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Issue no: 1154/182

FOCUS

ON THE ENVIRONMENTAL OMBUDSMAN GT sits down with David Morrison to discuss Georgia's environmental challenges

PAGE 13

• MAY 28 - 30, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue... Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

Short-Term Swings of the Georgian Lari: A Guessing Game with High Stakes ISET PAGE 4

Tbilisi to Host 9th Regional Microfinance Forum in October BUSINESS PAGE 5

Monthly Tourism Update BUSINESS PAGE 8

International Conference on Cyber Crime & Legal Compliance

European Elections See a Shift in Politics New Perspective for BUSINESS PAGE 10

BY AMY JONES

O

n 26 May, European elections were held across the 28 European member states to decide on who will sit in Strasburg. The preliminary results released on Monday show a shift in politics as the big center-left and centerright parties have lost their majority, whilst liberals, the greens, and nationalist parties have gained support. The center-left Social Democrat bloc is expected to lose around 41 seats in the European Parliament, slipping from 191 seats in 2014 to a predicted 150 seats. Continued on page 3

Photo source - Sky

Georgian Wine Producers Following Tokyo's International Exhibition BUSINESS PAGE 11

Georgian National Museum & TBC Bank Sign Memorandum of Collaboration CULTURE PAGE 14 Prepared for Georgia Today Business by

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NEWS

GEORGIA TODAY

MAY 28 - 30, 2019

Chinese FM Visits Georgia @entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: The Meister Brau (‘Beer Master’) winery has introduced eight varieties of wine especially for tourists who love Georgian wine. Meister Brau was launched four years ago and produces whisky, beer, fruit brandy and bottle-fermented beer. Founder Gocha Matcharadze claims that the company aims to present both wine and beer-making technologies, with the materials for beer imported from Germany. This year, the company started producing beer using technology that is totally new in Georgia. 60 tons of blueberries are to be exported from Georgia this summer. Motsvi Ltd, the producer company of blueberries, plans to distribute its products to the EU and Eastern countries by truck. Founder Zviad Mirianashvili states that only conjectural export countries are known so far, and further details are yet to be clarified. It has already been announced that along with Mostvi Ltd, three other companies plan to get involved in the process of blueberry export, all Ozurgeti-based (Guria): ‘Qartuli Motsvi’ (Georgian Blueberry), ‘Lurji Veli’ (Blue Meadow) and ‘GeoBerry’. New energy has come to the drinks market with Georgian brand DINO now to be spotted at retail chains. The product is produced by the Georgian Beer Company, the only enterprise in the South Caucasus to offer a wide assortment of nonalcoholic and low alcohol drinks. The company plans to expand the DINO line by adding other flavors. The creators of the DINO energy drink state that it is distinguished for a unique taste. Dino is the second energy drink in the portfolio of JSC Georgian Beer Company after ‘Wilder.’ Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge

Image source: MFA of Georgia

BY KETEVAN KVARATSKHELIYA

T

he Minister of Foreign Affairs of the People’s Republic of China Wang Yi paid an official visit to Georgia this weekend, within which he held meetings with his Georgian counterpart David Zalkaliani, as well as the Prime Minister of Georgia Mamuka Bakhtadze and President Salome Zurabishvili. At the meeting with Zalkaliani, the parties stated that Georgian-Chinese relations are developing dynamically and noted that the cooperation between the countries is exemplary in both bilateral and multilateral formats. The Georgian FM named the visit of his Chinese counterpart "historic," as it

is the first official visit of the Minister of Foreign Affairs of China to Georgia in the last 23 years. Wang Yi, on the behalf of the Chinese people and the government of the country, congratulated Georgia on its Independence Day. “Trade, investments, transport, as well as partnership within the frames of international organizations, were set as the major priorities for future cooperation,” states the Georgian Foreign Ministry. At the meeting with Prime Minister Bakhtadze, much emphasis was put on the progressing economic and trade partnership between Georgia and People’s Republic of China. The significance of the global Belt and Road Initiative and the contribution of Georgia in it was also strongly accentuated. “Yi stated the he fully shares the aspiration of Georgia to become the trans-

port-transit and logistics corridor between Europe and Asia,” said the PM’s Press Office. Salome Zurabishvili and Wang Yi had a conversation regarding the current situation in Georgia and the country’s relations with the neighboring states. The parties also discussed the importance of the strategic location of Georgia and the challenges faced by the country in sovereignty and territorial integrity. The Georgian President expressed her interest in cooperation as an observer within the China-Central and Eastern Europe Cooperation framework (16 + 1 format) and noted that Georgia’s involvement in the format will once again emphasize Georgia’s European aspirations. Wang Yi is concluded his official visit to Georgia on May 25.


BUSINESS

GEORGIA TODAY MAY 28 - 30, 2019

3

PM Bakhtadze Meets Turkey’s Defense Minister BY THEA MORRISON

G

eorgian Prime Minister Mamuka Bakhtadze had a meeting with the Defense Minister of Turkey, Hulusi Akar, in Tbilisi, on May 26. As part of his visit to attend Georgia's Independence Day celebrations, the Defense Minister of Turkey was hosted by the PM at the Administration of the Government. During the meeting, Hulusi Akar wished Mamuka Bakhtadze a Happy May 26, adding “Turkey will never change its position on Georgia's

territorial integrity.” The parties also discussed the current relations between the two countries, with special emphasis on defense cooperation, and the positive dynamic between the two countries in this direction. The sides underlined the importance of Georgia-Turkey defense relations in the context of Georgia's North-Atlantic aspirations. Also, the importance of Turkey's support in this regard, and of sharing experience with Georgia, was underscored. Recent developments in the region and prospects of deeper Georgia-Turkey partnership across a variety of areas were also mentioned by the officials.

European Elections See a Shift in Politics Continued from page 1 TheEuropeanParty(EPP)isalsoexpected to lost a significant number of seats, falling from 221 to 179, although they will still hold on to their position as the biggest bloc. Both parties will be forced to form a coalition with the Greens or Liberals as they will lose their majority. The Greens almost doubled their number of votes in the elections with a projected 71 seats compared to 52 in 2014. Northern European countries especially turned to climate-focused parties. In Germany, the Greens took second place

with 21% of the votes, behind Angela Merkel’s CDU conservative party. “This election was above all about the issue of climate and climate protection,” said Annegret Kramp-Karrenbauer, the leader of the CDU. The Greens came third in France, and are predicted to have good results in Belgium and the Netherlands. In Ireland, they won their first two seats since two decades, whilst in Finland and Denmark they also doubled their vote share, securing two seats. Meanwhile, far-right groups won fewer seats than expected despite strong results in Hungary, Italy, and Poland. Pro-EU

parties such as Spain’s socialist party PSOE ensured that far-right parties were unable to take a hold on Strasburg. The Nationalist bloc won 58 seats in total fewer than predicted. In the UK, the anti-European party, the Brexit Party, emerged in first place. Formed by former far-right UK Independence Party (UKIP) leader Nigel Farage, the party won approximately 35% of the vote. Despite Farage’s claims that pro-leave parties were the winners, proremain parties actually won a bigger share of the vote collectively. With Brexit causing political turmoil in the UK, vot-

ers turned away from the Conservative and Labor parties, choosing instead alternative parties such as the Brexit Party, Lib Dems and the Greens. Despite the increase in votes for alternative parties, the classic centrist parties still attracted the highest number of votes in the elections, securing 505 of 751 seats in Strasburg. The Liberal Democrats were especially successful, for example Emmanuel Macron’s En Marche party in France and the Lib Dems in the UK. This year’s elections saw a 12% rise in voter turnout compared to in 2014, from 43% to 51%.

As voter turnout has been decreasing ever since the first direct EU vote in 1979, EU officials are pleased at this reverse in trend, especially as the EU is often criticized for its level of democracy. “Europe wins! Voter turnout very high and pro-European parties are strongest,” tweeted Xavier Bettel, Prime Minister of Luxemburg following the election results. With pro-Europe parties winning the most seats and voter turnout increasing, Europeans have demonstrated their support for the EU over nationalist parties that have been gathering momentum across Europe.


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BUSINESS

GEORGIA TODAY

MAY 28 - 30, 2019

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.

