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facebook.com/ georgiatoday

Issue no: 990/100

• OCTOBER 17 - 19, 2017

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue... De Facto Abkhazia Calls on NATO to Stay Neutral NEWS PAGE 2

Strong Leader = Successful Team?! ISET PAGE 4

Tourism Market Watch

FOCUS

GALT & TAGGART PAGE 8

Japanese Ambassador to Georgia: Aiming to Develop Cultural & Economic Ties

ON THE ANAKLIA DEEP SEA PORT

Construction kicks off in December. Find out how Georgia got this far and what to expect next

PAGE 6

BUSINESS PAGE 9

Finance Minister Holds Meetings with International Financial Institutions in US BY NINO GUGUNISHVILI

D

imitry Kumsishvili, Minister of Finance of Georgia, held meetings with international financial institutions while on a visit to Washington DC this weekend. Kumsishvili participated in the annual International Monetary Fund and World Bank meetings, where he spoke about the fiscal reforms implemented in Georgia, focusing on the Estonian model which has been implemented in the country since the beginning of 2017, enabling the business sector to retain profit and use it for more invest-

ment, and in order to create a greater number of employment opportunities. “The ongoing and future reforms are based on the government’s Four Point Reform Plan, and it is important to use all the existing fiscal resources effectively,” the Minister said, going on to highlight the decision of the Georgian government to cut existing expenditure while increasing capital, namely for state infrastructure investment projects planned for the years of 2018-2021, that, as Kumsishvili said, are oriented towards financing infrastructure projects which are expected to encourage investments and economic activity in the financial sector.

During his visit, Kumsishvili met with Jihad Azour, IMF’s Director of Middle East and Central Asia Department, where he emphasized that Georgia is a leader in implementing reforms, and discussed the future steps needed for the country’s economy to become more competitive and achieve a higher pace of growth. Together with the President of the National Bank of Georgia, Koba Gvenetadze, Dimitry Kumsishvili also held meetings with JP Morgan

and Deutsche Bank representatives. The Minister members of the Georgian delegation also met with Frank Heemskerk, Executive Director at the Board of the World Bank Group, and Cyril Muller, World Bank Vice President for Europe and Central Asia.

Congo-Captured Georgian Pilot’s Family Holds Protest Rally SOCIETY PAGE 13

Turkey-Georgia-Azerbaijan Axis Will Only Strengthen POLITICS PAGE 15 Prepared for Georgia Today Business by

Markets Asof13ͲOctͲ2017

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GBP3.40

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+15,2%

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+3,0%

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112.49(YTM3.07%)

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Ͳ2,6%

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111.68(YTM4.95%)

+0,1%

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103.09(YTM5.37%)

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Price

w/w

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57,17

+2,8%

+3,6%

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1303,82

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2,4773

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+0,7%

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2,9276

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3,2915

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7535,44

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2,5475

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20259,51

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0,0432

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12991,87

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22871,72

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1,4658

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6605,80

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0,0052

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163,18

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0,0934

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1125,91

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0,8459

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SP500

2553,17

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0,7528

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MICEX

2098,77

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0,9745

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MSCIFM

2906,72

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57,3410

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GTIndex(GEL)

1133,66

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TRY/USD

3,6351

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GTIndex(USD)

922,38

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AZN/USD

1,6961

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MSCIEMEE MSCIEM


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NEWS

GEORGIA TODAY

OCTOBER 17 - 19, 2017

De Facto Abkhazia Calls on NATO to Stay Neutral BY THEA MORRISON

T US Embassy Disappointed in Absence of Consensus over Constitution BY THEA MORRISON

T

he United States (US) Embassy in Georgia released a statement on recent developments regarding the constitutional amendments in Georgia, saying they share the recommendations of the Venice Commission. “The Embassy places strong weight on the opinion of the Venice Commission, and supports its recommendations,” the statement reads. The Embassy also stressed that they are disappointed that the sides involved in the process could not reach consensus. “The Embassy believes that constitutional changes create the strongest

basis for lasting reform when they enjoy broad-based consensus across parties and society”. The Parliament of Georgia overruled President Giorgi Margvelashvili’s veto on the constitutional amendments at an extraordinary session on October 13. After overruling the veto, the parliamentary Georgian Dream (GD) majority adopted the primary version of the bill with 117 votes for and 7 against. The ruling GD has many times been able to override presidential vetoes as it has 116 MPs in a 150-seat parliament. The Presidential Administration, opposition and various Non-Governmental Organizations claim the constitution is “one-party” and was adopted by the ruling party without reaching consensus with the other opposition parties and the President.

he de facto Ministry of Foreign Affairs (MFA) of Georgia’s Russian-backed breakaway region of Abkhazia, has issued a statement regarding the resolution on strengthening stability and security in the Black Sea region, adopted by the NATO Parliamentary Assembly (NATO PA) on October 9 in Bucharest. The ‘Ministry’ says that the adoption of the resolution, which repeats stamps on the "occupation of Georgian territories", violations of human rights…and with persistent calls for Tbilisi to intensify its integration with the North Atlantic Alliance, is a matter of serious concern. “Western friends of Georgia who are pushing it towards NATO with all their might, do not want to recognize the lessons of the recent past. While encouraging Tbilisi to join this military bloc, the leaders of Western countries do not realize that they actually promote the growth of both aggression and intolerance within Georgian leadership and society,” the de facto MFA stated. The so-called ministry also says that after the recognition of sovereignty of the “Republic of Abkhazia” in 2008 by the Russian Federation, the relations between the two countries are regulated by official bilateral agreements, including by the military sphere. “The agreements within the military sphere are aimed at ensuring the defense and security of Abkhazia, and in no way affect Georgia. Regularly replicas of the

Photo source: gumilev-center.ru

Georgian side and its allies in the West stamps on the "occupation of Georgian territories" are simply meaningless,” the “MFA” added. The de facto Ministry also says that the leaders of Georgia and their Western friends in essence continue “the vicious course to increase the propaganda hysteria,” which in no way contributes to productive dialogue, and negates all the efforts made by the parties in the framework of the Geneva international discussions. “The Ministry of Foreign Affairs of the Republic of Abkhazia again appeals to the NATO Parliamentary Assembly, to remain neutral in the implementation of such documents," the statement reads. The resolution adopted by NATO PA

says that NATO supports Georgia’s EuroAtlantic integration, denounces the occupation and militarization of the Georgian territories by Russia, and condemns the human right violations in Georgia’s Russian occupied regions. It also blames Russia for intimidating and attempting to destabilize NATO aspirant countries. Moreover, the document recognizes Georgia’s progress and democratic reforms and reconfirms its commitment to the 2008 Bucharest Summit decision, that says that Georgia will eventually become a NATO member. The resolution calls upon the governments of the Black Sea region states to boost strategic discussions regarding Black Sea security.


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BUSINESS

GEORGIA TODAY

OCTOBER 17 - 19, 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.

Strong Leader = Successful Team?! BY NINO KAKULIA, IRAKLI KOCHLAMAZASHVILI & SALOME GELASHVILI

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he cooperative movement in Georgia started back in 2013 with EU support through the launching of the ENPARD project, a major component of which is the development of agricultural cooperatives across Georgia. According to the Agricultural Cooperatives Development Agency, there are 1,500 agricultural cooperatives in Georgia, and more than 250 of them have been supported by the ENPARD program (for the locations of these cooperatives see the map). Not all those newborn cooperatives will be successful, and their sustainability depends on many factors.

