Issue #1076 Business

Issue no: 1076/143

• AUGUST 21 - 23, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Georgian PM: We Will Have a Four-Season Resort in Bakhmaro NEWS PAGE 2

Gulf Georgia to Distribute Entrepreneur Magazine to Villages

FOCUS

ON SUPPORTING STARTUPS

Tbilisi City Hall to help support 152 entrepreneurs over four years

PAGE 6

NEWS PAGE 4

Heavy Hail Destroys Grape Harvest in Kakheti

Turkish Investment in Adjara Shrinks

BY THEA MORRISON

BUSINESS PAGE 5

“Alphabet as History” Catalogue Presentation

H

eavy hail and rain which hit Georgia’s Kakheti region, especially Akhmeta and Telavi municipalities, has destroyed the watermelon and grape harvest, flooded houses and streets and damaged infrastructure.

According to the Center for Active Impact on Natural Events, they fired 200 weather rockets and cloud masses were significantly reduced, but it did not help to save the harvest.

The 20-minute hail most of all affected three villages in Akhmeta: Kistauri, Akhshani and Matani and three villages in Telavi: Shalauri, Kasiskhevi and Nasamkhrali, destroying the entire harvest there.

After the hail, an Emergency Headquarters was set up in Kakheti to coordinate disaster liquidation works and calculate the damage inflicted.

The meeting at the Emergency Headquarters was attended by the Minister of Environment and Agriculture, Levan Davitashvili, and the representatives of the local governments.

The Minister said the headquarters continues to work on a special regime and provides communication between the farmers and the enterprises.

Davitashvili also met the locals and called on them to always insure their harvest. He said the

CULTURE PAGE 13

What History Teaches Us About Modern Russia POLITICS PAGE 15 Photo source: resonancedaily.com

State can give compensation only to those farmers who had their gardens ad vineyards insured.

The Minister noted that negotiations are underway with enterprises which have agreed to buy damaged grapes from the farmers to make alcohol.

“Locals affected by hail in villages in Akhmeta municipality will be able to sell their grapes to enterprises in Akhmeta…The population can take the damaged grapes there right now,” he said.

However, the farmers said the offer is unacceptable, adding they have no grapes to sell, as the hail destroyed nearly everything.

The locals of the affected villages held a protest rally asking for compensation, free chemicals and pesticides and mediation with the banks

Prepared for Georgia Today Business by

where they have loans.

Farmer Robert Khomizuri says 90% of his harvest is destroyed. He says the offer of the State to sell the damaged grapes will not work for him, as there is no harvest left in his vineyard.

“If they cannot give us compensation, they can at least give us pesticides which we need four times a year,” the farmer added.

The locals say that anti-hail systems do not work, and instead the money should be spent on farmers.

“We will not stop. We demand the State looks after us and helps us. We are without hope, all our harvest is destroyed and we now face starvation,” local Giorgi Gabanashvili said.

Markets As of 17ͲAugͲ2018

Price

w/w

m/m

BONDS

Price

w/w

m/m

Bank of Georgia (BGEO LN)

GBP 17.40

+1,7%

Ͳ7,9%

GEOROG 04/21

101.87 (YTM 5.98%)

Ͳ0,2%

+0,4%

Georgia Capital (CGEO LN)

STOCKS

GBP 10.49

+4,9%

+1,8%

GEORG 04/21

105.71 (YTM 4.55%)

Ͳ0,6%

Ͳ1,0%

GBP 2.60

Ͳ2,4%

Ͳ1,5%

GRAIL 07/22

105.18 (YTM 6.23%)

Ͳ0,7%

Ͳ0,7%

GBP 16.02

Ͳ2,9%

Ͳ7,1%

GEBGG 07/23

100.09 (YTM 5.98%)

+0,1%

+0,3%

GHG (GHG LN) TBC Bank Group (TBCG LN)

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

Price

w/w

m/m

CURRENCIES

Price

w/w

71,83

Ͳ1,3%

Ͳ0,5%

GEL / USD

2,5695

+2,8%

+4,8%

1 184,25

Ͳ2,2%

Ͳ3,5%

GEL / EUR

2,9397

+0,9%

+2,9%

m/m

GEL / GBP

3,2751

+0,8%

+1,8%

INDICES

Price

w/w

m/m

GEL / CHF

2,5770

+0,9%

+5,3%

FTSE 100

7 558,59

Ͳ1,4%

Ͳ0,9%

GEL / RUB

0,0382

+1,3%

Ͳ2,6%

FTSE 250

20 444,36

Ͳ1,1%

Ͳ2,0%

GEL / TRY

0,4271

+7,7%

Ͳ16,4%

DAX

12 210,55

Ͳ1,7%

Ͳ3,6%

GEL / AZN

1,5149

+1,1%

+5,0%

DOW JONES

25 669,32

+1,4%

+2,2%

NASDAQ MSCI EM EE MSCI EM SP 500

GEL / AMD

0,0053

Ͳ

+3,9%

7 816,33

Ͳ0,3%

Ͳ0,5%

GEL / UAH

0,0924

Ͳ1,1%

Ͳ1,4%

148,38

Ͳ1,3%

Ͳ6,4%

EUR / USD

0,8742

Ͳ0,2%

+1,9%

1 022,94

Ͳ3,7%

Ͳ4,5%

GBP / USD

0,7844

+0,2%

+2,9% Ͳ0,4%

2 850,13

+0,6%

+1,4%

CHF / USD

0,9957

+0,0%

MSCI FM

2 648,52

Ͳ2,2%

Ͳ1,3%

RUB / USD

67,0051

Ͳ1,0%

+7,0%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

6,0372

Ͳ5,1%

+25,6%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,6994

+0,1%

+0,3%

2

NEWS

GEORGIA TODAY

AUGUST 21 - 23, 2018

New Coca-Cola Georgian PM: We Will Have a Factory to Produce Four-Season Resort in Bakhmaro Georgian Water

BY THEA MORRISON

Photos: PM's Press Office

G

eorgian Prime Minister Mamuka Bakhtadze has stated that Bakhmaro resort, located in Georgia’s western region of Guria, will become a four-season resort.

