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Issue no: 956/83

• JUNE 20 - 22, 2017

• PUBLISHED TWICE WEEKLY

FOCUS

PRICE: GEL 2.50

In this week’s issue...

ON STABILITY & LIQUIDITY Exclusive interview with TBC Bank CFO on the move to the London Stock Exchange FTSE 250 Index

PAGE 6

German Ambassador Opens Event on 25 Years of Georgia-German Cooperation NEWS PAGE 2

We Need a Marshall Plan: We All Really Need One PAGE 4

Source: ft.com

Asian Infrastructure Investment Bank to Allocate $114m for Georgia BY THEA MORRISON

T

he Asian Infrastructure Investment Bank (AIIB) is to allocate $114million for the construction of the Batumi Bypass Road in the Adjara region of Georgia. Georgian Finance Minister and Vice-Premier Dimitry Kumsishvili and the AIIB Bank President Jin Liqun signed the agreement within the AIIB 2nd annual meeting in South Korea on June 17. The construction process will be launched this year and will be completed in 2022. Continued on page 5

Winery Khareba: Another Success for Georgia! PAGE 5

Three Winners & the Lucky One Who Can Build a New Life PAGE 9

Priorities & Reforms of MIA Border Police SOCIETY PAGE 11 Prepared for Georgia Today Business by

Markets Asof16ͲJunͲ2017

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2

NEWS

GEORGIA TODAY

JUNE 20 - 22, 2017

German Ambassador Opens Event on 25 Years of Georgia-German Cooperation BY THEA MORRISON

G

eorgia-German Year is a very important period in the relationship between Georgia and Germany, as this year the two countries mark the 25th anniversary of the GeorgiaGerman Development Cooperation. This year the two countries are both celebrating the arrival of the first German colonists 200 years ago and the establishing of diplomatic relations following the announcement of the independence of Georgia in 1992. In celebration, the German Embassy in Georgia organized a street festival on June 17 in the newly renovated Aghmashenebeli Avenue pedestrian zone, Tbilisi. The festive event was opened by the German Ambassador Heike Peitsch. “On this beautiful, summer’s day, we celebrate the 25th anniversary of the development of relations between Georgia and Germany. The 25th anniversary of diplomatic relations is also being celebrated. We are very glad that we have had such successful cooperation with Georgia. During these years, Germany contributed around EUR 850 million to Georgia's development, as well as doing much in economic, educational and other important fields. We want to show our joint projects and I am confident that our friendly relations will continue in the future as well. We'll always stand by your side,” the ambassador stated. Speeches were delivered by the Deputy Minister of Finance, Nikoloz Gagua and First Deputy Mayor of Tbilisi, Lasha Abashidze. “Today, we celebrate the 25th anniversary of the development of ties between

Georgia and Germany. These 25 years were very important for Georgia. It is very hard to estimate this cooperation. The assistance provided by the German side during these years is very important for Georgia. I am sure our cooperation will become even deeper in the future,” Deputy Finance Minister said. Since 1992, the Federal Ministry for Economic Cooperation and Development of Germany has allocated EUR 820 million in aid for Georgia. In addition, Georgia has benefited from regional cooperation programs for the South Caucasus (EUR 273 million for Armenia, Azerbaijan and Georgia since 2010). Germany aids Georgia in the energy, private, vocational education, environmental protection and water supply sectors. Furthermore, the two countries are cooperating on judicial reform, utility development and public finance management. After the opening ceremony, a diverse and interesting program was conducted with live music, talk shows, performances and various games. At the specially installed stage at Aghmashenebeli Avenue, the presentation of the forum-theater-World Vision was held.

There was also a contest of young artists - "Georgia's Green Future" and the children’s choir of the 6th School ‘Little Georgica’ performed on the stage. Further, there was an interview format with the Georgians who returned from Germany (successful program of re-integration: Migration for Development) and panel discussions - Georgian Youth Looks at the Future. At the end of the day, the band "Yellow" held a concert and the Movement Theater performed "Labyrinth" on environmental and biodiversity issues. On the renovated Aghmashenebeli Avenue were five tents in which the participating organizations presented themselves and informed guests about their work. The children were also involved in this process, making crafts and playing games for prizes. No1 tent housed the German Embassy, KFW's local office in Tbilisi, and the German International Cooperation Society (GIZ). Their program envisaged providing information about their activities, offering a wide variety of printed information materials, and a poster exhibition. It was also possible to travel to

the Georgian Protected areas by putting on virtual glasses. No2 tent was dedicated to political foundations – the Friedrich Ebert Foundation, Heinrich Boell Foundation, Friedrich Naumann Foundation Conrad Adenauer Foundation and German Economic Union (DWV). In the joint project of the Friedrich-Ebert Foundation, Goethe Institute and the "Real Laboratory of Future Planners", the German and Georgian welfare planners plan to work together with students to develop the vision of future development of the German District in Tbilisi. The project samples were presented and guests were able to express their opinions. In addition, children were given the opportunity to draw their dream district. Moreover, the Senior Expert Service (SES) was presented giving local organizations, associations, small and medium enterprises the opportunity to cooperate with German specialists, who are ready to share their knowledge and experience with partners around the world in more than 50 fields. Within the framework of the program, the projects implemented in Georgia were presented and the DWV representative held consultations with all interested people on receiving SES benefits. No3 tent was given to the following organizations: Adult Education Network of Georgia (GAEN), DVV International, Arbaitar-Samariter-Bundi (ASB), Savings Banks Fund for International Coopera-