THE THEORY SAYS… According to the literature, managerial skills, stakeholder involvement, a competitive environment, and access to finance are the determinants of sustainability for agricultural cooperatives. Some recent research has shown that good managerial skills are the main contributors to the success of an initiative. Further research has proved that strong leadership, paired with enthusiasm for collective action has led to more successful cooperation, whereas lack of management experience and knowledge has caused failures. Some studies have also found that managing cooperatives is more challenging compared to the one-member one-vote system involved in managing private firms, because of the complicated decision-making process in cooperatives (despite being more democratic). Having said that, the importance of having a strong leader is crucial for cooperative success.

THE PRACTICE SHOWS…. Lia Mukhashavria, founder of the ENPARD-supported agricultural coop-

situated on adjoining land plots. The managers are responsible for obtaining data on total production, land ownership, and the finances of the managed group of farmers. The core management team includes one agronomist, one factory manager, and one person (Lia herself), responsible for sales and communication.

NEXT STEPS TOWARDS SUSTAINABILITY

Source: www.enpard.ge

erative Guriis Tkhili, is an example of a strong leader who used her knowledge and experience to start a hazelnut processing cooperative in Guria. Lia is a Tbilisi-born lawyer and human rights activist who graduated from the Law Faculty of Tbilisi State University (Georgia) in 1989, the Law School of Temple University (US) in 1995 and the Frankfurt School of Finance & Management (Germany) in 1999, and worked for several international and local organizations from 1990-2014. The knowledge and experience generated during these years motivated her to leave Tbilisi, and in 2015 Lia moved to her home village in Guria in order to set up a hazelnut processing cooperative. Prior to moving to Guria, she collected information about the best production technologies in hazelnut production, market size, and prices, and visited farmers in Georgia and abroad, including the famous kibbutz in Israel. Eventually, together with four experienced hazelnut growers, she established her cooperative, which unites 97 members who together have about 150 ha of hazelnut orchards in four different villages in the Lanchkhuti municipality (Shukhuti,

Mamati, Atsana and Ninoshvili). The cooperative relies on a well-equipped hazelnut processing plant (162 m2) which is now ready to receive its first harvest for processing. The factory can process 5 tons of unpeeled hazelnut per day and has become a working place for 100 people working in two shifts. Instead of selling low price, in-shell hazelnuts on a ‘on-the-spot’ basis, the cooperative members plan to establish long-term contracts with clients and sell shelled hazelnuts directly to the market without involving intermediaries. This will allow them to keep higher added value from their sales.

FACE TO FACE WITH CHALLENGES While establishing the cooperative, Lia encountered challenges related to motivating people who were not enthusiastic about cooperation. They were (and still are) reluctant to share knowledge with each other. Lia calls this phenomenon “glekhis chkua” (peasant’s brain). Furthermore, age and gender imbalances are extremely pronounced in rural areas, meaning that only 20% of the population in the villages is young, according to Lia.

10 Galaktion Street

Also, farmers were quite skeptical about Lia as a female leader, despite her reputation and accomplishments, which they respect and are proud of. Another major challenge was to attract funds for building the nut processing plant. Led by Lia, the core team of the cooperative managed to benefit from the state program “Produce in Georgia.” The cooperative was provided with 1,700 m2 of land at the symbolic price of 1 GEL/ ha, with an obligation to invest GEL 136,000 for factory construction. In addition to this, Guriis Tkhili received a seven-year preferential agro credit to the amount of GEL 76,000 (the government subsidizes 8%, and Guriis Tkhili pays the rest - 3%). Furthermore, under the ENPARD program (CARE consortium), they got a recoverable grant of GEL 76,220 for the equipment needed for drying, cracking, calibrating, sorting and packaging hazelnuts in bulk. Yet another challenge was to manage the large number of members with resources spread across numerous villages. In order to manage the cooperative efficiently, Lia appointed 15 members as managers. Each manager deals with a group of farmers whose orchards are

According to Guriis Tkhili’s estimation, at least 80 tons of unpeeled hazelnuts will be processed at the factory this year. This in spite of the damage caused by the stink bug epidemic in western Georgia, fungal diseases, and unfavorable weather conditions, leading to a low harvest and low-quality hazelnuts in most parts of Guria. Fortunately, there was a quite good yield up in the Gurian mountain villages, which will be the major source of hazelnuts for the factory this year. As to the markets, Lia hopes to sell a decent quantity of shelled hazelnut directly on the international market in Turkey. She’s had negotiations with Ukrainian, Spanish and Belgian partners, and is considering selling shelled hazelnut on the Middle East and China markets in the future. She also plans to open shops for hazelnut and nut products, and envisions tourism as an opportunity. She believes that her cooperative, combined with the beauty of Gurian villages, will attract agro- and eco-tourists to the region. This will contribute to the creation of new jobs and income diversification for farmers. However, what Guriis Tkhili has achieved so far was very much dependent on Lia’s strong leadership skills; real success is yet to come, when other sustainability factors - such as cooperative member involvement, which will help guarantee stable production volume (avoiding side-selling) and decent quality (proper maintenance of hazelnut orchards); access to finance for avoiding cash problems (financing operational costs); and a good marketing strategy will be also in place and operational.

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


BUSINESS

GEORGIA TODAY OCTOBER 17 - 19, 2017

5

Wooden Dutch Motorbike Runs on Algae BY DIMITRI DOLABERIDZE

Pay through 20-Month Internal Interest-Free Installment at Completed King David Complex*

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rom today, and until November 20, the residences at King David can be purchased through 20-month internal interest-free installment payments! King David expects to welcome its first residents from December 1. Upon purchasing their apartments, residents can start renovation works and can move in even before full payment of the apartment. King David is a premium class multifunctional complex consisting of two towers. The taller tower, named King David Residences, is a residential space. The shorter tower, the King David Business Center, incorporates class-A office spaces. Over 40% of the project is made up of infrastructure. The towers are connected to each other on the first six floors and this is where the majority of amenities are allocated, including a 28-meter pool, a spa and fitness center, a garden on an open terrace with a space for children, a restaurant, cafeteria, event hall,

residential lobby with a bar, business center lobby, and parking. A 5-star restaurant with a 360-degree panoramic view of Tbilisi is located on the 32nd floor. King David has repeatedly celebrated international success and recognition in one of the most prestigious contests in the real estate field, the International Property Awards. King David was awarded with the highest (5-star) assessment and won the nomination “the best MixedUse Development in Georgia” in 2016 - 2017. Further, in 2017, King David was named the “Best High Rise Residential Development in Georgia 2017-2018”. King David is a place where the time of its residents and workers is greatly valued. In this regard, the company created a project where people can get everything they need in one space - the ability to live, work, entertain themselves, and relax. * NOTE: Headline offer open until November 20, 2017.