"Our Government aims to turn Bakhmaro into an international destination and one of the key landmarks of our country, the pride and joy of Georgia and a very important source of income for the local population," Bakhtadze stated while visiting the traditional horse race in Bakhmaro.

The PM noted that Bakhmaro faces two challenges - power and water supply, which will be addressed in the near future.

In his speech, Bakhtadze said the Mas-

BY SAMANTHA GUTHRIE

T

emur Chkonia, President of Coca-Cola Bottlers Georgia, Ltd., has announced that after the completion of the new Coca-Cola bottling plant in Mukhrani, Georgian water will be produced there.

Chkonia explained that the factory will be completed in November of this year, and will be operational by April 2019, after all the requisite equipment is transferred from the current Cola-Cola bottling factory, located in Tbilisi.

“Once construction work in Mukhrani ends, we will start bottling [Georgian] water and delivering it to other countries, specifically where Coca-Cola has representation. This will be bottled water under the Coca-Cola brand. We will not be involved in the distribution process,” outlined Chkonia.

The Coca-Cola Company website demonstrates the brand’s far reach. Business Insider reports that “The red and white Coca-Cola logo is recognized by 94% of the world’s population.” Coca-Cola operates in more than 200 countries worldwide, partnering with more than 27 million buyers who then sell the products to consumers.

ter Plan for Development of Bakhmaro envisages turning the region into a fourseason destination, attracting visitors year-round.

“At the same time, we will hire Austrian experts who will examine the Development Plan to make sure that we design

the site by taking into consideration the best European practices, turning it into a rare jewel of Georgia," he added.

The PM also commented on the traditional horse race, saying Guria horse riders are fascinating and help to maintain the traditional culture.

4

NEWS

GEORGIA TODAY

AUGUST 21 - 23, 2018

GNTA Initiates New Project to Popularize Culinary Tourism in Georgia Photo: Editor-in-Chief of the magazine Entrepreneur, George Sharashidze, Vice-President of Gulf Georgia Nino Jibladze and Director of the National Library Giorgi Kekelidze

Gulf Georgia to Distribute Entrepreneur Magazine to Villages

BY ANNA ZHVANIA

T

he Georgian National Tourism Administration (GNTA) of the Ministry of Economy and Sustainable Development has launched a new project aiming to popularize Georgian cuisine. The project will take the form of a festival and will become an annual event.

According to the GNTA, together with world-famous chefs, journalists and bloggers working on international wine tour-

ism and culinary topics visited Georgia.

“Four chefs from different countries participated in the specially planned tour. A Gala Dinner was held within the frames of the tour, attended by representatives of the government and diplomatic corps,” states the GNTA, “International cooks hosted masterclasses and prepared special dishes for the Gala Dinner and Giorgi Chogovadze, Head of the GNTA, met with the invited guests and journalists.”

The new project of the GNTA will aid Georgia in the international market as a culinary tourism destination and will popularize Tbilisi as a ‘Fine dining’ city.

BY KATIE RUTH DAVIES

W

ith the support of Gulf Georgia, Entrepreneur magazine will be distributed free of charge to numerous

village libraries.

In a Memorandum of Cooperation signed on August 17 by Vice-President of Gulf Georgia Nino Jibladze, Director of the National Library Giorgi Kekelidze, and Editor-in-Chief of the magazine Entrepreneur, George Sharashidze, Gulf Georgia

has pledged to buy issues of Entrepreneur magazine and distribute them free of charge to the National Library of Georgia to be forwarded to rural libraries.

The aim of the initiative is to increase literacy, business education, entrepreneurial spirit and the spread of innovative information in the regions of Georgia.

“I would like to thank Gulf Georgia for its support, together with the National Library of Georgia, in enabling us to deliver the Georgian edition of the worldfamous American magazine Entrepreneur to rural libraries,” said George Sharashidze.

“I am confident that the Entrepreneur magazine will be read by many young

people and people of any age who wish to develop and learn more about the modern trends of business and innovative economics. It will also help to show them a new way and motivate them to get started in their business plans. Reading the success stories of others will serve as a stimulus for them. I'm sure we’ll soon be hearing of new innovative projects and new entrepreneurs thanks to Gulf Georgia and the National Library of Georgia. I hope that we together - media, business, and the public and private sector, through joint efforts, will be able to disseminate the latest knowledge to the regions of Georgia.”

Underground Gas Storage to Be Built in Georgia

BY THEA MORRISON

T

he construction of an underground gas storage area will start in Georgia which will ensure the elimination of existing imbalances between gas supply and consumption in the country and satisfy the peak consumption in winter. The information was released by Georgia’s Prime Minister Mamuka Bakhtadze on August 17.

Bakhtadze said that a 150 million Euro loan agreement will be signed between Germany's Reconstruction and Development Bank and the Georgian Oil and Gas Corporation which envisages the construction of the infrastructure of the underground gas storage facility.

“This project is important not only in

terms of strengthening energy security, but also for stabilizing the gas supply during winter,” the Prime Minister said.

Georgian Economy Minister Giorgi Kobulia says implementation of the project will protect Georgia from risks.

“After the gas storage is constructed, the country will have gas reserves for one and a half months. This project is

commercially profitable, because we can purchase the gas when it is cheaper,” the minister explained.

BUSINESS

GEORGIA TODAY AUGUST 21 - 23, 2018

Turkish Investment in Adjara Shrinks

5

Source: Imedinews.ge, Photo: Facebook

Georgia Ranks 3rd in Int'l Robotics Competition Among 193 Countries

BY ANNA ZHVANIA

T

he robotics team of Georgia successfully achieved third place among 193 countries in the International Competition “First Global” held in Mexico, according to Imedinews.

"The real demonstration of non-radar and talent in Mexico, despite the difficulties of strength, inti-

macy, positive mindset, enthusiasm, and competitiveness," states Crystal JSC MFO in an official Facebook post.

The International Competition “First Global” runs an annual international robotics competition.

The Georgian national team participated in the competition for the second time this year. The team members included Givi Zaldastanishvili and American Academy students Sopo Kevlishvili, Lika Mikhelashvili and Nika Gegechkori. Their mentor is the teacher of the Academy, Ilia Mestvirishvili.