tion (Sparkassenstiftung). The program included: project "Gender Begins from Me" funded by the German Ministry of Foreign Affairs, an information table, a quiz on human rights with prizes, an exhibition-sale of leather and jewelry made by attendees of Adult Education Centers and Social Enterprises established by DVV International, the introduction of ASB Georgia Programs, teaching I gesture language, together with pupils of public and private schools for deaf children, as well as a gif-maker and photo booth with free-to-print photos. No4 Tent housed the organizations: SOS Children's Village of Georgia, World Vision, and Deutsche Welle which offered a program including an exhibition-sale and masterclasses of the handmade works of SOS children's rural beneficiaries, presentation of the campaign against exploitation of children who live and work on the streets – “It is not my choice", a presentation of DW Academy, a test on information freedom, a quiz about selfregulation of media (partner: Georgian Association of Regional Broadcasters), a masterclass in mobile reporting - video recording and installation, as well as live via smartphone (partner: information center network), a workshop on identification of fake information - Online Verification of Video and Photos (Partner: Media Development Fund). No5 tent offered a variety of drinks and food to guests.


4

BUSINESS

GEORGIA TODAY

JUNE 20 - 22, 2017

We Need a Marshall Plan: We All Really Need One BY VICTOR KIPIANI

G

eorgia's path towards EuroAtlantic integration has become ever more articulated and irreversible over the last decade or so. Relatively speaking, this path is not a particularly painful or restrictive one—unlike those of several of Georgia’s neighbors, some of whose agendas, although similar, remain declaratory in nature only, whereas others are badly singled out by their contradictory statements and actions. Much has been written and said about various instruments or initiatives which have enabled Georgia’s truly remarkable progress, but few of these, in our view, deserve special recognition: whilst some individual examples have doubtless made a meaningful contribution to the country's defensive capabilities, it is a combination of bilateral and international programs which has done much to strengthen Georgia’s institutions and contribute to its economic reforms. Since the beginnings of its newly restored independence, Georgia has benefited from the immense political, military and financial assistance of the United States. This support and cooperation eventually resulted in the USGeorgia Charter on Strategic Partnership, signed on 9 January, 2009. The Charter lays down a general framework whereby the United States express their unequivocal will to act as the key guarantor of Georgia's sovereignty, supporting its independence, political stability and territorial integrity. The Charter deals not only with security, economic, trade or

The health of Georgia’s economy and the well-being of its citizens are preconditions of paramount importance to the country’s political stability and peace

energy issues, but also with key humanitarian aspects by recognizing the importance of the need to increase people-topeople contacts and cultural exchanges. It clearly aims to build a democratic Georgia and thus to vividly demonstrate the real meaning of genuine partnership and a true "two-way " relationship. The next chapter of this rather brief account of Georgia's gradual return under the Euro-Atlantic security umbrella began with NATO's 2014 summit in Wales, during which Georgia was promised, in lieu of the long-awaited Membership Action Plan, a "substantial package", thereby bringing the country even closer to its trajectory of joining the alliance. The "Substantial NATO-Georgia Package" (SNGP) outlines a set of measures to strengthen the country's security through a “Defense and Related Security Capacity Building Initiative” comprising strategic level advice and liaison, defense capacity-building and training, multinational maneuvers and enhanced interoperability opportunities. One of the most concrete of these measures was the establishment of a NATO-Georgia Joint Training and Evaluation Center for training Georgian troops and improving the command and leadership capabilities of its officer corps. All in all, the Wales Summit was a cornerstone, recognizing as it did Georgia’s aspirations by granting the country an "elevated status". When speaking about the irreversibility of Georgia's pro-Western-agendadriven policies, the entry into force of the EU-Georgia Association Agreement on the 1st of July of 2016 was a momentous event. This agreement is not merely a unilateral expression of the willingness of Georgians to “return to the European fold” but an expression of the will of all the EU’s 28 member states to welcome us there. 80 percent of the agreement is taken up by a Deep and Comprehensive Free Trade Area section, which envisages removing customs tariffs and quotas and approximating Georgia’s traderelated laws and regulations with EU standards. Therefore, on top of its historic and crucial political bearing, the Association Agreement represents a very practicable means to diversify Georgia’s foreign trade, help its economic growth, and, eventually, facilitate its political and economic integration with the EU. Strongly related to and indeed often inseparable from Georgia's pro-EU stance is the recent decision to promote the country to the list of those whose nationals are exempt from EU entry visa requirements. This decision to ease business, cultural and private exchanges between Georgian nationals and their European counterparts undoubtedly strengthens Georgia’s pro-Western government, helping it to fend off Russia’s ongoing and uninterrupted attempts to dominate the region and to continue to push domesti-

