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facebook.com/ georgiatoday

Issue no: 1032/121

• MARCH 20 - 22, 2018

PRICE: GEL 2.50

In this week’s issue...

FOCUS

Putin ReElected as Russian President

ON TOP TBILISI

Tbilisi wins 2018 Experts’ Choice Award for Best Emerging Destination

• PUBLISHED TWICE WEEKLY

PAGE 11

NEWS PAGE 2

ReforMeter – Tracking SME & Capital Market Development Reforms ISET PAGE 4

Statistics of Global Ski-Lift Accidents in the Last 20 Years BUSINESS PAGE 5

Russian Spy Scandal: Statement from UK Embassy to Georgia BY TOM DAY

BUSINESS PAGE 7

First Real Estate Exhibition & Sale in Georgia BUSINESS PAGE 14

F

ollowing the Skripal poisoning in the UK this month, the British Embassy in Georgia has made a statement to the Georgian people, saying the Russian Federation’s behavior was “part of an established pattern of Russian state aggression deployed against Georgia and in other parts of Europe, including Ukraine,” and that the UK is “grateful for the firm support of our strategic partner Georgia.” They have also said that “this is how Russia has acted in every other case where it has been caught flouting international law: denial, distraction and threats.” Continued on page 2

Georgia Performs Well in Global Corruption Index, but New Cases Worrisome

Russian Ambassador to the EU: Russia Will Not 'Shut up & Go Away' British Ambassador to Georgia, Justin Mckenzie Smith

POLITICS PAGE 14 Prepared for Georgia Today Business by

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NEWS

GEORGIA TODAY

MARCH 20 - 22, 2018

Gudauri Ski-Lift Accident: The Full Story

Putin ReElected as Russian President BY TAMZIN WHITEWOOD

Image Source: youtube.com

BY TOM DAY

F

ollowing our website updates, GEORGIA TODAY now brings you the full story. Located in North-Eastern Georgia, 2,200 meters above sea level on the southern face of the Greater Caucasus mountain range, the glistening, sugar-white Gudauri ski resort is one of the most favorable skiing locations for both international and local visitors. Despite meeting international standards, on March 16, the white slopes were darkened when the ski-lift malfunctioned, putting lives at risk. Staff lost control of the Sadzele 5 lift when the it began to reverse at double speed, causing chair compartments to collide with each other. Some riders jumped from them, while others were flung out. Horrified by-standers watched as the incident took place. Eleven people were left injured, but, thankfully, no one was killed. One of the affected, Yuri Leontyev, was on the lift and managed to jump. He told reporters that “the ski lift stopped and started going in reverse. We had to jump from it, because at the bottom [of the hill] it was a total crush and [we had] no chance [of surviving]. We jumped and moved to a safe area." The victims include a pregnant Swedish citizen, 6 Russian citizens and 4 people from Ukraine. Georgia’s Deputy Health Minister announced

that the pregnant woman is in a stable condition, and the lives of the others affected are not in danger. Five people have been discharged from hospital. “None of the injured are in danger. The condition of the pregnant woman is satisfactory,” he said. Despite this breach in basic safety, the ski resort continues to operate as usual and skiers are allowed on all routes except the one in question. The cause of the incident is still unknown, but it is suspected that a voltage surge or an issue with the braking mechanism was to blame. An investigation has been launched involving the bodies of several European Union countries. The ski lift was installed by Austrian company Doppelmayr Garaventa Group, which has made over 14,800 installations in 92 countries. They have returned regularly to maintain the ski lift. Minister of Finance and Vice Premier, Dimitry Kumsishvili, said that they have contacted the company regarding the incident. “Not only experts from the Doppelmayr Company, but international independent experts will also be called upon. It is important for us to conduct an investigation through the involvement of independent experts,” Kumsishvili said. Media outlets around the world have reported the incident. BBC News, CNN, The Independent and The Washington Post boasted such headlines as “Ski lift from hell,” “Ski-lift failure in Georgia sends people flying into the air,” and “Skiers jump from speeding lift in Georgia.”

V

ladimir Putin has won the Russian Presidential election by an overwhelming majority. Putin, who first came to power as Prime Minister in 1999, received more

Image source: Independant.ie

than 76% of the vote, official results show. Mr Putin stated that voters had "recognized the achievements of the last few years" whilst addressing crowds in the Russian capital. The unsurprising result surpassed even the 2012 election, when he won by 64%. Other presidential candidates included Ksenia Sobchak, a former reality TV host, who received only 2% of votes, and veteran nationalist Vladimir Zhirinovsky, who got 6%.

7 Tbilisi Restaurants Closed Down Due to Violations Image source: NFA

BY THEA MORRISON

R

epresentatives of the Tbilisi National Food Agency (NFA) have examined 19 Tbilisi restaurants and café-bars and subsequently closed down seven due to “critical conditions” and violations of proper regulations. Nine business operators were fined for violations,

including meat quality, labeling and absence of proper registration. The NFA reports that discrepancies were revealed in the following facilities: Taglaura, Old City, Plaza Hall, Cruise, Golden Mug and Mukhambazi. All these facilities were closed down and fined 1,000 GEL each. Restaurants Tashre, Kakhetians, Keria and Restaurant Fish House were fined 1,000 GEL for serving 'unverified' meat. Paetoni and Lakada were both fined 1,200 GEL for breaching labeling regulations. Babilo and Texas were fined 500 GEL for not having registered with the economic activities registry. It should be noted that only three restaurants of the 19 comply with the regulations. The NFA says they will be checking other restaurants and café-bars in the future.

Russian Spy Scandal: Statement from UK Embassy to Georgia Continued from page 1 It reads: “On Sunday March 4, in Salisbury, England, Sergei Skripal and his daughter Yulia were found on a public bench, slipping out of consciousness, and were taken to hospital by emergency services, where they remain in critical condition. Investigations conducted by leading world experts at the Defense Science and Technology Laboratory at Porton Down have identified that they were poisoned with a military-grade nerve agent of a type developed by Russia. This is part of a group of nerve agents known as ‘Novichok’. Based on detailed investigations, and on the knowledge that Russia has previously produced this nerve agent, combined with Russia’s record of conducting state-sponsored assassinations, the British Government has concluded that it is highly likely that Russia was responsible for the act against Sergei and Yulia Skripal. We have decided that there were only two plausible explanations. Either: - This was a direct act by the Russian state against the United Kingdom; - Or the Russian Government had lost control of this potentially catastrophically damaging nerve agent and allowed it to get into the hands of others. Foreign Secretary Boris Johnson summoned the Russian Ambassador and asked him to explain which of these two explanations was correct. Russia offered no explanation as to how this Russianproduced nerve agent came to be used in Salisbury against Mr Skripal and his daughter; and no explanation as to why Russia has an undeclared chemical weapons program in contravention of international law. We have therefore concluded that this amounts to an unlawful use of force by the Russian state against the United Kingdom. We have not jumped to conclusions. We have carried out a thorough, careful investigation, which is continuing. We have asked the organization for the Prohibition of Chemical Weapons to independently verify the nerve agent used. We have offered Russia the chance to explain. Yet, Russia has refused.

I know that our friends in Georgia will not be surprised by these developments. This unlawful use of force by the Russian state against the UK is part of an established pattern of Russian state aggression deployed against Georgia and other parts of Europe, including Ukraine. On Wednesday, Prime Minister Theresa May set out to Parliament the full range of measures that it will take in response to the Kremlin’s decisions. These include: - The expulsion of 23 Russian diplomats who have been identified as undeclared intelligence officers. - The development of more targeted powers to detain people suspected of acting for Hostile States at the UK border. - Proposals for new counter-espionage powers and stronger powers to impose sanctions on those who violate human rights. - Freezing of Russian State assets wherever we have evidence that they may be used to threaten the life or property of UK nationals or residents. - Suspension of all planned high-level bilateral contacts with Russia. While the UK’s response must be robust, it must also remain true to their values – as a liberal democracy that believes in the rule of law. And in taking these measures, they have been clear that we have no disagreement with the people of Russia. It is the reckless acts of their government which we oppose. We are sincerely grateful for the firm support of our strategic partner Georgia, and many other countries around the world. We have heard the attacks and threats Russia has made over the past few days. We know there will be more to come. This is how Russia has acted in every other case where it has been caught flouting international law: denial, distraction and threats. But we will not let such threats deter us. We will stand firm, confident in our democracy and the rule of law. We will stand by the values which we share with the people of Georgia and the overwhelming majority of the international community.” Statement source: https://www.facebook.com/ukingeorgia/posts/2059742194043871


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BUSINESS

GEORGIA TODAY

MARCH 20 - 22, 2018

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.