Money Spent by Tourists in Georgia Reaches $431mln in July 2018

BY SAMANTHA GUTHRIE

I

n 2016, Turkish investors poured $135 million into the Autonomous Republic of Adjara, on Georgia’s southern Black Sea coast but numbers recently released for 2017 show that Turkish investment decreased 61% to $52.5 million. In 2016, Turkish investments comprised 32% of total investments in Adjara, while in 2017 Turkish investments were just 16% of total regional investments.

Eka Bakhtadze, Head of the Economic Development Department at the Ministry of Finance and Economy of Adjara, blamed the decrease on the completed construction of hydropower plants (HPP) in the region.

“The decline in investments is mainly due to the completion of HPP projects. Namely, from Norway and India and from Turkey...However, there is steady investment in the tourism sector from Turkey, mainly in the construction of hotels and housing,” she explained.

The Shuakhevi HPP began operating at full capacity in summer 2017. From 2015, several international financial institutions came together to realize the project, investing $416 million in the construction and operation of the plant. The project was constructed by Adjaristsqali Georgia – a joint venture between India’s Tata Power, Norway's Clean Energy Invest and the World Bank Group’s International Finance Corporation (IFC).

Turkish company Adjar Energy 2007 signed an agreement with the Georgian government in July, 2011, to construct three HPPs. Khelvachauri Hydro Power Station 1 began operating in March 2017 and Kirnati Hydro Power Station began operating earlier this summer. Khelvachauri Hydro Power Station 2 is set for completion next year. The company plans to invest a total of $200 million in building the three plants, which will have a combined annual output of 560 million KWh. The Ministry of Finance and Economy of Adjara reports that a total of $365.8 million was invested in Adjara in 2015, 29% ($107.5 mil) of which came from Turkey. In 2016, Adjara received a total of $427.9 million in investments, 32% ($135.6 mil) of which was from Turkey. In 2017, total investment in the region decreased to $330.8 mil – closer to pre-HPP numbers from 2015 – but Turkish investments accounted for just 16%.

Turkey is the second largest country to have

invested in Adjara in the past few years. NorwayIndia share the first place due to the construction of the Shuakhevi and Khulo HPPs (Khulo is set to be completed in 2019). Other significant sources of investment in Adjara include various small projects financed by investors from Azerbaijan, Turkmenistan, and Iraq.

Bakhtadze emphasized the importance of Turkey as an economic partner in a conversation with Batumlebi newspaper, saying “Turkey is our neighbor, and is always interested in our region. Its investment share is quite large. As a neighboring country and one of the most attractive countries for investment, there should be stable relations in the region.”

There has recently been some concern in Georgia about the dominance of Turkish investment, particularly in Batumi, Georgia’s second most populous city. In March 2017, Eurasia Net published an article describing a speech by Turkish President Recep Tayyip Erdogan in October 2016 near the Georgian border in Rize. During his speech, he said, “Our physical boundaries are different from the boundaries of our heart...Is it possible to separate Rize from Batumi?” This caused alarm in Georgia, where there is a long and unforgotten history of territorial integrity being infringed upon – most recently by Russia in Abkhazia and the Tskhinvali region. Turkey’s ambassador to Tbilisi later clarified Erdogan’s comment, saying “Batumi is Georgia and Rize is Turkey and it will always be this way,” but many Georgians are still anxious about the Turkish influence on the Black Sea coast.

Adjara spent three centuries under Ottoman rule – lasting until 1878. “Over the past decade and a half, Turkish investments have poured into the region, and today Batumi’s center and the Black Sea shore have been remade by rows of luxury hotels and casinos, largely built with Turkish money... A section of the city’s historic center, once an Armenian quarter, is now dominated by Turkish restaurants, bars, and teahouses. Dozens of ‘Thai massage’ parlors, fronts for prostitution, cater to mostly male Turkish visitors. Far more Turkish than Georgian is heard, and restaurant touts do not bother with any other language,” writes Eurasia Net. “The market should be diversified,” said Bakhtadze, “We are working on this task. The region should not be dependent on the investments of just one country. By diversification, I mean that the percentage of investments from other countries should be increased.”

Source: National Bank of Georgia

BY ANNA ZHVANIA

T

he National Bank of Georgia has published results of an ongoing macroeconomic overview of Georgia.

According to the statistics, in July 2018, tourists in Georgia spent a total of $431mln. The data clearly shows a 13.7% increase

in the money spent by tourists compared to July 2017. In July 2017, visitors spent only $379mln.

Until recently, Georgia had never received an inflow of more than $400mln per month from the tourism sector. Observing the general data from January-June 2018, the amount spent by foreign visitors equalled $792mln.

It is also noteworthy that the amount of visitors in July 2018 reached one million, a 10% increase compared to the same period of 2017.

Georgia Healthcare Group Profits in 2018

BY SAMANTHA GUTHRIE

G

eorgia Health Care Group (GHG) ended the first half of 2018 with 28.4 million GEL ($11.6 mln) in profits, according to the company’s financial report. Year-on-year growth is 17.1%.

In the same period, revenues increased by 14.7%, surpassing 419 million GEL ($163 mln).

GHG’s report indicates that increases can be attributed to growth in the healthcare, pharmaceutical and distribution sectors.

GHG’s holdings include pharmacy chains Pharmadepo and GPC, and insurance company Imedi

L. GHG also owns 16 referral clinics, 21 clinics and 17 polyclinics.

According to its website, GHG is the largest healthcare services provider in the Georgian healthcare ecosystem, “leading the market by offering the most comprehensive range of inpatient and outpatient services and by targeting the mass market segment through our vertically integrated network of hospitals and polyclinic clusters.” GHG is also the largest pharmaceutical provider and the second largest medical insurance provider in the country.

Georgia Healthcare Group joined the premium listing on London Stock Exchange in November 2015, attracting $100 million of new investment capital.