The Marshall Plan was not an act of charity: it was one of strategy cally for often challenging and painful pro-EU reforms. As we have already mentioned, this article is merely a snapshot of some of the measures this country and its partners have undertaken to maintain the unbroken tempo of change seeking to eradicate all remnants of Homo sovieticus subsp. georgicus (a subspecies which, to some extent, continues to linger nevertheless) and to present Georgia as an example of real achievement (as opposed to window-dressing) for others to follow for the benefit of their societies. However, a question remains: are the actions and initiatives which have been undertaken to date really enough to make a clean break with the past and ensure Georgia’s safety, or is something still missing? Georgia should indeed be grateful for all the support it is receiving—but is this support qualitatively and quantitatively enough considering the many swords of Damocles which hang over the country? Is it commensurate with the sacrifices the country has made and the burdens it is shouldering in order to reach the destination it has long dreamed of and deserves to reach, or are statements of "concern and encouragement" in support of Georgian independence merely intended to keep the country on the Western periphery but without, however, taking the much-needed and decisive step of embracing it? These questions linger like nagging thoughts, and remain without the clear-cut, definitive and long-awaited answers they require.

THE WAY AHEAD: A MARSHALL PLAN? The best solution to address these questions and relieve all concerns, cutting the Gordian knot, would be to design and carry out a Georgian version of the Marshall Plan which restored Europe after the Second World War. The original Marshall Plan was named after the US Secretary of State George Marshall, whose speech at Harvard University some 70 years ago would have profound consequences for Western Europe, then politically and economically ruined. More specifically, that Marshall Plan, which resulted in the US Foreign Assistance Act of 1948, provided meaningful funds for reconstructing post-war Europe. Importantly, and besides its financial

10 Galaktion Street

significance, the Marshall Plan helped shape the modern contours of European liberal and representative democracy, and stopped further Soviet penetration of Western Europe.

BUT WHY A NEW MARSHALL PLAN? WHY NOW? AND WHY FOR GEORGIA? Georgia continues to be the flagship of pro-Western and Euro-Atlantic sentiments in the region and beyond. Moreover, the country's unflinching dedication to pursuing its historically predetermined choice and the commitment of the majority of its citizens to the set of values they share with the shrinking family of modern democracies is both exemplary and exceptional. Such dedication, and even self-sacrifice, entails a hardening of various sorts of challenges which, in turn, require a great complexity of efforts to address. In pursuit of its choice, Georgia finds it ever more difficult keep walking as "the man in the street". There is no need to mention that when they speak about the security of their only ally in the region, our partners in the West are fully aware that the health of Georgia’s economy and the well-being of its citizens are preconditions of paramount importance to the country’s political stability and peace. A failure to achieve such peace and stability through economic growth may ultimately result in Georgia, the sole pro-Western democracy in the region, simply falling to pieces. It is also clear that Western support is not fully effective when it is provided "piecemeal" (as has mostly been the case so far), and that it needs to be backed

by the complete determination of all the countries which together have built the current levels of European and Atlantic unity. If one considers the impact such a Georgian Marshall Plan could have upon investment, it is clear that the Plan would also send a strong signal to American and European businesses, and would thereby have a cumulative effect.

BUT WHY DO WE ALL (AND NOT ONLY GEORGIANS) NEED SUCH A PLAN? Again, a Georgian Marshall Plan would be incontrovertible proof that real reforms “pay”, that the decay of a democratic and representative system is in fact a falsehood, and not "a chronicle of a death foretold". Such a bold and decisive move would once again emphasize the fact that the heyday of liberal internationalism lies ahead of us, and that the promotion and sustainability of correspondent values is not solely embodied in the United Nations, NATO and the European Union, but instead an earthly and tangible phenomenon in real action. It is worth remembering that when the Marshall Plan was being discussed in the immediate period which followed the end of the Second World War, George Marshall pointed out that the initiative was fundamental to Western interests because it promoted political stability and peace on the European continent. The Plan was not an act of charity: it was one of strategy. For all these reasons, it is high time a similar strategy was set in motion in Georgia.

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


BUSINESS

GEORGIA TODAY JUNE 20 - 22, 2017

5

Asian Infrastructure Investment Bank Winery Khareba: Another Success to Allocate $114m for Georgia for Georgia!

Continued from page 1 The road section to be constructed runs through the touristic and residential zones of Batumi and aims to alleviate the current problems experienced in international transit, promoting city bypasses for transit vehicles and enabling transit companies to increase cargo turnover. Another agreement was also signed by Asian Infrastructure Bank and Asian Development Bank (ADB) representatives concerning cooperation in the same project. Georgia’s Ambassador to the Republic of Korea, Otar Berdzenishvili, also attended the signing ceremony. The second Annual Meeting of the Board of Governors of the AIIB took place in South Korea on June 16-18, gathering officials and representatives from 57 countries. Kumsishvili delivered a speech at the conference and informed participants about the projects implemented in Georgia. “We have full support from the AIIB in implementing structural reforms as well as infrastructural projects in Georgia. Georgia is the founding member of the AIIB and the project to be implemented is on the list of the Bank's top 20 investment projects,” Kumsishvili stated. The Georgian minister also discussed the Tbilisi-Lars road project with the representatives of the AIIB and ADB and underlined the importance of the route for Georgia, highlighting that it is a large-