ReforMeter – Tracking SME & Capital Market Development Reforms

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eforMeter is implemented by ISET Policy Institute and supported by USAID G4G. Our goal is to generate reform progress analysis for policy making and public dialogue, and thereby promote informed debate about reform priorities and policy decisions, improve accountability and help build trust between the government, the private sector and the general public. Five reforms are currently being evaluated by the ReforMeter: Agricultural Development, SME and Innovation Development, Capital Market Development, Pension Reform Vocational Education and Training Reform. Each reform is evaluated, twice per year, by a group of stakeholders - 15 individuals not affiliated with the Government of Georgia but directly affected by the reform in question. The entire group of stakeholders are convened at ISET in order to review the results of the government survey as well as objective data and information about reform outcomes, which are collected and analyzed by the Project Team. The Government Survey measures progress in the implementation of selected reforms based on indicators and timetables agreed upon with the implementing agencies. Objective outcome indicators collected and analyzed by the Project Team measures the outcomes and impacts of each reform. Each member of the group provides an anonymous quantitative assessment of the reform. Stakeholders answer three questions (each to be scored on a 0-to10 scale): 1. What is your assessment of Georgia’s current performance in the area of [reform name]? 2. Is the economic reform agenda in the area of [reform] progressing as expected? 3. Is the economic reform likely to deliver adequate results? The total score for each reform is calculated as a simple average of individual assessments. The overall assessment of the reform process is automatically provided through the ReformVerdict – a summary score, derived as an average of scores assigned to each reform. The score is adjusted on a monthly basis, following monthly stakeholder meetings. Below we present results of the most recent assessments of the following reforms: SME/Innovation Development and Capital Market Development. Second Phase of the SME/Innovation Development Reform assessment was conducted on February 2, 2018. Based on the government survey, 39.2% of the reform, which is planned to be finalized by 2020, has been implemented. In the first phase, this indicator was 24.7%. It is notable that the rate of progress in the areas of institutional organization, capacity building and infrastructure are similar – in all of these areas, 40% of the reform has been implemented. It is noteworthy that the target indicators set by the strategy for 2020 has been already achieved. It should be emphasized that Enterprise Georgia, together with Good Governance Fund and PwC, has implemented a project targeted at increasing the number of SMEs in Georgia. This project also involves linking local entrepreneurs with international entrepreneurs. Last year Enterprise Georgia carried out research, and based on the results of this research, hotel and movie

research which areas are financed, and how this funding contributes to the promotion of applied science. The National Statistics Office of Georgia has changed the definition of SME to be in line with EU methodology. However, transition to the new system is gradual, and this complicates the comparison of statistical data during transition period. Starting in 2018, all entities should shift to the new methodology, which will enable us to compare Georgia with other countries. Georgia’s Innovation and Technology Agency (GITA) also plans to increase private sector involvement in ongoing projects. Involvement implies engaging the private sector in projects, and funding them in exchange for development and expansion of the private sector’s infrastructure. As there is a lack of innovative products on the local market, as well as export barriers, it is necessary to encourage innovative products within the country and increase their share in state procurement. On March 12 2018, the implementation of a capital market development strategy was evaluated during the second phase of ReforMeter. Government research revealed that at this stage, 67.7% of the reforms have been implemented. In Phase I, this indicator stood at 51%. The biggest progress was achieved in the development of legislative framework. Last year, together with other important activities, the German ranking agency Scope was added to the list of agencies (Moodys, S&P and Fitch) recognized by the National Bank of Georgia, which implies that the NBG will consider reliable rankings given by this body to the securities offered as collateral to the NBG. With help from IMF experts, a set of tax reforms were developed which imply

components were added to the program, “Produce in Georgia.” In the area of capacity building, teaching of entrepreneurship in vocational education centers has been improved. The subject of entrepreneurship has been added to vocational center programs, and in addition, the module itself has been improved and the qualifications of entrepreneurship lecturers have been enhanced. It is also notable that there is more statistical data on the SME sector; in particular, research on the weaknesses of the SME sector has been carried out. In addition, the studies “ICT Usage in Enterprises” and “ICT Usage in Households” are carried out on a regular basis. It is important to highlight the most important issues mentioned by the stakeholders: The number of patent and useful model applications submitted to Sakpatenti is very low and is decreasing annually. Also, there are no links between the science and private sectors, which means that the relevant science is developing mainly in a fundamental direction - not applied. The fact that Shota Rustaveli Foundation provides science grants on differ-

taxing various financial instruments according to the best international practices. In addition, taxation of instruments such as derivatives, repo and securities lending will be improved. Pension reform is also a part of the capital market development plan; the legislative package for pension reform is already prepared. Together with stakeholders, Deputy Minister of Finance Nikoloz Gagua and representatives of the National Bank of Georgia participated in a discussion wherein several important issues regarding the implementation of the reforms were voiced, in particular: The National Bank of Georgia believes that it is necessary to improve the legislative and regulatory framework of the capital market at the initial stage. In addition, harmonization with EU legislation is in progress, and this process is planned to be finalized by 2024. In order for Georgia to become a financial hub, it is necessary to obtain a competitive advantage. This can be achieved, for example, by creating a liberal tax environment and improving infrastructure. Focus should also be placed on neighboring countries in order to integrate them in Georgia’s financial market. However, the first stage objective is to develop the local market. Low liquidity in the financial markets and low financial literacy remain main challenges for capital market development in the country. A planned pension fund will likely provide liquidity and create demand on the market. Therefore, it is critical that pension funds are invested in Georgia, in securities denominated in GEL. Outcome indicators measuring government reform effectiveness remain significantly below the benchmarks for 2018 specified in the Capital Market Development Strategy.

ent levels is worth noting; however, the volume of the grants is very small and they cannot make any significant impact on the development of science in the country. However, even under such financing conditions, it is necessary to

10 Galaktion Street

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


BUSINESS

GEORGIA TODAY MARCH 20 - 22, 2018

Statistics of Global Ski-Lift Accidents in the Last 20 Years

T

he March 16 ski-lift accident at one of Georgia’s most famous ski resorts, Gudauri, which left 11 people injured, was covered worldwide, resulting in negative reactions from potential tourists and visitors to the country. The most-asked question tourists had after the accident was: “How safe are ski-lifts in Georgia?” Georgia’s authorities claim all the remaining ropeways function properly and are absolutely safe for visitors. In parallel with the launched investigation, the authorities also invited a group of independent, international technical experts to study the situation in detail and produce an unbiased report. However, many tourists have raised doubts as to whether Georgia can really have high-standard ski resorts like those of leading countries. In Georgia’s favor are the statistics of accidents at world ski resorts over the last 20 years, which show that fatal incidents can occur anywhere, even in the world’s leading countries. The Illicit Snowboarding reads that Austria is the most deadly place to travel on a ski lift, but the United States leads the way in terms of injuring people and by the sheer number of accidents. The list of accidents which happened in various cities since 1998 due to ski lift failure is as follows: 3 Feb 1998: Cavalese, Italy: 20 dead 1 Jul 1999: Saint-Etienne en Devoluy, France: 20 dead 26 Dec 1999: Crans Montana, Switzerland: 1 dead, 4 injured 6Jul2000:Oberstdorf,Germany:32injured

JTI Certified as #1 Top Employer 2018 in Georgia, Europe & Asia Pacific Regions

I

BY THEA MORRISON

Photo: Gudauri ski resort, Georgia. Image source: Ski Georgia

11 Nov 2000: Kaprun, Austria: 155 dead 4 Jan 2001: Powder Ridge, Minnesota, USA: 1 dead 1 Feb 2001: Angels Flight, San Francisco, USA: 1 dead, 7 injured 3 Jan 2003: Arthurs Seat, Melbourne, Australia: 18 injured 19 Oct 2003: Darjeeling, India: 4 dead, 11 injured 2 Apr 2004: Yerevan, Armenia: 3 dead, 6 injured 27 Jul 2004: Abisko National Park, Sweden: 1 dead, 3 injured 5 Sep 2005: Sölden, Austria: 9 dead, 10 injured 24 May 2007: Zillertal, Mayrhofen, Austria: 1 dead, 2 injured 28 Nov 2007: Heavenly, California, USA: 1 dead 2 Mar 2008: Chamonix, France: 1 dead 3 Jan 2008: Grindelwald, Switzerland: 1 dead, 3 injured 16 Dec 2008: Blackcomb, British Columbia, Canada: 10 injured 2 Mar 2009: Sierra Nevada National Park, Spain: 17 injured

1 Sep 2009: Heavenly, California, USA: 1 dead, 1 injured 17 Dec 2009: Devil’s Head, Wisconsin, USA: 14 injured December, 2010: Wyoming, western USA: 2 dead Dec 2011: Carrabassett Valley, Maine, UK: 8 injured Jan 2013: Hoch-Ybrig, Switzerland: 2 dead Dec 2014: Hunter Mountain Ski resort, US: 1 dead Mar 2015: Sugarloaf Mountain Resort, UK: 7 injured Feb 2016: Timberline Resort, West Virginia, US: 100 people stranded and two injured Dec 2017: Tussey Mountain, Pennsylvania, US: 100 people stranded and five injured Regarding the Gudauri incident, six of the 11 injured remain in hospital in the capital Tbilisi. The remaining tourists were discharged the day after the accident with only minor injuries.

