Issue #906 Business

facebook.com/ georgiatoday

Issue no: 906/58

• DECEMBER 20 - 22, 2016

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Martin Heidegger: Other Way - A New Book by Irakli Batiashvili NEWS PAGE 2

Georgia’s Co-Investment Fund Launches Mtkvari HPP Project

FOCUS ON REDUCING GOV'T INTERVENTION If the government wants to stabilize the Lari’s value, there is no alternative but to build trust in Georgia’s economy

ISET PAGE 4

Wine Tourism Association of Georgia to Host Christmas Market

BY NINO GUGUNISHVILI

T

he “Bulbuli” Christmas Market, organized by the Wine Tourism Association, is to be held on December 24 at the Muse cultural center near Turtle Lake (Kus Tba) in Tbi-

lisi.

Popular restaurants, winemakers, farmers, and artists will be participating at the event, which is promised to be filled with traditional Georgian, European and Asian cuisine degustations and local and European wine-tastings. An exhibition of handcrafts, a concert and lots of activities for children are also announced as a part of the upcoming Christmas Market next Saturday.

PAGE 5

Hilton Expands European Capital City Presence to Tbilisi PAGE 6

Sarajishvili Brandy Wins Three Medals at Degustation in USA PAGE 7

Dechert OnPoint: Why Brexit is Not Bad News for UK-Based Arbitration and Litigation PAGE 10

Annual Gazprom Meeting Ends without Agreement PAGE 12 Prepared for Georgia Today Business by

Markets As of 16ͲDecͲ2016

STOCKS Bank of Georgia (BGEO LN) GHG (GHG LN) TBC Bank Group (TBCG LN)

COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)

INDICES

Price

w/w

m/m

w/w

m/m

GBP 31.33

Ͳ7,3%

+11,9%

GEOROG 04/21

104.00 (YTM 5.70%)

Ͳ0,2%

+0,1%

GBP 3.73

Ͳ0,5%

+5,1%

GEORG 04/21

BONDS

109.10 (YTM 4.53%)

+0,2%

+0,6%

GBP 15.44

+2,9%

+18,1%

GRAIL 07/22

107.00 (YTM 6.24%)

+0,5%

Ͳ0,9%

BGEOLN 07/23

100.25 (YTM 5.95%)

+0,2%

Ͳ0,4%

Price

w/w

m/m

55,21

+1,6%

+18,4%

1 134,88

Ͳ2,2%

Ͳ7,4%

CURRENCIES

Price

Price

w/w

m/m

GEL / USD

2,7150

+4,6%

+9,4%

GEL / EUR

2,8234

+2,7%

+6,0%

Price

w/w

m/m

GEL / GBP

3,3772

+3,5%

FTSE 100

7 011,64

+0,8%

+3,9%

GEL / CHF

2,6355

+3,3%

+6,3%

FTSE 250

17 784,79

+0,3%

+1,8%

GEL / RUB

0,0439

+5,8%

+14,3%

DAX

11 404,01

+1,8%

+6,9%

GEL / TRY

0,7789

+4,4%

+4,1%

DOW JONES

19 843,41

+0,4%

+5,2%

GEL / AZN

1,5274

+5,9%

+7,2%

5 437,16

Ͳ0,1%

+2,7%

GEL / AMD

0,0056

+3,7%

MSCI EM EE

144,00

+2,0%

+12,7%

GEL / UAH

0,1029

+3,4%

+6,6%

MSCI EM

856,40

Ͳ2,4%

+1,1%

EUR / USD

0,9568

+1,0%

+2,3%

SP 500

2 258,07

Ͳ0,1%

+3,7%

GBP / USD

0,8008

+0,7%

Ͳ0,4%

MICEX

2 231,41

+1,0%

+10,0%

CHF / USD

1,0261

+0,9%

+2,4%

MSCI FM

2 386,92

Ͳ1,1%

Ͳ0,3%

RUB / USD

62,0650

Ͳ0,6%

GT Index (GEL)

1 176,94 +29,5%

+29,5%

TRY / USD

3,5053

+0,8%

+5,5%

GT Index (USD)

871,04 +24,9%

+21,0%

AZN / USD

1,7853

+0,9%

+2,2%

NASDAQ

+9,4%

+7,7%

Ͳ4,1%

2

NEWS

GEORGIA TODAY

DECEMBER 20 - 22, 2016

AP Reports Trump Moves to Cancel Deals in Azerbaijan, Georgia Martin Heidegger: Other Way A New Book by Irakli Batiashvili

BY NINO GUGUNISHVILI

P

hilosopher and politician Irakli Batiashvili’s new book- Martin Heidegger: Other Way was presented at Marriott Tbilisi Hotel this Saturday.

Dedicated to the 20th century German philosopher Martin Heidegger, Batiashvili’s new book is an attempt to analyse the legacy of the great thinker, intertwined with beletristical sections in which the author expresses his own personal associations and thoughts on some of the most important challenges the contemporary world faces today.

At the same time, in his book Batiashvili tries to revive Heidegger, who has been critisized for his antisemitist and fascist views. Batiashvili, as claimed by the many reviewers of the book, brings the reader to the depths of the great thinker’s realm where questions are raised as to the essence of an individual’s existence, and how ways of self-discovery and the road that a person undegoes in serach of and approaching god, are regarded as central.

“If we want to play an integral part in the cultural, socio-political or philosophical processes going on in the West,

we need more books like this one. It’ll be our visit-card,” said Rostom Chkheidze, writer, essayist, and literary critic at the book launch, while Zaza Shatirishvili, philosopher, noted that not many authors abroad would dare to write a book as Irakli Batashvili did, referring again to the controversy of Heidegger’s persona. “Irakli is a true philosopher who can see the world in its entiretyand that is very important," Shatirishvili said.

“This book is a dialogue. It’s not just the discussion between a very educated man, an intellectual, and one of the greatest philosopher’s [Martin Heidegger]; it’s a discussion between two thinkers, two philosophers, and that is exactly what makes this work so interesting," said Valerian Ramishvili, philosopher, one of the reviewers of the book.

Praise for the work was continued by Valeri Asatiani, Professor of Classical Philology, who noted that “Irakli Batiashvili gifted us with a philosophical essay marked with an undeniable aesthetistm, with original thinking vividly visible.”

Batiashvili himself recalls the period of working on the book as one of the most important and interesting in his life, saying that for him personally, Martin Heidegger’s philosophy is the phylosophy of the future.

BY THEA MORRISON

T

he Associated Press (AP) reports that the United States' (US) president-elect Donald Trump has canceled a licensing deal for a hotel in Azerbaijan and is taking steps to do the same for a project in neighboring Georgia.

Both projects either involved or were associated with people tied to politics, partnerships that could have raised problems once Donald Trump becomes president.

The AP says that the moves by Trump's company follow a cancellation earlier this week of a licensing deal for a hotel in Brazil. The Trump Organization also recently shut down four companies registered in Delaware that had no business operations but appeared tied to Saudi Arabia, possibly vehicles for future projects in the country.

Trump lawyer Alan Garten said Friday that developers in the projects in Azerbaijan, Georgia and Brazil had failed to meet the terms of licensing deals. He described the moves as "normal housekeeping" and not part of a strategy to reduce potential conflicts of interest.