Short-Term Swings of the Georgian Lari: A Guessing Game with High Stakes BY GIORGI MZHAVANADZE

I

n the last two weeks, the Lari depreciated, once again, against the US Dollar. The Georgian currency lost about eight Tetri against its American counterpart, causing quite a stir in the media, among political groups and economic experts. While government authorities claimed that the recent developments are short-term fluctuations driven by negative expectations, the Turkish Lira depreciation, the Dollar’s global strengthening, and are therefore not connected to the fundamentals of the Georgian economy, members of the opposition were quick to blame incompetent fiscal and monetary policy. One must point out that in such a short period of time, it is impossible for anyone to precisely determine the factors affecting the Lari’s exchange rate. This is mainly due to data availability, or, to be more precise, due to its absence, as data on trade, FDI, remittances and revenues from tourism for May are as yet unknown. Therefore, any attempts to explain away the recent fluctuations with macroeconomic factors are just wild guesses. However, using the Turkish Lira fluctuations as an explanation for all Lari “problems” seems to be a more logical (and at the same time easier) way to get rid of intrusive journalists. At first glance, it may be easy to reach the conclusion of “co-movement” between these currencies. To observe the relationship one can simply look at the graph of exchange rate developments against the US Dollar. Figure 1 shows a pattern for USD appreciation against the Georgian Lari, Russian Ruble, and Turkish Lira in the last five years (upward movement indicates USD appreciation against the currency in question). From this trio, Lira weakened the most (by 190.82%), while the USD gained “only” 57.08% compared to the Lari. Despite the difference in the magnitudes of currency swings, their direction is visually similar. For example, Lira and Lari were moving side by side until 2018, while the Ruble and Lari were repeating a parallel path since 2017.

Table 1. Georgian Lari exchange rate correlation with other currencies. Figure 1. US Dollar against selected currencies.

To measure and explain these relationships, economists use sophisticated econometric models which span many years. The non-economists may claim that these models are too esoteric – why not use an intuitive, “naïve” model, by calculating the degree of correlation between Lari and other currencies? Surely, the degree of economic closeness with other countries in the region (be it Russia, Turkey or Ukraine) could explain why Lari would move in unison with their currencies, and would provide an easy explanation for Lari depreciation against the USD. For example, if a Georgian worker in Tukey earns his/her salary in Lira and then transfers Lira into USD in order to send remittances back to Georgia, a depreciation of Turkish Lira against the USD would translate into less US Dollars entering Georgia, and, therefore, would cause a higher price for USD on the Georgian internal currency market. But in this blog I want to demonstrate the drawbacks of using the naïve approach (simple correlations) for explaining currency movements in the short run. If we calculate a simple correlation between Lari and other 40 currencies using NBG’s data on daily exchange rates for different periods (Table 1), the correlation between Georgian Lari and Russian Ruble is 0.85 for the last 5 years period and only 0.45 for June 2006 – June 2013 (period of Russian embargo on Georgian exports). Correlation coefficient with Turkish Lira and Azerbaijanian Manat is calculated to be 0.81 and 0.89 respectively

for the last 5 years. The results seem to be extremely logical, as these countries are our main trading partners, sources of remittances and tourism inflows for Georgia and exchange rate fluctuations should transmit to Lari through these and expectations channels . However, the fact that we see the coefficients with Belarussian Ruble, Ukrainian Hryvnia, Kuwaiti Dinar, Norwegian Krone and Swedish Krona to be higher than 0.9 destroyes our previous argument. The good thing is that high positive correlations with almost all currencies in Table 1 hint that there were some common factors which simultaneously affected all countries (especially in the last five years)- e.g. global appreciation of the US Dollar or oil price changes on the world markets. In order to disentangle these effects, one would need to use the sophisticated “esoteric” models. Thus, we may conclude that the discussion of the causes behind the Lari short-term depreciation against the USD usually does not give any specific answers. Without delving deeper into data on current account and capital flows, any “definitive” explanation would turn out to be a speculation at best and a lie at worst. Considering the fact that currency crisis and political instability in Turkey already had a negative impact on the Georgian economy in the first quarter of 2019, we may guess, or expect the same scenario to repeat itself in the upcoming macroeconomic data. Or, perhaps, the data will have a completely different story to tell – we have to wait and see…

Currency

2003-2019

Armenian Dram Australian Dollar Azerbaijanian Manat Belarussian Ruble Bulgarian Lev Canadian Dollar Chinese Yuan Czech Koruna Danish Krone Egyptian Pound Euro Hungarian Forint Iceland Krona Iranian Rial Israeli Sheqel Japanese Yen Kazakhstan Tenge Kuwaiti Dinar Moldovan Leu Norwegian Krone Polish Zloty Pound Sterling Romanian Leu Russian Ruble Serbian Dinar Singapore Dollar Swedish Krona Swiss Franc Tajikistan Somoni Turkish Lira Turkmenistan Manat Ukrainian Hryvnia Uzbekistan Sum

0.69 0.55 0.90 0.80 0.83 0.77 -0.04 0.59 0.83 0.82 0.83 0.83 0.18 0.80 -0.06 0.47 0.85 0.88 0.88 0.93 0.79 0.74 0.83 0.87 0.68 0.05 0.86 -0.09 0.80 0.84 0.41 0.86 0.74

2003-June 2006 0.91 0.72 0.60 -0.70 0.66 0.83 0.51 0.85 0.66 0.00 0.67 0.48 0.78 -0.94 0.14 0.34 0.91 0.82 0.69 0.74 0.84 0.72 0.70 0.82 -0.71 0.77 0.53 0.64 -0.41 0.52 -0.15 0.66 -0.81

June 2006June 2013 0.54 0.03 0.08 -0.01 0.57 0.08 0.13 0.53 0.56 0.19 0.57 0.51 0.22 0.03 0.40 -0.15 0.17 0.74 0.75 0.44 0.58 0.34 0.44 0.45 0.45 0.08 0.39 0.09 0.27 0.29 -0.02 0.40 0.14

Last 5 years 0.92 0.90 0.89 0.95 0.79 0.90 0.82 0.58 0.79 0.78 0.79 0.84 -0.20 0.82 0.21 0.51 0.89 0.93 0.75 0.92 0.79 0.84 0.89 0.85 0.75 0.82 0.93 0.79 0.91 0.81 0.90 0.95 0.68

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BUSINESS

GEORGIA TODAY MAY 28 - 30, 2019

Tbilisi to Host 9th Regional Microfinance Forum in October

Image source: Uniglobal

BY SAMANTHA GUTHRIE

T

he Annual Microfinance Forum of the Countries of Central Asia and the Caucasus will hold its 9th consecutive forum this year. The forum, organized by international knowledge-sharing and event-planning company Uniglobal, will be held in Tbilisi this October 3-4. The “Uniglobal team is committed to continue with the tradition of bringing on board a network of experts and senior level speakers to share experiences and perspectives on current and future trends, ongoing changes in regulation and challenges in Microfinance,” said the organizers. The forum brings together representatives of development organizations, banks, microfinance institutions (MFIs), foundations, and investment managers. Discussions center around common themes of transparency, regulations on the microfinance industry, the evolution of the industry, social reporting standards, investment, risk and asset management, and innovation. Uniglobal explains that this year, the forum will present innovation “from a different angle,” and that “senior top-level speakers that will bring lessons learned in order to suggest and discuss applicable solutions.” Several of the specific topics for the two-day forum have already been announced, including: ‘Investment outlook for 2019 in Caucasus and Central Asia,’ ‘Microfinance impact on sustainable development of entrepreneurship,’ ‘Local currency risks: successfully managing currency exposure your portfolio,’ ‘How to attract investors: what investors are looking for,’ ‘Exploring the opportunities of private investments,’ ‘Islamic Microfinance development: challenges and initiatives,’ ‘Financial education: ways to improve financial literacy,’ ‘Lifecycle of technology driven financial institution,’ ‘Alternative Financing: enhancing financial inclusion,’ ‘MFI digital transformation: knowledge management strategies and trainings,’ ‘Client focus: IT solutions to enhance customer service,’ ‘Performance management and data protection: new