5

T has been announced that JTI (Japan Tobacco International) has been once again certified as Top Employer in Georgia, Europe and Asia Pacific regions for its outstanding employee offerings. Independent research by the Top Employers Institute shows that the company looks after its people exceptionally well and is wholly dedicated to their development. The annual international research undertaken by the Top Employers Institute recognizes leading employers around the world: those that provide excellent employee conditions, nurture and develop talent throughout all levels of the organization, and which strive to continuously optimize employment practices. JTI is one of the selected companies to achieve the exclusive Top Employers award in Georgia, Europe and Asia Pacific 2018 certification. The company has also been certified in other countries in these regions. Crucial to the Top Employers process is that participating companies must meet the required high standard in the study in order to achieve the certification. Only organizations that achieve certification in at least four countries within the region receive the special Top Employers Europe and Asia Pacific 2018 recognition. The independent research verified their outstanding employee conditions in all certified countries. This earned JTI a coveted spot among a choice group of certified Top Employers. The Top Employers Institute assessed JTI’s employee offerings on the following criteria: • Talent Strategy • Workforce Planning • On-boarding • Learning & Development • Performance Management • Leadership Development • Career &

Succession Management • Compensation & Benefits • Culture “At JTI, we are truly passionate about our people,” said Alexander Pitchka, JTI Caucasus General Manager. “We invest in our company’s future by creating opportunities for our employees to explore and develop. We are happy to see them succeed and grow professionally. And we are very proud that our company has been recognized #1 Top Employer in Europe and Asia Pacific Region.” “Our extensive research concluded that JTI forms part of a select group of employers that advance employee conditions worldwide,” said David Plink, CEO of the Top Employers Institute. “Their people are well taken care of. Now that they have received the Top Employers Europe and Asia Pacific 2018 certification, they can truly consider themselves at the top of an exclusive group of the world’s best employers. Reason to celebrate!” JTI, a member of the Japan Tobacco Group of Companies, is a leading international tobacco manufacturer. It markets brands such as Winston, Camel, Sobranie, LD and Winchester. Headquartered in Geneva, Switzerland, and with operations in more than 120 countries, JTI employs around 40,000 employees worldwide. In Georgia, JTI employs over 120 local employees.


6

BUSINESS

GEORGIA TODAY

MARCH 20 - 22, 2018

Radisson Hotel Group Global Launch Radisson Blu Iveria Hotel, Tbilisi

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arlson Rezidor Hotel Group has announced its rebranding to Radisson Hotel Group, effective immediately, at the International Hotel Investment Forum (IHIF) in Berlin. The new identity leverages the powerful, international brand equity of the Radisson name to drive awareness in the marketplace, increase marketing efficiency across the global portfolio and offers exceptional experiences to make Every Moment Matter for guests, owners and talent. Every Moment Matters

Radisson Blu Hotel, Berlin

will be the new signature service philosophy of the company and all its hotel brands. Currently the 11th largest hotel group in the world, Radisson Hotel Group is made up of eight hotel brands with more than 1,400 hotels in operation and under development. The launch of the group’s new identity is a significant milestone in a five-year operating plan that will transform the business and position it to become the preferred choice for guests, owners, investors and talent. “Today is the start of an exciting era for the Radisson Hotel Group, united by our

new brand and long-term vision to become a top three hospitality company in the world,” said Federico J. González, President & CEO, The Rezidor Hotel Group and Chairman of the Global Steering Committee, Radisson Hotel Group. “Our five-year operating plan includes initiatives that redefine our value proposition, optimize our portfolio, streamline operations, invest in new technology systems and align our team members to deliver on our signature, Every Moment Matters. ‘Every moment Matters’ is about how we do business at the Radisson Hotel Group and who we are at the core - a place of purposeful encounters. For everyone. Everyday. Everywhere. Every time. Our rebranding is just the beginning.” The newly rebranded Radisson Hotel Group announced Radisson Collection, a premium collection of exceptional hotels in landmark locations. Driven by consumer demand for individuality and more personalized experiences, Radisson Collection brings together the finest hotels in the Radisson Hotel Group portfolio. 14 hotels were confirmed to join the collection following the launch. Radisson Collection will benefit from the power of the Radisson Hotel Group with a strategic market positioning and scale of a global brand. The collection will give hotel owners an opportunity to join an international network while

Radisson Blu Hotel, Batumi

maintaining the identity and authenticity of their hotels and resorts through a flexible framework for affiliation and endorsement. In addition, the newly rebranded Radisson Hotel Group is introducing a refreshed loyalty program, Radisson Rewards, replacing Club Carlson. Radisson Rewards will align with the hotel group’s new corporate identity and will make it easier for members to associate their benefits with all brands and initiatives. The updated program comes with some exciting enhancements, including mak-

ing status more accessible for members. All current members account numbers and point balances remain the same. With more than 1,100 hotels in operation worldwide, members of the Radisson Rewards program enjoy member only rates, access to exclusive benefits including room upgrades, early check-in / late check-out, and points towards free nights across these Radisson Hotel Group hotels: Radisson Collection, Radisson Blu, Radisson, Radisson RED, Park Plaza, Park Inn by Radisson and Country Inn & Suites by Radisson.


BUSINESS

GEORGIA TODAY MARCH 20 - 22, 2018

7

Georgia Performs Well in Global Corruption Index, but New Cases Worrisome ORGANIZATION OR DO YOU MONITOR NATIONAL NEWSPAPERS FROM ABROAD? The TRACE Compendium of transnational bribery cases draws on news reports, court filings, and official governmental statements. Because we do not directly investigate cases ourselves, we don’t have a mechanism for people to report misconduct to us directly.

Image source: The Daily Record

BY BENJAMIN MUSIC

C

orruption affecting political as well as business decisions is generally considered one of the main obstacles for an equal and prosperous civil society. No matter the political ideology, from the capitalismfavoring USA to communism-based China, corruption is seen as a hindrance to an efficient state, obstructing new legal implementations and necessary changes to the system. If a judicial system, for example, fails to prosecute regardless of the suspect’s financial and personal power, the legitimacy of the state suffers the most, endangering an overall civil obedience to laws enacted by the government. To many Georgians, a corrupt judicial system coupled with policemen driven by personal gains is nothing uncommon, but recent governments have successfully cracked down on corrupt officials, leaving the country in a better state than after the independence from the Soviet Union. This is also highlighted by the recent TRACE report, which ranks countries worldwide based on different government transparency categories. The report places Georgia at 23rd in an international environment in which high-level political corruption has seen a slight surge again. Despite the legislative improvements initially introduced by the post-Rose Revolution government, the spread of corruption differs strongly between specific industry sectors in Georgia and new cases of judicial opacity are being reported. These new cases are often a result of weak law enforcement procedures, as Georgia prides itself on one of the most advanced anti-bribery and anti-corruption legislations worldwide. GEORGIA TODAY had an interview with Alexandra Wrage, renowned antibribery and corruption expert and President of TRACE, where she explained the major developments in Georgia.

IN WHICH DIRECTION DO YOU SEE GEORGIA’S POLITICAL CORRUPTION

MOVING? AN IMPROVEMENT OR A WORSENING OF THE SITUATION? Since 2015, we’ve seen a deterioration in assessments of corruption between the government and foreign businesses, along with an across-the-board degradation in indicators of effective enforcement (increased diversion of public funds and a noticeable resurgence of organized crime). Anecdotally, it seems to have started a few years earlier, but the data can lag behind the reality on the ground. Widespread corruption in the judiciary is widely reported. At the same time, Georgia continues to be a leader on streamlined business procedures and reduced red tape, which helps to keep Georgia at the forefront of transparency in the region.

ARE THERE SPECIFIC EXAMPLES OF CORRUPTION IN GEORGIA WHICH HAVE CAUGHT YOUR ATTENTION DUE TO THEIR UNIQUENESS TO OTHER INTERNATIONAL CASES? The Linde Gas case is notable in the US as one of the early instances of the Department of Justice’s new “declination with disgorgement” policy for resolving foreign-bribery allegations. Less recently, the Rony Fuchs prosecution in 2011 stands out as among the more controversial resolutions of a transnational bribery case.

HOW SUCCESSFUL ARE ANTICORRUPTION CAMPAIGNS IN GEORGIA AND HOW IS THEIR SUCCESS MEASURED? The post–Rose Revolution reforms appear to have been quite successful in the short-term, thanks to the combination of political prioritization and radical streamlining of bureaucratic procedures. Determining success, however, is still largely an anecdotal process; measures of actual corruption remain hard to come by but the Georgian private sector speaks candidly, even passionately, about a recent shift in the wrong direction.

HOW DO YOU RECEIVE CORRUPTION CASES? IS THERE A WAY PEOPLE CAN REPORT DIRECTLY TO YOUR

WHERE DO YOU PERSONALLY SEE THE BIGGEST ISSUES WITH CORRUPTION IN GEORGIA AND WHAT ARE THE GREATEST OBSTACLES TO IMPROVING THE SITUATION? A critical element in sustaining the fight against corruption is an independent and well-functioning judicial system. Anecdotally, this is an area in which Georgia has significant problems. If the courts themselves are susceptible to bribery, it can be extremely difficult to find effective recourse against corrupt government officials. And corrupt courts are a deterrent to foreign investment; companies must insist on arbitration clauses in order to avoid judges that can be swayed by bribes, but that isn’t always possible.

DOES GEOPOLITICS PLAY A ROLE IN CORRUPTION IN GEORGIA? MEANING, ARE RUSSIA, THE US OR OTHER GLOBAL PLAYERS AFFECTING THE POLITICAL LANDSCAPE NEGATIVELY IN FAVOR OF CORRUPTION? Speaking generally, working against corruption is considerably easier within a politically stable context. Georgia’s geopolitical importance may indeed make it susceptible to destabilizing influences that can foster a corrupt environment. Unfortunately, many of the former Soviet states have been plagued by high levels of corruption, but Georgia has done more than most to promote transparency.