6

BUSINESS

GEORGIA TODAY

AUGUST 21 - 23, 2018

Tbilisi City Hall-EU Project to Support 152 Startup Business Plans

BY SAMANTHA GUTHRIE

T

bilisi City Hall will soon launch a new program to support local business startups, offering a free work space to entrepreneurs at the Nadzaladevi Mediathek library and coworking space, financing for the development of business plans, and assistance attracting investors and organizing advertising and sales. The services will be awarded to 152 startups for a period of four years.

Viktor Tsilosani, Deputy Head of Tbilisi City Hall’s Economic Development Department, told BM.ge last week that the project will cost approximately 1 million EUR and will be partially financed by the European Union.

The project is expected to start in late September. A registration website will soon be launched for applicants to enter the competition. “Everybody is welcome to register,” said Tsilosani. He explained that, “To register, startups will be asked to describe their business idea in 200 words. After they register, applicants will be able to work in Nadzaladevi

Mediathek free of charge for two months, where we will provide the services of marketers, accountants, lawyers and HR professionals who will help applicants polish their business ideas. “The main thing is that Tbilisi City Hall will not select the winners,” Tsilosani continued, “rather, a specific company will select the 152 startups.” City Hall plans to announce a competition for companies interested in evaluating the startups, selecting the winning projects, working with them to write a complete business plan, and helping them attract investors.

Mediathek is a coworking space developed by City Hall with locations in Vake, Varketili, and Nadzaladevi. The Nadzaladevi branch, in Veterans’ Park, was chosen for this project due to its size and capacity to accommodate up to 60 entrepreneurs working at once. All Mediathek branches are modern structures equipped with cutting age technology that offer the public cultural, cognitive and educational events.

Currently, 20,000 books are available at the three branches in multiple languages, with plans to continue to grow the collection. “It will bring more life not only to the park, but also to the entire district,” said then-mayor David Narma-

nia at the opening ceremony for the Nadzaladevi branch in May of last year.

Access to Mediathek branches is normally available for a monthly membership fee. Each Mediathek branch has a reading hall, computer area, and multi-

media rooms for movies, conferences and meetings. Members are able to use electronic resources and working spaces within the venue. There are also special educational and cognitive programs held for children and young adults.

The Economic Development Service is a structural unit of Tbilisi City Hall which works to create a favorable environment for Tbilisi's economic growth through the development and implementation of relevant policies.

Top 5 Business Complaints in Georgia

BY SAMANTHA GUTHRIE

T

he Office of the Business Ombudsman of Georgia has released a list of the top 5 complaints business owners bring to them.

1. Lack of uniform practices within the judicial system and delays in reviewing cases; 2. Bureaucracy in the public sector; 3. Responding to statements made by municipalities within legal deadlines; 4. (Tie) Lack of access to business financing, Lack of qualified workers in the labor market; 5. Investments lost due to complica-

Photo: Business Ombudsman of Georgia

tions with the privatization and registration process of agricultural lands.

The Office of the Business Ombudsman says that they have already begun

to study these problems and have issued recommendations to the relevant departments, reports Business Media.

In 2011, the Tax Ombudsman insti-

tute was created. From June 5, 2015, the new law on the Georgia Business Ombudsman came to effect, after which the institute continued operat-

ing under its current name.

Since January 2018, Irakli Lekvinadze has been the Business Ombudsman of Georgia.

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BUSINESS

GEORGIA TODAY AUGUST 21 - 23, 2018

Plans for Eliava Market

BY SHAWN WAYNE

T

he Mayor's Office has not yet made a decision whether the largest building materials market in Tbilisi will remain, though Deputy Mayor Maia Bitadze stresses that the unregulated sale of building materials in the center of Tbilisi is dangerous for the health.

“A framework plan has been developed in connection with Eliava market and the adjacent territory, which will clearly define the potential for the future development of this territory both in the recreational and in the social and business areas," Bitadze said, noting this plan should become a prerequisite for the proper development of the territory of the market and surroundings.

"It is unequivocal that the sale of construction materials or other threatening materials and products in this area should be arranged in such a way that there is no threat to the population residing

on the adjacent territory. The threat of dust in said territory should be minimized," Bitadze noted, adding that "Every trader there must comply with rules related to safety, with minimization of dusting. In connection with the functional development of the territory, there are town-planning documents stipulated by law and such issues are as yet unresolved on the basis of a bilateral agreement, but are resolved in the context of compliance with the current legislation and security."

According to the draft General Land Use Plan for Tbilisi, Eliava market may be turned into a park, though specialists of the laboratory for food, soil and mineral testing of the company "Multi Test" stated that the study of the territory of the market showed that the soil is not suitable for gardening.

The authors of the project called the threat to the health of the residents of the capital the reason for the necessary removalof the market.

Eliava market was founded in 1995 on an area of 13.2 hectares. It provides employment for around 15 thousand, both local and foreign traders.

Photo source: marinetraffic.com

Ship Sailing under Panama Flag with 17 Georgian Sailors Goes Missing

BY THEA MORRISON

A

ship which was sailing under Panama flag with 17 Georgian sailors has been missing since August 14.

According to the Ministry of Foreign Affairs (MIA) the last contact with the vessel Pantelena IMO 9321469, carrying oil, was in the Gulf of Guinea off the west coast of Africa.

The MIA says Greek company Lotus Shipping is carrying out the search.

“The Ministry of Foreign Affairs, together with the Sea Transport Agency of the Ministry of Eco-

nomics and Sustainable Development, is in coordination with the ship owner company to clarify the situation. We are actively working with Panama Flag Organization, too. The maritime forces of the region, as well as the United Kingdom Maritime Center - UKMTO are involved in the case,” the ministry stated.

Vladimir Konstantinidi, Deputy Director of the Consular Department of the Ministry of Foreign Affairs, stated there is a high probability that the ship was captured by pirates.

“We cannot confirm or rule out anything. Maybe we are dealing with piracy, because the west African coast is a risk area. Of course, we are looking into this,” he said.

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BUSINESS

GEORGIA TODAY

AUGUST 21 - 23, 2018

Tourist Flow from Israel to Adjara Up by 56% Photo source: KazTransGas Facebook

Gas Tariff to Increase for Enterprises & Companies in Tbilisi

Source: Imedinews, Photo: CBW.ge

BY ANNA ZHVANIA

A

ccording to the Department of Tourism and Resorts of Adjara, Sulkhan Glonti, Head of Adjara Tourism Department, met with Shabtai Tsur, Ambassador Extraordinary and Plenipotentiary of Israel to Georgia.