He said the Trump Organization had no moves underway to cancel any other overseas ventures.

The AP article reads that governmental ethics experts have been urging Trump to sell his vast holdings and hand the

cash to someone with no ties to the president-elect to invest in a way unknown to him, following the practice of most recent presidents.

“They say ridding himself (Trump) of his ownership stake in his business, not just managerial control, is the only way to assure he won't put private profit ahead of public interest in shaping tax, regulatory and foreign policies,” the article reads.

Trump has stakes in about 500 companies in more than 20 countries around the globe, though many of the foreign ventures involve him just lending his name to buildings owned by others.

The Georgia project is for a tower in the Black Sea resort city of Batumi. Garten says the president-elect's company

sent a "default notice" earlier this month to the developer because it had not lived up to terms of the licensing deal.

Garten described the move as typically a first step to canceling a deal.

Yet “just last week, Trump's development partner told Bloomberg News that the long-stalled project would go ahead, and that "talks are on," the AP reports.

Donald Trump visited Georgia in April 2012, when Mikheil Saakashvili was Georgia’s President, to launch new projects of Trump Towers in Tbilisi and Batumi.

The construction of towers was scheduled to start in 2013. The Batumi Tower project envisaged an investment of $250 million to build a five-star, 47-storey building.

GNTA Implements Standards for Marking Hiking Routes in Georgia

BY NINO GUGUNISHVILI

I

n collaboration with the Georgian Hiking and Travel Association, National Hiking Federation, Ecotourism Development Center, Agency of Protected Areas of Georgia and GEOLAND, the Georgian National Tourism Administration (GNTA) is implementing a unified standardized system of markings to be used for all the mountain-hiking itinararies

and routes throughout the country.

The marking system is designed based on the experience of Poland, Switzerland and France, countries regarded as leaders in the hiking tourism sphere in Europe.

The Upper Svaneti and Svaneti-Samegrelo linking hiking routes have already been marked, the GNTA says, while a further 156 itineraries, covering six regions of Georgia, are to be marked, and two more regions to be added, in 2017. The marking process of all eight regions is expected to be concluded by 2020.

The project initiated by GNTA also

provides trainings for hiking guides. In addition, the GNTA is working on the

creation of a united network for hiking routes that will facilitate access to tour-

istic infrastructure throughout the country.

NEWS

GEORGIA TODAY DECEMBER 20 - 22, 2016

The New Year in Arakishvili Residence – Discounts & Gifts Galore

B

uy a flat in the Arakishvili Residence and get it fully furnished with full premium appliances AND a special discount.

The residential complex is welcoming the New Year holidays by offering its clients the best household appliances and gifts.

Those who wish to purchase an apartment in the complex will receive a full suite of premium class German household appliances.

The two New Year's gift packages have been specially created for clients who wants to puchase up to 100 sq meters space or for those who want over 100 square meters. The latter package includes a Bosch refrigerator, gas set (oven, vent and gas stove), dishwasher, Multi-Robot, kitchen, washing machine, Breakfast set (toaster, electric kettle, and coffee machine), a vacuum cleaner, Samsung LED TV and Hyundai air conditioner.

LIVE IN THE BEST PLACE The Arakishvili Residence is situated in the center of Vake: one of the most popular residential locations in Tbilisi. Aside from its location, the project is architecturally intriguing.

The project is financed by the Bank of Georgia. Aside from current offer, Arakishvili Residence customers are able to benefit from flexible payment conditions.

It is also possible to get an interest-free loan until the end of the project. Customers are also able to get a mortgage at just 6% interest.

PROJECT SUPPORT: • The project is financed by the Bank • The exclusive broker for the complex is Colliers International Georgia • The complex is being built by company ‘Anagi’.

• The construction of the project will end in 2017.

3

4

BUSINESS

GEORGIA TODAY

DECEMBER 20 - 22, 2016

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.

What Chile Teaches Georgia until today: in the 2015 Index of Economic Freedom, published by the Fraser Institute, Chile's economy is ranked 7th (Georgia is 22nd). With almost USD 25,000 per capita income (PPP), Chile is the richest country of South America (Georgia: USD 9,500).

Finally, in 2010, the international community acknowledged Chile’s economic success story when it became the only South American country so far to be admitted to the OECD, the “rich man’s club of developed countries” (Karen Kornbluh).

When Pinochet died in 2006, an editorial in the Washington Post summarized his legacy as follows: “Mr. Pinochet was brutal: More than 3,000 people were killed by his government and tens of thousands tortured, mostly in his first three years.

Thousands of others spent years in exile. It's hard not to notice, however, that the evil dictator leaves behind the most successful country in Latin America. In the past 15 years, Chile's economy has grown at twice the regional average, and its poverty rate has been halved. It's leaving behind the developing world, where all of its neighbors remain mired.”

BY FLORIAN BIERMANN AND KÁLMÁN MIZSEI

I

n 1991, the former finance minister of Chile, Alejandro Foxley, said in an interview, “We may not like the government that came before us. But they did many things right. We have inherited an economy that is an asset.”

About twenty years before, General Augusto Pinochet had toppled the democratically elected President of Chile, Salvador Allende. Pinochet’s rule from 1973 to 1990 was characterized by severe violations of human rights, yet finally he agreed to hold a referendum on his political future, and when the Chilean people voted against him, he stepped down without bloodshed or violence.

SEEDING REFORMS Of what kind were Chile’s acclaimed economic policies? Pinochet relied on a group of Chicagotrained economists (nicknamed “Chicago Boys”) who, as Karen L. Remmer writes in the Journal of Developing Areas, “removed free market restrictions” and “dismantled the state sector of the economy in favor of private ownership”. Between

DON’T CHANGE A WINNING CONCEPT

1973 and 1976, the spending of the Chilean government fell by 40%, and 449 state-owned firms (out of 494) were privatized, while the government share in the labor force went down from 18% to 13%. In the agricultural sector, the Chicago Boys abolished existing restrictions on landholding size and land ownership. Previously one of the most protected economies in the world, Chile almost entirely erased protective tariffs, to “promote the modernization of Chilean industry, subject monopolies to foreign competition, and encourage a more efficient and rational allocation of economic resources” (Remmer). With regard to foreign investments, the government got rid of bureaucracy and lifted various restrictions for foreign investors. The goal was to make Chile, as it was officially announced, “the best place in Latin America to invest”. Government agencies, like the financial markets supervisory authority, were dissolved. Labor laws, restricting the layoffs of workers, were weakened, and social welfare expenditures and minimum wages were reduced. Remmer writes: “The theory of economic development guiding these policies was that… future economic progress would depend on the expansion of industries able to compete on the international market”.

The immediate consequences of this shock therapy were double-edged. The inflation rate fell from 505% in 1974 to 30% in 1978, and the balance of payment improved: in 1976, Chile achieved a trade surplus of USD 500 million. Not unexpectedly, however, inequality rose as well: it is estimated that the top 5% of income recipients increased their share of the national product from 23% to 50%.

And the reforms were pushed against the fierce resistance of large parts of the population. As Pablo Baraona, the governor of the Chilean Central Bank, said at the time: “The fact that more than 90% of the people are against our policies is proof that the model is working, that is has affected everybody and that it has privileged nobody”.