approaches to measure social performance of MFIs,’ and ‘Green economy: microfinance and poverty.’ There will also be two panel discussions, on the subjects: ‘Success factors of agro finance’ and ‘Operating in a digital world.’ The last time the Microfinance Forum of the Countries of Central Asia and the Caucasus was held in Tbilisi was in 2017. In 2018, the forum took place in Almaty, Kazakhstan, and in 2016 – Bishkek, Kyrgyzstan. At the 2019 forum, speakers will include Davit Utiashvili, Head of the Division of Financial Risks and Macro Prudential Policy at the National Bank of Georgia, Armenuhi Mkrtchyan, Head of Consumer Protection and Financial Education at the Central Bank of Armenia, Elizabeth Davitashvili, the Principal Banker for the EBRD in Georgia, and the heads of several international microfinance banks working in the region. Microfinance was introduced more than 35 years ago as a tool for fighting poverty and bypassing traditional financial institutions and infrastructure. It has become a tool for developing the financial sector in low-income countries. Once touted as a nearly miraculous solution to financing those in extreme poverty, spearheaded by organizations such as Grameen Bank in Bangladesh, microfinance is now increasingly criticized for trapping poor people in debt with high interest rates, predatory lending, and extreme collection tactics. Among concerns expressed by academics and international organizations over the high levels of debt in Georgia, policymakers introduced measures to regulate credit expansion. In the first round of credit regulations in May of 2018, the National Bank of Georgia mandated strict analyses of potential borrowers’ credit history and solvency, and restricted borrowing for certain lowincome individuals. The regulations put pressure specifically on MFIs, limiting their client base. The largest MFIs in Georgia re-registered as commercial banks, and the number of MFIs dropped from 73 to 65 between May 2018 and January 2019. The controversies surrounding microfinance and its role in the financial structures of developing countries is sure to be a prime topic of conversation at the 9th Annual Microfinance Forum of the Countries of Central Asia and the Caucasus this autumn.

Georgians Make 677,400 Trips Abroad in Q1, 2019 BY THEA MORRISON

G

eorgia’s National Statistics Office (Geostat) reports that in Quarter I of 2019, the number of Georgian resident travelers’ trips abroad equaled 677.4 thousand. Most of the trips, 44.7 %, were made by travelers of 31-50 years of age. The number of outbound visits by Georgian visitors from the above-mentioned made up 484.8 thousand. Moreover, in QI 2019, the number of Georgian resident visitors abroad equaled 367.3 thousand. “Georgian visitors made 269.8 thousand touristtype and 215.0 thousand same-day visits abroad. 58.9 % of Georgian resident visitors were only

tourists. The share of excursionists amounted to 36.6% while 4.4 % of visitors were both tourists and excursionists,” Geostat reports. The agency says the majority of outbound visitors (29.7 %) belonged to the age group of 31-50 years. The number of women was 45.3 % of the total number of visitors. In Q1 of 2019 the purpose of the majority of outbound visits (37.3%) was visiting friends or relatives. The majority of outbound visits were made to Turkey and Azerbaijan, 191.900 and 112.100 accordingly. In addition to this, In QI 2019, the average number of nights spent on outbound visits was 3.4 nights. 91.6 % of outbound visits were repeat visits. Moreover, the expenditures during the outbound visits made in QI 2019 equaled 359.3 million GEL. The average expenditure per visit amounted to 741.0 GEL.

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BUSINESS

GEORGIA TODAY

MAY 28 - 30, 2019

Russian Fuel Share on Georgian Market Increases from 5% to 27% in 2014-2018 BY THEA MORRISON

T

he share of Russian fuel imported into Georgia increased from 5% to 27% from 2014 to 2018 and is leading among the fuel importer countries. 83% of imported fuel comes from four countries: Russia, Romania, Azerbaijan and Turkmenistan. In 2014-2018, the cheapest fuel was imported from Azerbaijan but the largest share from Russia. The information was released by Transparency International Georgia (TI) which carried out a study of the Georgia’s automobile fuel market in 2014-2018. The organization says that competition on the fuel market has increased since 2013. “From 2012 to 2018, the number of fuel importers increased from 7 to 57. During the same period, the market share of large companies decreased from 93.4% to 69.5%,” TI Georgia reports. The NGO says Georgia fully depends on imported fuel. Further, in 2018, the value of imported oil and oil products reached $864 million, which is 9.5% of the total imports. The NGO notes the automobile fuel business is an important source of budget revenue for the state.

Image source: auto.ndtv.com

In addition, last year, taxes collected from this business amounted to GEL 1.3 billion, which is a tenth of the total tax

revenue. Turnover of automobile fuel retailers exceeded GEL 3 billion in 2017 and amounted to GEL 2.5 billion in nine

months of 2018. 10,050 people are employed in automobile fuel retailing and this figure

increases from year to year, according to the study. In terms of the prices of fuel, the NGO says the fluctuation of fuel prices mainly depends on world oil prices, the exchange rate and excise tax rates. The survey revealed that in the last five years, the global oil price has decreased by 48%, but this was not reflected on local fuel prices as Georgian currency depreciated by 53% and excise tax on fuel increased. From January 1, 2017, the excise tax per ton of petrol increased from GEL 250 to 500 and the excise tax per ton of diesel increased from GEL 150 to 400. Regarding the quality of fuel, the NGO notes that in recent years, the government has tightened automobile fuel standards. “The Environmental Supervision Department periodically inspects gas stations - in December 2018, lab tests revealed no excess lead in fuel,” reads the report. It also says that the TI Georgia tested the fuel quality of eight companies through a private lab, adding all studied samples, except one, met all the standards set out in the Government decrees. Furthermore, a public opinion poll of Transparency International Georgia has shown that nearly half of the population (46%) owns a car and when choosing fuel, they pay most attention to the price followed by the quality.

2019 International Transport Forum Annual Summit BY SAMANTHA GUTHRIE

T

he International Transport Forum (ITF) is an intergovernmental organization within the Organization for Economic Cooperation and Development (OECD). The 60 member countries of the ITF support the forum’s activities and work as a think tank for transport policy. The ITF “organizes global dialogue for better transport” and “works for transport policies that improve peoples’ lives.” Their mission is to “foster a deeper understanding of the role of transport in economic growth, environmental sustainability and social inclusion and to raise the public profile of transport policy.” The ITF also organizes the Annual Summit of Transport Ministers, which was held last week in Leipzig, Germany. It is the world’s largest gathering of transport ministers and the leading global platform for dialogue on transport policy, according to the forum. The 2019 Summit focused on the topics of how better transport connectivity can help integrate regions and enable the achievement of economic, social, and environmental goals. Georgia’s Deputy Minister of Economy and Sustainable Development, Akaki Saghirashvili, attended the summit. On Wednesday, an informal sub-meeting

was held between the Transport Ministers of the Black Sea Economic Cooperation (BSEC) Member States – Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Serbia, Turkey and Ukraine. During the sub-meeting, participants discussed regional transport, including the development of circular highways, maritime routes, and prospects for future, deeper cooperation. The conversation centered on “the importance of the BSEC’s permit system for promoting automobile transportation and trade between member countries,” reported the Ministry of Economy and Sustainable Development. Georgia has been able to satisfy one of the first requirements of the 2016 "Quality Charter," which regulates the permits, said Saghirashvili, and is now working to revoke existing restrictions and to increase quotas. The parties discussed further development of the permit system and the possibility of increasing the number of permits. The Ministry of Economy notes that “Georgian carriages actively use the BSEC permits, and by 2019, 1000 units allocated for the Georgian side have been fully utilized.” Saghirashvili affirmed “the importance of the transport and trade potential of the Black Sea region and deepening of international cooperation in this regard,” and raised the topics of Georgia’s ongoing reforms, national priorities in the

Image source: Ministry of Economy and Sustainable Development

transport sector, infrastructure projects, and recent transport-related successes. Deputy Minister Saghirashvili participated in a Ministers’ Roundtable on Wednesday, on the topic of Financing Infrastructure Connectivity. Other participants included ministers and deputy ministers from Colombia, United Arab

Emirates, Azerbaijan, Lithuania and France. During the roundtable, along with other issues, Saghirashvili spoke about Georgia's experience implementing large infrastructure projects and public and private cooperation reforms designed to improve the investment and business environment in the country

and to promote cooperation between the state and private sector. Saghirashvili also emphasized Georgia's progress with the EU and Asian countries, including the development of transport links with China. He invited the participants of the summit to the Tbilisi Silk Road Forum in October.