scale project and can be financed by two banks at the same time. Prior to the meeting, Kumsishvili spoke about Georgia’s convenient geo-political location, pointing to the fact it is the shortest route connecting Asia and Europe. The minister also stated that the Government of Georgia is implementing important investments for the development of the West-East transit corridor infrastructure, including the Express Highway, Anaklia Deep Sea Port and Georgian Railway Modernization projects. He also introduced the government’s Four Point Plan, which envisages modifying Georgia's income tax rules, improving governance, developing higher education and accelerating infrastructure projects. “The aim of the spatial development plan is to use the full potential of Georgia as a transit country, as well as to develop Georgia's tourism capabilities, which in turn will positively affect the welfare of the population,” Kusmishvili stated. The AIIB is a multilateral development bank that focuses on the development of infrastructure and interconnectivity in Asia. It opened its doors on January 16, 2016, following a 15 month participatory process during which its 57 founding members worked collaboratively to shape its principles, policies, value system and operating platform. The capital of the Bank is $100 billion, equivalent to 2/3 of the capital of the Asian Development Bank and about half that of the World Bank.

T

his year, Winery Khareba won the Gold Special Trophy for its White Dry Khareba aged wine at the prestigious annual wine contest Citadelles du Vin, held in Bordeaux, France. Each May, the world’s top 50 sommeliers spend a few days together in order to identify the best wines from 30 countries. Citadelles du Vin is held under the patronage of the International Organization of Vine and Wine (OIV). The organization ‘Vinofed’ is a member of the above-mentioned contest, which brings together seven core wine competitions from around the globe, Citadelles du Vin among them.

Irakli Kovzanadze: The NBG Has Qualified Management

C

hairman of the Budget and Finance Committee, Irakli Kovzanadze readily claimed that the NBG “has qualified management,” during the discussion of the 2016 annual report of the NBG at a parliamentary session. “The report is presented in a very interesting way and, compared with past years, many issues have been analyzed more deeply and broadly,” he noted, recognizing that 2016 was a difficult year for the Georgian economy and financial sector. “The presented report includes analyses and evaluations of different working aspects of the NBG in 2016, concentrated on the monetary and foreign exchange

policy. World economic trends and their impact on the Georgian economy, including exogenous factors which affected the functioning of the banking sector, have been presented in a very professional way”. He added that, through the leadership of Koba Gvenetadze, the NBG has qualified management, and has seen numerous positive aspects and innovations in banking activities. “There is a desire for improvement and a strong sense of responsibility which impacts positively on the steadiness of the banking sector and supports our country’s economy, too,” Kovzanadze said, before appealing to his colleagues to approve the 2016 annual NBG report.


6

BUSINESS

GEORGIA TODAY

JUNE 20 - 22, 2017

TBC Bank Achieves Inclusion in the FTSE 250 Index on the London Stock Exchange transparency, which are essential for maintaining a Premium Listing.

WHAT ARE THE MAJOR BENEFITS OF BEING IN THE FTSE 250, BOTH FOR THE BANK AND ITS CLIENTS? For TBC Bank, it expands the base of potential shareholders, which is expected to have a positive impact on our liquidity and share price volatility. This could be extended to the overall lowering cost of capital. This lower cost of funding can be potentially passed on to our clients in the form of lower loan pricing.

BY NINO GUGUNISHVILI

F

ollowing the news of TBC Bank’s recent inclusion in the FTSE 250 Index, GEORGIA TODAY met with Giorgi Shagidze, TBC Bank’s Chief Financial Officer and Deputy CEO, to talk about what the new achievement means for TBC Bank. As Georgia’s number one bank across all key metrics, TBC Bank is a key player in the Georgian financial market, so we were keen to discuss its development goals and strategic objectives. TBC Bank first entered the LSE in 2014 and joined its premium segment in the summer of 2016. Its current market cap-

italization is approximately GPB 900 million, with average daily traded volume amounting to GPB 1, 300.000 by value.

WHAT DOES IT MEAN TO BE ON THE FTSE 250 INDEX? The FTSE 250 is the next tier of companies listed on the Premium Segment of the LSE by market capitalization, below those included in the FTSE 100. The fact that TBC Bank is now one of the top 350 companies in the UK is a strong vindication of our growth strategy and the value that the market attaches to that. We anticipate that this will give the shares added stability, as well as greater liquidity for investors. It also underlines that fact that TBC Bank continues to comply with the highest standards of financial management, corporate governance and

WHAT ARE YOUR EXPECTATIONS AND PLANS FOR THE FUTURE? We will continue to invest in new technology products and services, specifically in mobile banking and internet banking which are already regarded as the best, not only in Georgia, but in the entire region. At the same time, we will continue to introduce even more innovative financial products. We have started selling TBC Insurance products and have ambitious plans to further introduce them to our customers. We continue to improve our services and take them to even higher levels.

SUMMARIZE THE CAPITAL MARKET DAY RECENTLY HELD AND ATTENDED IN LONDON Our Capital Markets Day is an annual

event to which we invite investors and analysts to London from the all over the world. From Georgia, all TBC Bank management members were present. Mr Koba Gvenetadze, Governor of the National Bank of Georgia, opened the event and made an introductory presentation on the economic environment and macro-economic policy. He was followed by each member of the management team, who presented on their respective business areas. Overall, the event provided an excellent opportunity for existing and potential investors and analysts to gain first-hand information on TBC Bank’s operational environment, our development goals and recent financial results. The day went extremely well, with around 100 attendees and a significant number also following via the webcast. A full replay of the event is available on our website.