A

designer from the Netherlands, Ritzert Mans, and scientist Peter Muiž have built a wooden motorcycle that runs on fuel which is derived from the processing of algae. "The main task in front of me was to find natural material for each part of the motorcycle," Mans said. The frame and seat of his motorcycle are made of steamed bentwood with hemp fiber, strengthened with reinforced attachments for a two-

point headset. The construction was fastened with ordinary wood glue. The motorcycle has a single-cylinder fuel "engine" of 500 cubic centimetre volume. Energy for the bike is provided by "oil from microalgae" and is driven by a belt on the steering wheel. "Algae oil has certain advantages: algae participates in photosynthesis, and through a certain process can convert CO2 into oil," says Mans. He added that the motorcycle pictured, and presented to the public, is not the final version, but just a working prototype, since work on the final version is not complete.


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BUSINESS

GEORGIA TODAY

OCTOBER 17 - 19, 2017

Anaklia Deep Sea Port Land Construction Works to start in December economic effect on our country,” Akhvlediani said. Georgia is the only country today in the Black Sea area without a deep-sea port, while Poti, as the major port of the country, lacks capacity to serve large container ships, “which means that, according to forecasts, by 2021, Georgia with just Batumi and Poti ports operating, would have no potential to fulfil the existing high demands, and that’s why the Anaklia Deep Sea Port project is such an important one for our country”. Members and partners of the Anaklia Development Consortium include Conti Group, TBC Holding and a new strategic partner that recently joined logistics company, Wondernet Express. The overall project cost is $2.5 billion, and ADC was granted Anaklia Deep Sea Port for a 52-year concession. “The first phase, construction of which is to start on December 20, 2017, will make a capacity of 900,000 containers, and a 1.5 million bulk cargo transportation- the overall budget for the first phase being $540 million,” Akhvlediani said.

BY NINO GUGUNISHVILI

A

naklia Deep Sea Port land construction works are to kick off on December 20, it was announced at a meeting between Anaklia Development Consortium and Georgian business sector representatives held at the Tax Payers Union’s office on Friday. “Anaklia Deep Sea Port is a project of unprecedented scale for our country, with which the process of creating a new reality both for Georgia and for the entire region has begun,” Mamuka Khazaradze, Anaklia Development Consortium CoFounder said. “Work on the Anaklia Deep Sea Port project started last year and we made a promise that within one year we would start the actual construction process,” he added. “It has been an intense year, seeing our team working alongside experts, professionals and world-leading international companies in marine infrastructure and environmental assessment. We managed to fulfil our promise and now we’re starting yet another important stage of the project, launching the actual construction works of the Anaklia Deep Sea Port”. In June, SSA Marine, a leading US operator, was announced as the future container terminal operator, as well as an investor in the Anaklia Deep Sea Port. The Anaklia Deep Sea Port master plan was prepared by Anaklia Development Consortium and approved by the Government of Georgia in October 2017, a document on which ADC for a period of one year worked together with an international company MTBS. In addition, in June Anaklia City JSC was established and Anaklia City & Special Economic Zone project launched. A memorandum with South Korea’s Incheon Free Economic Zone was signed, and communications with over 100 international companies began. At the same time, Anaklia City announced expression of interest on the Anaklia development plan, visionary master planning and economic analysis. The company is reviewing proposals from more than 30 international consulting consortiums. The study is to commence in late November 2017. Other major stages of the Anaklia Deep Sea Port project included marine, engineering, geo-technical, topography and other studies carried out by leading Dutch company Van Oord. The Anaklia Development Consortium has already completed the majority of feasibility studies, the project Phase 1 preliminary design has been developed and submitted, prepared together with leading

international companies including Moffatt and Nichol, Royal Haskoning DHV and Van Oord. The Georgian government has already transferred parts of the Anaklia Port investment area to Anaklia Development Consortium. An environmental impact assessment of the project was carried out by ADC through which over 50 studies were made to examine the flora, fauna and marine areas of the Anaklia Deep Sea port and its adjacent territory. Further to that, public meetings were held in the process of working on said assessment, while up to 20 local and international companies were involved, Royal Haskoning DHV and Ecoline International among them. Social and economic studies of the Samegrelo-Zemo Svaneti region were also carried out. “Together with our international partners, Conti Group, we changed the initial approach and the concept of the project, deciding to use 340 hectares of the 1000 hectares of land for the port itself, as technologies are developing extremely fast and ports today are practically large software companies, optimizing logistics, meaning there’s no need for huge territories for container transportation,” Khazaradze said. “We decided to build the Port in nine phases with an ultimate capacity of 100 million tons. Our idea was to have a port plus a special economic zone”. The Special Economic Zone is to be an administrative entity working under a special regime for which an organic

Within three years, the Anaklia Deep Sea Port is to receive the first ships. “The overall added economic value of the Anaklia Deep Sea Port project will be more than 300 billion, with as much as 21,000 people to be employed,” he added. Anaklia City is expected to be a dynamic, modern industrial and logistics hub which, like the Anaklia Deep Sea Port, “will bring tremendous economic effects to Georgia,” said Ketevan Bochorishvili. “This will be an industrial zone to accumulate numerous international companies, new technologies and new employment opportunities,” she stressed. While emphasizing the importance of Anaklia City, Bochorishvili said that it’s an advantage to the port, since with the highly organized infrastructure will allow it to offer additional services to companies on site, based on a ‘one window’ principle. “Our aim is to attract as many foreign companies as we can, ones which have not previously considered entering Georgia, and we would like to also attract production companies that could ben-

law is to be written. “This will make the area attractive for transportation, and for logistical centers and enterprises,” he said, adding that the Anaklia Deep Sea Port will become a transport and logistics hub of the region. The Friday meeting went on with detailed presentations of the Port and Anaklia City projects made by Levan Akhvlediani, ADC CEO, and Ketevan Bochorishvili, CEO, Anaklia City, describing the works already complete, the future impact and the opportunities those ambitious projects offer. “Due to its geographical location, Georgia has huge potential as a transit country,” Akhvlediani said. “It serves two regions, with primary and secondary markets, primary being the South Caucasus market, with Azerbaijan, Georgia and Armenia and the secondary market of Central Asia countries and the North Iran”. He noted that Georgia’s competitiveness has decreased due to a lack of infrastructure for the transportation of goods, with its main competitors the Russian corridor, Baltic countries and Iranian corridor. Akhvlediani stressed that with China increasingly developing the Silk Road, it changes the trade environment between the Europe and China, the potential of which Georgia needs to “fully benefit from”. “Every year, approximately 34 million containers are transported from China to Europe, and even if 1 or 2% of it comes through Georgia, it will have a great efit from the existing free trade agreements our country already has with the EU and China, which, of course, opens enormous opportunities,” the Anaklia City CEO said. “This is the first phase of the project we’re talking about, which will then develop the industrial park and logistics center into the scale of the city, adding new business services and demands on housing, health, tourism, education, IT and communication development, which in perspective will bring us a fully-functioning city,” she added. “SSA Marine, which is the operator of 250 terminals around the world, is not only the terminal operator of the Anaklia Deep Sea Port, they are also investors, and this is something crucially important,” Mamuka Khazaradze said to round up the meeting, adding that the Consortium is currently working with a leading Chinese company to unite a GeorgianAmerican Chinese conglomerate within the Anaklia Deep Sea Port project. “We’re open to all to participate, promote and support this project, I’m sure you’ll see lots of opportunities for your businesses in it,” Khazaradze concluded, addressing the attending Georgian business representatives.


BUSINESS

GEORGIA TODAY OCTOBER 17 - 19, 2017

RETAIL FPI |Should We Expect a Cold & Expensive Winter?

