Caucasian Business Week #14 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK July 22, 2013 #14

caucasian business week

July 22, 2013, Issue 14

caucasian1

BE INFORMED, DO BUSINESS

GEORGIA TI GEORGIA: RESTRICTIONS ON AGRICULTURAL LAND OWNERSHIP FOR FOREIGNERS WERE UNJUSTIFIED

Donald Tusk: I am convinced that Ivanishvili will guarantee the protection of European standards Pg. 2

I Georgia, Georgian branch of Transparency International, declared that imposition of restrictions on agricultural land ownership for foreigners was unjustified. Pg. 2

Kovzanadze and Chakrabarti discussed cooperation expansion

ALCOHOLIC BEVERAGES EXPORTS GROW BY 24%

Pg. 6

ADB ASSISTS NATIONAL BANK OF GEORGIA TO INTRODUCE BASEL II REGULATORY RISK-BASED STANDARDS

rom 15 to 19 July 2013 the Asian Development Bank (ADB) and National Bank of Georgia (NBG) host a training seminar on Financial Reporting & Disclosure Pg. 8

AZERBAIJAN RUSSIAN STOCK MARKET LOST OVER $300 MILLION OVER NAVALNY VERDICT

he outlook on Azerbaijan’s banking system remains stable, Moody’s Investors Service said in a new report Banking System Outlook Pg. 10

ARMENIA FIRST FREE ECONOMIC ZONE IN ARMENIA WILL BECOME EFFECTIVE FROM AUGUST 1

he first free economic zone in Armenia will come online from August 1 this year on the territories of Mars plant. Pg. 11

CIS RUSSIAN STOCK MARKET LOST OVER $300 MILLION OVER NAVALNY VERDICT

310 million following the momentous losses stoked by the 5-year prison sentence of anti-corruption blogger and opposition leader Aleksey Navalny Pg. 12

WORLD NEWS BERNANKE SEES NEED FOR BACKSTOP FOR MORTGAGE MARKET

ederal Reserve Chairman Ben Bernanke weighed into the contentious debate over the future of the housing finance system on Thursday Pg. 13

AS GEORGIA DEPUTY DIRECTOR: TBILISI NEEDS MICRO DISTRICTS LIKE DIRSI Pg. 5 COMPLEX

Pg. 3

GEORGE KADAGIDZE: EBRD WILL ISSUE OBLIGATIONS DENOMINATED IN GEL

uro Bank (EBRD) plans emission of the obligations denominated in GEL on Georgian market, which serves to Larization. President of the National Bank of Georgia (NBG) stated about this joint autumn project after the Wednesday’s meeting with Euro bank president. “It will be the first security in Georgia, emitted with national currency by international financial institution. It will enhance reduction of interest rates and we’ll open another successful page in financial sector,” - NBG president, George Kadagidze stated. Securities, placed publicly, are aimed for the banks also other interested companies and individuals. EBRD main bankers stated that currently amount and nominal value of the first emission is being determined. EBRD president Suma Chakrabarti gives high evaluation to Georgia’s

banking sector development. “The sector is on the high level and what’s important, it’s stable. EBRD is international organization and implements projects in many countries. Georgian banking sector is really exceptional from all other countries we work. Therefore, customers’ trust towards us is not surprising. Our nearest plan with National Bank is based on this trust: we agreed that in the nearest future we plan issue of EBRD local currency obligation - GEL bond”, - Chakrabarti stated. In the framework of 3-day visit, EBRD president met with prime minister and economic team members of the government. NBG informs that till now EBRD has invested 1,8 billion Euro in 158 projects. Among them in banking and financial sectors, energy, agro business and industry. Besides, they attracter 3 billion Euro from the financial markets for these projects.

Vakhtang Rcheulishvili: We do not Recognize Ungrounded Pretences, but this does not Absolve us from Responsibility Pg. 4 Irakli Kilauridze: Processes in “Center Point” Case are Going in the Wrong Direction Pg. 4

18-MONTH MORATORIUM WAS David ANNOUNCED ON SELLING Worthington: AGRICULTURAL LANDS TO FOREIGNERS it always amazes

rom July 17,amdendments in the Law on Privacy of the Agricultural Lands validated, according to which foreigners and legal entities registered abroad, also legal entities registered by foreigners in Georgia, ownership of agricultural lands were limited. The limitation lasts till December 31, 2014. Besides, announced moratorium does not include

on the agricultural lands, owned by foreigners before draft law validation. Acceding to law, till December 31, 2014 he government should provide elaboration of united state policy on agricultural lands ownership to rationally use and protect land resources. Meanwhile, agricultural and cadaster and land management united system should be regulated on the whole territory of Georgia.

NATAKHTARI STARTED BEER FEST FROM TBILISI

Pg. 9

me that people often want to copy a Western idea of branding Pg. 5

GOODWILL TO HOST SOFT DRINKS FESTIVAL ORGANIZED BY “CHOOSE GEORGIAN” AND PERITUS GROUP

JULY 26 -27

ational Wine Agency of Georgia reports that 7 wine companies have already exported production on the Russian market.

Pg. 9

MAIN EVENTS July 22, 2013 #14

caucasian business week

PRIME MINISTER CALLS VISITS TO POLAND, LITHUANIA SUCCESSFUL

DONALD TUSK: I AM CONVINCED THAT IVANISHVILI WILL GUARANTEE THE PROTECTION OF EUROPEAN STANDARDS

rime Minister Bidzina Ivanishvili has summed up his visit to Poland and Lithuania as successful. According to him, both states trust the new government of Georgia. The Prime Minister expressed excitement over the Lithuanians. “We touched upon all issues of economics and politics as well as future plans. The visit to Poland was also good. I would especially like to mention that a meeting with my Polish counterpart was held in a friendly atmosphere. I had the impression that we knew each other for a long time. There are different opinions both in Lithuania and Poland with regard to the new government of Georgia, but those who

remain doubtful are in minority. Both states trust the new government and regard us as friends,” said the Prime Minister. Ivanishvili is sure friendly relations will further develop both with Lithuania and Poland. “They want us to be successful at the Vilnius summit on November 27. They promised maximal support. I persuaded them that everything will be fine. We talked about NATO and the EU issues and they promised to support in this area too. We expect NATO to make good statements about Georgia’s position next year. I am very happy that we had such a successful visit,” said the Premier. Ivanishvili’s working visit to Poland has already been completed.