WHAT ARE THE KEY FACTORS THAT CONVINCE INVESTORS TO BE INTERESTED IN GEORGIA AND ITS BANKING SECTOR? It is widely acknowledged that Georgia maintains a unique position in terms of attracting overseas investment. The environment in Georgia is extremely investorfriendly, with low taxation, prudent regulation and ease of doing business are only some of the many positive factors. Secondly, the current strong economic trends play a very important role. If we look at the positive first quarter economic

statistics, we can see strong growth, and that remains a very important factor for investors. The banking sector plays a leading role in the Georgian economy, and for foreign equity investors, the LSElisted shares of the two leading Georgian banks are the easiest way for them to invest in our growth story.

TBC BANK RECEIVED A 45 MILLION LARI LOAN FROM SYMBIOTICS, A LEADING INVESTMENT COMPANY. WHAT WILL IT BE USED FOR? The loan will be used to support small, micro and medium size businesses in Georgia, in accordance with our stated strategy. Furthermore, the loan is denominated in Georgian Lari, which is very important for businesses. I would like also to highlight that Symbiotics has shown confidence in the Georgian Lari and overall economy by issuing the loan in Lari, without directly hedging it on the local market.

IS TBC BANK PLANNING TO ACQUIRE MORE RESOURCES IN LARI? Definitely, as it remains our main source of funding. Over the last three years we have been very active in making us a market leader, and we are intending to continue to acquire additional resources in Lari. Of course, we are also expecting to continue our partnership with Symbiotics.

Mixture of Cafe and Theatre under a single space in the very heart of the old city. Warm environment, Georgian & European Food, Art and Music Open everyday from 12:00 pm to 01:00 am

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8

BUSINESS

GEORGIA TODAY

JUNE 20 - 22, 2017

One Belt, One Road: How Far Will China Go for Georgia?

BY EMIL AVDALIANI

G

eorgia has historically been at the edge of empires. This has proved both an asset and a hindrance to its development. An asset because of its terrain and distance from global centers, making it difficult to invade and keep the country under rule, and a hindrance because its geography requires major investment to overcome its mountains, gorges, rivers, etc. Last week, I wrote how Georgia has been playing a rebalancing game for more than two decades turning to other regional powers to counter Russia. Turkey, Azerbaijan, partly Iran and larger players, such as the EU and US, are those which have their own share of interest in the South Caucasus. However, over the past years yet another power – China – has been slowly emerging in the region. But despite the fact that China is rapidly increasing its economic presence in Georgia, which may ultimately result in more Chinese security involvement, Beijing and Moscow could also cooperate in the South Caucasus. China has close trade contacts with all South Caucasus countries and has invested extensively in the region. China is now Georgia's third-largest trade partner (the first two places being occupied by Turkey and Azerbaijan and the fourth by Russia). Trade between the two countries increased from approximately $115 million in 2006 to $820 million in 20142015. In 2017, China and Georgia finally signed a free trade agreement during the visit of the Georgian delegation to China in May. The country also hopes that its position on the Black Sea, with Batumi, Poti and Anaklia ports, will make it a logistics hub for the entire region and China. China only recently set its eye on the South Caucasus and its valuable infrastructure. This was a

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

Address: 11 Grishashvili Str., 4600, Kutaisi, Georgia TEL 219 71 00 info@bwkutaisi.com

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

For Tbilisi, it would be a boon to its security if China got more involved... However, it is likely no more than wishful thinking that China will openly confront Russia any time soon

result of China’s One Belt One Road (OBOR) initiative, which is a multi-billion-dollar project, according to which the country will be reconnected (as in ancient times) to Europe through the shortest distance of Central Asia, South Caucasus and the Black Sea (although this is not the only route the Chinese are working on). Georgia can readily boast its Black Sea ports, east-west highway, which essentially connects Azerbaijan and the Black Sea coast, and existing and upcoming railway projects (Baku-Tbilisi-Kars). Tbilisi sees intensive relations with China as yet another tool to somehow diminish Russian resurgence. With its pro-western course maintained, the country dearly needs Chinese investment to foster the creation of jobs and other economic opportunities. So far, the Chinese have built a new city on the outskirts of Tbilisi, have invested in Kutaisi, second-largest city in the country, and own ž of shares of Poti’s Free Industrial Zone. Although it is difficult to see the importance of investments in Tbilisi and Kutaisi, Poti’s possession is a significant one. An ordinary observer could see a clear east-west line to the Black Sea spotted with Chinese presence all along. It is difficult at present to ascertain what the Chinese moves will be in the future, but it is also clear that as the Russian forces move the demarcation line of the breakaway South Ossetia further south and ever closer to the east-west highway, China will be more worried as it endangers its economic interconnection with Europe. Beijing will either have to find a consensus with Russia or get more involved securitywise. And there is already a precedent for China getting involved militarily in the territories important to its OBOR project. For example, in Central Asia, China has made some steps which could potentially challenge Russia's economic and political influence in the region. We know that China is already the largest trade partner of each of the Central Asian states and that Beijing has deepened its military and security ties with Tajikistan and partly with Kyrgyzstan, mainly by holding military exercises and building military infrastructure on the Tajik-Afghan border. For Tbilisi, it would be a boon to its security if China got more involved in the South Caucasus. However, it is likely no more than wishful thinking that China will openly confront Russia any time soon. Even in Central Asia, despite inroads, Moscow still refuses to comment openly on whether Beijing is compromising the existing order. Another reason to think that Georgia will not so easily become a land for confrontation between China and Russia is the fact that the country is only a small piece in China's OBOR. Also, although Beijing will pay more attention to the region, it may not actively invest resources into Georgian security beyond law enforcement and counterterrorism cooperation, as in Tajikistan and Kyrgyzstan. This would be the case especially if its actions might clash with Russia's. As mentioned, Georgia is not the only transit route China has its eye on in its grand project.