IS THERE A GENERATIONAL DIFFERENCE ON HOW THE GENERAL PUBLIC ACCEPTS/ FIGHTS CORRUPTION? There may be, and we can certainly have hope in the power of youthful idealism to shift societal expectations. To the extent that some of the systemic corruption is a holdover from the Soviet period, there is reason to hope that the impact of generational change – for example, to leadership with no experience of Georgia during that time – will be more relevant in Georgia than in many countries. But the adverse effects of corruption are widely diffused, with no systematic age discrimination. This

is an issue that affects everyone, and everyone can contribute to addressing it.

WHICH SPECIFIC LEGISLATIVE MEASURES CAN THE GOVERNMENT IMPOSE TO IMPROVE THE SITUATION? As noted earlier, Georgia’s anti-corruption laws are already among the best in the world, and it has taken the important steps of reducing the opportunity for low-level bribe solicitation by cutting unnecessary red tape. Addressing higher-level corruption may require improving the citizenry’s power to provide oversight and apply political pressure. Legislative steps toward increased transparency, due process and press freedom can be among the most productive in this respect. The apparent cooperation of the Georgian government with the Azeri government’s abduction of journalist Afgan Mukhtarli was a dramatic step backward in this respect.

IS THERE A LACK OF LAW ENFORCEMENT IN GEORGIA OR DOES THE ANTICORRUPTION LAW LACK ESSENTIAL PARAGRAPHS TO BE EFFECTIVE? Georgia has one of the most complete sets of anti-corruption laws in the world, with one of the best rankings on that score in the TRACE Bribery Risk Matrix. The enforcement conditions, however, while clearly better than the regional norm, barely make it into the top quartile (ranking 45th out of 200). Given that there is often a significant difference between the laws on the books and the law as enforced, this shouldn’t be seen as an unusually dramatic disconnect. But it does underscore our observation that enforcement is usually a better gauge of effective anti-corruption efforts than legislation alone.

WHERE, BESIDES POLITICAL CORRUPTION, IS CORRUPTION VERY EVIDENT? Looking at the indicators of bribery expectation in the TRACE Bribery Risk Matrix, we see a striking disconnect between, on the one hand, the very low

number of bribe requests businesses report having received, and, on the other hand, the comparatively high degree of corruption observed in the civil justice system, in favoritism shown by government officials, and in the behavior of business firms. The Georgian police have a relatively good reputation, buttressed by the widespread use of technology. Low-level corruption in the customs department, on the other hand, raises concerns, as does the opacity around very high-level deals associated with transit fees for oil and gas transported through the country. Interview Ends Here The TRACE report is divided into four categories: Business Interactions with Government, Anti-Bribery Laws and Enforcement, Government and Civil Services Transparency, and Capacity for Civil Society Oversight. Georgia performs much stronger in the former two compared to the latter two indicating ample room for civil society engagement and transparency. The report praises Georgia’s very low score of 16 in the first category, based on a very low degree of government interaction, low expectation of bribes, and a very low regulatory burden. In the second category, the report highlights a very low score of 17, based on a very high quality of anti-bribery laws and a high quality of anti-bribery enforcement. In both categories, Georgia scores similarly to European countries such as Germany, Austria or Iceland. The Government and Civil Services Transparency category lags behind the strong performances of the first two categories, receiving a score of 31. Despite the difference, the score is strong in an international context, justified by the report through good governmental transparency and good transparency of financial interests. A similar score of 32 is obtained by the last category Capacity for Civil Society Oversight explained by a high degree of media freedom/ quality and a high degree of civic participation. Georgia’s main problem will remain the enforcement of laws ensuring a fair and transparent judiciary, alongside the equal treatment of powerful individuals in front of the law.


8

BUSINESS

GEORGIA TODAY

MARCH 20 - 22, 2018

Selling the Secrets of Brands using social media well is that you have to think about all of these different audiences when designing your campaigning: your audience’s audience’s audience has an audience, too.

SO IN ADDITION TO KEEPING YOUR AUDIENCE’S AUDIENCE IN MIND, WHAT OTHER COMPONENTS ARE THERE TO PRODUCING A SUCCESSFUL CAMPAIGN? IS THERE A SECRET FORMULA?

EXCLUSIVE INTERVIEW BY MATE FOLDI

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rofessor Brian Hallett of IE Business School Madrid works in the field of brand storytelling: he is a visual storyteller. A professional photographer and image maker by trade with more than twenty years experience in 18 countries, his company, The Big Fish has produced online branded content and advertising campaigns for companies like Cartier, Mastercard, Hugo Boss, Coca Cola, McDonald’s, Max Factor, ESPN, Patek Phillipe, Hyundai, BMW, Pantene & Wella. GEORGIA TODAY caught up with him at Rooms Hotel before his talk at the IE Business School Madrid’s master class, ‘Contagious: When Brands Go Viral’.

WHAT ARE SOME OF THE KEY FACTORS IN THE ADVERTISING CAMPAIGNS YOU PRODUCE ? DO YOU HAVE A SPECIAL FORMULA? There are lots of different things that you can reach into: you can create online campaigns that are very surprising, that are remarkable, that are shocking. Our campaigns are focused mostly on authenticity. One way to do storytelling is to sit down, write a really cool and clever script and produce it. What we do is create a whole process where the subjects are involved in the creation of the material itself. To give an example, we did a series of videos recently focused on a series of people’s passions and dreams. We did a long process of workshops with the people, getting them involved in the actual creation of the language that’s used. It’s quite a lengthy process that requires a lot of facilitation and people skills. By going through it, you’re able to get ideas and include content that you would never have got without involving these people in the creative process. The result is that the campaigns are more authentic and authenticity is one of the characteristics of successful online campaigns. We also tailor the content to the relevant social media platforms that it will be shared on, as each have their own format. With Instagram, for example, we will make short fifteen-second teasers. Also, the interesting thing about Instagram is that a lot of people use it with the sound off, so if you rely on sound to market your brand on this particular platform, it’s not going to work. And so with that in mind, we produce contents with text on the screen, which allows people who use Instagram as a ‘quick fix’ of visual entertainment, to absorb your content. Facebook, on the other hand, tends to be used when we are in a more relaxed state : it’s got a longer format and more information, so for that we might cre-

ate a two-three minute piece of content. When we design content, we want to know what our call to action is: what we want people to do upon engaging with this material. Are we trying to drive traffic to the webpage? Then we’ll design another version for a webpage. I’m not involved in the actual dissemination of the content, but we definitely think about what the platform is in terms of how we produce the content.

TELL US ABOUT VIRAL CAMPAIGNS. WHAT DO THEY HAVE IN COMMON, AND WHAT ELEMENTS MAKE THEM UNIQUE? The problem with the idea of going ‘viral’ is that you can have 100 pieces of content which are exactly the same but only one of those goes viral. Why is that? I compare virality to predicting earthquakes. We know that they are going to happen and approximately where they will be geographically, but we have no idea when/how/where they are going to happen: they are very difficult to predict. The big difference between traditional broadcast advertising and social-sharing (going viral) is that the former has a direct return on investment. For example, if someone bought a page two ad in your newspaper, they would be somewhat guaranteed a certain amount of readership, allowing them to expect a sort of direct return on investment. The problem with social-sharing is that it is very unpredictable: we try to predict it, we try to control it, we try to direct it, but in the end everything is kind of turned around. It’s a much more unpredictable process. Now what are the factors that make things go viral? Surprise is the main one. In other words, if you see something that is new and different that surprises you, you are much more likely to engage with that content than if it wasn’t surprising. There is something called the MAYA rule (most advanced yet acceptable), and what that means is that something has to be surprising, advanced and a novelty, but acceptable in the sense that if it’s too crazy or too shocking, you might not understand it. Sometimes what brands do is produce crazy content that has nothing to do with the brand itself to get your attention, but then at the end their logo will appear, and all of a sudden you’ll be like “what did that have to with Volkswagen?” for example; why did they show me that content? The MAYA rule is essentially a guideline that tells you to be surprising but not to the extent that you lose people along the way. Content and context are two other important factors to consider. Your content has to be relevant to the information out there in the world at the given time you put it out there. If you link your content to some contextual or current events, it’s much more likely to catch on. There’s also celebrity power. Recently,

there was a brilliant campaign in Spain where the idea was to create a campaign to get people talking about recycling, and so they got former Real Madrid star Guti to go on Twitter and Facebook commenting how stupid and how much of a waste of time recycling is. Eventually, his comments went so viral that it made the news and was shared amongst the population at large. After a week, Guti gets back on social media and says “Hey everybody, I was just joking. The reason I did that was to raise awareness and to start the conversation about recycling.” So, just by a making a simple statement on social media, you can make a huge ripple effect. To understand virality, you need to understand its components. First of all, they have a fast increase in sharing (within the first couple of days) before dropping off. The second thing that is really important about viral campaigns is that they are shared amongst many different networks. You are a gatekeeper who has your own network of friends, and one of the characteristics of viral campaigns is that they hop (jump) from network to network. It’s not just a question of say, Béyonce sharing a photo with her x-million of followers, it’s the fact that her followers share it with their own networks that make it viral. A critical point that brands need to think about when they create content that they want to be shared is not just to target their audience but their audience’s audience. In other words, if I only target you, you will just like my content; however, if I target your audience, you will say ‘Oh, I’m going to share this because the people that follow me will find this interesting’. The key to