he Polish Prime Minister Donald Tusk is confident that Bidzina Ivanishvili will guarantee the protection of European standards and Europe will get the expected outcome from Georgia. Tusk stated about it after the meeting with Prime Minister Bidzina Ivanishvili today. Bidzina Ivanishvili’s press office released a joint statement made by Georgia’s PM and the Polish Prime Minister. According to the Polish Prime Minister, he will warmly welcome the Prime Minister to Warsaw, because he represents the country with which Poland has friendly relations. “We appreciate the steps that Georgia has made, despite the political changes, the friendship between the two countries is a permanent policy. I am sure Georgia’s democratic reforms will continue. As for the internal political aspects, I would like to stress that our conversation was held in very warm conditions. We sincerely discussed various political issues and this conversation was satisfactory for me. Everything became clear to me. I am sure that Mr. Bidzina Ivanishvili will be a guarantee for protection of European standards and Europe will get the expected outcome from Georgia,”- said Donald Tusk. He also expressed his willingness to accept the Georgian Prime-Minister’s invitation to Georgia. For his part, Bidzina Ivanishvili also

expressed his gratitude for Tusk for the support that Poland tends towards Georgia’s European integration as well as the non-recognition policy of the occupied regions and its participation in the European Union Monitoring Mission in Georgia. According to the Georgian Prime-Minister, the meeting focused on issues of multilateral cooperation, including economic, cultural-humanitarian relations, and the importance of sharing the Polish experience in the field of agriculture and local selfgovernance. “I am glad that I’ve met with my Polish colleague and had the opportunity to discuss many issues. I have invited him to Georgia and I hope that he will be able to visit us in the nearest future. Our meeting enables us to further deepen the relationships and I would be glad if we have such a great support from Poland in future, too,”said Ivanishvili.

TI GEORGIA: RESTRICTIONS ON KALADZE: REGARDING KHUDONHES, AGRICULTURAL LAND OWNERSHIP “THERE WAS A MORATORIUM, BUT FOR FOREIGNERS WERE NOW THE WORKS ARE UNDERWAY” UNJUSTIFIED nergy Minister Kakha Kaladze de- which environmental impact assessment should

clared to journalists today that regarding KhudonHES, “there was a moratorium, but now the works are underway”. According to him, TransElectrica Limited, which implements the project, should start geological work as well as resettlement and negotiations with local population. On the other hand, Kaladze said that implementation of the project was delayed for a year, during

be presented to Environment and Natural Resources Protection Ministry. “Only then will be known if construction of hes begins”, the Minister declared. To remind, according to international experts’ assessment, expected cost of the project makes up $776 million. After construction of this water power station in mountainous region Svaneti, area of 528 ha will be flooded (including 4 villages).

BATUMI TOWER MAY GIVE ROOM TO BUSINESS CENTER

inance and Economic Ministry of Ajara considers that Batumi Tower is irrelevant for a university and therefore plans on placement of a business centre there are discussed. As head of Ajara government Archil Khabadze declared today, more than 78 million lari was already spent for the object, while extra 12 million lari is necessary to complete the building. Utility and maintenance costs of the building amount to about 500,000 lari annually, so studying there will be much more expensive for a student than in any other university, Khabadze said. Khabadze pointed that handing over of the building to Batumi municipality or Ajara Supreme

Council as not discussed as its maintenance would be too expensive for state bodies. Currently, work on giving the building in rent to foreign investors is underway, he declared, noting that Turkish and Ukrainian businessmen have already showed up an interest. As the Ajara Ministry declares, construction of the building started in 2011 under name of Black Sea Business Center. Later, the object was planed to hand over to Black Sea University, but the President Mikheil Saakashvili decided to place Technology University there and opened it just a week before the parliamentary elections of 2012 (though, plans changed after the new government came).

PRESIDENTIAL RESIDENCY TO MOVE TO ATONELI STREET

inister of Infrastructure and Regional Development David Narmania declared that Tbilisi residence of the country’s future president (who will be elected in October) will be located on Atoneli Str. 25 instead of Avlabar. Earlier, the building hosted

the US embassy. As Narmania said, repair of part of the building should be completed already by the end of October, while the whole building will be ready in the end of April 2014. Repairing works are implemented by the LLC Artesi, which was hired for reconstruction of the building already by the previous government.

BUSINESS WEEK

caucasian The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili DISTRIBUTED FREE OF CHARGE Editor-in-chief: Evgeni Mikeladze Mobile phone: 591 013936; 555 472234 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

I Georgia, Georgian branch of Transparency International, declared that imposition of restrictions on agricultural land ownership for foreigners was unjustified. The organization admits the need to settle issues, related to land management, but considers that imposed restrictions for foreigners violate constitutional rights of ownership. Imposition, even temporarily, of such restrictions is inadmissible after judgement, issued by Constitutional Court, TI Georgia declares. These restrictions can seriously hinder the economic development of the country and this “definitely will have negative effect on the investment climate”, the organization considers. In future, restrictions on land registration for

aliens may be revised again, which will create additional uncertainty among foreign investors, TI Georgia says, pointing that investors, who have already made investments in the country and now want to expand their activity, will also have problems. We had appealed earlier to the Parliament with request to revise the mentioned norms, but our initiative was left unanswered, TI Georgia declared, noting that it is going to appeal to Constitutional Court in near future to abolish these restrictions. To remind, amendments in law “On Agricultural Land Ownership”, being adopted in June, prohibit agricultural land ownership for foreign individuals and legal entities until December 31, 2014.