BUSINESS

GEORGIA TODAY MAY 28 - 30, 2019

7

28 Years of Georgia's Independence. The Economic Angle

BY ERIC LIVNY

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aving just celebrated its 28th anniversary as an independent state, Georgia remains in a state of revolutionary flux. Just like a box of chocolates, this beautiful country is full of contrasting flavors, never losing the ability to surprise and fascinate at every twist and turn of its history. Most paradoxically, while Georgia’s unprecedented reforms have become an export commodity, many Georgian reformers and revolutionaries are wanted at home for abusing the power of their office. Georgia’s laws and institutions continue to be constantly remodeled: some new regulations are quickly and decisively introduced only to be patched or altogether reversed; having vanished in the recent past, many government agencies and regulations are resurrected under new names. A major issue is strategic direction. Having signed the so-called Deep and Comprehensive Free Trade Area (DCFTA) agreement with the EU, Georgian policymakers are struggling to understand and deal with the “deep” and “comprehensive” impact this agreement will have on domestic producers and consumers. Moreover, while being firmly committed to the European path, Georgia is having a hard time adopting certain European values, sticking instead to centuries-old traditions, including nepotism and homophobia. Another concern is, of course, not to lose Russia and the vast Eurasian market in the course of “Euro-Atlantic integration”. *** Georgia’s modern-day revolutions started on 9 April 1989, when a peaceful pro-independence demonstration was forcefully broken by the Soviet army.

What followed was utter chaos: civil conflict and ethnic strife, mafia wars, crime, corruption and an almost complete collapse of public infrastructure and services. Once the wealthiest and most privileged of USSR republics, a kind of Soviet Riviera, Georgia went into an economic and political freefall even before its declaration of independence on 9 April 1991. In economic terms, Georgia dropped behind most other newly independent states (except, perhaps, the war-torn and chronically poor Tajikistan). Moreover, given its initially favorable position, the depth of Georgia’s “transformational recession” involved a largerthan-elsewhere decline in wealth, income, health and quality of life for the vast majority of its population. Georgian people reacted to the crisis with their feet: through mass emigration (mostly to Russia, but not only) and secession, threatening Georgia’s future as an independent state. As a result of ethnic clashes in Abkhazia and South Ossetia, Georgia has effectively lost control of about 20% of its territory. Until 2004, it had only limited control over Adjara. While no precise data are available for the early independence period due to the informal nature of Georgia’s criminalized economy, Georgia’s GDP is estimated to have shrunk to less than a 1/3 of its 1989 level. According to an IMF memorandum, “three years after independence, the country had suffered a severe decline in recorded output, totaling 35 percent in 1994 alone”. The first signs of stability came with the end of the civil war in late 1993, after a series of agreements cemented Georgia’s relations with the West. By then, Georgia has acquired a new significance as a potential transit corridor – bypassing Russia and Iran – for the vast Caspian oil and gas resources. Consequently, Georgia received a warm embrace from the thennew Clinton administration, paving the

way for the signing of a Bilateral Investment Treaty in July 1995, and, ultimately, the construction of extensive oil and gas pipeline infrastructure across Georgia’s territories. Simultaneously, Georgia started ascending the list of US foreign aid recipients, with the World Bank and IMF providing additional support to ensure macroeconomic stability and facilitate structural reforms. Internal stability was greatly helped by the government’s success in accommodating or restraining organized crime after the second failed attempt at Eduard Shevardnadze’s life in August 1995, and his election as Georgian president in November of that year. Georgia continued on a path of gradual economic recovery between 1995 and 2003. Real GDP per capita grew at rather impressive rates (from a very low base) in 1996 and 1997: by 14.0% and 12.6% respectively (see World Bank Development Indicators). Georgia was hurt by Russia’s 1998 financial crisis, as reflected in lackluster economic growth performance in 1998-2000. However, economic growth picked up again in 2001-2003, with real GDP per capita increasing by a healthy 12.5% in 2003, the last year of Shevardnadze’s rule. While these growth figures are evidence of Shevardnadze administration’s early successes in implementing economic consolidation and state-building measures, they only tell a part of the story. Though no longer at war with itself, Georgia has by and large remained a dysfunctional, failed state. In 2002, it ranked 85th in the Transparency International Corruption Perceptions Index for 102 countries. EBRD’s Business Environment and Enterprise Performance Survey, conducted in the same year, indicated that “although the business climate has been improving in some respects over time, bribery indicators are deteriorating and firms in Georgia perceive corruption as a bigger obstacle

than elsewhere in the CIS.” Among factors inhibiting the business climate, the IMF lists “political fragmentation, a tradition of clan and family based loyalties, weaknesses in the legal and judicial systems, and a culture of non-payment that is considered as socially acceptable.” Very importantly, whatever economic growth has been achieved in Shevardnadze’s times, it failed to trickle down. Adjusted for purchasing power parity, Georgia’s gross national income per capita in 2003 stood at $3,470. In comparison with other non-oil CIS, Georgia did better than Kyrgyzstan, Uzbekistan and Moldova ($1,840, 2,230, and 2,690, respectively), but worse than its immediate neighbor Armenia ($3,630), and much worse than Ukraine and Belarus ($5,160 and 7,380). Moreover, the “median” Georgian, as opposed to the “average” Georgian, was much poorer in 2003 than suggested by the per capita income figures. Like any average indicator, the income per capita measure masks inequality in the distribution of income, and in 2003 Georgia was much less equal, as measured by the so-called GINI coefficient, stood at 39.5 points, well above its levels in all other CIS countries where GINI values ranged between 35.5 (Uzbekistan) and 28.7 compared to all ex-Soviet peers (with the exception of Russia). In 2003, Georgia’s income inequality (Ukraine). With close to a half of Georgia’s population locked into subsistence agriculture, and another half operating largely in the shadow, the Shevardnadze government was barely able to cover its own operational costs, let alone offer an effective policy response to Georgia’s mounting poverty and inequality challenges. Assessing Georgia’s poverty situation in 2003, the IMF’s noted that “widespread poverty has been brought on by the dramatic drop in incomes … and the subsequent collapse in social services… Government

has not provided an effective income redistribution mechanism and has failed to provide adequate social safety nets. This largely stems from low tax collections, which have led to accumulation of regressive wage, pension and social insurance arrears. Although public spending on health and education grew during the late 1990s, it remains 90% lower than in the pre-transition period (1% of GDP for health, and 2.2% for education in 2001). Also, demands for high informal payments further limit access to quality healthcare and education, while poor targeting of social spending and energy subsidy have compounded the problem.” With hindsight, it appears that until 2003 Georgia had been trapped in a vicious circle of pretense that encompassed all aspects of citizen-state relations. Existing in name only, the “state” pretended to provide law & order, public infrastructure and utilities, insurance for health and old-age disability. Georgian “citizens” paid in kind – by pretending to contribute to the health and social insurance, evading taxes and bribing off “public servants”. The reality was that anyone living and trying to do business in Georgia had nobody to rely on other than themselves, informal social networks and the mafia. People did not pay taxes and did not expect to receive any government services in return. They learned to provide for all their needs, including the security of own life and property, contract enforcement, health and education, heating and electricity. Breaking out of this vicious circle required no less than another revolution in state affairs and in people’s minds…

ABOUT THE AUTHOR: Eric Livny is Founder and President at Tbilinomics Policy Advisors and Chair of Economic Policy Committee at the International Chamber of Commerce (ICC Georgia).