There are many different ways to break this down but Jonah Berger, Professor at University of Pennsylvania, has got a really interesting book called “Contagious”. He lists a whole series of elements, social currency being one of them. As an example, there is an online store which sells high-end fashion called “vente-privee”. I don’t know if they still do this, but when they first started out they used a strategy where you could only access their store if someone invited you. What it does is give the person who inviting others a certain amount of social currency: it makes them ‘cool’. Those kinds of elements to content creation can help to drive the sharing and how people feel about interacting. Triggers are another thing. What do you think about first thing on a Monday mornings, what brand or product? A lot people will think of coffee. So if you associated your brand with the trigger of Monday morning coffee, what happens is people start associating with it. Take KitKat and their slogan “take a break, have a KitKat” as an example. In Spain it has become part of the vernacular: when people want to go on a break they say “que voy a tomar un Kitkat” — they’re not actually going to go eat a KitKat but they’re going to go for a break. However, the trigger has become so ingrained in people’s activities that they actually refer to it by the brand. So there are certain ways we can approach this. Emotional content is also a very important aspect of Brand Storytelling. There is also the public aspect: does this content make me more visible? But the aspect most important for me is the storytelling, the authenticity. You’ll see a lot brands these days producing content that is storytelling: it doesn’t feel like it’s talking directly about the brand, but the brand it’s conveying its values through the stories. This is what I was saying before: you’ll see certain kind of content and go, ‘what does that have to do with The North Face? Indeed, take their example; what does The North Face Sell? Outdoor clothing ? No, they sell Exploration. There are many companies that sell equipment but what North Face sells is a lifestyle. They have so much confidence in their Brand Iden-

tity that they can produce a bunch of content without actually featuring any of their products, and just dropping their logo in at the end, and we get it. And in some cases, it’s so powerful, that we SHARE it.

TO SELL A LIFESTYLE, WOULDN’T YOU ALREADY HAVE TO BE KNOWN IN THE INDUSTRY? No, I would think of it in the opposite way. We have this thing called the 'marketing funnel': awareness, all the way down to call to action/purchase. The branded content funnel is a little bit different, you could do brand awareness development through branded content. The effect would be almost the opposite: if I’ve never heard of your brand and you just come to me with your product, I will likely tune it out saying ‘Oh it’s just another add’. But if you come to me, and connect to me somehow in a deeper way, an emotional way, and even more…at a values level, and at the same time make me more aware about what your brand is about, I’ll probably be more interested when you start talking about your product.

SO WHAT WOULD YOUR ADVICE BE FOR MARKETING GEORGIAN WINE? GEORGIA HAS A SPECIAL HISTORY WITH WINE AND WAS RECENTLY FOUND TO BE THE CRADLE OF WINE WITH VINTAGES AS OLD AS 8000 YEARS FOUND HERE. AND YET, DESPITE THIS AND ITS QUALITY, HARDLY ANYONE KNOWS ABOUT IT. If you look at what you’ve just talked about, you’ve mentioned two important things: the first is heritage. Heritage is a really important marketing and storytelling tool. You could do a whole campaign not even talking about the quality of the wine or anything but just focusing on this idea that wine was invented in Georgia. That’s some really interesting! Now the second thing you talked about is that it’s unknown. And if you want to surprise people, wanted to grab people’s attention, it might be interesting to almost play with this idea that it’s a secret. In other words, rather than doing the typical and very obvious “look at the history of Georgian wine”, what if you did the exact opposite? What if you said “look, we have a secret,” and save it, so people don’t know. You could keep talking about it as if it was Italy, France, Spain, and then all of a sudden at the very end you reveal that you were talking about Georgia. Use some aspect which has a surprise element. Capitalize on the fact that it’s a secret. Every brand has this fascinating secret. I guess the question is to discover the secret and then tell its story.


10

BUSINESS

GEORGIA TODAY

MARCH 20 - 22, 2018

Georgia Employs 7 Times Fewer Disabled Persons than EU Countries BY THEA MORRISON

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he recent study of Georgiabased Non-Governmental Organization (NGO), the Institute for the Development of Freedom of Information (IDFI), reads that persons with disabilities in Georgia have greater problems with unemployment than those in European Union countries, where seven times more disabled people are employed compared to Georgia. The NGO says that, according to the latest 2014 census results from Geostat, there are 100,113 Persons with disabilities (PwDs) in Georgia, which amounts to around 2.7% of the total population. Around 82,000 persons did not specify their status or refused to provide an answer. However, according to the Social Service Agency, there were 118,651 persons with disabilities registered as recipients of social assistance by March 1, 2015, and 125,104 in 2017. “Unemployment is one of the most significant and severest problems in

Georgia. Due to lack of adapted work environments, as well as negative stereotypes, this problem is especially critical in the case of persons with disabilities,” the NGO stated. The organization stressed that according to the 2014 population census, persons with disabilities lack opportunities for employment and self-realization. It added that out of 96,102 persons with disabilities aged 15 and older, 34.4% were employed, while the same figure for the remainder of the employed population was 54%. In addition, 86.2% of employed persons with disabilities were self-employed, while the same figure for the rest of the employed population was 53.6%. Finally, of the 96,102 persons with disabilities aged 15 and older, only 4.8% (4,571 persons) were employed (contracted) in 2014. The IDFI reports that the majority of people with disabilities in the public sector are employed in local self-government bodies; accordingly, trends of the public sector in 2014-2016 are largely determined by the practice of employing people with disabilities in similar institutions. For example, in 2016, the number of people with disabilities

Photo source: IDFI

employed in local self-government bodies decreased from 77 to 28 (63%). “However, the level of overall decline falls significantly behind the decrease in the number of persons with disabilities employed in the public sector in 2016, which raises questions about the basis used to reduce the number of

employees,” the report reads. According to the official statistical data of the European Union, as of 2014, the average employment rate for people with disabilities in Europe was 48.7%. The highest employment rates for people with disabilities are given in the following countries: Switzerland – 70.4%,

Germany – 59.7%, Luxemburg – 57.8%, Sweden – 56.5%, Finland – 55.2%, and Estonia – 55.1%. The lowest rates are given in Greece – 27.8% and Serbia – 25.8%.3 “In the EU, an average of 69% of people with disabilities are hired employees. Therefore, the employment rate for people with disabilities in EU countries averages at 33.6%, which is about seven times higher than the number for Georgia,” the report reads. The NGO says that United Nations Convention on the Rights of Persons with Disabilities (UNCPRD), which Georgia ratified in 2013, obliges the country to provide and facilitate the full realization of human rights and fundamental freedoms for persons with disabilities without any discrimination arising from their disability. This Convention also obligates states to collect statistical and research data on PwDs. “The data requested and received by the IDFI from various Georgian state agencies by the end of 2017, as well as the latest reports of the Public Defender’s Office, clearly indicate that the Georgian State is still unable to collect comprehensive statistical data on PwDs,” the NGO reported.

Letterato Opens a New Course on Critical Thinking in English

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etterato, the young Thinkers’ Academy, has kicked off a new English-language program in critical thinking for IX-XII grade students. The program is designed to address important skills development, such as logical reasoning, interpersonal communication, and creative thinking, and is aimed at the cultivation of intellectual autonomy, fairmindedness and objectivity in students. As we take a tour of The Thinkers’ Academy, everything resonates care and a willingness to a create student-oriented environment. Comfortable seats, carpets, colorful interior design make an exclusive environment where youngsters can relax and dive into deep thought and analysis individually or in teams. Tamara Razmadze, the founder and director of Letterato, shows us the main classroom and explains: “We live in a technological era where information is largely available and knowledge much more accessible. However, human intelligence has never been so important. The ability to think critically, determine the quality and reliability of information, analyze an issue from different angles and rationalize key decisions, whether it refers to personal life or issues of public importance, are traits that will be

more and more valued as technological breakthroughs accelerate. The quality of education, closely linked with innovation and creativity, plays a key role in the well-being of countries around the globe, reflected in the competitiveness and quality of life in general.” And that is how the idea of Letterato was born: to fill a void which exists in supporting youth in the development of their critical and creative thinking abilities, and to create a space where they can engage in meaningful dialogue with their peers, exchange ideas and broaden their horizons. “This is a space where teenagers solve complex problems while having fun,” Razmadze tells us. The Critical Thinking Course in English Language is part of this endeavor to offer something rewarding for the young generation of the expat community, or those Georgian youngsters who would like to integrate in the multicultural environment, expand their knowledge and skills, and get equipped with the abilities that will shape their success in future. The three-month course is led by a tutor from the USA, Michael Martley, MBA and Bachelor of Political Science, who has been living in Georgia since 2014. According to Martley, critical thinking