Does the Chilean economic agenda seem familiar to you?

HARVESTING SUCCESS As it is usually the case with economic reforms, their fruits can only be harvested much later, often by the successors of those who implemented them.

While in Chile of the 1970s, there was a lot of turmoil and social hardship, the situation stabilized in the 1980’s. The greatest dividends, however, were incurred in the 1990s and later. Between 1990 and 1993, Chile experienced an average growth rate of 7.7%, and from 1994 to 1999, this number was still as high as 5.6%. Between 1973 and 1999, exports grew by a staggering 9% per year. And the impact lasted

Returning to Georgia, there is no doubt that the government of Georgian Dream can claim a great achievement, namely ending the notorious practices of extortions and political blackmail which had become the unjustifiable epitome of the late Saakashvili era. In 2012, an increasingly authoritarian government was replaced by a more civilized one (like in Chile, without violence, a fact for which one cannot praise Pinochet and Saakashvili too much).

However, there is an important difference between Chile and Georgia: the subsequent governments of Chile were careful not to reverse the successful economic policies that were enacted under the previous government. As Robert Packenham and William Ratliff write for the Hoover Institution: “All four civilian governments [of Chile] since 1990 have maintained the new, more market-oriented economic and social models inherited from the military regime.

Although there were changes at the margins after 1990, the point of sharpest and deepest positive change was unquestionably 1973 and immediately thereafter, not 1970 or 1990.”

The Georgian government, on the other hand, puts at stake those libertarian economic principles for which Georgia had gained international reputation between 2004 and 2012. By adopting policies of excessive government interventions, be it through the reinstatement of a competition authority, the announced antidumping law, or the anti-dollarization measures recently promulgated as a response to the Lari devaluation, Georgia may quickly forfeit its economic advantages. As one can learn in an advanced microeconomics class, a government must only tinker with the free market if there is market failure. Without market failure, government interventions can only make a bad situation worse.

Economic theory is very elaborate on this, and there is no place for reasonable doubt on this matter. Dollarization, however, is no market failure but the optimal adjustment of economic agents to a situation of economic uncertainties. The government should abstain from interfering.

Clearly, there are many economists endorsing the government’s interventionist plans, but one should realize that many of the countries sending and paying these experts have in the last 13 years not been economically as successful as Georgia. Many European nations, for example, did not experience satisfactory growth for decades, suffering from the very structural problems caused by the interventionist recipes they want to prescribe to Georgia.

If the government wants to stabilize the Lari’s value in the long run, there is no alternative but to build trust in Georgia’s economy. This trust will be primarily established by reducing the government’s involvement in economic matters, as demonstrated between 2004 and 2008, when the price of the dollar fell from 2.20 GEL to 1.40 GEL. This long-term appreciation of the Lari was interrupted Continued on page 5

BUSINESS

GEORGIA TODAY DECEMBER 20 - 22, 2016

What Chile Teaches Georgia Continued from page 4 by temporary devaluations, and it is important to understand that these are totally inevitable for a very small economy exposed to the forces of international foreign exchange markets. Instead of economically detrimental responses to something that cannot be controlled, the government must concentrate on the long run – building trust, letting the market work, and interfering only in clear-cut cases of market failure. Cushioning social hardship in a limited way may be part of the program. Most important, however, is that there will be no tinkering with the Liberty Act. The current government is making very promising efforts to move Georgia towards true judicial independence. That would be a lasting contribution to the building of a sustainable Georgian state, particularly in view of the growing dangers stemming from the geopolitical dynamics here. Indeed, like in Chile, there are many points where the Georgian Dream government can (and did) improve on its predecessor. The economic principles that guided Saakashvili’s reign, however, are not one of those.

For the sake of successful state building, this needs urgent remedy. It will strengthen Georgian Dream’s legacy, without any doubt!

Florian Biermann is assistant professor of economics at ISET, where he teaches, among others, a course in market failure.

Kálmán Mizsei is former visiting professor at the Central European University in Budapest, Hungary. He served as regional director of UNDP for Europe and the CIS, Special Representative of the EU in Moldova, and head of the EU advisory mission to Ukraine. Currently, he is writing a study on transformation processes in Eastern Europe.

5

Georgia’s Co-Investment Fund Launches Mtkvari HPP Project

BY THEA MORRIOSN

Mtkvari HPP presentation

G

eorgia is to have a new Hydro Power Plant (HPP) in Akhaltsikhe Municipality, South Georgia, on the river Mtkvari.

The project was launched by Georgia’s Co-Investment Fund (CIF). Initially, the project was started in 2009 but the construction works were then suspended.

In 2014, the CIF purchased 100 percent share of the project and renewed the works this year.

The USD 131 million project was introduced by the CIF on Friday at a presentation attended by the Energy Minister and Deputy-Premier, Kakha Kaladze, and Infrastructure Minister, Zurab Alavidze.

“Implementation and financing of such projects promotes the rapid development and progress of all regions of the country,” Kaladze stated.

Georgia’s Co-Investment Fund underlined that the Mtkvari HPP is being built with the most advanced technologies and the construction process monitored

by Europe’s leading companies.

"The Fund has already invested more than USD 53 million in the project; more than 500 people are employed in construction of the plant; and a source of

multi-million permanent income is being created for the country’s budget,” CIF representatives stated.

Georgia’s Energy Ministry reports that the total installed capacity of the HPP will be 53 Megawatts. It is expected to produce

255 million MW/ h power annually.

The Mtkvari Hydro Power Plant will become operational in 2019.

6

BUSINESS

Hilton Expands European Capital City Presence to Tbilisi

H

ilton is to introduce its flagship Hilton Hotels & Resorts brand to the capital of Georgia with the signing of a management agreement with Granat LLC. The 206guest room Hilton Tbilisi is set to open in early 2019. The building’s historic façade will be preserved as part of the design, while a striking glass roof will be constructed on top of the building and will house the hotel’s rooftop bar and spa.

“Hilton Tbilisi joins a robust portfolio of Hilton Hotels & Resorts either trading or in development across 30 European capitals, underscoring our regional strategy to expand into more Eastern European cities,” said Patrick Fitzgibbon, Senior Vice President of Development, EMEA, Hilton. “Tbilisi’s diverse economy, with substantial international infrastructure investment, a burgeoning events calendar and leisure growth, makes the city a promising market to be introducing our flagship brand to.”

Located on Kostrova Street, Hilton Tbilisi will be equidistant between two of the city’s most vibrant and colourful districts. Tbilisi’s main thoroughfare, Rustavelli Avenue, three kilometers away and spotted with picturesque architecture, is home to the city’s main cultural, religious and government buildings.

Vake, the city’s busy commercial district and the heart of Tbilisi’s developing financial center, can be found the same distance in the opposite direction. Hilton Tbilisi will also be two kilometers from the city’s main train station and 15 kilometers from Tbilisi International Airport.

Dimitry Kumsishvili, former Minister of Economy and Sustainable Development of Georgia said, “The long term goal of Georgia’s Tourism Strategy 2025 is to develop the country as a soughtafter tourist destination and increase the international profile of Georgia. Projects such as Hilton Tbilisi are key to broadening the appeal of Tbilisi and Georgia to more international visitors and will help boost tourism to the city.”