BUSINESS

GEORGIA TODAY JUNE 20 - 22, 2017

BY THEA MORRISON

M

y relationship with Terabank started two years ago when I became their payroll customer. I went to open a bank deposit and learned about the lottery. Despite the fact that I actively observe the bank's proposals, I didn’t pay much attention to it and certainly had no expectation of winning. When I got that call from the bank, I was in the gym and couldn’t understand what they were talking about. I was told that I’d won the first midterm lottery of ‘Build Up Your Life’! - Terabank customer and the winner of the lottery, Mariam Tkavashvili, says. Mariam won a selection of Smart House equipment that gives her the opportunity to spend time at home more comfortably. The second lucky person was Nestan Kvatashvili, who applied to Terabank for a loan to buy some real estate. “I knew about the Terabank lottery but I didn’t even imagine I’d win,” she says. “The contract between me and Terabank was signed on March 20 before

Three Winners & the Lucky One Who Can Build a New Life the interim lottery and on April 20 I was told I’d won. I got prizes for my car: 1 ton of fuel, a 1000 GEL voucher for servicing my car, a car coffee machine, a video control camera and a 50 voucher for car washing – everything for a comfortable and enjoyable drive. I would like to thank Terabank for such amazing prizes. I will always participate in such lotteries because there is a real chance to win!”

Nestan is the winner of the second midterm lottery. Now, she is looking forward to the final lottery to be held on June 20. The winner of the third midterm lottery was Nino Zirakashvili, who won a set of travel items. “I’ve been a Terabank customer for many years. First, I just got my salary there, but later I became interested in other products as well. I learned about

the lottery in one of the branches when the operator acquainted me with the terms. I didn’t pay much attention as I’ve never won anything in my life. It’s an amazing feeling when you win and I’m now looking forward to the final lottery,” Nino says. The Terabank lottery and its prizes have a symbolic character. The first midterm lottery was connected to house equipment, the second to a car and the

9

third to travelling. This means that in the final lottery, named ‘Build Up a New Life’ and set to be drawn on June 20, the winner will get all three prizes together: a house, a car and a travel voucher, as well as salary for a year. All these prizes will go to a single lucky Terabank customer. The winner will be announced at 8pm on June 20 and from that moment will start a new life with Terabank.


10

BUSINESS

GEORGIA TODAY

JUNE 20 - 22, 2017

Special Commission Selects Surveillance Agency Head

BY THEA MORRISON

A

special commission, comprised of the Deputy Chairman of the Supreme Court, Chair of the Legal Issues Committee, Head of the Defense and Security Committee, Chairman of Human Rights and Civil Integration Committee, Parliamentary Secretary of the Government of Georgia and the Head of the State Security Service (SSS), have selected the Head of the newly established Surveillance Agency. The commission discussed many candidates but finally chose Koba Kobidze for the post, whose candidacy has been sent to the Prime Minister (PM) of Georgia, Giorgi Kvirikashvili, for approval. Kobidze worked as the Deputy Head of the Operative-Technical Agency of the State Security Service of Georgia, which carried out covert surveillance before the new agency was established following the new surveillance draft bill adopted by parliament on March 1. The legislative package includes provisions for the creation of a legal entity of public law (LEPL), the Operative-Technical Agency of Georgia, to be responsible for covert surveillance. The agency is under the supervision of the SSS and is also accountable to the PM, having to submit a generalized report of its activities annually. The responsibilities of the agency include hidden surveillance of phone communication, retrieving information from computer systems, control of post office transfers, secret audio and video surveillance and photographic surveillance.

The new bill on covert investigative actions became necessary after the Constitutional Court of Georgia ruled on April 14, 2016, that the existing model of surveillance, with the Interior Ministry and Personal Data Protection Inspector as key players, needed to be changed. The court stated that the existing legislation, which allowed the police to have direct and unrestricted access to telecom operators’ networks to monitor communications, was unconstitutional and set a deadline of March 31, 2017, to implement the court’s decision and replace the existing surveillance law with a new one. However, now that the new entity has been established, the opposition, Non-Governmental Organizations (NGOs) and the Public Defender of Georgia are appealing the law on covert surveillance, claiming that the changes are not in line with the verdict of the Constitutional Court and that the key to surveillance remains still in the hands of the SSS. The Presidential Administration also disapproves of the surveillance law. President Giorgi Margvelashvili vetoed the bill on March 20 when Parliament sent the draft to him to be signed. However, after two days, the ruling Georgian Dream (GD) MPs were able to override the presidential veto. Otar Kakhidze, member of the parliamentary minority European Georgia says that the process of choosing the head of the agency was managed by the SSS. He says the new agency is like the previous one and is in control of the State Security Service. "The law, which was adopted by GD, contradicts the decision of the Constitutional Court, which states that this agency should not belong to the Security Service…The appointment of Kobidze also indicates that the agency is under the control of the SSS and will fulfill political orders. The head of the Agency was presented by the head of the SSS and, accordingly, the process was led by the State Security Service," Kakhidze stressed. The head of the commission, Vakhtang Gomelauri, says the process of selecting candidates was held objectively. “The commission session was held according to the law. Among many applicants, three best candidates were selected, one of which was chosen to head the agency,” Gomelauri says. The ruling party says the new agency is independent, is line with the verdict of the Constitutional Court and that the main positive side of it is that it is not authorized to carry out investigative actions.