and problem solving are skills that will set you apart from others. Finding and implementing solutions is what the world needs in general, not stagnation. “Being a critical thinker benefits any occupation. I think we can all agree that leading business people have set themselves apart by dissecting challenges and finding solutions. A great chef has to create unique dishes; a great lawyer has to negotiate complicated situations, and great scientists are finding cures for diseases,” he says. Martley has over 15 years of diverse working experience, serving in a variety of career roles, including time in financial services, the defense sector, and civil society organizations. Mike has conducted a number of career skills classes, including creative/critical thinking aspects as part of his responsibilities. Teaching, for him is a great way to give back to society. “The course will start in April and the students will enhance their wisdom and knowledge as we conduct discussions and/or exercises each session on a variety of real world topics that will create situations where they will learn to think through challenges and find solutions. They will create, build, problem-solve and work in teams while exercising their critical thinking skills in dynamic ways. At the course conclusion, they can walk away with confidence in understanding problems, analyzing solutions and making decisions as an individual or in teams,” Martley tells us. After the completion of the three-month course, students will have obtained stronger analytical skills, better problemsolving skills, as well as enhanced critical reasoning and communications skills. The curriculum is designed in an interactive way and offers a variety of case studies, group work, role playing and practical exercises. The curriculum comprises diverse topics and concepts, from human rights, knowledge management and planning, to globalization, costbenefit analysis and self-actualization. “I want the students to finish the course with an understanding of these concepts and generate their own point of view based on evidence and ethics,” Mike Martley says. The 12-week curriculum

focuses on students who will take a walk in simulated real-world situations referring to city management and planning, governance and public good, self-development and lessons of failure. Tamara Razmadze explains, “what I like about our curriculum and this course in particular, is that it also stimulates the youngsters to think about themselves and what they are going to aspire to in future: whether they want to become creators versus consumers. We assist the students to unleash their potential and utilize it for their well-being and for the greater good.” Letterato was established with the key aim to assist students in expanding their knowledge, acquiring critical, objectivity-based thinking and debating skills and broadening their horizons in important areas of modern life such as human and civil rights, political decisions, ethics, literature and arts, beyond the regular school hours. According to Tamara Razmadze, “Today we are seeing incredible democratization of knowledge and accessibility of information, which is one of the greatest achievements of

human civilization, but we also live in an era of superficial knowledge and ready-to-use answers to all questions we have. This leads to intellectual laziness, which is the opposite of critical thinking. That is why low-quality, biased or fake information is so vastly circulated and accepted in today’s world. We help our young generation to re-imagine the world they live in and start questioning, not digesting whatever material is presented to them. At the same time, the problems they have to solve will require the utilization of ethics, emotional intelligence and exhaustive information relevant and to the point. The teaching curricula are designed in a way that responds to the requirements of modern reality that makes the learning process really dynamic and exciting,” Razmadze says. More about Letterato can be found at the following link: www.letterato.ge You can signup to the Critical Thinking Course in English Language before the end of March at the following link: http://www.letterato.ge/ index.php/en/registration or at info@letterato. ge


BUSINESS

GEORGIA TODAY MARCH 20 - 22, 2018

11

Tbilisi Wins 2018 Experts’ Choice Award for Best Emerging Destination BY TOM DAY AND KATIE RUTH DAVIES

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bilisi has earned its place at the top of this year’s Experts’ Choice ‘Best Emerging Destination’ award. The decision was made based on recommendations from leading travel media companies and also takes into account the cities placement in the “best of 2018” lists, including the amount and quality of hotels, restaurants and attraction reviews. Experts from National Geographic, The Guardian and Rough Guides all concur that it is time the world takes notice of Georgia’scapital,Tbilisi,whichwasselected by TripExpert on the basis of over 1 million reviews from 85 publications. The announcement article says, “the city, which has been influenced by countless cultures and been part of many empires, remains intrinsically itself while striving to embrace change.” The emerging art scene in the capital is also mentioned in the article, saying “a burgeoning arts scene is breathing new life into Old Tbilisi. Project ArtBeat, a gallery whose focus is on emerging and mid-career artists from Georgia and around the world, established a permanent presence in the neighborhood of narrow streets and buildings known for their shambolic charm.” It also recommends a visit to cultural center and writers' residence, the Writer’s House, and Fabrika Hostel, an "affordable 98-room property in a converted textile factory, particularly liked by The Guardian for its “huge courtyard surrounded by independent bars and shops.”

"Across the river and in another category altogether is the gorgeous Rooms Hotel," the article reads, which Lonely Planet calls “by far Tbilisi’s most stylish hotel.” The 137-room converted Sovietera publishing house boasts a number of "unique suites and interiors that weave together a contemporary sensibility with a vintage Georgian aesthetic." Tripexpert notes that in 2017, Vice had in mind to ask whether Tbilisi's favorite Bassiani, an industrial chic club built under the national football stadium, might be the new Berghain. "There’s increasing openness to the LGBTQ community and venues like Bassiani are destinations for travelers of diverse identities." The article also mentions the 24-hour sulfur baths, Georgia's ancient wine culture, and its cuisine, going on to highlight "the best restaurant in town: Shavi Lomi, the beloved creation of chef Meriko Gubeladze," serving up unique Georgian fusion in a cozy atmosphere. The two runners up in the Emerging Destination category were Medellin and Belgrade. GEORGIA TODAY contacted TripExpert Co-Founder Andrew Nicol to find out more about his inspiration behind creating the company and what he thought of this year’s winner. “As someone who grew up in South Africa, a developing country where tourism is an important industry, I followed with interest our new Experts’ Choice Award for Best Emerging Destination. Georgia, and Tbilisi in particular, received highly complimentary coverage in many of the 85+ publications that we track on TripExpert, including National Geographic, The Guardian, Rough Guides and The Wall Street Journal. We also

Tbilisi. Image source: Tony Hanmer

noted an increasing number of venues in Tbilisi receiving our Experts’ Choice award,” Nicol told us. “Two especially promising features of Tbilisi are its growing arts and nightlife scenes, which often appear to be leading indicators of a boom in a city’s tourism industry. Once a destination is perceived as ‘alternative,’ ‘edgy,’ or ‘cool’ (all words which our expert reviewers have used for Tbilisi), it starts attracting a growing number of international travelers, which in turn creates demand for new hotels, bars and restaurants and draws yet more visitors. Of all the cities that we considered for the award, Tbilisi is the best placed for tourism growth in the coming years.”

We asked him if he’d been to Tbilisi himself, and he told us ‘no’. “Although other members of our team have been to the city, I’ve not yet had the opportunity, but it’s now at the top of my list!” We then turned the conversation to TripExpert. “I founded TripExpert to provide a more reliable alternative to crowdsourced travel sites,” he told us. “By relying exclusively on reviews written by professionals, we eliminate many of the problems with user reviews, which are often misleading and are subject to abuse. For smaller destinations like Tbilisi, a particular problem with user reviews is that travelers don’t have any basis for com-

parison: for example, they will likely only ever stay at one hotel in the city. Reviewers writing for travel guides, magazines and newspapers are better placed to recommend the very best. We hope that being able to rely on the advice of experts will help travelers make the most of their trips to Tbilisi or to any of the other destinations that we cover.” So, it looks like Georgia’s ever-growing tourism numbers will see a further boom in the near future. Make sure you get in on it! See the full TripExpert article https://www. tripexpert.com/posts/tbilisi-2018-best-emerging-destination


12

BUSINESS

GEORGIA TODAY

MARCH 20 - 22, 2018

Chatbot for Business: TBC Bank Creates New Product BY THEA MORRISON

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or the first time in Georgia, TBC Bank is offering its clients an innovative product “Chatbot for Business,” which allows companies to sell their products by Facebook messenger. “Chatbot for Business” is a sales channel through which various company users will receive information about a product, company location or working hours, and will be able to purchase products in seconds on Facebook messenger. Users can share the product offered by the robot with their friends without leaving the chat. Chatbot brings together the following

an increased level of company sales and customer satisfaction, with users able to buy a product in seconds, easily. The beta version of Chatbot is already available for business clients, however, the works on the product are underway and many new features will be added in the near future. Companies interested in using “Chatbot for Business” should comppete the application form on http://www.businessbot.ge/ after which an employee of TBC Bank will help them activate the chatbot. (If the company does not have an account in TBC Bank, it is necessary to open an account for the use of the product). Detailed information about chatbot is available at http://www.businessbot.ge/

functions: 1. Electronic Commerce - the simplest and fastest way to buy a product. This feature will enable users to buy a product on Facebook through any form of payment, just like on an online store. 2. Finding locations and working hours – By means of automatic response, the users will get information about locations and working hours without a call center or waiting for an operator. 3. Search System with Meta Tags – Meta Tags will enable the company to provide clients with the most relevant offer. The user will be able to receive information about all products interesting for them by typing one word into the search box. Chatbot simplifies business relationships with customers which results in

Average Hotel Prices in Georgia & Hotel Price Index (February 2018) 2018, the number of international travelers visiting Georgia decreased by 1%. Of these international travelers, the proportion who stayed in Georgia for 24 hours or more (classified as tourists) decreased by 6% compared to the previous month4. The insignificant change of prices in February can be linked to this fact. The 3-star, 4-star and 5-star hotel price index decreased by 3.2% in February 2018 compared to January 2018. For these types of hotels, Tbilisi and SamtskheJavakheti regions recorded the steepest price decreases. In guesthouses, the price index decreased insignificantly by 0.9%. In this type of accommodation, the biggest percentage price decrease for standard double rooms was recorded in Racha region.

Graph 1: In the graph, average prices for standard double rooms in 3 and 4-star hotels and guesthouses are given by region. 5-star hotel prices are provided below.

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n this bulletin, we discuss: • Hotel prices1 in February across different regions of Georgia. • The hotel price index2 in February 2018 compared to January

2018. • Monthly hotel price changes during the November 2017-February 2018 period.