Elguja Tsintsadze, Chief Executive Officer, Granat LLC, said, “This is our first hotel development and we are proud to be working with Hilton on our maiden hospitality project. The exterior of the Soviet era building will be fully restored, while a stunning glass roof will be constructed on top of the hotel in a USD 50 million investment. The result will be one of the city’s finest and most unique hotels.”

In addition to the rooftop bar, the hotel will include an all-day dining restaurant, lobby bar and a street facing café. For

GEORGIA TODAY

DECEMBER 20 - 22, 2016

Techpark Hosts Business Forum "Made in Georgia"

business and events visitors, the hotel will offer more than 1,000 square meters of function and meeting space, in addition to an Executive Lounge and business center.

“Hilton is the world’s leading hospitality brand and throughout its nearly 100year history it has continually pioneered into new destinations,” said Andreas Lackner, Regional Head, Full Service Brand Management, Hilton. “This magnificent addition in Tbilisi will invite our guests to visit the charming capital city, while sharing in our love of hospitality.”

Hilton Hotels & Resorts has 18 properties currently under development across Europe, with two hotels in Georgia: Hilton Batumi on the Black Sea coast, which opened in the summer of 2015, and Hilton Garden Inn Tbilisi Chavchavadze, which is currently under construction and set to open in 2018 in the heart of Tbilisi's financial district.

Hilton Tbilisi will be located at 59 Merab Kostava Street, Tbilisi, 0179.

ABOUT HILTON Hilton is a leading global hospitality company, comprising more than 4,800 managed, franchised, owned and leased hotels and timeshare properties with nearly 789,000 rooms in 104 countries and territories. For 97 years, Hilton has been dedicated to continuing its tradition of providing exceptional guest experiences. The company's portfolio of 13 world-class global brands includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio - A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand Vacations. The company also manages an award-winning customer loyalty program, Hilton HHonors®.

ABOUT HILTON HOTELS & RESORTS For nearly a century, Hilton Hotels & Resorts has been proudly welcoming the world's travelers. With more than 570 hotels across six continents, Hilton Hotels & Resorts provides the foundation for memorable travel experiences and values every guest who walks through its doors. As the flagship brand of Hilton, Hilton Hotels & Resorts continues to set the standard for hospitality, providing new product innovations and services to meet guests' evolving needs. Hilton Hotels & Resorts is a part of the awardwinning Hilton HHonors program.

L

ast week Techpark Tbilisi, Business Georgia, with the partnership of Business Contact and Maestro TV, organized Business Forum “Made in Georgia”.

Within the topic were discussed the challenges and potential of local products produced in Georgia.

The main objective of the event was to provide the audience with in-depth information in order to simplify the correct perception and estimated role of local businesses in strengthening the country's economy and creating a favorable business environment. The chosen topics answered the challenges that local manufacturers face in a wide variety of contexts and are equally important for various types of businesses.

The forum was attended by high level government officials, commercial and international sectors, entrepreneurs and start-ups, chain store representatives, distributors, importer and exporter company representatives, investors, financial institutions, media, chambers of commerce and industry, individuals who represent decision-making organizations, and those playing a key role in creating an effective business environment.

Business Georgia’s General Director Ana Gogishvili talked about the positive aspects of the Business Forum. "This event was intended to promote local production, to answer existing questions through discussion, and to provide deep

study for better understanding. Participants had an opportunity to learn about the achievements in development of local business and share their experience in producing goods and services in the country. Business Georgia contributed to stimulating the advancement of Georgian entrepreneurship by organizing this Business Forum," she said.

At the forum, speakers discussed the current situation of Georgian Products on Local and Global Markets, the production spectrum, product competitive-

The event aimed to promote local production, to answer existing questions through discussion, and to provide deep study for better understanding

ROUTING

TBILISI ISTANBUL ATATURK AIRPORT ISTANBUL ATATURK AIRPORT TBILISI TBILISI ISTANBUL SABIHA GOKCEN AIRPORT ISTANBUL SABIHA GOKCEN AIRPORT TBILISI BATUMI - ISTANBUL ISTANBUL - BATUMI

10 Galaktion Street

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

ness - quality and international standards, the role of distribution channels and chain stores, trade relations as an additional opportunity, its impact on export and import, and success stories of Georgian brands. They also discussed Georgia’s potential in producing goods and services, the main concerns of producers, government incentives, international facilitators, the role of innovation for production, financial resources, the role of the banking sector, foreign direct investments and the role of media in promoting an entrepreneurial mindset.

The Business Forum speakers were: CEO of Partnership Fund Davit Saganelidze, Deputy Minister of Economy and Sustainable Development Ketevan Bochorishvili, Chairman of the National Wine Agency Giorgi Samanishvili, Head of the Georgian National Tourism Administration Giorgi Chogovadze, Entrepreneurship Development Agency Ana Kvaratskhelia, President of the Georgian Small & Medium Enterprises Association Mikheil Chelidze, Secretary General of the EU-Georgia Business Council Zviad Tchumburidze, Director of the Start-up Georgia Vazha Menabde, Director of Sakpatenti Nikoloz Gogilidze, Chief of Party of the USAID G4G Natalia Beruashvili and Deputy Head of the GCCI Nato Chikovani.

The speakers reviewed and outlined plans for the expansion of the market for Georgian products and increasing the scale of production in Georgia.

FLIGHT NUMBER

TK 387 TK 385 TK 383 TK 386 TK 384 TK 382

WEEK DAYS

DEPARTURE

ARRIVAL

EVERYDAY

05.50 11.45 18.10 01.40 07.30 13.55

07.25 13.25 20.00 04.55 10.50 17.15

07.40

09.00

20.45

00.10+1

17.50 13.55

19.10 16.55

TK 381 EVERYDAY TK 380 TK 393 TK 392

EVERYDAY

BUSINESS

GEORGIA TODAY DECEMBER 20 - 22, 2016

Asia Development Bank to Finance Water and Sanitation System Improvements in Georgia

Giorgi Koberidze, Director of Water Supply Company and Yesim Elhan, Kayalar ADB country Director Georgia

BY NINO GUGUNISHVILI

C

hiatura, Marneuli and Bolnisi will have their sanitation and water supply systems renewed in 2017 within the USD 99 million project financed by the Asia Development Bank under the recent loan agreement between the ADB and the Government of Georgia. The project will be implemented

with the participation of the United Water Supply Company and the Ministry of Infrastructure and Regional Development of Georgia under the framework of the Urban Services Improvement Investment Program, signed by ADB and Georgia in 2011 which aims to improve infrastructure through the reconstruction of water supply and sanitation systems throughout the country.

ADB has already mobilized more than USD 2.1 billion in public and private sector financing in Georgia since 2007.

Sarajishvili Brandy Wins Three Medals at Degustation in USA

BY THEA MORRISON

G

eorgian wine brandy Producer Sarajishvili won two gold and one silver medal at the degustation of tastings.com powered by the Beverage Testing Institute, which aims at producing fair, impartial wine reviews for consumers.

The degustation was held in Chicago, United States, where Sarajishvili XO brandy got 92 points out of 100, while Sarajishvili VS Brandy was awarded 91 points.

Besides the gold medals, Sarajishvili Extra Special Reserve got 87 points and was awarded a silver.

Tastings.com reports that Sarajishvili XO brandy has an "exceptional taste."