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BUSINESS

GEORGIA TODAY

MAY 28 - 30, 2019

Monthly Tourism Update

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

Graph2: Expenditures spent by international travelers in Georgia

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VERAGE HOTEL PRICES

In Georgia, the average cost of a room1 in a 3-star hotel was 123 GEL per night in April 2019. While the average cost of a room in a 4-star hotel in Georgia was 215 GEL per night and the average cost of a room in a guesthouse2 was 70 GEL per night. The average cost of a room in a 5-star hotel in Georgia in April 2019 was 484 GEL per night. In Tbilisi, the average price was 525 GEL, followed by Adjara – 473 GEL, Samtskhe-Javakheti - 368 GEL, and Kakheti - 367 GEL. According to Airbnb, In April 2019, among the Black Sea Countries the lowest price for an apartment was recorded in the capital of Bulgaria, Sofia – 40 USD, while the highest price was recorded in Moscow – 100 USD. Among the capitals of other Black Sea countries the price distribution were the following: Tbilisi – 42 USD, Bucharest – 44 USD, Istanbul – 48 USD, and Kiev – 91USD.

Table 1: Percentage change of prices in April 2019 over March 2019 and over April 2018

INTERNATIONAL TRAVELERS’ EXPENDITURE IN GEORGIA In Georgia, in the first quarter of 2019, the expenditure spent by international travelers on accommodation amounted USD 101.8 mln, while the average expenditure per visit – 228.9 GEL5. In the given period, the expenditure on accommodation amounted 25.7% of total expenditure spent by international travelers in Georgia. These indicators are accordingly 1.5% and 2.6% lower compared to the first quarter of 2018. It has to be noted that in the first quarter of 2019, compared to the first quarter of 2018, the number of international travelers increased by 2.2%, while among the international travelers, the proportion who stayed in Georgia for 24 hours or more (classified as tourists) increased by 5.1%. Although international travelers from 20 high spender countries decreased by 0.5%6. The decreases were recorded from Iran, Qatar, Turkey, Armenia and United Arab Emirates accordingly by 56.5%, 18%, 15.7%, 4.8%.

HOTEL PRICE INDEX In April 2019, in Georgia the hotel price index3 increased by 2.2% compared to March 2019. The 3-star, 4-star and 5-star hotel price index increased by 0.5%, while for guesthouses, the price index increased by 5%. It has to be noted that In April 2019, compared to March 2019, the number of international travelers trips in Georgia increased by 4.6%, while among the international travelers, the proportion who stayed in Georgia for 24 hours or more (classified as tourists) increased by 6.1%4. Regardless the fact that in April 2019, compared to April 2018, the number of international travelers trips in Georgia increased by 4.6%, and among the international travelers, the proportion who stayed in Georgia for 24 hours or more (classified as tourists) increased by 4.2%, the hotel prices in Georgia decreased by 1.8%. This was mainly due to price decreases of 3*, 4* and 5* hotels. In Georgia in April 2019, compared to April 2018, the prices of 3*, 4* and 5* hotels decreased by 2.9%, while the prices of guesthouses increased by 1.9%.

1 The results are based on the surveying of standard double hotel room prices of 3, 4, 5-star hotels and guesthouses in 10 regions of Georgia. Hotels were chosen arbitrarily according to random sampling principle. The study contains 71% (312) of all 3, 4 and 5-star hotels and 25% (456 guesthouses) of all guesthouses registered on www.booking. com The 3, 4 and 5-star hotel price data was collected by contacting hotels individually, while the prices of guesthouses were taken from booking.com. The average prices are arithmetic mean of standard double hotel room prices. 2 Guesthouse: a type of accommodation that is characterized by having a small number of rooms and services are usually offered by the resident family. 3 The calculation of the hotel price index is based on the recommendations given by the International Monetary Fund (IMF). The elementary aggregate price index is calculated by Jevons index (Consumer Price Index Manual-Theory and Practice (2004), Practical Guide to Producing Consumer Price Indices (2009)). 4 Source: GNTA. 5 Source: GNTA. 6. Source: Geostat. 7 * Preliminary results


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BUSINESS

GEORGIA TODAY

MAY 28 - 30, 2019

International Conference on Cyber Crime & Legal Compliance

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etecting and preventing cyber crime while being compliant has never been more complicated. Compliance protects your business continuity as well as your clients' data and personal information from potential attacks or breaches that might cause financial loss, risk your reputation, and lead your company to face sanctions. In addition, compliance works for your competitive advantage, allowing you to offer your clients data and data transfer security. During the International Conference on Cyber Crime and Legal Compliance, participants will hear about sensitive issues for data protection security and the biggest risks, norms and regulations of the moment. They'll also touch on the economic aspects of compliance, including how companies can and should prevent and protect themselves from data breaches, economic sanctions, cybercrime, and how to ensure legal compliance with

For those that cannot, or would rather not make the journey to Tbilisi, purchasing a ticket will guarantee you access to the conference via video, as well as electronic access to educational materials used

national and international regulations. The Conference offers education on the topic of 'Cyber Crime and Legal Compliance', outstanding networking opportunities with tech and law experts, a complimentary lunch and question and answer sessions with speakers Gaynor OgdenSutton, Former Head of the Public Defender Service of England and Wales, Maka Petriashvili, Cyber Security Expert, Co-founder of CYSEC Cyber Security Educational Center, John Chain, Blockchain Expert, Founder and President of Chain Enterprises LLC, Nevada, USA, Maksim Iavich (Cyber Security Expert, Professor of Computer Science, Founder and President of Scientific Cyber Security Association) and Sandro Bibilashvili (International Georgian Law Expert, BGI Legal Partner. Adviser to large corporations investing in Georgia in banking, oil and industry, among others.) Conference participants will be introduced to Data Protection, get to watch a cyber-crime simulation in real time, and learn hands on the importance of pen testing and the ways to prevent and catch cyber criminals. Guests will also have the chance to network with Tech and Law Experts, find out more about regulations and legislation for Data Protection and how to avoid data breaches, economic sanctions and cyber-attacks. Find out more about the speakers below:

GAYNOR OGDEN-SUTTON Gaynor is an Oxford University, Balliol College, Law graduate and master’s degree holder, Solicitor and High Court Advocate. She currently advises the Governing Board of Educational Providers of South West England on constitutional, legal governance, issues. Gaynor has an exceptional background and expertise in criminal law, having been a Senior Crown Prosecutor from 1989 to 1991. Throughout her impressive legal career as a specialist criminal law practitioner, she has been involved in notable cases e.g. changing the definition of ‘suspect’ and bringing about changes in the Police and Criminal Investigation Code. The Legal Services Commission of England and Wales has sent Gaynor to lecture and advise in Mexico, Columbia, Malawi, Lithuania and Georgia on the establishment of legal

SANDRO BIBILASHVILI

defense systems and the management of government legal organizations.

MAKA PETRIASHVILI Maka has worked at the Ministry of Defense of Georgia since 1999, specializing in cyber security, military intelligence, defense policy and planning, human resources and strategic defense review. She worked as a human resources and organizational development consultant in the Cyber Security Bureau and coordinated the Cyber Security Awareness Project in 2015-2016. She is also involved with cyber security awareness training and has participated in the development of NATO’s Cyber Security Generic Reference Curriculum. She holds a Master’s degree in security studies from the US Naval Postgraduate School in Monterey, California, and a Master’s degree in Human Resource Management from the University of Manchester, England. Maka is involved in various cyber security projects as a lecturer on cyber security, cyber hygiene and cyber bullying.

JOHN CHAIN Long before founding Chain Enterprises LLC in Nevada, USA, John Chain had been tackling unique problems in technology. From as early as age 11, when he took over his family’s IBM XT computer, he experimented with a bulletin board based on Wildcat! BBS and dove into Slackware Linux from a CD in the back of a computer magazine, soon after Phrack, Alt 2600, and DEFCON l to self-study in software development and offensive Cyber Security. John recently retired in Colorado after spending 12 years as a Green Beret with the 10th Special Forces Group of the US Army. During his service he developed offensive and defensive cyber solutions, worked as a Department of Defense trainer alongside a penetration testing organization within the defense community, developed custom built solutions with single board computers and off the shelf electronics, and managed various exercises and events around the globe with multinational partners. When Bitcoin surfaced in 2009, he did some research and dedicated several machines to mining. Although the old mining hardware has long since disappeared,

The Conference offers education on the topic of 'Cyber Crime and Legal Compliance' and outstanding networking opportunities with tech and law experts hisdedicationtoexploreanddevelopwithin the blockchain space continues to grow. No longer content with simply mining, John focuses his tech energy on creating unique solutions with existing hardware. His latest project leverages GPU mining hardware to create cluster machine learning and distributed rendering solutions.