STARWOOD TO MAKE NEW INVESTMENT IN GEORGIA

artnership Fund reported that Turkish company Starwood Hotels & Resorts wants to make a new investment in Georgia. For this purpose, chairman of Georgia-Turkey friendship group in Turkish Parliament Hussein Shahin and president of Starwood Mehmet Yildiz met the Fund’s director Irakli Kovzanadze today. Turkish ambassador to Georgia Murat Burhan, also attending the meeting, pointed that Turkey is “Georgia’s trade partner number one and one of

the largest investor”. The ambassador declared that Starwood has already invested $12 million in Batumi, and wants now to make a new, even larger investment. To remind, Starwood has built hotel Sheraton in Batumi, implementing the project with Turkish construction company Nurol Insaat ve Ticaret AS. At this stage, Georgian Partnership Fund already cooperates with Turkish investment company Chalik Group. The Fund implements energy project in Gardabani in cooperation with this company.

FRUIT PRODUCTION REDUCED BY 15.7% IN 2012

akstat reported that fruit production made up 159,700 t in 2012. This showing, compared with 2011, is reduced by 15.7%. Samegrelo – Zemo Svaneti region accounts for the largest share of total production – 26.3% (year-onyear growth in production made up 21.3%). Next largest producer regions are Shida Kartli – 23.8% (decline – 38.5%) and Imereti – 13.8% (growth – 17.8%). The rest regions account for 36% of total fruit production (their combined production declined year-on-year by 22.5%).

NEWS July 22, 2013 #14

caucasian business week

GOODWILL TO HOST SOFT DRINKS FESTIVAL ORGANIZED BY “CHOOSE GEORGIAN” AND PERITUS GROUP

KOVZANADZE AND CHAKRABARTI DISCUSSED COOPERATION EXPANSION

rakli Kovzanadze, executive director of Partnership Fund met with European Bank for Reconstruction and Development (EBRD) delegation, headed by EBRD President Suma Chakrabarti. Partnership Fund informs that EBRD delegation was introduced to Partnership Funds mission, objectives, opportunities and ongoing important projects. The sides discussed ongoing process of transformation of Partnership Fund into Sovereign Fund. “EBRD president’s visit is positive development and positive signal for the investors; Sir Suma Chakrabarti’s statement that EuroBank plans investment of additional $200 million in Georgia, makes EBRD delegation visit more important. On the meeting EBRD president and high officials were introduced to objectives and opportunities of our fund. They also acquired to transmission issues of Partnership Fund into Sovereign Fund. We discussed our joint projects. As you know, Eurobank participates in several important proj-

ects with cooperation of State Electro System of Georgia, which is member of Partnership Fund. We talked about concrete aspects of the cooperation expansion. I’m sure Eurobank’s interest in the Partnership Fund’s projects will have concrete results in the near future and will enable us to expand investment scale In the economic sectors, where Georgia has state priorities”, - Irakli Kovzanadze stated. EBRD president Sir Suma Chakrabarti states that EBRD delegation visit in the Partnership Fund was interesting. “It was important for us to learn about opportunities of this powerful fund, its transformation into Sovereign Fund. We discussed our ongoing projects in the State Electro System of Georgia. We got full and exhaustive information from the fund’s executive director Irakli Kovzanadze on this and other issues. I hope that our future cooperation will be important and productive”, EBRD president stated.

oodwill will host soft drinks festival that is organized by Choose Georgian and Peritus Group. Beer, lemonade, natural juices, mineral and spring waters manufacturers will take part in the festival. The program includes exhibition and tasting of products, various entertainment events, flashmobs, competitions, lotteries. The organizers will also hold special competition for reporters. The festival will be held at the Saburtalo branch of Goodwill network in late July and will last two days (July 26 to July 27). Those wishing to take part in the festival should contact the organizers on the following address: info@peritus. ge/558445566 Commersant radio station FM 95.5, Commersant. ge, the Коммерсант Грузия newspaper, BPI.ge, Caucasian Bsiness Week, Newswire.ge provide media support for the event. The trademark of Choose Georgian was created by the Sales Management Company to support and popularize Georgian products. The company provides sales management, research, marketing, advertising and management services to small and medium-sized companies. The company or-

ganizes Georgian products exhibitions- Choose Georgian. Peritus Group is a strategic communications agency that started operation in Georgia five years ago. The agency has already implemented about 100 successful projects. Peritus Group offers branding, PR and events management services, innovations. Ten-year experience of experts is a good precondition for a success.

TBILISI INTERNATIONAL FESTIVAL OF THEATRE International Program 25,26 SEPTEMBER, 2013 ‘Dark, strange and fantastical.... ‘An exquisite spectacle .... Jonathan Swift

GULLIVER’S TRAVELS (Acting exercises inspired by the work of Jonathan Swift) Directed by Silviu Purcărete

MINDIA GADAEV: WE’LL IMPLEMENT NEW PROJECT BY NEW COMPANY

otel Hayat project will not be implemented, respectively, we made a decision to lose company Loyal Estate, - Mindia Gadaev, Park Hayat project manager stated to

GBC. He says that Loyal Estate’s has a debt to investors, who experienced loss due to unimplemented project. “We go nowhere. We stay here and work on the projects. When we decide what project to carry out, what is financial plan, stockholders structure, then we’ll found a new company and implement the project”, - Gadaev stated and mentioned that investors are used to their loss and

addressing court about bankruptcy is formality. Gadaev can’t specify what project will be implemented instead of park Hayat. Probably, trade center will be built on the place of restaurant Aragvi. Reminding that Loyal Estate got bankrupt. Company has 82,3 million GEL debt to 5 creditors. Besides, city court informs that the company has no activities currently and can’t satisfy upcoming requirements. Loyal Estate, which was planning Part Hayat building in Tbilisi, bankrupted. The company has 82,3 million GEL debt towards 5 creditors. 3 foreign companies are among the Loyal Estate creditors: Bulver International Ink, debt to which is 18 418 393 GEL, Locaiback Investments - 40 655 124 GEL debt and Senford Perfection Limited - 4 033 940 debt. The company owns 4 565 570 million GEL to Revenue service and 14 656 484 GEL to JSC TBC Bank. The company addressed city court to start proceeding on insolvency, although because the company has no activities and can’t satisfy upcoming requests, court refused to open case. The court informs that currently, total property of debtor is only the amount on their account - 5420 GEL. The court determined: if in one month any creditor does not apply for insolvency of the LTD Loyal Estate, LTD Loyal Estate will be recognized as bankrupt. It will cause cancellation of debtor Loyal Estate registration. Reminding that Loyal Estate planned building of 5-star park Hayat on the Sanapiro, on the territory of former restaurant Aragvi. Although, along with other problems, could not raise funds and therefore construction did not occur.

