all our students in their studies. Their older colleagues in our first two cohorts are already working in their fields and building their careers, so we already know these new students will have success in building Georgia’s Economy,” said Ken Walsh, Dean of SDSU Georgia Convocation is a ritual that signifies

the beginning of a college career. Convocation brings new students and their families together with faculty and staff to mark a new beginning. It also serves as a vehicle to instill core institutional values of scholarship, citizenship, and leadership. In 2017, SDSU accepted more than 200 students into its internationally accredited American degree programs in Georgia. The 3rd cohort, like the previous one, is diverse: students from Tbilisi and

all regions of Georgia are represented. There are also more than 20 international students from eight different countries and six exchange students from SDSU’s California campus. The history of San Diego State University (SDSU) began in the late 19th century. It is one of the biggest and most popular universities in California with 35,000 students and a $130 million budget for research. San Diego State University, through funding from the US Govern-

ment’s Millennium Challenge Corporation, offers internationally accredited Bachelor of Science programs in the fields of science, technology, engineering, and mathematics (STEM) in Georgia. SDSU Georgia graduates will receive an American degree. Programs offered by the university will support the development of construction, science and technology fields along with Georgia’s human capital capacity for economic growth.

Celebrate the European Day of Languages

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ncouraged by previous fantastic experience, the European Union National Institutes for Culture (EUNIC) is delighted to celebrate the European Day of Languages in Tbilisi. Starting from 11AM on Sunday, 24 September, schoolchildren from various public and private schools will have an exciting opportunity to participate in parallel activities such as language workshops and different competitions. They can also learn more about different cultures at various information desks and win great prizes. Registration for the event starts at 10AM. At the initiative of the Council of Europe, Strasburg, the European Day of Lan-

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guages has been celebrated each year since 2001 on September 26. Throughout Europe, 800 million Europeans, represented in the Council of Europe's 47 member states, are encouraged to learn more languages, at any age, in and out of school. Being convinced that linguistic diversity is a tool for achieving greater intercultural understanding and a key element in the rich cultural heritage of our continent, the Council of Europe promotes plurilingualism in the whole of Europe. WHERE: First Classical Gymnasium, Rustaveli Avenue, Tbilisi WHEN: Sunday 24 September, 10AM to 17:45PM

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Issue #982 Business  

September 19 - 21, 2017

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