MAKSIM IAVICH Maksim is a distinguished cyber security academic and practitioner, heading the Cyber Security Department at Caucasus University, and was named ‘Best Young Scientist of the Year’ by the Shota Rustaveli National Foundation in his homeland of Georgia. Internationally, Maksim is known as a prominent speaker at global cyber security and hacking conferences. In 2018, Maksim was the keynote speaker on Defcamp9, one of the biggest hacking conferences in Europe. He is certified in cyber security by international universities such as Stanford and Maryland. Maksim is involved in various, international scientific cyber security projects as the key researcher, and a highly skilled cryptographer and software penetration tester.

Sandro (Vasil) is a partner in BGI Advisory Services Georgia and BGI Legal. Mr. Bibilashvili joined the firm in January 2002 as a paralegal, before continuing to enhance his legal education in Europe. Prior to rejoining the firm in August 2005, Mr. Bibilashvili served as an associate at Business & Legal Consulting LLC, one of the prominent law firms in Georgia. Professional experience of Mr. Bibilashvili includes spells at the Office of Congressman Bernard Sanders (I), Burlington, VT, USA (legal intern) and Ministry of Foreign Affairs of Georgia, Department of International Law, Tbilisi, Georgia (legal intern). Mr Bibilashvili specializes in mergers & acquisitions, real estate & construction, energy and oil & gas, labour law, litigation, arbitration & mediation, securities, contracts, corporate and commercial law and environmental law.


BUSINESS

GEORGIA TODAY MAY 28 - 30, 2019

New Perspective for Georgian Wine Producers Following Tokyo's International Exhibition

ADVERTORIAL

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n March 2019, the project ‘Georgia-Homeland of Wine’ was launched in Tokyo for two months. As a result of the support of the Government of Georgia, the Ministry of Agriculture, the National Wine Agency of Georgia, Georgian Wine Association, National Museum and Sakpatenti, Georgia caught Japan’s attention and won positive feedback. “Georgia - Homeland of Wine serves to present our country to the world positively,” said Deputy Chairman of the National Wine Agency Davit Tkemaladze. “At the same time, it is a very important project for the wine industry, within which the scientifically proven fact that Georgia is the homeland of wine is put into the spotlight. Our project, along with wine, is about multiple directions, with the ultimate goal of increasing interest towards our country. Along with wine, we introduce the Georgian ‘supra’ tradition as part of our culture and

promote our cuisine.” Within the event, 20 large and smaller Georgian wine producers were represented. In terms of wine exports, Japan is a strategic market for Georgia. In 2018, Georgian wine exports to Tokyo increased by 37%. With such large-scale activities, a stable growth in numbers is also expected in future. "We needed two years of preparation prior to going to Tokyo. Wine that we take to such events should meet many requirements. We discuss each application, taste the wine and then select which companies will be represented at the exposition. It is all done openly, in public. Everyone understands that such issues are extremely tricky and, along with the prestige, we are bearing responsibility for the industry and for the country's image,” Tkemaladze noted. The export growth in the Japanese market means an increase of interest towards Georgian wine across the entire Asian market, as Japan is the developer of trends in the region and among neighboring countries.

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12

BUSINESS

GEORGIA TODAY

MAY 28 - 30, 2019

6 Reasons You Should Purchase the HUAWEI WATCH GT TRANSLATED BY KETEVAN KVARATSKHELIYA

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he smart watch is the most in-demand and interesting products after the smartphone. A smart watch is a multifunctional, miniature device launched for your comfort. It is enough to try it on your wrist just once: you won’t want to take it off! Let’s explore its specific functions further. HUAWEI continues its customer care policy by offering the elegant HUAWEI WATCH GT, available now at the company’s partner chain stores, which stirred considerable interest among clientele prior to launch- all of whom were eager to see its distinguished design and functions.

WHY SHOULD YOU PURCHASE THE HUAWEI WATCH GT? THERE ARE 6 REASONS: 1) The simple, but elegant and fashionable design Beautiful and eye-catching, this is one of those rare cases, where evaluations match the device, achieved by the HUAWEI WATCH GT through its optimal design and orange and green bracelets. The HUAWEI WATCH GT is characterized by classical, aesthetic elements, making it ideal for youngsters in any situation. 2) An incredibly strong battery, enabling you to be available anytime The durability of a battery is no longer a matter one can be amazed by, but the given model is unique in this case as the HUAWEI WATCH GT can be used

actively non-stop for 24 hours. That, plus the heart rate monitor, sleep-tracking function, recording missed calls, reminders and a switched-on display

all day. This is a long list of reasons customers choose the HUAWEI WATCH GT. 3) Smarter 24/7 heartrate monitoring

in actual time The HUAWEI WATCH GT Heartrate monitor is a core index presenting the results of exercise, customer capabili-

ties and health condition. HUAWEI has independently created its TruSeen 3.0 heartrate monitoring technology and optimized multi-sensor merging plus a nerve net and artificial intelligence technologies. 4) A wide assortment of models with diverse frames Equipped with 46 and 42 mm ceramic frames, the active and elegant watches are distinguished with a gradient design, reflecting light and taking on different colors from different perspectives. The HUAWEI WATCH GT is presented with various frame styles to suit every kind of situation and taste. 5) Colored HD sensor display for better images The watch is equipped with an AMOLED HD colored sensor display, guaranteeing the best images in any situation. 6) Maximum comfort of a high-tech bracelet The bracelet, made of innovative rubber, ensures maximum comfort for the customer, once again outlining its outstanding nature. HUAWEI products and services are available in more than 170 countries and are used by a third of the world's population. There are 16 research and development centers operating worldwide in the USA, Germany, Sweden, Russia, India and China. HUAWEI Consumer BG is one of three business units of HUAWEI, mainly focusing on the production of smartphones, personal computers, tablets and cloud services. The HUAWEI Global Network is based on 20 years of experience in the telecommunications business and serves to the production of innovative technologies to customers around the world.

Georgian Miners Fail to Reach Consensus with Employer BY THEA MORRISON

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round 3000 workers of a manganesemineinChiatura, who went on strike on May 15, failed to reach consensus with their employer company, Georgian Manganese Holding (GMH), and are continuing their protests. The parties failed to reach an agreement on the main demand of the protesters, a 50% pay rise, and the miners left the meeting in protest. Rustavi 2 TV reports that the miners were willing to compromise with the company's administration and agreed to increase their salaries by 30% instead of 50% if the remaining 20% salary rise would be seen in the future. However, according to the TV channel, the company's administration refused to accept the offer and are still offering 25% increase in salaries. Protesters marched through the town and called on the population once again to join the strike and support them. A rally is underway in front of the City Council building where the protesters have placed tents and continue a hunger strike. Before the meeting between the miners and the GMH representatives, one worker who is on hunger strike became unwell and was transferred to hospital. The miners claim the rally will continue until their demands are met.

Chiatura miners are supported by the employees of the Tkibuli coal mines, who joined the protesters in Chiatura and called on the authorities to ensure fair working conditions and a decent salary for the miners. In addition to the increased salaries, the miners ask for an improved life insurance package, prohibition of heavy truck movement in the town, and guarantees that the leadership of the company GMH will not carry out disciplinary measures against them after the strike is over. The Public Defender of Georgia, Nino Lomjaria, met the miners on strike in Chiatura to hear more about their demands on the improvement of labor conditions and security. According to Lomjaria, the Ombudsman's Office does not have a full mandate on all the issues the miners are discussing, but says the miners' work schedule is not in line with the Labor Code of Georgia. “We will thoroughly study the working hours and working regime of the miners. I was told they have a 12-hour regime over two weeks, which I believe is contrary to the terms of the labor legislation which sets the maximum working hours. Moreover, they have to work in unsafe and hazardous conditions,” the Public defender stressed. Human Rights Watch (HRW), an international non-governmental organization based in New York, also commented on the case last week.