“Spicy, woody aromas and flavors of leather, dried fruits, chestnut, honey and pepper, with a satiny, crisp, dry-yet-fruity medium body and a tingling, engaging, medium-length conditioned leather, spiced raisins, cola, and mossy earth finish. A nice woody brandy that will play nicely in whisky cocktails,” the review reads.

As for Sarajishvili VS Brandy, tastings.com says it has a brilliant amber color.

“Savory, umami aromas and flavors of salty nuts and olives, conditioned leather, raisins in balsamic, and brown butter with a supple, bright, dryish medium-to-full body and a tingling, intriguing, medium-length oak, brown spices, cola float with mocha gelato, and mossy earth finish. A woody, spicy brandy for cigars or cocktails,” the review reads.

Sarajishvili is the oldest leading wine brandy manufacturing Georgian company. It was established in 1884 as a pioneer in Georgia for using classical French cognac technologies for wine brandy production. The brand offers a generous range- from three to 100 year-old brandies, produced to satisfy the needs of many, from low to high-income consumer categories. Sarajishvili products are successfully sold in more than 15 countries.

7

8

BUSINESS

GEORGIA TODAY

DECEMBER 20 - 22, 2016

HSC Group: Drive to Excellence INTERVIEW BY NATIA LIPARTELAINI

H

SC Group is one of the leading consulting groups on today’s Georgian market. The consulting group was founded this year by three enthusiastic and energetic young professionals: Giorgi Dolidze (CEO, co-founder), David Zarnadze (co-founder and lawyer, and Davit Markhulia (co-founder and FCO).

HSC Group aims to offer high quality service and service packs for small and medium businesses in the field of hospitality. Among the wide range of services that the company offers are: sales/marketing, revenue management, general management, accounting, working standards formation and enforcement, service management, operating in on-line reservation systems (OTA), and legal and financial analyses.

The three founders already have a fresh perspective and concrete plans in terms of achieving those ambitious objectives in order to bring positive changes to the Georgian hospitality sector. GEORGIA TODAY talked to Giorgi Dolidze and David Zarnadze to find out more about their activities and the current situation in the sector.

HOW WAS HSC GROUP FOUNDED? Giorgi: Our work meant we often had to travel and visit various hotels at which we interacted with representatives of the hospitality sector. We sensed that there was a problem among Small and Medium Sized Enterprises (SME) to successfully operate in the market and maintain standards, especially in terms of service quality and adequately equipped rooms with the aim of attaining customer satisfaction. We decided to have SME as our target segment, as big businesses such as 5-star hotels do not really face such problems, supported as they are by large international companies. We founded the Group in February after a period of market research to confirm our choice. We aim to help the SMEs in the hospitality sector to improve their efficiency of doing business and to meet existing market requirements.

WHAT ARE YOUR KEY COMPETENCIES? David: Our goal is to offer a professional service mainly to hotels, which allows them to strengthen their position in the market, to remove inefficien-

cies and to run their business according to modern standards. We provide such services as research of the current position of the hotel, measurement of efficiency level, “mystery shopper” studies, assessment of the competitive environment, and SWOT analysis of the business which enable us to suggest effective ways to overcome problems and barriers. We also assist the SME in estimating and developing relationships with partners, refinement of legal and financial activities and other important issues which are essential for the effective operation of the business.

Giorgi: Our core competencies are: operational management, financial management and legal ser-

vices. When we were thinking about what services to offer, we listed every possible service a hotel might need based on market research. We found out what the market requirements were and came up with 26 types of services that are a perfect fit for them. We have partners and often do outsourcing. We also often have invited trainers.

WHAT ARE THE IMPORTANT CHALLENGES THAT THE GEORGIAN HOSPITALITY SECTOR IS FACING TODAY? Giorgi: Even though the hospitality industry is developing quite dynamically, there are lots of problems, especially for SMEs, 4 and 3-star hotels.

David: The way the hotel star rating system is regulated is a challenge in itself.

Giorgi: Yes, we actually aim to work with the Georgian government in order to develop a better system for accrediting stars to hotels, as nowadays you can find lots of hotels in Georgia that claim to be 4-star and are simple not. The problem is more discernible in the regions, outside of Tbilisi. What would not even be considered a 2-star hotel in Europe claims to be a 4-star in Georgia, and this is not good. Our company does not have only commercial objectives; we want to cooperate with the government in order to improve the existing standards in the hospitality sector. We’ve already had 15 orders from different companies so far, mainly from Tbilisi, but we aim to move beyond and start operating in the regions.

IS THE GEORGIAN TAX SYSTEM KIND TO THE HOTEL BUSINESS? David: The Georgian tax system is a field that requires monitoring as our laws change regularly.

One of those changes will occur from 2017; there will be some changes to the Georgian tax system which means it will be essential for companies that operate in the hospitality sector to have consultations in order to keep up with the changes.

TELL US ABOUT THE TRAININGS YOU OFFER HOTEL STAFF David: We’ve had training programs in six hotels already. Our training programs tend to last one month and implies training receptionists, house-keepers and managers to smile, be approachable and do so in a natural way. We train them in every required service that is needed during the customer’s entire journey; basically in every operational, legal and financial activity, such as what packages to offer or how to deal with problematic customers. You’d be surprised the problems that exist in some hotels- there is no e-mail culture whatsoever; in some cases the staff does not even know how to answer phone inquiries.

HOW DO YOU CARRY OUT “MYSTERY SHOPPER” RESEARCH? David: This method is stereotypically used in banks, for some reason. It’s a great way to expose problems that exist for the customer in order to improve the system. The method involves a researcher visiting the establishment as a guest and deliberately creating problems or special circumstances that the hotel staff needs to deal with.

Based on these observations, and photo and audio reporting of the whole customer journey, concrete suggestions can be made to the visited hotel.

YOU ALSO HELP COMPANIES TO MANAGE SOCIAL MEDIA NETWORKS Giorgi: Yes. Very often, companies do not know how to effectively promote their company and end up targeting the wrong audience. This is due to the fact that they do not know who are their main audience or customers are. It is possible to effectively manage social media and with a very low budget communicate relevant information and ensure maximum exposure.

David: The main platform in that sense is, of course, Facebook, but people from Russia, Kazakhstan and Ukraine for example, use social network VK (vkontakte) and this should be taken into consideration if the target audience is from those countries.

WHAT ARE YOUR FUTURE PLANS?

You’d be surprised the problems that exist in some hotels- there is no e-mail culture whatsoever; in some cases the staff doesn't even know how to answer phone inquiries

Giorgi: First of all we haven't really invested much in PR and marketing; so far we’ve only developed partnerships based on our personal contacts. The strategy we've been using is mainly word-of-mouth but we do plan to increase our marketing activities.

As I said, we plan to work with the Georgian National Tourism Administration to develop interesting projects. We also plan to offer business strategy plans to companies and establish relationships with companies who have the same profiles abroad in order to share even more international experience with local hotels. We also want to start working with restaurants in future. We've worked with standards that need to be maintained in hotel restaurants but we want to expand our work even more in that regard.