AVERAGE HOTEL PRICES In February 2018, the average cost of a room in a 3-star hotel in Georgia was GEL 136 per night. The most expensive 3-star hotels in Georgia were in MtskhetaMtianeti region (exceeding the average

price by 56%). The average cost of a room in a 4-star hotel in Georgia in February 2018 was GEL 198 per night. The most expensive 4-star hotels were found in MtskhetaMtianeti region (exceeding the average price by 52%). The average cost of a room in a 5-star hotel in Georgia in February 2018 was GEL 363. In Tbilisi, the average price was GEL 591, followed by SamtskheJavakheti-GEL 358, Kakheti-GEL 297, and Adjara-GEL 207. In February 2018, the average cost of a room in a guesthouse in Georgia was

HOTEL PRICE DYNAMICS NOVEMBER

2017-FEBRUARY 2018 During the period of November 2017February 2018, a monthly hotel price increase was only recorded in December (9.3%). In addition, the highest daily rates for standard double hotel rooms during this period was recorded in December 2017. The highest monthly decrease of price for standard double hotel rooms was recorded in January 2018 (6.4%). Looking at the monthly data, the lowest average price for standard double rooms in a 3-star hotel was recorded in January, while for the same type of room in 4-star and 5-star hotels the lowest rates were recorded in February 2018 and for guesthouses these rates were at their lowest in November 2017. During these four months, prices for guesthouses were stable compared to prices for 3-star, 4-star and 5-star hotels.

GEL 86. The highest daily rates for guesthouses were found in Kvemo Kartli, Guria, Mtskheta-Mtianeti and SamegreloZemo Svaneti regions.

HOTEL PRICE INDEX In February 2018, the hotel price index3 decreased by 2.2% compared to January 2018. The daily rates for standard double hotel rooms decreased significantly in Racha and Tbilisi, while the daily rates increased the most in Mtskheta-Mtianeti. The prices remained stable in the other regions. In February 2018, compared to January

Graph 2: Monthly Hotel Price Index

Table 1: Percentage change of prices in February 2018 over January 2018 1 The results are based on the surveying of standard double hotel room prices of 3, 4, 5-star hotels and guesthouses in 10 regions of Georgia. Hotels were chosen arbitrarily according to random sampling principle. The study contains 71% (312) of all 3, 4 and 5-star hotels and 25% (456

guesthouses) of all guesthouses registered on www.booking.com The 3, 4 and 5-star hotel price data was collected by contacting hotels individually, while the prices of guesthouses were taken from booking.com. The average prices are arithmetic mean of standard double hotel room prices.

2 The calculation of the hotel price index is based on the recommendations given by the International Monetary Fund (IMF). The elementary aggregate price index is calculated by Jevons index (Consumer Price Index Manual-Theory and Practice (2004), Practical Guide to Producing

Consumer Price Indices (2009)). 3 Guesthouse: a type of accommodation that is characterized by having a small number of rooms and services are usually offered by the resident family. 4 According to the Georgian National Tourism Administration, in February

2018, 440,806 international travelers visited Georgia. Of these, 177,845 travelers stayed in Georgia for 24 hours or more. In January 2018, the number of international travelers was 444,421, of whom 189,476 travelers stayed in Georgia for 24 hours or more.


BUSINESS

GEORGIA TODAY MARCH 20 - 22, 2018

Oleg Zhukov: Oracle Sees Big Potential in Georgia

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he business conference ‘Oracle Day in Georgia’ took place in Tbilisi on February 21. The main goal of the event was to introduce Oracle’s stateof-the-art digital technologies and expertise to Georgian IT leaders; in particular, how to optimize business processes using Oracle's innovative cloud technologies. Oleg Zhukov, Oracle Cluster Leader for Russia, Kazakhstan, Central Asia and the Caucasus, opened the business conference. Company representatives and invited experts presented new technologies and innovative IT solutions to Georgian specialists. They also discussed cloud technology and shared ready recipes that will help to adapt to the digital era of business, reduce costs and update IT infrastructure. The agenda of ‘Oracle Day in Georgia’ included such important topics as cloud technologies, cyber security and Oracle Information security solutions, Oracle Analytics Cloud: a single platform for Business Intelligence and Data Discovery, smart chatbots, Modern Data Warehouses on Oracle Engineered Systems, new features of Oracle’s database 18c and the new DBMS focus – Autonomous Database, and more. GEORGIA TODAY spoke to Zhukov to find out more about ‘Oracle Day in Georgia’ and Georgia’s potential in technologies.

WHAT CHALLENGES DOES CLOUD RESPOND TO AND HOW DOES IT HELP BUSINESSES TO COMBAT CYBER-ATTACKS?

HOW PROFITABLE FOR ORACLE IS THE GEORGIAN MARKET IN THESE DIRECTIONS?

What was just recently only an intriguing trend is now a reality and a new imperative in business management. What is the Oracle Intellectual Chat-Bot? It can communicate by text as well as by sound. It analyzes and interacts with you in a familiar language.

Every year, we organize an event at the Oracle headquarters in San Francisco, where we invite our customers and partners from all over the world. After that, we hold similar events everywhere we have representatives. In Georgia we had Oracle Day because we see a huge potential for business development here. Accordingly, Georgia is our so-called “focus” country. This year, all my teams are both technically and organizationally focused on Georgia, Azerbaijan and Uzbekistan. In these countries, Oracle business and development opportunities are quite large, and we see our customers’ attitude to our technologies, namely, how quickly our IT technologies are being adopted by Georgian businesses and also by the public sector. Georgian banks and telecom operators have several years’ experience working with us.

HOW VALUABLE ARE YOUR PRODUCTS FOR STATE STRUCTURES? State structures in Georgia are actively developing and are interested in our products. The main direction that we offer to the Georgian market is cloud technologies. Interest is mainly directed at optimizing costs for all initiatives, if companies start to collaborate with Oracle as a cloud provider. We also assist in the development of software and Engineered Systems. Cloud is the main priority. Oracle is the fastest growing cloud company at scale.

Cloud is a market where all kinds of data are secured, vitally important nowadays. For a large amount of information, we can use additional analytical software to analyze data related to the specific topic and suggest future decisions. Cloud is able to predetermine certain types of hazards and avoid them. Another direction we have, and which is “future,” is the creation of large software products that eliminate human errors by using new generation algorithms and artificial intelligence to see the current errors and exclude them in future. All these tools are already built into our database. Oracle Autonomous Database Cloud is self-driving, selfsecuring and self-repairing. Speaking about Georgia, I would like to note that the country is very modern and is not afraid to adopt new technologies because they care about making things safer.

WHAT ARE THE LATEST TRENDS IN BUSINESS INFORMATION TECHNOLOGY, BY WHICH WE MEAN ORACLE INTELLECTUAL CHAT-BOTS, ARTIFICIAL INTELLIGENCE, MACHINE LEARNING, CLOUD SERVICES, PREDICTIVE ANALYTICS AND SO ON?

AND HOW DO YOU ASSESS THE MARKET IN GEORGIA? We have wonderful partners and customers in Georgia. They are eager to use new technologies and they are trying to learn more about them, because they are concerned about costs, optimization of business processes and the reduction of bureaucracy. Oracle sees quite a significant potential in Georgia, which, for sure, we’ll be developing.

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BUSINESS

GEORGIA TODAY

MARCH 20 - 22, 2018

First Real Estate Exhibition & Sale in Georgia

O

n March 30- April 1, the real estate exhibition-sale “Area-expo 2018” will be hosted in Tbilisi for the first time. This event will bring together the construction sector to exhibit real estate and planned projects to customers and interested persons. No such exhibition-sale has been conducted in Georgia before, although it is very popular abroad. Area-expo 2018 will host developer and construction companies active in Georgia, about 15 exhibitors covering issues regarding construction and relevant know-how, thousands of visitors and potential real estate purchasers. This is a place where real estate owners, interested purchasers, business units and persons responsible for the development of sectors gather. The event is officially supported by the ministries of Economy and of Sustainable Development in Georgial, which will present an exhibition and sale of the National Agency of State Property as "50 Assets for Your Hotel". The event is fully organized by Area Group, a Real estate service company aiming to establish international standards in the sector. Organizers say, “Area-

expo” will become one of the most important events for developing the annual market in the future. Nino Jinjolava, the managing partner of the company, claims it will go beyond the boundaries of Georgia and will become even more diverse for both the participants and the audience. “Major changes are occuring in the real estate marketand, nowadays, around 8.3% of GDP is occupied by this sector,” Jinjolava said. “It is one of the main branches of the economy in general. Although chaotic constructions are now common, the lack of clear and well-formed policies and a unified general development plan for this sector from the government, and customers’ and citizens’ lack of knowledge of this field has changed the true image of the city.” The market has become actively competitive and consumer demand for quality and additional services has also increased significantly. In these conditions the government is more inclined to make changes in this field and meet the international and European requirements: all the actors in the must contribute to the development of real estate. Therefore, every initiation, which serves to maintain healthy competition in the industry, bring diversity to the market and which is directed to self-development, is seen as a key factor in the advancement of the estate sector. Such events are especially relevant when the estate industry is expanding in every direction: starting with the number of granted planning approvals anda high supply and demand index. In this situation, having access to consistent information sources is extremely important for the retail consumer. “Area-expo 2018 is an ideal information platform where both developers and consumers can obtain information about the innovations currently occuring in the estate industry. Every ongoing construction project will be presented in the exhibition space, where consumers have an opportunity to compare and chose apartments, office and commercial spaces, according to the price, location, favorable payment terms,etc. Within the scope of the exhibition, the banks will be presented at the place to purchase real estate properties selected by the user within the event. The exhibition will take place in “Expo-Gerogia” IV, V and VI pavilions. Minister of the Economy and Sustainable Development, Dimitry Kumsishvili, will open the event.