Image source: Netgazeti

NGO HRW conducted research on the working conditions in extractive industries in Georgia, and heard how miners, like those on strike, work shifts of 15 consecutive days, working 12 hours a day underground, including at night. The organization stressed that the

manganese company should listen carefully to workers’ complaints and take steps to ensure safe and fair working conditions. They also demanded Georgia bring its labor code in line with International Labor Organization standards and put in place a full labor inspectorate

with powers and resources to monitor and enforce all labor rights. However, Georgian Manganese believes the miners’ strike goes beyond legal frames and says their demand for a 50% pay rise is unacceptable. They have said they will take the case to court.


BUSINESS

GEORGIA TODAY MAY 28 - 30, 2019

13

Meet Georgia’s New Environmental Protection Ombudsman EXCLUSIVE INTERVIEW BY BY NINI DAKHUNDARIDZE

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arlier in May, PM Mamuka Bakhtadze introduced David Morrison as the Ombudsman of the recently created ‘Department of Environmental Protection.’ Between 2008 and 2016, Morrison worked as Executive Director of the CNF, the Caucasus Nature Fund, which works to protect the environment. In an interview with GEORGIA TODAY, the first Ombudsman of Environmental Protection in Georgia discusses his job responsibilities, the current situation and future development opportunities in the the field of Environmental Protection. “First, let me say how honored I am that the Prime Minister asked me to be Georgia’s Environmental Ombudsman. There are formally defined responsibilities of course, among others: sectoral coordination on environmental and natural resource management issues; communication and coordination with government bodies, national and local; bringing knowledge and recommendations on international “green economy” and “green technology” practices; ensuring active public and private sector involvement in implementing environmental reforms; and promoting cooperation and mediation. But that is a lot of words and I think it is easier to understand if you think of it in terms of how it works. “The mechanism has two steps. Step 1 will be to listen: listen to NGOs, to business and to ordinary citizens. We need to hear people’s concerns on the environment and their concerns about actions that might be taken to protect it. On the basis of this listening exercise, Step 2 will be to develop and promote solutions that will benefit the environment. Our recommendations could touch all walks of life in one way or another, from government to business to ordinary citizens. We will seek consensus and propose solutions we think can be implemented.”

THERE ARE MANY NGOS WORKING ON ENVIRONMENTAL PROTECTION. WHAT IS THE CORE NEED FOR AN OMBUDSMAN AS A MEDIATOR BETWEEN THESE NGOS AND THE GOVERNMENT? The NGOs of course already give the environment a voice. But they do not always agree and so one function will be to understand the differences between them and seek to reconcile the different positions. As I said, we will also be a listener and will reflect not only the green NGOs’ voices but other views that reasonably need to be considered, be

We need to find the right balance for Georgia, to ensure that regulations are clear and can be complied with and then that they can be monitored and enforced

Photo taken from: georgiacapital.ge

they from business, other parts of civil society or the general public. We will not always agree, but we will listen to other points of view and integrate them where possible as we push our green agenda.

HOW WOULD YOU RATE THE CURRENT ENVIRONMENTAL SITUATION IN GEORGIA? WHAT CHALLENGES HAVE WE FACED SUCCESSFULLY? WHAT CHALLENGES DO WE HAVE YET TO OVERCOME? We have clean, potable water in Tbilisi and the city’s sewage is now being treated and not dumped raw into the river. That is, unfortunately, not true in much of the rest of the country. Power is reliable but not enough is being sourced from renewables and there is no consensus on the steps needed to promote a renewable energy transition. Periodic vehicle inspections have been introduced, but dirty exhaust still poisons Georgia’s citizens, particularly the country’s children. The waste disposal and plastic bag problems remain despite attempts to tackle them. So the situation is serious and alarming and in need of a national movement to address it; but it is not hopeless.

WHAT WILL YOUR FIRST STEPS BE AS THE FIRST OMBUDSMAN OF ENVIRONMENTAL PROTECTION? WHICH ISSUES DO YOU CHOOSE TO PRIORITIZE? Today, the Ombudsman has been named but we have no office or staff and the budget is being agreed. The first steps, to be taken over the summer, will be to get a small office up and running. Priorities will be discussed and agreed following our first open meeting in September.

VIEWS ON SOLVING IT?

The environmental situation is serious and alarming, and in need of a national movement to address it, but it is not hopeless WHAT’S YOUR APPROACH TO THE REGULATIONS THE GOVERNMENT HAS ENFORCED? DO YOU THINK THEY SHOULD BE ANY STRICTER? There is no government on earth that does not fall short on enforcing some regulations, and no country on earth that has exactly the right level of regulation on all issues affecting the environment. We need to find the right balance for Georgia, to ensure that regulations are clear and can be complied with and then that they can be monitored and enforced. One of the challenges, for Georgia and any country,is that this is not a static thing: regulation needs to evolve as problems, solutions, technology and society evolve. Our job will be to try to push Georgia to keep up with it.

AIR POLLUTION IS AN EVERGROWING PROBLEM IN GEORGIA, ESPECIALLY IN TBILISI. WHAT ARE YOUR

You asked what our priorities are likely to be and from what I have heard so far, this is the number one problem on people’s minds. There are multiple causes so there is no one solution. Each large city that faces serious air pollution is of course unique, but air pollution is really just a different combination of largely similar human and climatic inputs. We will need to look at what is working in other cities and adapt it to Georgia. We need many different sectors of society, from business to ordinary citizens, to recognize the problem and be ready to contribute to the different solutions that will be proposed.

MUCH LIKE MANAGING AIR POLLUTION, CONSERVING BIODIVERSITY AND KEEPING GREEN SPACES IN GEORGIA, ESPECIALLY IN TBILISI, IS A BIG CONCERN. WHAT IS YOUR APPROACH TO THE PROBLEM? I have been involved with green spaces in Georgia for many years: the amazing national parks and protected areas of Georgia. The way forward here is more and better: more and better protected areas in the countryside and more and better green spaces in the cities. The approach is to raise awareness, promote and then implement modern spatial planning and management, and finally to enforce it.

CONSIDERING YOUR YEARS OF EXPERIENCE IN THE FIELD, DO YOU THINK THERE’S ANY PATTERN FOR ENVIRONMENTAL PROTECTION THAT GEORGIA SHOULD FOLLOW? IF SO, WHAT COUNTRY COULD BE SEEN AS A “ROLE MODEL” FOR GEORGIA? There is no one model. Different countries are strong in different sectors. One may have the right model for water management; another for waste management;

a third for controls on traffic and pollution. But in each case, we need to make sure that the model is adapted to the circumstances here in Georgia. My mantra is copy, but don’t copy/paste: rather, copy and adapt.

WHAT PROGRESS DO YOU HOPE FOR IN THE FIELD OF ENVIRONMENTAL PROTECTION? Georgia has unique biodiversity and great natural beauty, which is why I came here in the first place. The natural wealth: mountains, deserts, rivers and seaside, is splendid, as are Georgia’s ancient culture and traditions. These need to thrive alongside vibrant, modern cities and a healthy and growing economy. Environmental protection needs to become a key story line in the next chapter of Georgia’s modernization. If we seize the right opportunities, we can leapfrog the mistakes of others and become a leader as the world moves, as it must, to a greener future. This is a grand vision that needs to begin with first steps. I look forward to getting started.