BUSINESS

GEORGIA TODAY DECEMBER 20 - 22, 2016

Kheledula HPP to Be Built in Georgia

BY THEA MORRISON

T

urkish company Anadolu Tasıt Ticaret A.S. is investing USD 90 million to build the 50.77 Megawatt Kheledula Hydro Power Plant (HPP) in Georgia’s Kvemo Svaneti region, Lentekhi municipality, over the River Kheledula next year.

The construction will be carried out on the basis of a memorandum of understanding signed between the Georgian government and Anadolu Group in May, 2015.

Georgia’s Vice Prime Minister and the Minister of Energy Kakha Kaladze and Anadolu Tasıt Ticaret A.S. Energy Group Coordinator Tugban Izzet Aksiyom signed a deal on the Kheledula-3 HPP construction on Thursday.

According to the memorandum, the company is obliged to realease a part of the processed energy onto the local market.

The project will be especially profitable for Georgia in the winter season when there is a power deficit in the country.

Kaladze stated the energy sector is vital for Georgia’s economic and energy development and such projects will help Georgia to gain energy independence.

Badagoni Wine Company Celebrates 10th Anniversary in London

Badagoni Celebration in London

BY NINO GUGUNISHVILI

A

fter a celebration dedicated to the 10th anniversary of the Badagoni Wine Company held in the region of Kakheti, Georgia, this November, the Institute of Directors in London hosted a follow-up event organized by the Georgian Wine Club.

The Georgian Wine Club is a UK-based wine importing company, founded by Berdia Qamarauli and his business partner Dennis Muriu, with an online presence selling exclusive, Georgian fine wines.

“The event was one of the most important for us.

Badagoni Wine Company is our biggest supplier and a trusted partner,” said Qamarauli. “This year was especially important for them as it is their 10th year anniversary. The celebratory event was also a very important evening for Georgian wine in general. No such event has been held in the UK before and we are very proud that we managed to do it together with Badagoni and in association with British Georgian Chamber of Commerce and Georgian Embassy to the UK. The event was attended by representatives of the British government, business persons, UK media, and Georgian diaspora. The Georgian Wine Club intends to

organize such events in future to help promote Georgian wine in the UK even further.”

The celebration, held in a historic building, designed by 19th century architect John Nash who also designed the Brighton Pavillion and Marble Arch, was followed by a gala-dinner and a concert with Georgian musicians Liza Bagrationi, Nikoloz Rachveli and Giorgi Zagareli performing music by Giya Kancheli and other Georgian composers.

Qamarauli and Muriu talked about the history of Georgian wine and introduced a range to the guests.

Serge Pradier, Food and Beverage Manager at the Institute of Directors was in charge of food and wine pairing- offering guests a detailed description and giving tasting notes for each of the wines.

Tamar Beruchashvili, Ambassador of Georgia to the UK, greeted the guests attending the event while Giorgi Salakaia, Founder of Badagoni Winery, expressed his gratitude and willingness to be more exposed to the UK market.

Mako Abashidze, Founder Director of the British Georgian Chamber of Commerce, then congratulated Badagoni on 10 successful years and announced the signing of the Memorandum of Cooperation between BGCC and the Solidarity Fund in Georgia, which took place during her last visit to Tbilisi “We plan to hold a series of fundraising events in London next year to raise awareness of the Georgian Solidarity Fund in the UK,” she said.

9

10

BUSINESS

GEORGIA TODAY

DECEMBER 20 - 22, 2016

Dechert OnPoint: Why Brexit is Not Bad News for UK-Based Arbitration and Litigation

D

echert is partnering with Georgia Today on a regular section of the paper which will provide updated information regarding significant legal changes and developments in Georgia. In particular, we highlight significant issues which may impact businesses operating in Georgia. Contributing this week are London-based Dechert Partners Arif Ali and Miriam Gonzalez, Londonbased Senior Directors Roger Matthews and Andrew Hood, London-based Senior Associate Daniel Dozsa, and Brusselsbased Special Counsel Erica Stein.

Together, they make up Dechert's Brexit and International Arbitration team, which has market-leading experience in advising clients in all aspects of Brexit, including international arbitration and litigation issues associated with it.

WHY BREXIT IS NOT BAD NEWS FOR UK-BASED ARBITRATION AND LITIGATION A lot has been said about the uncertainties surrounding Brexit and its likely impact on doing business with and within the UK. Will London remain Europe’s financial center? Will the UK reinstate customs duties on imports and will the EU reciprocate? Will the UK impose restrictions on the free movement of

London may become the go-to neutral forum to resolve intra-EU disputes

workers? Just to name a few examples.

Answering these questions is, at the moment, difficult. However, when it comes to Brexit’s likely impact on UK-based arbitration and litigation, the picture is clearer and the outlook more positive.

LONDON’S POSITION AS ONE OF THE WORLD’S LEADING ARBITRATION CENTERS IS UNLIKELY TO CHANGE EU law by and large does not apply to arbitration. The Brussels Regulation, which governs the recognition and enforcement of judgments within the EU, does not apply to arbitration (Art. 1(2)(d) of Regulation No 1215/2012 (Recast) – for the sake of simplicity, we will refer to both the Brussels Regula-

tion (Recast) (No 1215/2012) and the predecessor Brussels Regulation (No 44/2001) as the Brussels Regulation.

Arbitral awards within and outside the EU are recognized and enforced under the 1958 New York Convention, which currently counts 156 members, and is widely considered as the single most important international legal instrument governing the international resolution of commercial disputes. Brexit will not change that.

Thus, arbitral awards rendered in London will continue to be enforced postBrexit internationally, including within the EU, in accordance with the New York Convention.

The UK is renowned for its arbitrationfriendly laws and experienced legal bar

applying such laws. Brexit will not change that. Brexit, therefore, is unlikely to impact London’s standing as a leading international arbitration center.

In fact, there may be an opportunity for London to become the go-to neutral forum to resolve intra-EU disputes.

EU law is currently incorporated into UK law by virtue of the 1972 European Communities Act. To implement Brexit, the UK will have to repeal or substantially amend the European Communities Act (hence the on-going debate whether Parliament, as the legislator, is required to approve the Government’s “Article 50” notice to the EU – a cardinal question that will ultimately be decided by the UK Supreme Court at the beginning of 2017).

While the UK’s post-Brexit legal framework is thus difficult to predict, it is almost certain that Brexit will terminate the primacy of EU law over domestic UK law and will free the UK courts from the controlling jurisdiction of the Court of Justice of the EU (CJEU). Currently, many EU companies opt for Swiss-seated arbitrations, precisely because EU law is not part of Swiss domestic law and Swiss courts are not subject to the controlling jurisdiction of the CJEU or the European Commission. Switzerland is thus widely considered neutral ground, where claims based on EU law (including the competition and state aid defenses often invoked by respondent states and companies alike) are dealt with expeditiously and without the pro-EU slant often exhibited by EU member states’ courts, which are under an obligation of “sincere cooperation” in the enforcement of EU law (Art. 4(3) Treaty on European Union).

Thus, by simplifying English law and the English legal system, Brexit could in fact make the UK a more attractive and neutral jurisdiction to resolve international disputes. Furthermore, the UK judges’ and legal practitioners’ decades of experience in applying EU law could serve them well in efficiently resolving disputes with an EU element.