I

n the first half of October, food prices in Tbilisi’s major supermarkets increased by 10.8% compared to October 2017. On a monthly basis (that is, compared to September 2017), ISET’s Retail Food Price Index increased slightly by 1.7%. On a biweekly basis, most of the prices increased, leading to a higher Retail FPI. The largest bi-weekly price changes were recorded for seasonal food products such as fresh fruit and vegetables. Prices increased the most for cucumbers (51%), eggplants (43%), and peaches (22%). Carrots (4%), sugar (3%), and pasta (1%) showed the biggest price drops.

PRICES OF FOOD CATEGORIES IN MORE DETAIL Tbilisi’s retail markets experienced significant annual price increases in all five food categories comprising the Retail FPI: fruits and vegetables (2.0%), grocery (2.5%), non-alcoholic beverages (6.6%), meat (9.2%), and dairy products (13.1%). The most drastic price increases were observed for dairy products. One explanation might be the

changes in regulations undertaken because of the Association Agreement (AA) between the EU and Georgia. Following stricter food safety regulations, on July 1, 2017, the technical regulations for the dairy sector came into force. In addition, the recent spike in international prices might also have put additional upward pressure on prices in the dairy sector. According to the FAO’s latest data on their Dairy Price Index, dairy prices increased by 27.4% on an annual basis, reflecting supply constraints in the EU, Australia, and New Zealand. Georgian consumers may be even more concerned about food prices, as the Georgian lari is experiencing depreciation: in October, the exchange rate between the Georgian Lari and the US dollar moved up from 2.36 GEL/USD to 2.48 GEL/USD, compared to the corresponding time period last year. Since Georgia is a net importer of food commodities, one might expect further price increases, especially if international trends are maintained in the future. Food spikes in early October might signal hard times for Georgian consumers come winter.

7

Naftogaz of Ukraine Expecting Billions in Compensation from Gazprom

BY DIMITRI DOLABERIDZE

U

krainian Naftogaz hopes to receive billions in compensation following the results of the arbitration of Stockholm lawsuits against Gazprom, says the commercial director of Naftogaz,

Yuri Vitrenko. In his opinion, the Stockholm Arbitration will not decide that the Ukrainian side should pay compen-

sation to the Russian side. "We’ve already made our calculations…but to say anything concrete at this time is difficult. However, we expect Gazprom will pay us a very significant amount. It's about billions of dollars, if not more than ten billion. We do not expect that, as a result of this process, if we take both the sale and the lawsuit on transit, we will be forced to pay something to Gazprom," Vitrenko said, adding that the Ukrainian gas holding expects to provide services for the transit of Russian "blue fuel" by the end of 2019. Continued on page 10


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BUSINESS

GEORGIA TODAY

OCTOBER 17 - 19, 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.

BRANDED HOTEL SUPPLY OUTSIDE OF TBILISI SET TO INCREASE SIGNIFICANTLY IN COMING YEARS Adjara Group Hospitality plans to open a 100-room Rooms Hotel in KokhtaMitarbi, the mountain resort near Bakuriani, which opened to visitors last season. With locations in Batumi and Sagarejo also in the pipeline, the Rooms brand could potentially have a portfolio of five hotels across Georgia by 2019. An 85-room Holiday Inn, expected to open in Telavi in 2018, has been added to the Kakheti accommodation pipeline, which already includes a Radisson Blu in Tsinandali and a Golden Tulip in Telavi. Branded hotel presence is also set to expand in Kutaisi. Temur Chkonia announced plans to open a five-star, 100-room Courtyard Marriott in 2019. The hotel will be the second international branded hotel in Kutaisi, following Best Western’s opening in early 2017.

TURNOVER IN HOTELS AND RESTAURANTS INCREASED 17.5% Y/Y TO US$ 553.8MN IN 2016, SAY GEOSTAT’S ANNUAL FIGURES Turnover reached US$ 271.7mn in the first six months of 2017, as strong visitor growth has boosted hospitality sector revenues. The sector has also posted significant gains in employment, with over 37,000 people employed in the hotel and restaurant industry in 2016. The sector accounted for 5.6% of total business sector employment, up from 3.2% in

tors, overtaking Ukraine as the fifthlargest source market.

2007. Salaries in the sector remain low, 33.2% lower than the business sector average. FDI in hotels and restaurants in the first half of 2017 is already at US$ 45.1mn, compared to average annual FDI of US$ 64.0mn in the sector over 20122016.

TOURISM VALUE ADDED UP 5.9% Y/Y TO GEL 1.0BN IN 1H17, ACCOUNTING FOR 6.8% OF GDP, COMPARED TO 7.1% IN 1H16 The accommodation units subsector was the main driver, with 30.0% y/y growth. Travel companies, which account for 32.5% of tourism value added, posted a 2.5% y/y decline. International travel inflows to Georgia increased 31.2% y/y to US$ 391.0mn in August 2017 and 29.0% y/y to US$ 1.86bn in the first eight months of 2017, according to NBG’s preliminary estimates. Foreign card operations in Georgia were up 25.0% y/y to GEL 212.0mn in August 2017 and 32.8% y/y to GEL 1.37bn in the first eight months of 2017.

AGENCY OF PROTECTED AREAS PUBLISHES VISITOR STATISTICS FOR THE FIRST NINE MONTHS OF 2017 The number of visitors to protected areas was up 32.7% y/y to over 856,000 and already surpassed the 2016 annual figure. The number of domestic visitors increased 30.3% y/y to nearly 486,000,

New Metro Station ‘University’ Opens in Tbilisi BY NINO GUGUNISHVILI

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he new 23rd metropolitan s t a t i o n ' U n i ve r s i t y ' opened in Tbilisi on Thursday. The project was financed by the Asian Development Bank, with construction works carried by Spanish company Cobra Assignia.

The expansion of the second metro line in Tbilisi, from Delisi towards the University, started in 1985 and was put on hold in 1993. In 2000, the VazhaPshavela station opened, where of two parallel tunnels, only one was used. With the completion of the recent construction works, the second tunnel from Delisi to Vazha Pshavela metro stations will now be open. The first metro station in Tbilisi opened in 1966.

while the number of international visitors was up 36.0% y/y to nearly 371,000. Russia (27.9% of international visitors), Israel (11.6%), and Poland (6.9%) were the top drivers of growth. The most popular destinations were Prometheus Cave, Martvili Canyon, and Kazbegi National Park, each hosting over 130,000 visitors.

INTERNATIONAL ARRIVALS TO GEORGIA NUMBER OF INTERNATIONAL ARRIVALS UP 20.9% Y/Y TO 0.76MN IN SEPTEMBER 2017 Of the top four source markets, there was strong growth from Armenia (+11.8% y/y), Azerbaijan (+15.6% y/y), and Russia (+32.0% y/y). The number of visitors from Turkey also increased (+10.5% y/y) for the third consecutive month. Arrivals from the EU were up 28.0% y/y to over 42,000 visitors.