During the meeting, the parties discussed cooperation within the tourism sector, the increase in the number of visitors from Israel to Georgia, and future, perspective projects.

According to the statistics of JanuaryJune 2018, the number of tourists from Israel to Adjara surged to 56%, compared

to the same period of 2018. In 2019, a business and tourism forum is planned to take place in Batumi, which will play a vital role in the tourism and business sector.

“We have hosted a number of advertorial and other types of events in Israel in order to promote the tourist products of Georgia and stimulate tourist inflow from Israel to Georgia,” said Glonti.

During the meeting, the Israeli Ambassador highlighted the advertising activities carried out by the Department of Tourism of Adjara in Israel, which positively reflect the popularization of the Adjara region, as well as Georgia, in Israel. Israel is among the top five countries from which tourist inflow in Adjara is the highest.

BY THEA MORRISON

T

bilisi gas provider KazTransGas has announced that the gas tariffs will increase for Tbilisi enterprises and companies from September 16, rising from GEL 0.75 to GEL 0.80.

The company says the price increase is necessary to complete all the ongoing works on gas supply networks in the capital, adding that even after the increase, their tariffs are the lowest in the country.

“For commercial customers, the gas price in the regions is 0.86 GEL (including VAT),” KazTransGas – Tbilisi stated, adding the tariff will increase for 15,000

commercial customers out of 500,000 customers in the capital.

“The issue has been studied by the Georgian National Energy and Water Supply Regulatory Commission and the price increase has been substantiated,” the company said.

Economic experts say the tariff change might result in an increase in product prices, which will most of all affect the population.

Expert Gia Jandieri says after the gas tariffs are put up, the State should reduce some other taxes in order to promote small businesses.

“When businesses see increased taxes, of course this will affect the product prices…In order to overcome these challenges, the government needs to act,” he said.

Small entrepreneurs say the tariff increase will force them to increase their product price and services, which might lose them customers.

“The price of flour has been increasing and now if the gas tariff goes up too, the cost of bread will be up for sure,” one bakery owner said.

However, the Minister of Economy and Sustainable Development of Georgia, Giorgi Kobulia, says the tariff change will not affect the population, adding that there is no problem if the provider decides to slightly increase the tariff in Tbilisi and highlighting it is still lower in the capital than in the regions.

“Generally, we do not dictate to the commercial sector what price should be imposed. This is not our prerogative,” he said.

BUSINESS

GEORGIA TODAY AUGUST 21 - 23, 2018

Connecting the Caspian & the Black Seas

Image source: EBRD, Twitter

BY DIMITRI DOLEBERIDZE

T

he construction of the Eurasia Shipping channel, which connects the Black and Caspian seas, requires the consent of all the Caspian states, reports the Ambassador at Large of the Ministry of Foreign Affairs of Kazakhstan, Zulfiya Amanzholova.

“The Caspian Sea is a closed reservoir with a unique ecosystem, which is very fragile," she explained. “In order to implement any projects related to connecting the Caspian Sea with the Black Sea, it is necessary to obtain the consent of all five Caspian littoral states, and it is necessary to conduct appropriate environmental assessments.

The whole point is how feasible the project will be from an economic point of view and how serious the environmental risks will be.”

According to the diplomat, articles on the protec-

tion of the marine environment of the Caspian are contained in the Tehran Convention, signed in 2003.

The proposal to connect the Caspian and Black seas has been voiced repeatedly since the 18th century. In recent years, the President of Kazakhstan Nursultan Nazarbayev several times suggested building a shipping channel named “Eurasia.”

According to political scientist Eduard Poletayev, with the “Eurasia” channel, Kazakhstan would have access to the world’s ocean, that is, it would become a full-fledged sea power. Poletaev believes that the most effective way to implement such a project is a mechanism of public-private partnerships. The international consortium, aside from Russia and Kazakhstan, may theoretically include China, Uzbekistan, Azerbaijan and Turkmenistan.

The possibilities of the existing Volga-Don canal are already at a limit, and not all modern vessels with a large displacement can pass through it. The planned carrying capacity of “Eurasia” is estimated at 45 million tons, which is three times higher than the functioning Volga-Don channel.

Iran Wants to Supply Electricity to Russia

BY DIMITRI DOLABERIDZE

A

ccording to Iranian Energy Minister Reza Ardakanian, Iran has begun negotiations with Azerbaijan and Armenia on the possibility of exporting electricity to Russia through the territory of these countries.

“We started negotiations in pairs Iran-Armenia and Iran-Azerbaijan on the possibility of electricity supplies to Russia,” Ardakanian said.

“We are seriously following the plan of Iran's

accession to the European electricity networks,” he said, adding that joining Iran's northern neighbors is one of the scenarios.

The Energy Minister also noted that Iran seeks to exchange electricity with neighboring countries like Pakistan, Afghanistan, Turkmenistan, Azerbaijan, Turkey and Iraq.

Armenia annually receives from Iran about 500 million cubic meters. Gas is through a pipeline with a capacity of 2 billion cubic meters, gas is mainly processed into electricity at local thermal power plants. Payment is made by electricity from the calculation of 3 kWh per 1 cubic meter of gas.

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10

BUSINESS

GEORGIA TODAY

AUGUST 21 - 23, 2018

2018 Grape Harvest Prep Meeting Held in Telavi

BY SAMANTHA GUTHRIE

D

eputy Minister of Environmental Protection and Agriculture of Georgia, Giorgi Khanishvili, met last week with the municipal heads of the Kakheti region to discuss organizational issues relating to the 2018 grape harvest called, in Georgian, rtveli.

The meeting, held in Telavi, was attended by First Deputy Chairman of the Agrarian Issues Committee of the Parliament of Georgia Gela Samkharauli, State Representative-Governor of Kakheti Irakli Kadagishvili, and Acting Chairman of the National Wine Agency Andro Aslanishvili, along with representatives from information-consulting services firms and local municipalities.