About performance: The series of performative meditations coordinated by the director Silviu Purcărete, proposes a unique and novel approach of Jonathan Swift’s work, where fantasy blends with a savage political satire. A number of images presented to the public with an original score by Shaun Davey, composer of the musical suite „Voices from the Merry Cemetery”, explore themes of voyage, dream exile, immigration, emigration, solitude and togetherness. The performance opens with Swift himself, in his last years of life living in an asylum, victim of a continuous degradation of the body and mind, while we can hear the voice of the director, Silviu Purcarete reading a passage from the Fourth Book of „The Gulliver’s Travels”. He returns home after his voyage in the land of the Houyhnhnms – represented on stage by women dressed in horses and by a live horse crossing the stage – the hero feeling only disgust towards his family that remind him of the repellent humanoid yahoos. The events that succeed are part of his dream or nightmare. A child – symbol of innocence - that rides a wooden bicycle in the shape of a horse will be the witness of the yahoo’s horrors. Grotesque characters with swollen abdomens offer their children to a cook to be butchered – idea taken from Swift’s essay „A Modest Proposal for Preventing the Children of Poor People in Ireland from Being Burden to their Parents”, a row of robotic office men that ask for indulgence from the innocent – the child, present in Jonathan’s Swifts writings as the image of God – and finish in a ferocious life and death battle. Duration: 85 minutes Without Intermission Web-site: www.tnrs.ro www.tbilisiinternational.com; www.facebook.com/TbilisiInternational

BUSINESS DISPUTES caucasian business week

July 22, 2013 #14

WE DO NOT RECOGNIZE UNGROUNDED PRETENCES, BUT THIS DOES NOT ABSOLVE US FROM RESPONSIBILITY

An interview with “Centre - Point” founder VAKHTANG RCHEULISHVILI - How did you react when heard prosecution’s charges against “Center - Point” and “Dexus” founders and, in your opinion, why is your company in such a situation? - Above all, the issue is very painful when the company’s management is accused. This is not normal, but alarming phenomenon. We are interested this process to be completed as soon as possible, because in this case the answer should be given to many questions. Among them: If there is an environment promoting business in Georgia? We all know that during the previous government Georgia was perceived in the world as the state supporting business and implementing reforms and had an image of the country reformer. Today, the whole population, along with us, is waiting for the results of a new economic policy. According to the latest data, “Center - Point” owns a 25-30% share of the construction market. Therefore, when I talk about “Center - Point”, of course, I am talking about the Georgian business. Do you know that at the time “Center – Point” budget exceeded even the budget of Abkhazia? So the question - why the company is in crisis, who is to blame etc. - concerns the whole Geor-

gia, especially those people who are associated with “Center - Point” and not only with “Center - Point, but with other development companies. - Do you admit your guilt? - We do not admit our guilt in the episodes in which we are accused in a fraud, but on the other hand, we cannot absolve ourselves of responsibility and we do not intend to do it. In other words, the company has made mistakes and irregularities as well. We want it all to be found out who is to blame. We are responsible not only to repay the debt, but also because of the pain caused to these families. In Georgia, this is a very topical issue. Not only for 6 thousand clients, but for the Georgian economy. On the other hand, it should be very important for other companies in order they not to share our fate in future. In our view, the current situation is not the result of any cause, but is rather complex. - In your opinion, whose fault is in this matter? - “Bank of Georgia” also participated in the attack on “Center – Point”. In fact, Maya had a dispute over the years with this bank. President of Britain’s central bank also said that the big-

gest problem was when the credit (which is the bank’s main function) and investment sectors are not separated (when the bank puts money into the field, where it can get profits , or in this case in the construction business). The first dispute occurred when Maya was demanded to give up a share in the company in exchange for financing of our activities. Then, several companies agreed to a similar offer, but we did not. What is happening today? “Bank of Georgia” owns a development company “m 2”. In such a case, the bank will not finance other development companies and uses its own forces to bankrupt other companies. The relationship between “Bank of Georgia” and our company is a clear example of it. - Or was it a deliberate action against you on the part of the bank? - The bank had its own interests. But there is another side: the bank’s head was Premier’s brother and some nepotism had place. Everyone knows that the Director of the bank and the Prime Minister were brothers, but this is not my matter. A fact is that more than one million dollars were taken away from one of our objects and we were actually robbed. So, what happened is a personal tragedy for Maya and Rusudan because Rusudan was the government’s Vice Speaker and supported the course of the previous government. Maya and Rusudan asked Adeishvili to help. Adeishvilli is Maya’s friend, but instead of help, the company was taken away. I do not think it’s coincidence that Ninoshvili market, which was bought for 2 million 100 thousand appeared at the disposal of the Sharangia family. How can it be random when they are President’s friends? - When we are talking about “Dexus” forcible entry in the “Center Point” management, you mention the names of people with Rusudan Kervalishvili was in the same team , why did not they talk about this publicly before? - The members of this team could not resist the temptation that is called a great property and elections.All that was needed for election. Initially, when Maya and Rusudan applied to Adeishvili, there was the sense that they would help us, but when they saw a 100 million turnover, they could not resist the temptation. However, investigation should answer to this question. Rusudan still cannot believe it, it is very difficult