NUMBER OF INTERNATIONAL ARRIVALS UP 19.2% Y/Y TO 5.82MN VISITORS IN FIRST NINE MONTHS OF 2017 The number of visitors increased from all major source countries except for Turkey (-4.7% y/y). The largest individual contributor to overall growth was Russia (+33.6% y/y), while Armenia and Azerbaijan also posted double-digit increases. The number of Iranian visitors was up 2.3x to almost 273,000 visi-

SHARE OF TOP FOUR SOURCE MARKETS IN TOTAL INT’L ARRIVALS AT 78.9% IN THE FIRST NINE MONTHS OF 2017; SECONDARY SOURCES CONTINUE TO POST ROBUST PERFORMANCES The arrival growth from secondary (nonEU) source markets contributed 4.0ppts to the overall growth of 19.2% y/y. The number of Israeli visitors increased 34.9% y/y to almost 100,000, while the number of visitors from Saudi Arabia was up 175.9% y/y to over 53,000. Arrivals from the EU were up 24.8% y/y to almost

264,000 visitors, with Germany, Poland, and UK accounting for a third of the growth.

TOURIST CATEGORY CONTINUES TO DRIVE ARRIVAL GROWTH IN SEPTEMBER 2017 The number of overnight visitors (‘tourist’ category) was up 24.8% y/y and accounted for 49.9% of international arrivals. Same-day arrivals and transit visitors posted 12.7% y/y and 22.6% y/y growth rates, respectively. The number of tourist arrivals in the first nine months of 2017 is up 28.8% y/y to 2.78mn, already higher than the number of tourists in Georgia in all of 2016.


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Japanese Ambassador to Georgia: Aiming to Develop Cultural & Economic Ties EXCLUSIVE INTERVIEW BY MATE FOLDI

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eorgia and Japan have a special relationship. Since Georgia’s independence from the Soviet Union, the cooperation between the two nations has been ever increasing, not only politically but economically and culturally, too. Indeed, Japan has had a two-tier Grassroots Grant Projects scheme active in Georgia since 1998, part of the Official Development Assistance (ODA) financial aid offered by the Japanese government for the development of projects initiated by local communities, with the goal of fulfilling diverse communal needs at the grassroots level. As the Embassy website explains, “Funding is provided for not-profit organizations such as non-governmental organizations (NGOs) and local authorities on a project basis. By making the financial support more open to the grassroots level, those people in marginalized or any other disadvantaged groups receive a genuine contribution for immediate improvement of their living conditions”. The project is divided into two parts: 1) Grant Assistance for Grassroots Human Security Grant Projects (GGP) and 2) Grant Assistance for Grassroots Cultural Grant Projects (GCGP). The former aims to ensure “basic "Human Security" through

the implementation of projects of various types and necessity in Georgia… [by empowering] people and communities and addressing the basic human needs in such fields as Primary Healthcare, Primary Education, Agriculture, Social Protection, Poverty Alleviation, and any other field related to basic human needs”. GCGP provides “nonrefundable financial assistance to support the implementation of cultural, sport and higher education projects conducted by non-profit organizations…that are active at Georgia’s grassroots level.” So, not only does GCGP directly support the promotion of culture and higher education in Georgia, it also fulfils the function of a cooperation mechanism, encouraging understanding and cultural exchanges with Japan. The Grant Assistance can be used only for financing: construction/reconstruction/rehabilitation of buildings/infrastructures serving as improved security conditions for vulnerable groups; procurement of equipment of vital importance; and “soft components" such as capacity building, training for beneficiaries and NGO staff (for GGP only). It cannot be used for financing salaries or any other administration/utility costs of the applicant organization, conferences, studies, invited experts, purchase of land, personal vehicles, office electronics, livestock or plant seedlings, rent or any other kind of utility cost, operating and maintenance costs of facilities and equipment, or consumables or multiple small

items that are hard to track and monitor. To get an idea of the extent to which the Grant Assistance project has blossomed in Georgia, it is worth looking at the facts and figures in the GGP sector. Over the last two decades, 157 grassroots initiatives have been financed, with the total investment reaching $15,837,878 at the end of the 2016 Fiscal year. By 2014, the bulk of the grants had been awarded to education and healthcare related projects: 56 projects totalling $3,897,685 for the former; 26 projects at $2,252,863 for the latter. Examples of the projects that Japan has assisted in this capacity include: ‘Rehabilitation of the Hospital for IDPs from Abkhazia in Tbilisi’ (2010); ‘The Project for Improvement of Medical Center in Zugdidi City’ (2012); ‘The Project for Improvement of the Georgia Red Cross Primary Health Clinic in Rustavi City of Kvemo Kartli Region’ (2013); and ‘The Project for Explosive Remnants of War and Mine Clearance in the Area of Administrative Boundary Line with Tskhinvali Region’ (2016). To find out more about Japan-Georgia relations, GEORGIA TODAY went to meet the Ambassador of Japan to Georgia. Mr. Tadaharu Uehara has a background in the insurance and re-insurance industry, providing insurance solutions to multinational companies in which he worked for over three-decades. Now the Ambassador Extraordinary and Plenipotentiary of Japan to Georgia, he says he is enjoying his new position, which

I believe that the warmth of hospitality is a common value that is shared between our two countries

he has held since August 1, as well as the country he is now positioned in. “Georgia’s natural beauty is extremely impressive, along with the country’s mesmerizing, rich, and very complex history and culture. Georgian hospitality is special; in my short time here, I’ve had many great and pleasant experiences with it. I believe that the warmth of hospitality is a common value that is shared between our two countries; even though the format or style of the hospitality is pretty different. I love Georgian hospitality and I hope that most of the Georgian people share the same positive attitude towards Japanese hospitality.”

WHAT IS THE HISTORY OF JAPAN’S RELATIONSHIP WITH GEORGIA? TELL US ABOUT THE PROJECTS YOU HAVE COOPERATED ON POLITICALLY, ECONOMICALLY, AND CULTURALLY, AS WELL AS THE ONES THAT YOU ARE COLLABORATING ON NOW

The most important thing to make note of, and something we always reiterate, is that our countries share common values like democracy and the rule of law. This is the bottom line of our relationship. Japan has always supported Georgia in its sovereignty and territorial integrity. We established diplomatic relations in 1992, and the Japanese Embassy in Tbilisi opened in 2009. In 2014, Georgia’s President visited Japan, with his visit being well received by the Japanese public, and this year Japan hosted Georgia’s Foreign Minister in June, and Japanese Parliamentary Vice-Minister for Foreign Affairs made a reciprocal visit to Tbilisi later that month. We would like to promote more high-level exchanges and visits between the two countries. In terms of economy, it’s important to emphasize that Japan is one of the largest donors to Georgia in terms of cumulative ODA for its economic growth, behind the large international organizations like the World Bank. Continued on page 10


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Naftogaz of Ukraine Japanese Ambassador to Georgia: Aiming to Develop Expecting Billions in Compensation from Cultural & Economic Ties Continued from page 9 Japan’s ODA has focused on two areas: improving the economic infrastructure and the people’s standards of living in Georgia. I’m proud of the Japanese government’s long-term involvement and investment in supporting Georgia. Trade-wise, Japanese exports to Georgia amount to $150 million in 2016, but Georgian exports to Japan are relatively smaller, worth only $11 million.

HOW CAN WE BALANCE OUT THOSE FIGURES? I want to promote Georgian exports like wine and agriculture products to Japan and increase the number of Japanese tourists to Georgia by introducing the power of its natural resources and beauty, and by stimulating Japanese private business investments in this country.