Khanishvili outlined the activities necessary for successfully organizing the harvesters and programs related to the development of the wine and agriculture sectors.

“It is vital for the State to conduct the harvest successfully. In previous years, the harvesting process has required external financial support. As a result of good state policies in the viticulture and winemaking sectors, there is no necessity for this anymore, and business has returned to the right place – the entrepreneur and the farmer agree on prices.

Increased exports, diversification of export markets, increased awareness of Georgian wine – these trends are reflected in the economic policy of the country, which provides the basis for a harvest without state subsidies, which is the right business model,” Khanishvili told the meeting’s attendees.

Khanishvili emphasized the importance of producing high quality wine in Georgia to maintain international popularity and increase export numbers. The harvesting process has a significant impact on the quality of a wine, he explained.

Aslanishvili of the National Wine Agency announced the Harvest Headquarters will begin operating around the end of August and is ready to start registering farms and companies that wish to participate in the collective harvest.

“The purpose of the coordination headquarters will be to promote the organization of the harvest and to ensure accountability and traceability, which is a precondition for high quality production,” he said.

Samkharauli, from Parliament’s Agrarian Issues Committee, pointed out that parallel to the growth in wine exports, the number of tourists in Georgia is increasing by the year. With tourism comes an increased demand for wine consumption in the domestic market, which is another precondition for a successful harvest and for grape growers

Image source: Bpn.ge

and winemakers to be able to operate in the free market without government support. Kadagishvili, Governor of Kakheti, boasted that the land area of new vineyards is increasing annually and indicates that the wine industry is sustainable and continuing to expand.

Due to the current state of the wine industry, its growth and successes, the 2018 harvest will be reflective of full market price conditions and will be the first in the last 10 years without government subsidies for grape growers.

In the first half of 2018, 45.4 million

bottles of wine were exported from Georgia, bringing in $107,8 million in revenue – a 19% increase from the same period in 2017. The wine was exported to 50 countries worldwide, at the top of the list Russia, Ukraine, China, Kazakhstan and Poland.

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12

BUSINESS

GEORGIA TODAY

AUGUST 21 - 23, 2018

The Language Barrier

BY SHAWN WAYNE

Y

ears back, the Russian language was compulsory for children to learn and was universally taught in the education system. It was a very important language in Georgia, especially if you wanted to work and study in certain fields. What’s more, Russian was and still remains an essential language among ethnic Armenians and Azeris residing outside of Tbilisi, to say nothing of communication with citizens from former Soviet republics.

The unsurprising reality, however, is that proficiency in Russian is slowly fading in Georgia. Only a few schools remain where all subjects are taught in Russian, the result of this being debatable. Three years ago, a survey was done by Gorbi. com of what languages Georgians can freely converse in besides their native language. The survey revealed that 65% of the Georgian population can speak a language other than their native tongue and a third speaks only one language.

Not surprisingly, Georgian is the main language spoken in households across the country. For about 90% of Georgia’s population, Georgian being the obvious home spoken language, Azeri is 5.2%, Armenian 3.4% and Russian 1.4%, are the three main languages spoken in households besides Georgian.

The main languages spoken at home are correlated with actual ethnicity, with 86.9 % of people living in Georgia being ethnically Georgian, followed by Azeris at 6.3%, Armenians 4.5% and Russians at 0.7%.

International languages being learned by students are as follows: Russian 88%, English 18% and German 4% - based on respondents claims, these three are the most frequently mentioned foreign languages.

Even though both males and females can converse in Russian much more than in English, males tend to converse in Russian more than females, while females tend to converse in English slightly more than males. Furthermore, speaking in these two languages varies a lot depending on age. 46% of people aged from 18-24 can speak in English, compared to 2% of people who can speak English freely in the 55-64 age groups, meaning the younger generation is much more likely to speak in English than the older generation. On the other hand, the older generation is much more likely to speak

in Russian; with 97% of people aged 55-64 able to fluently speak in Russian and only 66% of people aged from 18-24 can speak in Russian.

The reason for this is obvious, going on the history of Georgia. People aged 18-24 were born in a time where Russian influence was fading from Georgia; borders with other countries were opened; and people gained access to computers and the internet where one can read and watch a plethora of content in English.

Also, from 2005, schools were given freedom to choose which foreign languages to teach, whilst in 2010, English became the mandatory first foreign language to be taught in schools. The principle of free choice is maintained with regard to the second foreign language

taught; starting from the seventh grade.

It is also noteworthy that even though knowing Russian does not vary a lot by socio-economic class, knowing English varies a lot due to one’s economic status.

5% of people from the poor socio-economic class report speaking English fluently, compared to 33% of people from the upper-middle class. This is also not surprising since people with more money can pay more for education, and gain more exposure via other means. In addition, English classes in general are much more expensive than Russian classes, meaning that lower- and upper-middle class families can better afford English tutors.

More recently, Georgians have been flooding to western universities where

they study mostly in English, and after returning, a good number of these people are employed by the government, with some serving in top positions.

Naturally, they have no issue with the English language as several of them have PHDs in that language. With changing times however, and tourism on the rise every day, Georgia needs a larger segment of society to be fluent in English, as this will bring only positive results.

The English Proficiency Index and the Eurobarometer surveys make it obvious that countries with a population highly proficient in English are economically more advanced than their neighboring countries. English is an important tool for economic development because it facilitates the attraction of investments,

the development of tourism and the establishment of trade relations with other countries.

An increase in the level of knowledge of English in Georgia will also have a positive impact on the prospects for economic development. It will become much easier to attract tourists and investors if Georgia has an English-speaking service sector – in other words, if Georgian public servants, lawyers, doctors, and hotel and restaurant service personnel are able to easily establish contact with visiting foreign guests who want to start a business or even those who have arrived for a holiday, it will be an invitation to people from around the world saying: Hey, we speak your language, come and see what else we have to offer!

Russia to Lift Visa Requirements for Turkish Officials & Businesspeople

BY SAMANTHA GUTHRIE

R

ussia’s TASS news agency reports that the Russian government plans to lift the visa requirements for some Turkish citizens. Senior government officials, diplomats, and businesspeople, including truck drivers, will no longer need a visa to enter Russia.