to believe. I could not believe about the Sharangia family, but the facts are evident. For me, not the entire national movement is bad, for me there are people who did bad things in the national movement. - In your opinion, who stood behind “Dexus”? - I consider “Dexus” company as a weapon in Gigi Ugulava’s hands. We came to the company only three months ago and have a serious rehabilitation plan, we’ll fulfill all obligations and in addition, will help other developers. - The central bank President George Kadagidze and Tbilisi Mayor Gigi Ugulava were named among the people who forced “Center Point” to transfer the business under “Dexus” management, can you tell us about their role in “Dexus” and “Center - Point” case? - Kadagidze participated in the negotiations with the government, which we conducted so that they helped us. I cannot say anything bad or good about Kadagidze , but it is clear that he actively took part in this affair, he even attended the talks when “Center – Point” was passed into the hands of “Dexus” company. - What interest did George Kadagidze have in this matter? - It sounded like it was a close friend of Tsaguria. We just want to find out why “Dexus” received such a serious support from the Government and we were deprived of everything? I cannot say anything more about Kadagidze, except that he participated in this matter, however, the investigation will determine his role. - The transfer of “ Centre- Point” under “Dexus” management was not voluntary but compulsory? - The form was voluntary but the content involuntary. Do you know why we appealed to the government? We couldn’t remove money from bad payers. - Is the process of construction of the facilities underway? - Yes ... We only have a problem with bad payers. -Are resources available to complete the facilities? - Of course.. We do not have a resource problem. On the contrary, the problems made people more active and the population stood alongside Maya. The interest toward “Center – Point” has grown.

IRAKLI KILAURIDZE -”DEXUS”: PROCESSES IN “CENTER POINT” CASE ARE GOING IN THE WRONG DIRECTION

onstruction of “Center - Point” facilities has stalled and the processes in this case are going in the wrong direction - “Dexus” managing partner Irakli Kilauridze said today as a guest of “Commersant” Business-Club. He said that the motivation of “Center Point” founders is not the satisfaction of people, but an improvement of their own welfare and the fact that the Rcheulishvilisfunneled assets out of the company proves that. Note: The information provided to the Prosecutor’s Office by “Dexus” says that in March 2013 Maya Rcheulishvili, as “Gateway Holding” and “Borjomi - Likani rest house” director, transferred to her husband Vakhtang Rcheulishvili 8 units of real estate property. In connection with the above-mentioned facts Kilauridze notes that Maya Rcheulishvili transferred to Vakhtang Rcheulishvili a 64.25 sq.m. apartment worth 25 700 USD and a 63.75 sq.m. apartment worth 25 700 USD, which means that 1 sq.m. of space was transferred for 400 USD. Vakhtang Rcheulishvili disposes the two flats to an individual Jaba Jincharadze on June 24, 2013 to repay the monetary commitment of 100 000 USD. As Kilauridze told the media today, “Dexus” completed construction of 250 thousand square meters since the entry into the “Center - Point” management to the transfer and Vakhtang Rcheulishvili’s statement that “Dexus” competed

only one unit is unfair. “Dexus”, which was responsible for the rehabilitation of the bankrupt company, has achieved concrete results. The company managed to satisfy 4 thousand consumers from 6 thousand. The case institutedagainst our company, charges against one of our founders, and the seizure of all property (which in factis peremptorily sequestered) cause damage to our business reputation and image, “- says Kilauridze. He said that the Rcheulishvilis strategy is to transfer the case in the political context with the use of unreasonable and absurd accusations, when it should be considered as pure civic and business “case”. “What about the National Bank President, he did not participate in this process, at least this is not known to me. I have known George Kadagidze for a long time. It is clear that they want to move everything in the dirty political context, when, in reality, it comes to the economy and business, “- says Kilauridze. In his words, “Center - Point” rehabilitation was initiated by “Center – Point” founders, and for this purpose they met with government representatives. Kilauridze said that the Mayor desired such problems not to develop in the city. Kilauridze claims that after taking a decision on the entering into the management, “Dexus” took a month timeout and studied the information provided by the “Center - Point” founders.

According to Irakli Kilauridze , in a few months “Dexus” presented the company’s action plan and the rehabilitation was carried out within the plan, but the termination of the contract before the term has not allowed the company to carry out 80% of the rehabilitation for three years. He notes that in the backdrop of the charges against “Dexus” in the recent period, (in particular about the completion of only one object), the company wants to arrange a small demonstrative exhibitionwhich will allow the society to make the conclusions regarding “Dexus” activities. “Bring the experts and see how many constructions “Dexus” has finished in 30 months. We have an idea to organize a small exhibition about what we inherited after taking over the management and in what state we left the buildings,”- says Kilauridze.

INTERVIEW July 22, 2013 #14

caucasian business week

AS GEORGIA DEPUTY DIRECTOR: TBILISI NEEDS MICRO DISTRICTS LIKE DIRSI COMPLEX

DAVID WORTHINGTON: IT ALWAYS AMAZES ME THAT PEOPLE OFTEN WANT TO COPY A WESTERN IDEA OF BRANDING Tag line: Useful. Memorable. Beautiful. David Worthington is a director of the London Transport Museum, chairman of the London Transport Museum Trading Board, chairman of CCSkills Patrons Group and chairman of design companies Holmes & Marchant and Lloyd Northover at MSQ Partners. He is a long-term independent design consultant to Sainsbury’s (one of the UK’s largest retailers.), the Design Council and the parliamentary advisory group, Policy Connect. His branding and retail design clients have included: Diesel, Jaguar Cars, Shell International, McLaren, F1 and First Choice/Tui. David is one of the key note speakers at the “Marketing Brilliance Awards”, Georgia, held in Tbilisi on 25th October 2013. Marketing Brilliance Award offers: • One-day conference featuring world-class speakers from Microsoft, BBC, London Transport Museum, Nokia, Philips and many more • Gala dinner and the Awards Ceremony - You have achieved a lot in your career, what helped you in difficult times to carry on achieving your goals and objectives? - It’s quite simple really: I’ve been lucky enough to have a job which enables me to do something that I really love; to design things. Whereas, so many people have work they really don’t enjoy, I have never had that problem. As a result, I am definitely a workaholic and that’s not always healthy, no matter how much I enjoy it. So, I have a boat which is where I go to forget about work – which I do – and instead I set about designing and making things for my boat instead! - What would you suggest three characteristics of successful brands are? - Usefulness, memorability, beauty. Think about a product like a phone or a car…. We buy something that we need; something we know will work well and we can rely on; something we like the look of which ‘feels right’ to us. Even fashion is the same – great fit, great name, great look. - What should one consider when creating a new brand? - Several things, but the most important question to answer is, ‘Why would anyone need this new brand?’. Perhaps it’s a new service, or a different way of doing something that’s already available? Perhaps it’s cheaper or faster, better quality or longer lasting? The key to any new brand is to answer these questions and more, and to really establish the core customer benefits. When you’ve done this, you will have your brief – and the first step in creating a great new brand is to have a great brief. Next you need to hire a great design and branding consultants…! - You are a key-Note Speaker at the Marketing Brilliance Conference, Georgia; could you tell us more about your presentation? - I will be talking about Design and Branding at the Marketing Brilliance Conference in Tbilisi and I’ve been thinking about how to make that useful for the audience (and I hope, memorable and beautiful too!). I’ve been lucky enough to work in dozens of dif-