HOW DO THE RECENT HOSTILE DEVELOPMENTS IN NORTH KOREA AFFECT TOKYO’S FOREIGN POLICY AND ITS ABILITY TO CONTINUE ITS FDI PROJECTS ACROSS THE GLOBE? I don’t think the issue in and with North Korea is related to Japan’s political and economic relationship with Georgia. It really is a separate issue. What we would like to do with Georgia is to support the country, and jointly contribute to

the security and the prosperity in the international community.

WHAT ARE YOUR VISIONS FOR FUTURE COOPERATION WITH GEORGIA? ARE THERE ANY PLANS FOR PROJECTS IN THE AFOREMENTIONED SECTORS ALREADY IN PLACE? We have laid solid and significant groundwork for the development of Georgia since it became independent. It is my mission to further strengthen the political, economic, cultural, and educational ties with Georgia over the great platform that we have mutually created between the two countries and the two country’s people. I’m very optimistic about a new relationship and a closer cooperation on all these levels between Georgia and Japan.

THANK YOU VERY MUCH, ANY FINAL REMARKS? I am very thankful for Georgia’s acceptance of Japanese culture. Indeed, Japan has a very long relationship with Georgia, and this is something that I would like to reiterate. Upon doing some historical research, I learned that the recent DNA analysis had indicated that our Koshu grapes, wine grapes, are scientifically identical to one of the Georgian species. It is definitely a very interesting discovery as it goes to show just how far back the

two countries go. Moreover, we have a very old national treasure warehouse ‘Shosoin’ in Nara prefecture that was built in the 8th century by the thenEmperor. Within that warehouse, we found Sasanian ornamental jugs, plates and pots: Japan is one of the destinations of the Silk Road, that bridge between East and West and a project that Georgian government is emphasizing. Since Japan is recognized as a part of that, this bridge between the cultures, it is very natural for Japan to play a cooperative role to develop this strategy in modern form. Another relationship interesting to note is Japan’s love for Georgian Ballet. The great Vakhtang Chabukiani first came to Japan in the early 1970s to support one of the Japanese ballet companies and this unique and beautiful relationship continues until today thanks to the devotion of [Prima Ballerina] Nina Ananiashvili who has taken over the project. Today, Japanese ballet dancers, including trainees resident in Tbilisi, account for 11 people out of a total of about 40 Japanese residents in Georgia. We highly value this rich cultural relationship where a mutual respect has been fostered. I will do my best to develop further mutual respect not only in the cultural and people to people’s relationships, but also stronger economic ties between the two countries.

Gazprom

Continued from page 7 Regarding the fulfilment of the contract on gas supplies after the court decision in Stockholm, Vitrenko stated that while the Ukrainian side "does not yet know whether it will buy Russian gas or have such a duty, it does not expect to make any new agreements with the Russians". Naftogaz of Ukraine and Gazprom have been unable to reach a compromise on a number of claims and lawsuits in the Stockholm Arbitration. The parties have been trying to figure out their relationship since the summer of 2014, constantly increasing the number of claims against each other, bringing them to absurd tens of billions. Gazprom, in particular, demanded that Naftogaz pay fines for the shortage of Russian "blue fuel", and the Ukrainian side insisted

on concluding an additional agreement on the contract. At the end of May, when the preliminary verdict of Stockholm Arbitration on the counterclaims of Russian and Ukrainian state-owned companies was made public, the Ukrainian party celebrated the victory and stated that the "take or pay" rule had been canceled by the court decision, back-dating to 2014. However, then Gazprom refuted the announcement, with Deputy Chairman of the Board of the Russian gas concern, Alexander Medvedev, claiming the preliminary court decision contains no such statement. In turn, the Chairman himself, Alexei Miller, said at a press conference following the company's annual shareholders meeting, that Gazprom would appeal the interim verdict of the Stockholm Arbitration.


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Brain Food & Books at the Knowledge Café in Tsnori, Kakheti BY NINO GUGUNISHVILI

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wo hours outside Tbilisi, in the large village of Tsnori, Kakheti region, a threefloor house is being renovated to open as a new home for the Knowledge Café, a multifunctional library, meeting spot and café, and the only one in the area so far. It was opened in 2016 by Nana Bagalishvili and her friends from Tsnori. “There were no public spaces in Tsnori, unlike in Tbilisi, where people could meet,” Nana told GEORGIA TODAY. “So, me and my friends, all from Tsnori and having studied together in Tbilisi, decided to do something about it. We had no experience or special skills in organizing: we just got together, 25 of us, and from 2011 to 2016 organized events on the street: from book presentations

to Halloween celebrations!” They finally got GEL 19,000 funding from the Children and Youth Development Fund to rent a building and get furniture to set up the Knowledge Café social enterprise. There’s a bookstore where you can buy books for the cheapest price in Georgia, a multi-media library, a center for informal education, and a café called “Smart Taste” (Chkviani Gemo). All the books in the library and the computers were donated. “We want to share knowledge and experience from center to region. Nothing social happens here in Tsnori; the only place you can go is the local shop. Before the Knowledge Café opened, youth here were hanging out on the streets or in each other’s homes,” Nana says. “We wanted to be a social enterprise because we don’t want to be fully dependent on donors- we’ve managed to operate with no additional funding for our educational projects for an entire year since

Nana Bagalishvili, Co-founder of the Knowledge Cafe in Tsnori, Kakheti

our opening in 2016,” Nana tells us. The Café team has already organized more than 100 educational and cultural activities in the Knowledge Café, lots of their projects realized with the help of volunteers locally and even some coming from other towns and villages in the region to help. “This is a space for anyone who wants to share their experience and knowledge with others. We recently hosted the Minister of the Environment and Natural Resources Protection of Georgia, Mariam Jashi, a member of Parliament, and the Minister of Agriculture is to come,” Nana says, adding that even local businessmen hold meetings at the Café. The Knowledge Café also offers regular film screenings, book readings for children and special activities for the older members of the local population. “At first, adults came along only because their grandchildren were, and then we decided to engage them, too, and came up with the idea of collecting their stories about how Tsnori looked in the past. It was interesting both for us and for them,” Nana says, going on to tell us about a new project that focuses on the stories of women who have made a social impact. “This one will be for girls from the neighboring villages. We’ll collect narratives, photos and video material and make an archive and post it on our Facebook page. We also plan to make an open museum in Tsnori and in three other villages. We think it will motivate more women to be active”. The Knowledge Café is slowly becoming an information center, and as Nana told us, they’re now trying to financially

This is a space for anyone who wants to share their experience and knowledge with others

support local, socially deprived youth with the ‘Kizikhi Education Fund’. Currently, the Knowledge Café is running a fundraising campaign, which they hope will give them a chance to buy a new building of their own, as the house they are currently renovating for use is rented. The social campaign is called “დადე შენი აგური” (Lay Your Brick”). It is open to all- both individuals and companiesto donate. One brick costs just 5 GEL and each donor will have their name painted on a brick and mounted in the wall of the new Café when it is built. Nana estimates they need a 200-square meter space consisting of a large meeting area and a mansard third floor where a ‘Robotic School’ for children can be set up. “We also want the new Knowledge Café to be fully adapted for individuals with special needs,” Nana said. Since they only managed to raise GEL 26,000 from individuals at the launch of the fundraiser, it was decided to contact companies directly by sending them individually painted bricks featuring their company names and logos and accompanied by an explanation of the initiative. Many companies are yet to respond, but Nana is optimistic. Originally, the idea of launching the social campaign was inspired by the fact that the village of Machkhaani, near Tsnori, boasts the first ever Theater to be built with public funds, in 1899. “In honor of that, the Knowledge Café has helped set up an International Theater Festival in Machkhaani,” Nana says. The Knowledge Café is also a nominee for the upcoming TBC/Geocell Social Enterprise of the Year at the Business

We don’t want to be dependent on donors: we’ve managed to operate with no additional funding for our educational projects since opening in 2016 Awards 2017. “No matter whether we win or not, we’re excited to participate, as we’re interested in getting in touch with other social enterprises,” Nana tells us. If you happen to be passing by Tsnori, or even if you’re not- be sure to pop into the Knowledge Café. From views over the Alazani Valley and Caucasus Mountains to delicious home-made churchkhelas, and cheese with crispy Kakhetian bread, you’ll be sure to take something special home with you. If you’re lucky, you’ll get to meet the brilliant Nana Bagalishvili and team- undoubtedly game-changers in their region.