Environmental protection needs to become a key story line in the next chapter of Georgia’s modernization


14

CULTURE

GEORGIA TODAY

MAY 28 - 30, 2019

Georgian National Museum & TBC Bank Sign Memorandum of Collaboration BY KETEVAN KVARATSKHELIYA

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long with a number of major financial and banking projects, TBC Bank has engaged in yet another cultural project. On May 24, David Lortkipanidze, Director General of the Georgian National Museum, and Nikoloz Kurdiani, Deputy CEO of TBC Bank, signed a memorandum of collaboration, approving a long-term partnership between the two institutions aimed at the promotion of the ancient Colchian culture. Prior to the official signing ceremony, David Lortkipanidze addressed the attendees. “There are many cases when memorandums are signed only for formal purposes,” he said. “But there are other circumstances when such documents serve for clearly outlined, specific targets. I firmly believe that today we witness the second case.” He went on to praise TBC Bank for its involvement in social and cultural projects. “The activities carried out by TBC Bank do not require any additional advertising. This is the case when, through innovations, a Georgian company strongly establishes itself on a global scale and acquires international recognition, as well as reputation,” noted Lortkipanidze. He moved on to explain the mission of the National Museum. “The Georgian National Museum has a mission to not only preserve the existing cultural heritage, but also to promote and introduce it to wider audiences. In this case, the two institutions have met to consider a better future,” he said. He also mentioned that the National Museum and TBC have been cooperating for many years, but have also set a specific goal to integrate the Georgian national heritage with modernity and that they will not spare effort for heritage accessible on the local, as well as global scale. Nikoloz Kurdiani also spoke about the main goals

of the memorandum. “Heritage and the future generation are of vital importance to TBC Bank,” he said. “Everything we do is focused on these two spheres. We try to integrate them. This collaboration is a clear example of our approaches. Today, we are launching a memorandum which is to enable the two institutions to present incredibly interesting content to the public and create various informative and interactive tools

which will increase their popularity.” Kurdiani stated that the project is to integrate 16 museums across the country, and recalled other social initiatives implemented by TBC Bank, including the promotion of rugby and projects with the National Center of Manuscripts. The artefacts of ancient Colchian culture found as a result of archeological excavations have proved to be unique and represent one of the most impor-

tant cultural heritages of the world. The Georgian National Museum is well-aware of its important role in the informal education of the population and the development of tourism countrywide. TBC shares this perspective and has set the popularization of the museum exhibits as one of its major priorities. In addition, it also plans to become a partner of the renovated Vani Museum, set to be launched in 2020.

New Museum to Be Launched in Oni

Image source: droa.ge

BY KETEVAN KVARATSKHELIYA

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t a briefing held prior to the government meeting on May 23, the Prime Minister of Georgia Mamuka Bakhtadze stated that a new local museum is to be built in the town of

Oni, Racha. The Head of the Government focused on the importance of the development of the rural areas across the country and noted that providing appropriate infrastructure is vital in this case. “Regional development is a major priority for us. It is the only way to achieve inclusive growth in

Georgia. To ensure equal development in the regions of the country, it is important to put in place relevant infrastructure in each of them,” stated Bakhtadze. The PM also accentuated the significance of the tourism industry for the general progress of Georgia. “Tourism is the best sector for inclusive growth. We are developing relevant infrastructure in our mountain areas. This very goal is served by the Georgian Government's decision to build a local museum in Oni,” he said. The new multifunctional museum in Oni is planned to integrate a conference hall, an archive, a library, a multimedia library, as well as an educational space for minors.


CULTURE

GEORGIA TODAY MAY 28 - 30, 2019

15

ZEG Storytelling Festival or How to Build a Good Narrative

WILL IT BE ADDRESSED THROUGH THE FESTIVAL?

BY GABRIELLE COLCHEN

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rom June 20-22, the ZEG Storytelling Festival will take place in Tbilisi, a unique occasion for anyone interested in improving their narrative skills to gain knowledge from well-known storytelling enthusiasts and professionals from around the world. The festival is organized by Impact Hub Tbilisi, an international network providing space to individuals, entrepreneurs and organizations focused on driving change, and Coda Story, an award-winning non-profit newsroom that specializes in storytelling innovation. GEORGIA TODAY met Ketevan Ebanoidze and Elene Jvania, both co-founders of Impact Hub Tbilisi, and Natalia Antelava, Co-founder of Coda Story, who told us what people can gain from the first edition of this unique festival.

WHY DID YOU DECIDE TO CREATE THIS FESTIVAL TOGETHER? Impact Hub’s mission is to foster collaboration between its members. Coda Story was one of the first members of Impact Hub when it opened in 2016. We had long wanted to collaborate on a project since we both have something to bring to the other. We eventually had the idea of creating this festival together.

STORYTELLING IS A VERY BROAD CONCEPT. WHAT IS IT EXACTLY AND HOW

Storytelling is at the heart of a larger human story; it is what distinguishes us from animals: our ability to create a narrative and then to believe it. One of the most spectacular examples of storytelling is money - how did we as a human race come to agree on the value of a piece of metal or paper? A narrative has power when everyone buys into it. Storytelling is something that concerns everyone. People often need to tell a story for their business, but everyone needs to tell stories as human beings, for themselves. The ability to craft a narrative is at the heart of everyone’s life. Therefore, the idea of our festival is to make people understand that storytelling is important in any industry and any realm. There are thousands of ways to build a story: you can do it thanks to a drawing, a picture, or thanks to music, for example. We will have 29 speakers from all around the world and all from different fields, among them photographers, writers and journalists. Our festival is designed for everyone, starting with students and ending with high-level professionals. We want to involve a lot of young Georgians, therefore, we will have a call for volunteers so that they have the opportunity to get involved in the organization of the event.

WHY IS IT IMPORTANT TO MAKE GOOD STORIES? Capturing the attention of other people and expressing oneself has major importance. Coda has a very strong focus on journalism and storytelling because a

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lot of very good journalism is wasted by a badly packaged story that is either impossible to read or just not interesting. Our objective is to make very complex objects exciting and engaging ones. Journalism is an industry that has a lot to learn from other industries and the way they tell their own stories, such as fashion or entertainment. ZEG will have a strong focus on journalism but is not only for journalists; it is for a much wider public because everyone can benefit from it. How people tell stories either brings them success or failure.

WHAT IS THE GOAL OF THE FESTIVAL? It is to make people think hard about the changing narratives of the societies that we live in. We need to keep reflecting on how to shape future narratives in the way we believe they should be shaped [Zeg means the day after tomorrow]. We want to make people think, connect to each other and inspire each other. The people coming will gain very practical skills. We also want to begin a conversation that will continue beyond the twoday festival. Hopefully, participants will be able to build new cooperation and projects. Everyone can gain from this festival because they will think about things they never thought about; they will be stimulated. The sessions and talks will be organized according to special topics so that people can choose the ones they are interested in. However, we still think that people can gain knowledge from very different fields and we want to expose them to different forms of storytelling. It is by coming out of

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Vazha Tavberidze, Nugzar B. Ruhadze, Samantha Guthrie, Amy Jones, Thea Morrison, Ana Dumbadze, Ketevan Kvaratskheliya Photographer: Irakli Dolidze

your own field of knowledge and comfort that you really develop new ideas.

WHAT IS SPECIAL ABOUT GEORGIA HOSTING SUCH AN EVENT? One of the opening panels of the festival will look at Georgia's own story of reshaping its narrative. It is called “Georgia Re-imagined” and it will focus on discussing how Georgia re-imagined itself and what it takes for a country to change its course: a change of narrative. It is hard to say what kind of stories Georgia needs for its future. We are not in the business of prescribing treatments, but rather in exploring how narratives are changing and how we can craft powerful stories that challenge and shift perceptions.

WHAT ACTIVITIES ARE GOING TO TAKE PLACE DURING THE TWO-DAY FESTIVAL? We will have some people showing their work and we would like this part of the festival to expand in the next editions. However, the festival is more about how to craft a story rather than showing stories to people. It will be a combination of different

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kinds of events. Apart from workshops, talks, masterclasses, in-conversation sessions and networking, there will also be tours of the city and a Georgian traditional supra, which is one of Georgia’s most specific ways of doing storytelling. These last two activities will be especially for guests coming from abroad.

CAN YOU TELL US THE NAMES OF SOME OF YOUR MOST IMPORTANT SPEAKERS? We have a very good line up of speakers which helped us to grab people’s attention, among them we will host Cate Adams, the Vice President of Warner Bros. Pictures creative group; Joe Sabia, the creator and interviewer of Vogue’s 400 million-view celebrity interview franchise "73 Questions"; Aaron Rasmussen, co-founder of MasterClass, an education platform in which creative experts give classes to an online audience; and Suketu Mehta, writer and finalist of the 2005 Pulitzer Prize. The interview has been edited for more clarity. Venue: Fabrika Dates: 20-22 June Up to 300 participants. More info on tbilisistorytelling.com

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Profile for Georgia Today

Issue #1154 Business  

May 28 - 30, 2019

Issue #1154 Business  

May 28 - 30, 2019

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