ferent countries and it always amazes me that people often want to copy a Western idea of branding, when their own history and culture is so rich. So, one of the subjects I will talk about is how you create a modern brand without loosing the integrity of the country it comes from. I think the origin of brands is going to become more and more important as the world increasingly becomes a single global marketplace. The other thing I will do is to talk in a very practical way, so that the audience can take the things they hear and apply them to their own businesses. Finally, I will probably talk a bit about the design of London Transport, because it’s such a good example of a business that grew to understand how to use design and through that created one of the most well-known global brands – which for a metro system is rather amazing. I like to think that part of that is because it’s extremely useful, often memorable (although not always in a good way) and on occasions it can be quite beautiful too! By the way, it will be my second time in Georgia, I was first there when I was 14 years old, so I’m really looking forward to coming back! I spoke at one of the Marketing Conferences in London, by BOC-Global Events Group, earlier this year, and am confident that they will make this event a truly valuable experience. David Worthington is one of the key note speakers at the “Marketing Brilliance Awards”, Georgia, held in Tbilisi on 25th October 2013. The ceremony is organised by British company – BOC Global Events Group, supported by most of Georgian Media: Event Marketing Partner: Marketer.ge; General Media Partner: Palitra Media, Official Radio: Palitra Radio, Radio Imedi ; Official Online TV: Palitra TV, ITV.ge; Media Partners: BPI, Caucasus Business Week, Ambebi.ge, iMarketing.ge, Presa.ge, People.ge, Droni.ge. Find Out More: www.Marketing-Brilliance. boc-uk.com

- Is DIRSI implementing one of the major projects in Georgia? -Today we own 20 hectares of a land plot and we are constructing 22 residential buildings with 5 228 apartments. Total residential space makes up 440 000 square meters. Total construction space is over 700 square meters, including a parking place, recreation zone and other infrastructure that are necessary for comfortable living environment. - What stage has the construction project reached? -The construction process proceeds in unceased regime. The construction project is divided in two stages. The first stage will end in 2014 and a total of 11 buildings will be put into exploitation. The remainder part of the complex will be completed by the end of 2016. At this stage several buildings have been already constructed and the process follows the plan. - What kind of apartments will be available for customers and how much will they cost? - Owners of apartments in the DIRSI complex will be able to see the view to the Old Tbilisi, the Mtkvari river and surrounding mountains and enjoy comfortable living conditions. All apartments will have Italian kitchen with ovens, fridges, bathrooms, central heating system, landline telephone, internet and TV sets. Moreover, the complex will have noiseless and fast Italian elevators, water reservoirs, electricity supply reserve generators, as well as noise, heat and hydro insulating systems. We have very flexible sales system and therefore, everyone in our country is able to buy a DIRSI apartment. Customers are able to enjoy interestfree installment plans and take mortgage loans with convenient terms. We also offer several discount schemes due to the volume of purchase, installment schemes and so on. - You are carrying out active campaign. How much is the interest, how many apartments have been sold and what is the ratio of foreign citizens in your sales?. -The interest is huge. The city needs similar micro districts with high quality residential space. The number of buyers doubles after our presentations as they receive detailed information on sales tersm, technical parameters of the complex. All details have been already determined and customers have not to care for details after the purchase. Our complex includes all necessary components, nursery schools, shopping malls, playgrounds, medical centers, recreation zones and restaurants, social assets and so on. - Why do customers buy DIRSI apartments? What is your main advantage? -DIRSI complex offers innovative approaches in many aspects, for example, electricity supply. The complex will have its own 110 kilowatt power station. Low rates on electricity is of crucial importance, because DIRSI complex will not provide gas supply. Security of residents is considered to be one of the most important issues in the DIRSI complex. Therefore, all buildings in the DIRSI complex will be able to withstand 9-magnitude earthquakes.

As to hot water and heating systems, a boiler will be constructed on the complex territory to serve the whole complex. This signifies heating system and hot water will be centralized. All apartments will have water meters to measure resource consumption. Moreover, DIRSI is the first complex in Georgia to use the modern system of sound insulation. The system almost completely insulates the sound and apartments become more comfortable. It is also worth noting special panels will be used to line buildings and they can save 30% of the power for cooling or warming apartments. Costs on public utilities will be very low in the DIRSI complex thanks to energy efficient systems and this is very important for customers. The complex has several other advantages. After potential buyers receive information on all services, they give preference to DIRSI. The fact our company produces nearly all construction materials is of crucial importance. We have organized our own production of blocks, conrete and so on and self-cost of construction works is considerably reduced and high quality of the service is guaranteed. At the stage of projection, we were trying to take into account all demands and needs of future inhabitants of the DIRSI complex and we have reached particular architectural solutions: The minimum distance between residential buildings is 30 meters. The very distance ensures natural light and ventilation for all buildings. Streets and foot-paths are projected in the way that children from any building can reach secondary schools without crossing motorways. Based on modern paces of urbanization, we often meet such typical and city-related problems as lack of green zones. The DIRSI complex will have three times larger green zones and total space will make up 50 000 square meters. The underground and aboveground parking places can hold 4800 motorcars and this suffice for both the complex residents and their guests. The medical center with modern technologies is staffed with professional doctors and they will care for the healthcare of DIRSI residents for 24 hours. The DIRSI complex will also include secondary schools and nursery schools. Secondary schools will hold 600 children, while nursery schools will hold 300 children. Trade and entertaining centers will create maximum of comfort to DIRSI residents ad we expect the centers to become a favorate place for the complex dwellers. The DIRSI complex will provide the best opportunities for recreation after busy working day. Cafes and restaurants on the boulevard will look to favorite views and create comfortable environment. In the vicinity of the residential complex park of attractions on 15 hectares will become a favoraite place for children and adults.