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GEORGIA TODAY OCTOBER 17 - 19, 2017

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Congo-Captured Georgian Pilot’s Family Holds Protest Rally BY THEA MORRISON

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amily members and friends of Georgian pilot Soso Osorauli, who was captured by the Congolese rebels in January, held a protest rally at the Ministry of Foreign Affairs of Georgia (MFA) on Sunday. The demonstrators called on the MFA, Interior Ministry and the Defense Ministry, to create a joint task-force that will go to Congo and find out what has really happened to Osorauli. The family of the Georgian pilot says they were told by the MFA that Osorauli was killed. However, they still believe him to be alive. “We were informed by the Georgians in Congo that he is alive. This situation has been ongoing for nearly a year now. We demand the creation of a group to go over there. We also demand the pilot’s brother, Giorgi Osorauli, be included in this task-force,” Osarauli’s family members stated at the protest. Later, the Foreign Ministry released a statement regarding, saying they are “doing their best to get to the truth”. “From the very beginning, all possible mechanisms as its disposal were used by the MFA to release and return the captured pilot to Georgia. His family and all interested persons were also informed about all steps taken by the Ministry,” the statement reads. The Ministry added that when the

news about Osorauli’s death was leaked, they obtained a photograph, which was examined by experts and shown to the family representative, adding even after this, that the MFA did not condemn the release of this information, nor carry out any verification for it. “Due to the serious situation caused by the hostilities in the Democratic Republic of the Congo, it is still impossible to fully verify the information. We continue working with all relevant international organizations, as well as with the government of the Democratic Republic of the Congo, regarding the issue,” the MFA stated. The Ministry also said that despite the information received from various sources about Osorauli, it is not feasible to confirm his death. “We share the concerns of family members in this worrying, uncertain situation, but we assure all that the state institutions are doing their best to obtain the truth, thus there is no reason to directly involve family members. As before, the family of the pilot will be informed about every step taken by the state,” the statement reads. The MFA and the Ministry of Defense (MoD) confirmed in February that one Georgian had been wounded and another captured after two helicopters of the Congo Air Force were shot down by rebels on January 27. Georgia’s MoD stated that the reason for the Georgian citizens’ presence in Congo was unknown, but added that Osorauli once served in the Georgian

armed forces, choosing to quit in 2015 for personal reasons. In late May, the MFA of Georgia held a special briefing, wherein Georgian Deputy Foreign Minister Zviad Gonadze said that there were rumors that an attack took place between the opposed

parties in DR Congo and Osorauli was killed, but he added this information had yet to be confirmed officially. On July 5, Georgian channel Iberia TV released a video of Osorauli who addressed his family members and asked them not to believe the accusation that

he had killed many people. Beka Dvali, the Ambassador of Georgia in South Africa, said that the video was old and was shot in May. Since then, no official news about Osorauli has been made known to the family or the media.


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Safety Week in HeidelbergCement

BY KATIE RUTH DAVIES

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s per tradition, in the last week of September, HeidelbergCement hosted its annual Safety Week, which aims at raising awareness of safety and health issues among its employees. Various events and trainings were held at the company’s cement and concrete plants and headquarters. This year, Safety Week was opened on September 25, with “First Aid” training in the headquarters of the company, attended by employees and the management crew. Throughout the week, an emergency team was established at the cement plants involving a ready-

trained evacuation team. To motivate employees, HeidelbergCement awarded the ‘safest working team’ with certificates. For employees driving corporate cars, and those who need to drive a lot for their jobs, a safe-driving course was held at the Rustavi Autodrome. Simultaneously, an entertainment event was held for employee’s children, followed by tree-planting in the areas surrounding the cement plants. Safety Week covered all HeidelbergCement plants in Georgia, including its Poti cement plant where the event was concluded. Health and safety issues are one of the main priorities of HeidelbergCement. Regardless of their working position, each employee understands the importance of the issue, and takes responsibility to meet the safety standards.

From Gruzia to Sakartvelo & the Man behind the Idea EXCLUSIVE INTERVIEW BY VAZHA TAVBERIDZE

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ithuania is soon to start calling Georgia “Sakartvelo” instead of the soviet-style “Gruzia”. The idea belongs to the speaker of Lithuania’s parliament, Viktoras Pranckietis. GEORGIA TODAY contacted him in Vilnius to find out more about this wonderful gift to the Georgian people.

I THINK I’D BE SPEAKING ON BEHALF OF ALL PRO-WESTERN SOCIETY IN GEORGIA (AND THANKFULLY, IT’S AN OVERWHELMING MAJORITY), IF I START BY SAYING A BIG THANKS FOR THIS GESTURE! WHAT DO YOU THINK THE PRACTICAL AND SYMBOLIC IMPLICATIONS ARE OF THIS CHANGE? In February 2015, I was in Georgia having a pleasant chat with an administrator of the hotel I was staying in. That man said that the word “Gruzia” is unpleasant to Georgians, that it’s perceived as imposed by outside sources, and that Georgian’s have their own name for their country – Sakartvelo. That’s when I started thinking about it. Two years on, I met with Georgian President, Giorgi Margvelashvili, and remembered that little chat, so I asked him: ‘Mr. President, would it be good news for you if I announced that in Lithuanian, Georgia would be called Sakartvelo instead of Gruzia?’ And he promptly said that it would make the Georgian people very happy. So, the simple idea became a reality, and now I have the pleasure to call on the Lithuanian people to adopt Sakartvelo as the name for Georgia. Maybe at first not as a substitute, but as a synonym. I think it would be great: if this makes both nations happy, let’s do it. It’s a small

gift between our two nations and I hope people will embrace it.

GEORGIA HAS ASPIRATIONS TO JOIN THE EURO-ATLANTIC COMMUNITY, AS LITHUANIA DID BACK IN 2004. HOW CAN LITHUANIA HELP GEORGIA ACCOMPLISH ITS GOAL? We do our best to support the Eastern Partnership countries, and the EU’s South-Eastern enlargement. I’d say we are advocates and leaders when it comes to bringing these issues to the table with our partners in Brussels and Strasburg. We are one of the first to bring Georgia’s challenges forward and call on other countries to support that wonderful country. We’re standing beside Georgia, and the name change is yet another demonstration of our firm support.