Turkish Foreign Minister Mevlut Cavusoglu announced the news at the 10th annual Ambassadors’ Conference in Ankara this Wednesday.

"We reached agreements with Russia to abolish visas for businessmen and holders of official passports," Cavusoglu told TRT TV. Cavusoglu says the RussianTurkish working group will meet to fur-

Photo: Alexander Shcherbak/TASS

ther discuss the details after its Islamic holiday Eid al-Adha, celebrated this year in Turkey August 21-24.

In 2010, Turkey and Russia signed an agreement allowing for 30-day visa-free entry for both countries’ citizens. The agreement was suspended on January 1, 2016 by Moscow after Turkey shot down Russia’s Su-24 bomber on the border with Syria in November, 2015.

Russia’s visa leniency reflects a move

by Turkey in April, 2016 to lift visa requirements for Russian citizens entering Turkey on service passports, extended in June of that year to professional drivers transporting cargo.

Negotiations on Russian reciprocity initially began in October 2016, but were suspended after the murder of Russian Ambassador to Turkey Andrei Karlov on December 19, 2016.

CULTURE

GEORGIA TODAY AUGUST 21 - 23, 2018

13

“Alphabet as History” Catalogue Presentation

but the result saw the extensive material transformed into an illustrated scientific work of the Georgian alphabet and culture.

The book will offer the opportunity for readers to follow the development of the Georgian alphabet, starting from

BY ANNA ZHVANIA

O

n 18 August, a presentation of the catalogue “Alphabet as History,” dedicated to the history of the Georgian alphabet and writing, was held at the Art Palace (State Museum of Theater, Music, Cinema and Choreography).

Mikheil Batiashvili, Minister of Education, Science, Culture and Sport, Mikheil Giorgadze, Deputy Minister, Giorgi Kalandia, Director of the Art Palace, and Medea Metreveli, Director of the Georgian National Book Center, hosted the event.

The Georgian-English catalogue was published with the support of the Ministry of Education, Science, Culture and Sport of Georgia and Georgian National Book Center. It combines unique manu-

scripts, printed books, rarities and works of contemporary artists. The book was published as part of the exhibition "Tbilisi in my Thoughts" dedicated to the history of the Georgian script in the Museum of Offenbach, which, in turn, is dedicated to the presentation of Georgia as an honorable guest country at the 2018 Frankfurt Book Fair.

Many samples were published for the first time in the catalogue. Initially, it was only planned as an exhibition guide,

ancient periods to contemporary art, to observe the peculiar characteristics of all periods, to look at the history of the Georgian book or periodic printing history and to discover the works of Georgian font writers and their modern achievements.

14

POLITICS

GEORGIA TODAY

AUGUST 21 - 23, 2018

Georgia & its Communist Legacy

EXCLUSIVE INTERVIEW BY ANTOINE DEWAEST

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I

n 1991, Georgia turned its back on the USSR. But just because Georgia opened it borders to a free market and removed its “Stalin status” does not mean that the country is free from its past. 70 years as a Soviet Republic has left a strong legacy in society here, maybe less visible than status, but harder to remove. That is what we call “post communism,” i.e. how former soviet countries face and manage their post USSR national blueprint. Ghia Nodia is a professor from the Ilia State University, whose field of study is nationalism, democracy and regional security. Academic work remains the main part of his working life, and he briefly held the post of Minister of Education in 2008. He gave GEORGIA TODAY an exclusive insight into the communist legacy still alive in Georgia today.

HOW DID PEOPLE REACT WHEN THE NATIONAL BORDERS OPENED? Well, people were at the beginning reluctant to see such a change, first because it was a change in their everyday lives, then because it occurred while the civil war was ravaging the economy. Of course, the breakdown of the communist system initially led to economic disaster and society needed time to restore growth. People struggled to make a difference between market results and the national disruption.

WHAT IS THE STRONGEST REMAINING COMMUNIST LEGACY HERE? First, I would say that people feel somewhat distanced from state institutions. The State is something seen as negative, even repressive, in Georgia and society feels isolated from it. There is no doubt that the reasons for it can be found in the history of its having been a “colonized” country. For instance, if you have a case to fix with someone, you don’t sue him, you negotiate directly. People distrust the Georgian justice system and find it awkward to call the police, seeing it as a betrayal.

Then, people suffer from a lack of autonomy.

During the USSR, everything wrong outside your apartment door would be tackled by the regime.

The State provided you everything you needed.

When the USSR collapsed, people were told “now you’re independent, you have to solve your prob-

During the USSR, everything wrong outside your apartment door would be tackled by the regime

Nationalism has a bad reputation in western countries, but not here, and Georgia will definitely turn towards it lems by yourself.” People are still not used to it.

For instance, after 1991, when elevators broke people sat waiting for state intervention, but nothing happened. So, they learnt how to manage it alone, or together as a collective. But at the beginning it was quite hard, with debates and tensions. In Georgia, contrary to western European countries, individualism is something positive. As a result of 70 years of communism, personal development and responsibilities given by individualism are a thing people agree on and support.

There is also a lack of societal pluralism. The communist system was “classless,” which means that today many struggle to understand their place in society. And there is no real pluralism in social forces and interests. People are socially aggregated, and do not understand what societal pluralism means, or why we might need it.

AND NATIONALISM? Nationalism is also a legacy of communism. Paradoxically, nationalism was stronger in soviet countries than in capitalist countries during the Cold War. Nationalism has a bad reputation in western countries, but not here, and Georgia will definitely turn toward it. The key question is what kind of nationalism Georgia will vote for. They are two nationalisms here: civic and republican nationalism, versus ethnic nationalism. The latter is exclusive, the first not. “Georgia for Georgians” could epitomize the idea. This more traditional nationalism used to be friendly, with Russia considering that the threat came from Muslims and Europe.

Civic nationalism, on the other hand, is critical of Russia and pro-western in nature.

I think nationalism becomes a problem when it blinds people. When I was Minister of Education in 2008, we were fighting this blindness: the policy then was to try to teach history differently, from several points of view, including sources to allow students to be critical. But some people, in particular the Church, thought we were not nationalist enough by doing so.