BUSINESS July 22, 2013 #14

caucasian business week

TATA GROUP DISCUSSES PROBABLE INVESTMENTS IN GEORGIA

eorgian National Investment Agency reported that Indian TATA Group plans to visit Ajara today. The delegation, which includes also representatives of International Finance Corporation (IFC, member of the World Bank group) and Norwegian company Clean Energy, is headed by executive director of TATA Powers. According to the Agency, besides hydroelectric station’s construction on Acharistskali river (joint projects with Clean Energy), the visit aims also discussion of prospects of other investments. This is already the second visit of TATA Group to Georgia. The delegation plans to meet Georgia’s Prime Minister, Energy Minister and Minister of Environment and Natural Resources Protection.

“RETAIL MARKET HAS A GREAT POTENTIAL DESPITE THE SHARP COMPETITION”

ompetition is grown on the retail market despite slowed growth of economic in the country, the newspaper reports. Expert Irakli Lekvinadze and Giorgi Abashishvili, researcher of IliaUni Business Review, estimate the situation in retail segment. As Lekvinadze notes, today supermarkets’ profit margin is within 25-35%, and “if competition grows, these margins will be decreased further”. The expert does not exclude that district shops, which “have not so good storage conditions”,

might be replaced by retail supermarket chain. There are several serious players on the market: Carrefour, Goodwill, Smart, Fresco, Two Steps, Populi, he notes. Lekvinadze points at problems of Populi and considers that they are linked to bad management and not to reduction of customers. While commenting on the retailers’ activity, Abashishvili notes that Carrefour’s appearance on the Georgian market was one of the most important facts in recent period, while Goodwill’s revenues have been significantly decreased supposedly doe to that. Fresco, Two Steps, Furshet have their loyal customers, but Abashishvili does not consider them the main competitors of brand chains. He points that Nikora was considered initially as meat-product shop, but it has acquired functions of supermarket gradually, while Smart, which placed focus on the highways initially, now has the ambition to develop the urban chain as well, the expert notes.

EBRD PLANS ADDITIONAL INVESTMENTS IN GEORGIA

resident of EBRD Suma Chakrabarti declared that the bank is going to invest extra $200 million in Georgia. He said this at the meeting with executive director of Georgian Partnership Fund Irakli Kovzanadze today. As Partnership Fund told Sarke, it is not yet finally decided, which particular project will be financed by EBRD. Presumably, projects will be prepared by the end of this year, so their timelines will be defined than, the Fund said, adding that EBRD pays special attention to energy, but is also interested in agriculture and infrastructure as well.

To note, EBRD takes part in several projects in cooperation with Georgian State Electric System, which is handed over to the Partnership Fund for management.

Gia Maisashvili - “THERE ARE ECONOMIC STAGNATION AND HOPELESSNESS IN THE COUNTRY”

ia Maisashvili, head of Leaders’ School, estimates that “there are economic stagnation and hopelessness in the country”. “In the first instance, economical and educational objectives should be determined”, the expert regards and adds that “nearly a year has passed, but none of them are determined”. We pay attention to the minor cases – needless detentions and further releases and so on, he notes. According to Maisashvili, the previous government “has led the county to the catastrophe” and now, the ruling coalition “must make correct conclusions from the made mistakes”. “I want new government to be successful, but I have a big disappointment”, Maisashvili declares and names 2 key tasks for Georgia – during 5 years, the country should enter the list of 15 most educated nations and “the country’s economic development should be dynamic enough in order to reach level of Eastern European countries”.

TURKISH ANADOLU GROUP TO MAKE NEW INVESTMENTS IN GEORGIA

nergy Minister Kakha Kaladze declared that Turkish Anadolu Group expressed the will to invest additional $300 million in Georgia’s energy sector. The Ministry has already started working on the projects, which might be interesting for the company, the Minister told journalists today. To remind, Anadolu Group’s subsidiary company Georgian Urban Energy is already engaged in construction of ParavanHES (Samtskhe-Javakheti region), which investment cost makes up $125 million.

TBILISI AIRPORT RUNWAY DISAPPROVED

amaz Gaiashvili, director of Georgian Airways (AirZena), insists that runway of Tbilisi Airport is defective, while air controllers lack the proper skills. In his turn, pilot Giorgi Inasaridze excludes technical problems in the airports and points at permanent control in this direction. Giorgi Kodua, founder of Sky Georgia, considers that all documents, which have been signed under economy ministership of Vera Kobalia, should be reviewed. These documents do not protect interests of Georgian companies, he declares.

Kodua points at monopolistic status of TAV Georgia (airport operating company). “All companies are obliged to apply the service, offered by TAV Georgia”, he says. It should be noted that Ministry of Economy holds now negotiations with TAV Georgia regarding construction of the second runway. The Ministry considers that previous contracts signed with this company should be reviewed. In its turn, TAV Georgia declares that if negotiations fail, the agreements will remain in force, which envisages management of the airport until 2027.

HEAD OF RUSHYDRO TO VISIT GEORGIA IN NEAR FUTURE

eorgian Energy Minister Kakha Kaladze declared that Yevgeny Dod, chairman of the management board of Russian RusHydro, will visit Georgia in near future. As Kaladze told journalists today at the meeting held within initiative Georgian Government for Open Governing, RusHydro has keen interest in investments, but no concrete decisions have been taken so far. The Minister refrained from specifying and noted only that the decisions will be announced after this visit.