POLITICS

Russian Ambassador to the EU: Russia Will Not 'Shut up & Go Away' BY KATIE RUTH DAVIES

City Center is 4-star hotel in the center of Tbilisi City. With our wonderful staff and service, the hotel is packed to the brim with that world renowned Georgian culture, cuisine and hospitality- everything you need to make your stay perfect! Want a top location and calm environment? Hotel City Center is the place for you! Feel the comfort of stylish and tastefully decorated rooms: City Center provides the ideal place to unwind or catch up on work. Explore the different types of rooms and choose a space that's right for you. Whether it’s time for a board meeting and trainings or you need a fitness club to work out in, be sure that you’ve found the perfect place. And that’s not all! We know that dining is not only about food; it’s also about atmosphere and good service, and that is something we at City Center hotel pride ourselves on, so come along and try out our restaurant and café.

Address: Queen Tamar Avenue #24 Website: www.citycenter.ge Email: info@citycenter.ge

R

ussia is not going to shut up and certainly not go away! - Vladimir Chizhov, Russian Ambassador to the EU, told Andrew Marr on BBC One this morning, responding to the much-mocked request to do so by UK Defense Secretary Gavin Williamson last Thursday. The interview came in the aftermath of the March 4 poisoning of former Russian spy Sergei Skripal and his daughter and following the tit-for-tat plan to remove British diplomats from Russia, after British PM Teresa May kicked out 23 Russian VIPs from the UK last week. Despite the overwhelming synicism and mockery seeming to come from the Kremlin in response to the global accusations regarding their culpability in the March 4 attack, Chizhov told Marr that "It is not a funny matter, and the latest I heard from Moscow, two criminal investigations are to be launched by the Russian Investigation Commitee regarding the Skripal and Nikolai Glushkov cases." He went on to tell Marr that Russia would be wanting to come to the UK to join British police in the investigations. Marr then spoke to Boris Johnson, Secretary of State for Foreign & Commonwealth Affairs, who would not answer directly as to whether the UK would allow the Russians to partipate in the investigation. "We gave the Russians a very clear choice from the start: [to explain] how the chemical nerve agent novachok appeared on British soil or that we would be forced to follow the trail of culpability which leads to the Kremlin. Their response was not a response from a country that wants to be engaged in getting to the bottom of the matter." Some in the UK, including Labor leader Jeremy Corbin, have suggested the poisioning of Skripal may have been carried out by members of the Russian mafia rather than the State itself. "We gave the Kremlin a chance to answer and were met with smug sarcasm, denial and delay," Johnson told Marr.

Johnson explained that on Monday 19, technical experts from La Hague's Organization for the Prohibition of Chemical Weapons would be coming to the UK to analyse the samples of the novachok nerve agent found during the Skripal investigation. "The samples will be tested by the top international laboratories," Johnson claimed, suggesting that Russian help was no longer needed or welcome. "We've had evidence in last 10 years that Russia has received delivery of nerve agents and has been stock-piling novachok," Johnson told Marr. He went on to note the reactions of the global community to this latest agressive act from Russia. "We have seen a difference in reactions this time compared with the reaction to the Litvinenko poisoning in 2006; then there was more hesitation, more suggestions of the involvement of rogue elements. This time, more fingers are being pointed at Russia. Attitudes have changed," Johnson said. "And Russia does care what we say and that's why I think the UK is in the Kremlin's crosshairs. To the best of our knowledge, this is a Russian made nerve agent. People from the US, Germany, France, the Balkans have experienced malign Russian behavior. They see the country going in the wrong direction and are no longer willing to give Russia the benefit of the doubt. They are standing shoulder-to-shoulder with the UK in this." Marr then moved the topic onto the defense budget and saw Johnson noting that more needs to be spent. "We are one of biggest contributers to the NATO defence budget, at 20%," he noted, going on to mention the UK's Cyber Security Center and the confidence that the country can defend itsself from infrastructure attacks and the like. As to further measures to be taken against Russia, the Foreign Secretary said they would be discussing the matter at the National Security Council in the coming days. "The UK is already persuing a number of measures and hardening our borders, using the tools available under existing statutes. We will be persuing those who corruptly obtained their wealth, those with proven links with Putin. Other measures, if any, will be decided."


POLITICS

GEORGIA TODAY MARCH 20 - 22, 2018

15

Russia’s Drive in the Caucasus

OP-ED BY EMIL AVDALIANI

A

debate is going on within the analytical community on what Russia’s strategic interests in the Caucasus region are. It is worth saying from the get-go that they are a mixture of economic and political imperatives. There are at least five reasons behind Russia’s drive to dominate the region, a region linking Russia’s hinterland with the Middle East and serving

as a bridgehead between the Black and the Caspian seas. Moreover, indirectly, the Caucasus bridge also serves as a major potential way in which the Central Asian region can be connected to the European market. The Baku–Tbilisi–Ceyhan (BTC) oil pipeline, the South Caucasus Pipeline (gas), and railway infrastructure such as Baku-Tbilisi-Kars railway, are major projects which reconnect not only the two seas, but potentially Central Asia with Europe. Thence comes Russia’s geopolitical imperative to project its influence in controlling gas and oil exports to Europe, which can potentially endanger Russia’s monopoly in that continent.

There are many tools Moscow has used, including ethnic conflicts and subversion of pro-European policies. And these tools are still very much effective. Indeed, Nagorno-Karabakh and other conflicts can easily be ratcheted up by Moscow to gain geopolitical momentum. As such, the South Caucasus represents one of the major theaters of the WestRussia confrontation. The Caucasus is also important for its large number of ethnic groups. This is an important factor, often forgotten in geopolitical analyses, as the Russian North Caucasus has been a source of unrest for several centuries to date. The role of the North Caucasus is also quite striking as it is in this region that Russia’s potential weakness will first be reflected. In other words, instability in the North Caucasus equals a prerequisite for the demise of Russia’s geopolitical force. Yet another reason is the Caucasus’ proximity to the Middle East. Wars in Syria and Iraq have played an important role in raising the profile of the Caucasus in Russian geopolitical calculus. Moscow is worried that Islamist extremism could be expanded to the restive Chechnya and Dagestan. In fact, this was one of the reasons why Russia entered the Syrian war in late 2015. A large part of the Russian strategic thinking rests on the premises of the existence of the Caucasus Range. This is a significant obstacle: in fact, it represents by far the only large geographic barrier the

Russians have ever crossed in their history. Russia could well have shut itself behind the mountain range and not have tried to cross into the South Caucasus. But since the decision was made in the late XVIII-early XIX centuries by Russia, its rulers have always aimed to improve the existing and create additional routes through the range to be better positioned in the region. Russia could not allow those natural and artificial passes to be under foreign control as it would essentially mean barring Moscow’s projection of power into the region. Currently, Russia has three major routes in: the first from Sochi and the surrounding territories to Abkhazia along the Black Sea coast; the second through the Roki Pass in South Ossetia (Samachablo); and the third along the Caspian Sea coast from Dagestan to Azerbaijan. Russia has consistently dominated the three routes and when threatened, has used military action, much as it did in 2008 when there was a real possibility of the Roki Pass being overtaken by Georgian troops. The reasons behind Russia’s drive in the Caucasus are only several which are most visible in everyday politics. If Russia has traditionally been the power which shielded the region from Turkey and Iran, nowadays we see an interesting picture where these powers interact pretty much smoothly in numerous theaters, most importantly in Syria. It is interesting though how this changed dynamic will have a bearing on the Caucasus itself.

Georgia Receives €45 Million of Financial Assistance BY BENJAMIN MUSIC

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fter the European Commission proposed to support Georgia’s economic development, the European Parliament has approved financial assistance worth €45 million. Considering the importance of strengthening Georgia’s macro-level economic performance, the additional financial support will cover essential financial needs between 2017-2020. Sajad Karim, Head of the Georgia-EU Association Committee, has published a Parliamentary paper on Twitter, specifying the composition of the two installments of a medium-term loan worth €35 million and a grant worth €10 million. As stated in the paper, it is the third time since the illegal Russian incursion into Georgian territory in 2008 that the EU has supported Georgia’s financial situation. The money comes as additional

support to the European Neighbourhood Program, aiming to foster the relationship between the EU and its neighboring states. The EU points to Georgia’s fiscal deficit, hoping to counter against the negative developments partially caused by a depreciation of the Georgian Lari. The EU highlights, however, the great developments of Georgia in the fields of democracy, the rule of law and human rights, which the EU continues to closely monitor, hoping for an even stronger rapprochement between Georgia and the EU. Since the disappearance of the iron curtain, the EU has set up major financial and political aid programs, aiming to stabilize neighboring countries. Often, the desired effect has not turned out to be easily achievable, as countries like Libya and Syria are in the midst of a civil war. With other countries, such as Georgia or Morocco, the EU partnerships have been more effective, helping both governments to implement essential reforms and amend existent laws.

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Issue #1032 Business  

March 20 - 22, 2018

Issue #1032 Business  

March 20 - 22, 2018

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