As to court proceedings, it is highly unlikely that Brexit will terminate the free movement of judgments between the UK and the EU. The free movement of domestic court judgments in the EU is older than the UK’s EU membership. The members of the EEC (later, EC, then EU) ratified the Brussels Convention in 1968, ensuring that domestic court judgments made in one Member State would be recognized and enforced throughout the other Member States of the EEC. The UK acceded to the Brussels Convention in 1978, ten years after its inception and five years Continued on page 11

RENT YOUR DREAM APARTMENT IN TSKNETI

Very cosy one bedroom 75 sq.m apartment in Tbilisi area with spectacular view over the mountains.

Located in Tskneti, a prestigious, quiet, green and safe neighborhood 15 minutes drive from the city center. The bright and sunny apartment is newly furnished and comes with a fully equipped kitchen and bathroom.

Comfortable and stylish living-room, cozy bedroom with closet and king-sized bed. 20 sq.m terrace overlooking the mountains. Relax while enjoying the view and unwind with a glass of wine on the balcony as you watch the sun set.

Parking & WiFi available.

If you are looking for the perfect place to live, this is the apartment for you!

Only long-term residents should apply.

Ideally suited for a couple or single.

For more information contact: + 995 595279997

BUSINESS

GEORGIA TODAY DECEMBER 20 - 22, 2016

POLITICS

Dechert OnPoint: Why Brexit is Not Bad News for UK-Based Arbitration and Litigation Continued from page 10 after the UK’s accession to the EEC. Although the Brussels Convention was generally superseded by the Brussels Regulation in 2001, it continues to apply to certain overseas territories of EU member states (Art. 68(1) Brussels Regulation).

The “Brussels Regime” has thus become part of EU law. However, the EU has also extended the Brussels Regime to neighboring, non-EU states. In 1988, the EC and the Member States of EFTA with the exception of Lichtenstein (today, Iceland, Switzerland and Norway) ratified the Lugano Convention, the terms of which mirrored the Brussels Convention. When the EU internalized the Brussels Convention through the Brussels Regulation, the EFTA states followed suit by entering into new Lugano Convention (recast, 2007), which mirrored the terms of the Brussels Regulation.

Thus, membership in the EU has never been a pre-condition to being part of the European area of free movement of judgments.

In summary, although there is uncertainty as to how the free movement of judgments will be ensured between the UK and the EU, post-Brexit, it is highly unlikely that either the UK or the EU would seek the UK’s exit from the Brussels Regime, because the ensuing judicial vacuum would seriously undermine the UK’s commercial stability and its role as a finance hub and it would also hurt the EU’s commercial interests.

Finally, Brexit could reinforce the UK’s intra-EU Bilateral Investment Treaties, reducing investors’ enforcement risk.

Another consequence of Brexit will be that the UK’s Bilateral Investment Treaties (BITs) with other EU member states will no longer be “intra-EU” BITs. In general, BITs promote foreign direct investment by protecting investors from illegal expropriation, discrimination, or the breach of their legitimate expectations and by giving them the powerful recourse to have their potential grievances against the host state adjudicated before a neutral, international arbitration forum, as opposed to the host state’s domestic courts. As such, ensuring proper BIT coverage, where available, is essential in structuring any large scale crossborder investment.

The European Commission has taken the position that intra-EU BITs have been superseded by EU law and should therefore be considered void or, at the very least, terminated by the Member States concerned, and the illegality of arbitral awards rendered under intra-EU

*** Note: This article does not constitute legal advice. You are responsible for consulting with your own professional legal advisors concerning specific circumstances for your business.

Dechert Georgia is the Tbilisi branch of Dechert LLP, a global specialist law firm that focuses on core transactional and litigation practices, providing world-class services to major corporations, financial institutions and private funds worldwide. With more than 900 Lawyers in our global practice groups working in 27 offices across Europe, the CIS, Asia, the Middle East and the United States, Dechert has the resources to deliver seamless, high quality legal services to clients worldwide.

For more information, please visit www. dechert.com or contact Nicola Mariani at nicola.mariani@dechert.com.

George Sharashidze COMMERCIAL DEPARTMENT

Commercial Director: Iva Merabishvili Marketing Manager: Mako Burduli

GEORGIA TODAY

All the Electorate's Men

BITs is routinely raised by losing states in proceedings to enforce or set aside arbitral awards before Member State courts. The CJEU (the only court that can give an authoritative opinion on this issue) is yet to deliver its preliminary ruling on the legality of one such intraEU BIT, and even if it does determine such arbitral awards rendered under intra EU-BITs to be illegal, it is uncertain whether the CJEU will constrain its opinion to the legality of the specific BIT at issue (between the Netherlands and Slovakia), or whether it will opine on the broader issue of the compatibility of intra-EU BITs with the EU legal order.

The UK has intra-EU BITs with twelve member states (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia). These BITs will cease to be intra-EU BITs, post-Brexit.

Therefore, investors relying on these intra-EU BITs to bring claims against EU Member States post-Brexit will be able to do so with the reduced risk of the respondent state successfully raising the EU defense in the arbitration, or in the subsequent annulment or enforcement proceedings. And even if the UK were to terminate these intra-EU BITs in the course of Brexit (which is yet to be determined), it is very unlikely that such termination would affect investments that have already been made at the time of the BITs’ termination.

Therefore, companies intending to make significant investments in countries with which the UK has intra-EU BITs are well-advised to consider structuring their investment so as to benefit from the protections that the UK’s BITs could have to offer.

PUBLISHER & GM

EDITORIAL DEPARTMENT:

Editor-In-Chief: Katie Ruth Davies

11

OP-ED BY ROBERT ISAF

A

s we go to press, the United States of America will elect their 45th president.

Of course, especially from this far away, we’d be forgiven for thinking that particular milestone already past. If the international spotlight has ever rested on the peculiar institution of the Electoral College, though, it does so now. I’ll leave it to readers to review the details of the system for themselves; there’s a litany of articles, essays, thinkpieces, and general entreaties circulating now on the topic, many of which contain the germ at least of some genuinely marvelous speculative fiction.

I’d like to call instead for all of us to step back for a moment, and reflect on the true meaning of the Electoral College. December 19th was much more than merely a moment for American families to gather and give thanks for the gift of Representative Democracy over their traditional meal of Chicken Tetrazzini, blissfully oblivious to whatever’s actually cogging on in the background.

No; this year, let’s all of us, in every nation, let America’s Electoral College be a reminder of what true national sovereignty is, and must be: a compromise, between the interests of a state’s citizens as individual persons, and the interests of the state’s communities as individual groups.

This is deep, serious stuff! And too often forgotten or full-out ignored, even by the high priests who ought to know better. Among all the punditry we hear things like “the Electoral College has failed” (by which of course is meant that it’s failed to conform to the popular vote), or that it’s an “anachronism” that needs to be abolished or “reformed” (by bringing it more fully into line with the popular vote), or, in its defense, that it’s an “emergency brake on the process of selecting a president” (Lawrence Lessig, a Harvard law professor).

Of course that’s all rubbish. The College isn’t a failsafe to the process; it is the process. There are some stops and whistles attached, to be sure, but they’re attached TO the core organ, rather than visa versa. If there’s an emergency brake, it exists in Congress, which has a last opportunity to object to electors’ legality as electors, and does, in fact, rubber-

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Karen Tovmasyan, Dimitri Dolaberidze, Maka Lomadze, Tim Ogden, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison, Natia Liparteliani

stamp the whole thing. The popular vote is properly sideshow.