RETAIL FPI | IS GEORGIAN WHEAT GETTING STRONGER?!

I

n the middle of June, food prices increased by 5.0% on an annual basis (that is, compared to June 2016), but decreased by 0.3% on a monthly basis (that is, compared to May 2017). During the last two weeks, greens, potatoes, and cabbage showed the biggest increase in prices by 29.4%, 23.8%, and 23.3%, respectively. In the meantime, tomato, cucumber and cheese prices dropped by 26.8%, 15.7% and 7.1%, respectively.

WHEAT PRODUCTION IN GEORGIA During the last couple of years, wheat flour prices in the major supermarkets of Tbilisi ranged from 1.8 GEL/kg to 2.1 GEL/kg. According to the diagram, wheat prices were relatively low during the first half of the 2015, but increased in the second half of the year. The same price dynamics was observed for 2016. Currently, prices are relatively high, though domestic production of wheat, as shown by Geostat’s latest report, is steadily increasing. According to the table, the increase in production

is paired with a decrease in imports and a higher self-sufficiency ratio (from 7% in 2014 to 19% in 2016), which might be an early sign of a relatively successful import substitution strategy. However, it should be noted that the total supply of wheat was lower in 2016 compared to previous years, which implies that one should carefully monitor the total supply figures in order to avoid shortages, which usually result in price spikes. Indicator (ths.tons)

2014

2015

2016

Opening Stocks

95

48

73

Domestic Production

48

126

127

Import

651

647

552

Total Supply

794

821

752

Source: Agriculture of Georgia 2016, Geostat’s Annual Publication Note: Total Supply is a sum of Opening Stocks, Domestic Production and Imports


SOCIETY

GEORGIA TODAY JUNE 20 - 22, 2017

Priorities & Reforms of MIA Border Police G EORGIA TODAY met Major General Dato Nikoleishvili to find out about the ongoing reforms at the Border Police of Georgia under the Ministry of Internal Affairs. “Georgia`s location in the region and its geographic characteristics create a unique variety of perspectives and challenges in terms of Border Management. The Visa Liberalization process with the EU further increased the importance of efficient and well-coordinated work by the Border Management agencies. We’re aware of existing risks and, therefore, are taking all necessary measures to cope with the challenges we face and make utmost use of the opportunities we have. “The Government of Georgia has identified Border Management as one of the top priorities of its policy. The Integrated Border Management (IBM) Strategy and its Action Plan, which has been approved by the government, is built on the European four level control model (internal control activities within the country, control at borders, cooperation with neighboring countries, and activities implemented in the third countries) and encompasses border control, border surveillance, risk analysis, operational effectiveness, and cooperation between border control agencies on an interstate and international level, as key pillars of the strategy. “Based on the IBM principles, we are oriented to develop the Land Border, Coast Guard and Aviation capabilities based on strong analysis, skilled personnel and modern technologies. To this end, we have elaborated a development strategy, which is translated into the 5 year Modernization, Standardization and Unification Plan of the Border Police of Georgia. “Based on thorough research and analysis of the system, structure and ongoing processes at the MIA Border Police of Georgia, the subsequent reformation process has been initiated. A new structure for the Border Police has been created, which is designed to ensure achievement of the strategic goals and further support application of modern approaches and technologies, as well as enhancement of cooperation with partner nations and organizations. The high leadership of the Ministry of Internal Affairs is very much focused on the development of the Border Police”.

TELL US MORE ABOUT THAT REFORMATION PROCESS I’d like to underline that this result-oriented and intensive reformation is ongoing. We’re working particularly hard on the following directions: development of the institutional capabilities of the Border Police of Georgia; modernization