WHAT DO THE GEORGIAN PEOPLE MISS MOST ABOUT THE USSR? Some people still miss the communist system for its “minimal healthcare education.” It was highly efficient for dealing with many illnesses. But Georgia has implemented a more efficient healthcare system since 2014.

POLITICS

GEORGIA TODAY AUGUST 21 - 23, 2018

15

What History Teaches Us About Modern Russia

BY EMIL AVDALIANI

H

istorical comparisons are necessary when analyzing current political realities. Examples may at times be misleading and the author should be careful when highlighting particular historical developments, yet Russian history is arguably one of those stories where recurrent cycles have been seen throughout the last several centuries.

A constant feature has been the country rising from chaos, returning as a regional and sometimes even global power, then aspiring to consolidate its gains through strong-hand rule and the addition of neighboring territories before the entire system collapses. Then comes a new cycle.

One of the constants of that fateful historical cycle is the country’s geography. Russia is big, spanning almost the entire northern Eurasian landmass. However, behind this immense land is hidden the fact that more than half the country is non-navigable (as major rivers fall into the Northern Ocean) and the climate harsh enough to hinder any meaningful agricultural works beyond the Ural Mountains.

What is central, though, is Russia's heartland running from St. Petersburg and the Finnish border southwards to the Black and Caspian seas. This heartland is essentially a series of plains, quite vulnerable from all sides. Indeed, Mongol and other nomadic peoples’ invasions from the east in the Middle Ages, as well as European conquerors’ onslaughts from the west in the modern period, has forced Russia to try to expand its borders and influence outward to create buffer zones between its heartland and rival regional powers in Europe and the Middle East.

To contain this immense geographic sphere, the Russian leaders have had to expend immense financial, military and political resources. Moscow centralized control over its heartland and the surrounding territories, subsidizing the economies of most of the incorporated territories at the same time as managing their diverse populations. This forcible drive to expansion (in order to survive), though successful for a short period, proved to be unsustainable in the long-run.

Historical cycles in Russia usually begin with a national catastrophe. Sometimes it comes as a result of internal havoc, sometimes it has followed foreign threat. The end result has always been the dissolution of the existing order and ensuing chaos.

After the collapse comes resurrection: usually the system that governed during the crisis is transformed into something new when a strong figure appears. The new leading figure creates a stable system and reoccupies both the Russian heartland and the borderlands. New paradigms for the unified Russian space and all the various nations living there are then created to heighten the sense of national identity among both Russians and nonRussians.

There were three cases in Russian history which prove that the country regularly experiences this developmental pattern which, rooted in Russia’s geography, is to be seen again, now, in the early 21st century, under the rule of Vladimir Putin.

In the late 17th-early 18th century, Russia experienced a long period of chaos with the old Rurik dynasty’s rule in a shambles and state structures experiencing deep troubles. Army, administration as well as personal fidelity links were weakened

or totally destroyed. The chaos was decade-long, and the result was a restructuring: a new dynasty headed by Mikhail Romanov I. A new project for the Russian Empire (in everything but name) was born. The new dynasty set out to incorporate borderlands and compete with regional powers, ending the troubles.

In the 20th century, the Russian Revolution caused the downfall of the Romanov dynasty and ushered in a period of civil war and chaos where the Bolsheviks managed to build a powerful base to recreate a fallen Russian Empire, albeit on a different ideological basis. Lenin and Stalin set out to reincorporate borderlands and re-shape ethnic understanding within the newly created Soviet Union.

Control over large territories then came under stress as large resources were spent on exercising control over rather than producing enough for the population. The result was an over extension of the Soviet power.

Then that pattern again: the Soviet Union collapsed and the ensuing military and social chaos was topped by the 1998 financial crisis. Attempts to transition to a market economy led to radical privatization and the rise of oligarchs, which in turn resulted in a nearly 40% decline in GDP. Numerous parties emerged with very different agendas. The security services and military were weakened, while the Russian people struggled to find a new identity to unite under. Secession attempts in some of Russia's regions led to wars, most notably in Chechnya.

As borderlands again rioted against the Russian heartland and so did some territories of Russia proper, it was logical that a Russian resurgence of some sort would happen under a new figure (like Mikhail I, Lenin and Stalin). Indeed, under Vladimir Putin, prosperity set in. Russia is strong militarily.

Its economy, although under huge duress from both internal and foreign factors, is still in much better shape than it was in the 1990s. Quite logically, Putin, like his predecessors mentioned above, set out to regain the borderlands. War with Georgia, conflict in Ukraine, support for secessionist regimes across the former Soviet Union as well as the unveiling of the Eurasian Economic Union, are some of his major moves to reshape Russia and return her to the club of major global powers.

The rise and success of the Putin government falls within Russia's historical cycle. He plays the role of savior on par with Mikhail I and Lenin.

However, as stated at the beginning, although historical comparisons need to be made, one also needs to be careful not to overestimate some similarities.

True, Putin falls within this historical cycle and, according to it, Russia should now be very close to its military and economic preeminence as under the first Romanov and Soviet leaders. It is also true that Putin is popular and is unlikely to face a real challenger inside Russia. Nevertheless, his rule shows some signs of fundamental weakness. Like his predecessors, Putin faces Russia's perennial problem: geography. The aggravating trend here is that in Putin’s case, Russia’s geographic challenge seems to be more problematic. NATO and the European Union are expanding their influence in Eastern Europe and the former Soviet space; China is growing its military and economic power in Central Asia (yet another in Moscow’s backyard); economic problems are serious as western resolve to keep and even increase sanctions against Russia sees no sign of abating. Moreover, unlike the Romanovs or the Soviets, the Putin government

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does not possess an ideological tool. His Eurasian concept might be tempting but has no real economic essence as too many important states across the post Soviet space do not want to join.

In conclusion, it can be argued that historical parallels work but they fail too. Putin indeed falls

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into the Russian historical cycle of the rise and fall of the Russian state seen over the centuries. But there are crucial differences too that for the near future will refuse his government some fundamental successes as he seeks to transform the country into a real global power.

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