Now, why on earth should we care, you ask, half a world and a daylight away?

The Electoral College remains significant for all of us, wherever we are, precisely because of how sharply its perceived flaws throw into relief the terms of that national compromise required of any state.

What the crowds and coneheads clamoring for the primacy of the popular vote are really doing is declaring the interest of the individual person, as a policy consideration, to be sacrosanct, and taken over all other considerations. In order to seriously and consistently argue like that, “One Man, One Vote” has to be treated as a sort of Single-and-Alone, with an almost fundamentalist fervor.

But no society is simply a clustering of citizens. Nor, when voting, is any but the most tragically hermetic citizen voting purely based on his or her own ‘individual’ interests. The communities to which we belong – especially those communities in which membership is most normally inherited, into which we are naturally born, to which we are native, those communities defined by a national quality like language, or ethnicity, or religion, or tribe – these communities have individual interests of their own, as a body.

In the US, the communities that matter, that are allowed to vie equally with each other as communities over shaping state policy, are defined by territory, and called states. America’s system is laughably far from perfect, and even so has been shamelessly declawed over the decades; but the spectacle of an Electoral College every four years, consisting of individuals representing by constitution and with their conscientious vote their state, rather than simply some faceless plurality of yesses, is a visceral reminder of a basic truth. Individuals matter, but not at the expense of the communities to which they belong, and which in turn constitute the State at large.

Without passing any judgement or suggesting any change, then, let us consider our own state. Is the Republic of Georgia in fact quite as monolithic as its electoral practice suggests? Does the district system adequately reflect the full diversity of communities and communal interests that make up the state? Are, in fact, the most essential communities within Georgia even recognized as such under the law? In America, a country of transplants and colonists, the political simplicity of

Photographer: Irakli Dolidze Layout: Misha Mchedlishvili Webmaster: Sergey Gevenov Circulation Managers: David Kerdikashvili, David Djandjgava

distilling all communal bonds down to the essentially economic ones formed by land ownership and tenancy is – without further commentary – possible. Is the same possible, or even desirable, here?

The closer we come to simplicity in electoral practice, the closer we come to autocracy. This can seem benign and even positive seen in passing, or perhaps purely superficial; but who wants to live under an autocracy of someone else’s sheer majority? If states aren’t made complex, they either homogenize and bleach out, or break apart. If small language communities aren’t given policy protection, aren’t allowed to legally voice their own interests as an individual group at the forum of state policy-making, they will disappear under the chatter of majority. If territorial communities feel frustrated in their attempts to influence state policy, they’ll leave – as happened, violently, in the US in 19th century, in Yugoslavia in the ‘90s, and, of course, here.

Needless to say, I make no commentary here on the morality of this – only on the fact of it.

Protests continue now across America.

To the extent that these protesters simply feel that Hillary Clinton has won the right to be President, or that her lead in the popular vote proves the need to abolish the Electoral College, they are deeply misguided. Her much-discussed 2.8 million margin of victory is attributable almost entirely to the combined six counties of New York and LA alone – completely entirely if we ignore Staten Island (and who doesn’t?). That isn’t to say that she won 2.8 million votes in those two cities – she won 2.8 million more votes there than did her opponent.

Ignoring, for now, the (grotesquely unfit) character of that opponent, we ought at least to appreciate a system that protects Alabama, and even New Hampshire, from the autocracy of the Brooklynite.

The challenges here are different. Guria probably doesn’t need protection from the whim of the Tbiliseli. But here, as in any country, there are assuredly groups and communities that DO need extra care – and if they can’t be immediately, instinctively identified, then it’s probably a matter of even more necessity.

So, as the United States of America deconstruct themselves, the innards of what’s been a fair machine should provide some engaged study for a newer and smaller democracy now working to make the best of itself, for all its citizens and all its communities, in the century that comes.

ADDRESS

1 Melikishvili Str. Tbilisi, 0179, Georgia Tel.: +995 32 229 59 19 E: info@georgiatoday.ge F: GeorgiaToday ADVERTISING & SUBSCRIPTION

+995 595 279997 E-mail: marketing@ georgiatoday.ge

Reproducing material, photos and advertisements without prior editorial permission is strictly forbidden.

The author is responsible for all material. Rights of authors are preserved. The newspaper is registered in Mtatsminda district court.

Reg. # 06/4-309

12

POLITICS

Annual Gazprom Meeting Ends without Agreement

BY NATIA LIPARTELIANI

A

recent meeting with Gazprom representatives ended without results. As Vice PM of Georgia, Minister of Energy, Kakha Kaladze told reporters, the views of Gazprom did not coincide with the views of the Government of Georgia.

Kaladze said that the Georgian Government does not want to change the existing conditions of the agreement.

“The agreement on transit is signed annually. They said we should receive financial reimbursement but we have been receiving 10% of the transited natural gas as the cost of transit and as such

their new proposal is unacceptable for us,” Kaladze said.

Gazprom is the largest Russian gasproducing company, supplying numerous countries, including 25 EU members, with natural gas worldwide.

Georgia's energy minister, former A.C. Milan football star Kakha Kaladze has held several meetings with Gazprom representatives, stating that Georgia is seeking energy diversification. Kaladze had previously justified the negotiations with Gazprom by saying Azerbaijan was without the technical ability to supply more gas.

Some believe an agreement with Gazprom will threaten the region's energy status quo and Georgia might become dependent on Russian energy, which, in turn, critics say, could jeopardize Georgia’s Western-oriented integration plans.

GEORGIA TODAY

DECEMBER 20 - 22, 2016

EU, UNDP Summarize Parliamentary Election Media Monitoring

T

he need for more in-depth analysis of political programs, growing polarization in some media segments and cases of hate speech are the focus of recommendations to the Georgian media that have resulted from the 2016 Parliamentary Election media monitoring supported by the European Union (EU) and United Nations Development Programme (UNDP).

The final reports of media monitoring, released at a press conference on 16 D e ce m b e r, acknowledged the progress made by the Georgian media in recent years, and highlighted challenges on the way to quality reporting and professional and ethical media culture.

"Media freedom and pluralism are fundamental values in our cooperation with Georgia. I am pleased that positive trends were observed, pointing to more balanced and diverse reporting in media during the election period. This

positive dynamic contributes to further strengthening of democracy in Georgia," said Janos Herman, Ambassador of the European Union to Georgia.

The EU-UNDP media monitoring examined media performance during the 2016 Parliamentary elections in Georgia covering forty-seven national and local media outlets: televisions, radio, print and

online media. The monitoring was carried out from May through November 2016 by the three Georgian civil society organizations: the Georgian Charter of Journalistic Ethics, Internews Georgia, and the Civic Development Institute (CDI). Throughout the entire monitoring process, media monitors were receiving professional support from the Slovak media monitoring organization Memo’98.

“Findings of the election media monitoring have been informed by the tremendous job of collecting and analysing of up to 300 thousand media monitoring cases, undertaken by our partner civil society organizations. The EU-UNDP media monitoring has become an essential part of election cycles in Georgia equally useful and beneficial for the media and public,” said Niels Scott, Head of the United Nations in Georgia.