of Command, Control, Communication and Surveillance Systems; implementation of high, modern technological systems – BOMS project; strengthening informational technology policy and development; development of border infrastructure; enhancing Border Police interdiction capabilities; modernization and unification of Coast guard and Aviation Fleet; and advancement of the modern information and knowledge management processes through the establishment of a Unified System of Risk Analysis at the State Border of Georgia. In the rapidly changing environment, our top asset is our service personnel, who need to be given a proper working environment, equipped with the right set of skills and provided with relevant equipment. That is why the cornerstone of our reform is transformation of the human resources management practice. In order to ensure that our employees meet a higher degree of proficiency, as well as current and future demands, the Professional Development section has been created, responsible for planning, implementing and evaluating the Professional Development programs. The Border Police of Georgia is devoted to increasing new capabilities with the new highly qualified personnel. We’re grateful to the US Government that, for the first time in the history of the Georgian Border Police, two Georgian youngsters will have the opportunity to study at the USCG Academy. After Graduation, the two western educated officers will join the Georgian Coast Guard. Further, recently, in cooperation with the Academy of the MIA, a one-month Officers’ Training Course was established to train all the officers of the Border Police. Development in the analytical direction is also our top priority. We’re focused on the development of the institutional mechanisms crucial for the improvement and modernization of the Border Police of Georgia. In this regard, as mentioned above, we’re implementing a Unified System of Risk Analysis at the State Border which will ensure timely identification of risks existing there, as well as the gaps and challenges in the field of migration and border management, after which we’ll develop effective mechanisms for the implementation of responsive and preventive measures. The system will support optimal decision-making aimed at risk reduction with consideration of the available resources and capabilities. Nowadays, the current threats have acquired more generalized, common characters, meaning that no single country on its own can deter and handle the risks. Therefore, cooperation with the neighboring countries, partner states and international organizations has vital

PUBLISHER & GM

George Sharashidze COMMERCIAL DEPARTMENT

Commercial Director: Iva Merabishvili Marketing Manager: Mariam Giorgadze

GEORGIA TODAY

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

importance in seeking efficient and practical solutions for ensuring security. We are committed to stronger ties with our international counterparts and donor organizations, which substantially assist us in ensuring application of joint efforts towards coping with the common security challenges. Cooperation with partner countries and international organizations is the cornerstone to successful attainment of our reforms and goals. Our strategic partners, USA and the European Union, have strengthened the State Border of Georgia in terms of Institutional Development and Capacity Building. We are extremely thankful and acknowledge the role of the US Defense Threat Reduction Agency (DTRA), Export Control and Related Border Security (EXBS) Program, US Department of Energy, EU Delegation to Georgia, International Organization for Migration (IOM), UN and its subordinate agencies for their role in the transformation and development of the Border Police. The MIA Border Police of Georgia has a very fruitful cooperation with neighboring countries - Turkey, Azerbaijan and Armenia. Successful projects are being implemented with the Baltic States within the framework of bilateral cooperation. The MIA Border Police of Georgia intensifies its cooperation with the border protection agencies of Finland, Greece and Poland. Recently, a Cynological Center was opened with the great support of our strategic partner, the US. The project was implemented and funded by the US Defense Threat Reduction Agency (DTRA). The Center contributes to the

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

11

Dato Nikoleishvili, Head of Border Police of Georgia under the Ministry of Internal Affairs

capacity building of the MIA Border Police and further enhances Georgia’s land border security. It’s already staffed and is properly functioning and we’re now elaborating a development plan for the Cynological sphere.

THE NATO SECRETARY GENERAL MULTIPLE TIMES EMPHASIZED THE IMPORTANCE OF THE BLACK SEA BASIN. WHAT IS GEORGIA’S ROLE IN TERMS OF ENSURING SECURITY IN THE REGION? Georgia’s role in ensuring and maintaining security in the region is important. Georgia is a reliable NATO partner with a contributing role in ensuring security and peace in the Black Sea Basin. Attaining higher standards and developing the Coast Guard are among the top priorities of the Border Police, where the Joint Maritime Operation Center (JMOC) represents an indivisible part of the Border Police of Georgia. With the great support of the United States, JMOC functions within the Border Police of Georgia. This Center will ensure full maritime domain awareness as it will have integrated data from all maritime agencies -Coast Guard, Patrol Police Department, Revenue Service (Customs), Maritime Transport Agency (under the Ministry of Economy and Sustainable Development), Ministry of Environment and Natural Resources Protection, State Security Agency, Ministry of Defense and others. We believe JMOC will serve as a strong analytical hub during peace time, as well as ensure coordinated operations during crises and in case of war. The Objectives of the JMOC are: • To control the legal regime of the territorial waters of Georgia: threat pre-

Website Manager: Tamzin Whitewood Website Copy-Editor: Gabrielle Guerrier Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

vention, detection and subsequent response; efficient interoperability between the responsible and relevant agencies; information sharing in order to prevent unnecessary duplication of efforts. The JMOC coordinates the activities of the agencies responsible for the maritime border protection and ensures efficient national resource allocation and utilization during crisis and peacetime; • To support search and rescue activities at sea; ensure the security of ships and cargo and environmental protection in the maritime space of Georgia; establish an interagency cooperation mechanism for detecting/identifying, analyzing, notifying and responding to the threats and challenges in real-time; • To deepen cooperation, exchange information and participate in joint operations with other countries of the Black Sea region as well as with international partners. As the Head of the Border Police, I believe that the Joint Maritime Operation Center is the strength of our country and particularly the Georgian Border Police. Its operational efficiency is our top goal. Under my leadership, the necessary procedures were expedited to guarantee timely and effective functioning of the JMOC. We are in consultation with the NATO Maritime Command and National Maritime Information Center of the United Kingdom in order to elaborate mechanisms for information exchange between JMOC and the abovementioned agencies. We acknowledge JMOC’s importance on a national as well as international level. This is a unique concept and we’re working very hard to make it fully-functional for the benefit of Georgia and Georgia’s reliable partner countries.

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Issue #956 Business  

June 20 - 22, 2017

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