WHAT IMPRESSIONS DID YOU HAVE AFTER YOUR VISIT TO GEORGIA? You know, I felt very sad as I stood near the boundary line just 30 km away from Tbilisi, and when I saw those people that live beyond the barbed wire, they said ‘we live as Georgians, our country is Georgia, but currently I’m beyond the fence’. And then I saw the places where the refugees live. I don’t think they are good living conditions. We have a common experience of Russian occupation and we, Lithuanians, know very well how those people feel: we felt the same for more than 50 years. As for what we can do for Georgia and Georgians, we have our know-how and we are justifiably proud of what we, together with other Baltic countries, have achieved: we are a very good example of how a totalitarian regime can be peacefully transformed into a modern, democratic state. And that I think is an example worth following for Georgia, too, to fulfill its dreams and ambitions.


POLITICS

GEORGIA TODAY OCTOBER 17 - 19, 2017

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Georgia Has 73 Constituencies, 3.634 Polling Stations for October Local Elections BY THEA MORRISON

D Photo source: newsweek.com

Turkey-GeorgiaAzerbaijan Axis Will Only Strengthen OP-ED BY EMIL AVDALIANI

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any pundits across our region have begun wondering what impact the recent improvement of relations between Turkey and Russia could have on the South Caucasus, and especially on Georgia. Tbilisi has notoriously bad relations with Moscow, and it is interesting to see how the Russian factor would influence the current state of close relations between Turkey and Georgia and, by extension, Azerbaijan. As I will argue below, despite close Russia-Turkey contacts, Tbilisi and Ankara, along with Baku, will remain committed partners for a number of reasons ranging from economic and military to purely political spheres. It will also be shown that the backbone of this endured partnership will be the Trilateral format together with Azerbaijan. Indeed, Russian-Turkish relations have improved over the last year and a half. Both countries have shared interests in Syria, and the two have made significant steps forward in energy and economic co-operation. Ankara is currently considering buying a Russian S-400, and have become interested in the future S-500. This all is clear, but it is important to note that this Russian-Turkish improvement of relations will not come at the cost of Turkey sacrificing its co-operation with Georgia and by extension with Azerbaijan. For instance, Turkey’s President, Recep Tayyip Erdogan, made some interesting remarks about supporting Georgia and Azerbaijan’s territorial integrity at this year’s UN Annual Assembly, and was no less supportive of Ukraine’s state when he recently visited Kiev. Moreover, to underpin all those statements, there is also a clear geopolitical paradigm where Ankara enjoys the trilateral format with Georgia and Azerbaijan. The format was first introduced in May 2012 in Batumi, and since then the engagement between the three countries has only been increasing. The defense and economic co-operation between the countries increased, and we witnessed numerous joint military exercises between the three armies. Furthermore, the countries also co-operate on the exchange of military staff and military expertise. The durability of strategic partnership takes precedence as the three countries need each other. Military co-operation, along with railways and pipelines, represents a sticking point for Turkey, Georgia, and Azerbaijan.

Considering how shaky the regional, political and security landscape in the South Caucasus and the Black Sea is, co-operation between the three countries is certainly important. The trilateral alliance is altogether noteworthy as is consists of NATO member Turkey, EU/NATO-oriented Georgia, and Azerbaijan which, up until now, has avoided joining any large economic or military alliances. However, despite the three countries’ evidently divergent strategic paths, the basis for trilateral co-operation has only increased. Every of the three countries need the others. Turkey wants a more stable Georgia, with deeper economic and energy relations, while Azerbaijan, in the light of uncertainties regarding Nagorno-Karabakh, needs Turkey’s backing. Georgia, in-between, under pressure from Russia and being dependent on transit, in turn, needs both Turkey and Azerbaijan. Moreover, the two countries are Tbilisi’s biggest trade partners and investment sources. The trilateral co-operation between Turkey, Georgia and Azerbaijan is also based on mutual interests and geopolitical challenges. The countries are less concerned with different religions, foreign policy vectors, etc. All three see how interdependent they are, and there are clear imperatives (internal problems, foreign pressure) to increase the co-operation within this format. In other words, energy and transport infrastructure tying the three states, such as the Baku-Tbilisi-Ceyhan, pipeline takes precedence. Furthermore, the countries are set to unveil later this year the important Baku-Tbilisi-Akhalkalaki-Kars railway which will effectively connect the Caspian and the Black seas and increase regional interconnectivity. This geopolitical thinking has been central to Turkey-Georgia-Azerbaijan co-operation. True, the countries still lack a common agenda on how to further develop their military co-operation, and there are not yet any concrete mechanisms on how to deal with foreign challenges, but the trilateral format nevertheless has proved to be a long-lasting one. Thus, despite much-improved Turkey-Russia relations, there are no concrete developments suggesting that this will negatively impact the existing relations between Turkey and Georgia, and the larger Trilateral format discussed above. In fact, what we have recently seen suggests that co-operation between the three countries has only increased, regardless of how volatile the region generally is. This makes it also quite likely that, based on geopolitical imperatives, Turkey, Georgia and Azerbaijan will further work on increasing their mutual engagement.

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GEORGIA TODAY

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Editor-In-Chief: Katie Ruth Davies

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Maka Lomadze, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison Photographer: Irakli Dolidze

uring the upcoming October 21 local elections, 73 constituencies and 3,634 polling stations will function and receive voters throughout Georgia. The information was released by the Head of the Central Election Commission (CEC) Tamar Zhvania at the mid-term report presentation. She added that 13 mayoral candidates have been registered in Tbilisi. 28 candidates will run the race for the Mayor’s post in 4 self-governing cities and 338 in the districts. 1243 candidate members have also been registered for the elections. 994 of them will be elected via proportional voting and 249 via the majoritarian election system. Zhvania also added that 28 subjects, including 22 political associations, 5 election blocs and one initiative group, were registered. CEC Speaker Ana Mikeladze said that 9,546.450 bulletins will be printed for the October 21 local

self-government elections in 9 printers in Tbilisi. During the local elections, the voters will be given 3 types of ballot papers at the polling stations: 1. A blue bulletin - to choose a party or election bloc via proportional elections 2. A pink ballot paper - to select a majoritarian member for the City Council 3. A light green bulletin - to choose a self-governing city or mayor of self-governing community. In total, around 3,440.123 voters have been registered for the upcoming elections.

FIRST BRAND HOTEL IN KUTAISI UNDER BEST WESTERN INTERNATIONAL Within the framework of the Georgian Hotels’ Regional Network Development Project “12 hotels in 12 regionsâ€? by GHYHORSPHQWFRPSDQ\Âł6LPHWULD´WKHÂżUVWEUDQGKRWHOKDV been opened in Kutaisi under the Best Western International brand. The hotel accommodates 45 guest rooms, including 40 standard rooms and 5 suites. The hotel was designed taking into consideration special conditions and safety for guests with disabilities.

Three mobile conference halls are available with a total capacity of about 100 persons. (XURSHDQFXLVLQHFDQEHHQMR\HGLQWKHJURXQGĂ€RRUFDIp and a grill-bar menu in the roof top restaurant with panoramic views over the city. The International Hotels Management Company “T3 Hospitality Management,â€? providing the hotel management, has 20 years’ experience in hotel management in different countries globally.

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Website Manager/Editor: Tamzin Whitewood Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

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Issue #990 Business  

October 17 - 19, 2017

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