AVERAGE CONSUMER’S LIVING WAGE MADE UP 132.6 LARI IN JUNE

akstat reported that living wage of average consumer amounted to 132.6 lari in June. The living wage of average family made up 251.1 lari. To remind, these showings in May were 132.8 lari and 251.4 lari, respectively. In June of 2012, they amounted to respective 132 lari and 249.9 lari.

ALCOHOLIC BEVERAGES EXPORTS GROW BY 24%

ational Wine Agency of Georgia reports that 7 wine companies have already exported production on the Russian market: GWS – 280,000 bottles, Dugladze Wine Company – 270,000, Kakheti Traditional Winery – 250,000, Wine Cellar’s Door – 108,000, Batono – 72,000, Tbilgvino – 30,000, Georgian Wine – 15,600. According to head of the Agency Levan Davitashvili, average cost of Georgian wine in Russia makes up $3.5 and “it is well sold”. The producers plan to sell up to 10 million bottles, the volume, which is twice less comparing to the rate, fixed before Russian embargo.

Regarding adulteration, expert of viticulture and agriculture Giorgi Barisashvili declares that Georgia exports wine of high quality and “we are not responsible on the next activities”.

BUSINESS & ECONOMY July 22, 2013 #14

caucasian business week

LEADING GDP INDICATOR FOR GEORGIA The Georgian economy muddling through with growth rates in the 2-3% range

ISET PI has updated its forecasts for Georgia’s real GDP growth rates using the May 2013 releases of predictor indices. The updated (fifth) growth forecast for the 2nd quarter of 2013 was revised downward from 3.9% to 2.4%; the second growth forecast for the 3rd quarter of 2013 stands at 1.7%. Meanwhile, Geostat announced the official summary statistics for the 1st quarter of 2013, revising GDP growth rate upward from 1.9% to 2.4%.

THE “WIZZ AIR EFFECT” OR HOW GEORGIA BECAME PART OF THE GLOBAL ECONOMY

n Monday evening I am taking the express train from Tbilisi to Samtredia with my wife and two kids (business class, 120GEL). We plan to stay overnight in a little family hotel (40GEL), and at 6.30am we’ll board the Wizz Air flight to Katowice, Poland, at the cost €40 a person and €35 per suitcase (one way). Seat reservations, luggage, train and guesthouse included, the roundtrip to Poland will cost my family around €700 compared to €1,500-2,000 using any other, conventional option. A real bargain! (even if we ignore the fact that my wife’s family is actually from Katowice!) The renovation of Kutaisi airport and entry by a low cost carrier (LCC) are significant events in Georgia’s modern history. Yes, for now the choice of destinations served by Wizz Air is very limited and commuting from Tbilisi to Kutaisi presents a formidable challenge, certainly for the business travelers among us. Because of these limitations, in the first three months since opening in late September 2012, Kutaisi served a miniscule 4,000 passengers per month, as compared with the 2012 Tbilisi average of 100,000/month. Yet, the Kutaisi/Wizz Air option will no doubt have a strong positive impact on Georgia’s economy and its connection to the rest of the world. Low cost carriers, such as Wizz Air, are a boon for competition in the travel industry. The 1993 report by the U.S. Department of Transportation coined the term “Southwest Effect” to describe the plummeting of fares and increase in the amount of travel to and from destinations that became part of the Southwest Airlines network. Airlines competing with Southwest Airlines resisted its entry fearing for their share and profitability in markets in which they enjoyed a near-monopoly. To some extent, their fears were justified: Southwest Airlines is currently one of the largest US carriers, driving its competitors out of business and enjoying near-monopoly in many markets (which, ironically, implies a reversing of the “Southwest Effect”). Of course, Kutaisi and Tbilisi are far from being perfect substitutes, which for the time being limits the impact of Kutaisi/Wizz Air on competition. Due to infrequent flights, limited choice of connections, remote airport location and a lack of a convenient train/road link, Kutaisi is not really an option for Tbilisi-bound business travelers. Almost all Asian destinations – an increasing source of visitors to Georgia – are not yet served by Kutaisi airport. Also, Kutaisi does not yet have sufficient capacity to handle cargo, which is likely to become a subject of fierce competition in the future. That said, we do already observe competition on some of the most popular routes e.g. to/from Ukraine and Poland. Most directly affected are Ukraine International Airlines (about 10% of Tbilisi airport passenger traffic in 2012), Aerosvit and the Polish LOT, which serve the same destinations as Wizz Air (Donetsk, Kharkov, Kiev, and Warsaw). The prices offered by Wizz Air are a fraction of airfares on the conventional carriers. Yet, at least for now, the gap appears to persist:

Economic activity, particularly in the private sector, is slowly recovering from the lows recorded late in 2012. For now, “good” and “bad” months continue to alternate. The May data do not look as good as the ones from April (which was an exceptionally good month), however, they are quite positive when compared to the earlier period in 2013. Some of the important positive trends have been maintained, giving reasons for cautious optimism as far as the longer term forecasts are concerned. For instance, total deposits, both in domestic and foreign currencies, continued to grow y/y by 8.4% and 26.2% respectively. For comparison, the corresponding growth rates from April were 6.7% and 21%.The money aggregates also maintained their high growth rates, with M3 growing by 13% and M2 growing by 14% (growth rates were standing at 19.4% and 11.9%, respectively, in April). The price indices continued to provide positive signals as well. The Producer Price Index (PPI) lost -0.5% and the CPI took one more step away from the deflationary trend. After April’s -1.7%, CPI changed by a miniscule -0.1% in May. The CPI data are already available for June, and we are glad to see that it started on an upward trend after a long period of deflation. All this may indicate that the Georgian private sector has finally started expanding, albeit at a modest pace. Similar to the CPI, imports show signs of recovery from the slump. In May, imports lost only 3.2% y/y compared with much larger declines in previous months (9.5% in March and 7.2% in April). Insofar Georgian producers heavily rely on the imported goods as inputs, a recovery in imports may signal a recovery in domestic output. One piece of bad news, however, is that exports ended up in the negative territory, losing 8% (y/y) after having a solid 17.2% increase in April. In addition, the data on money inflows (mostly remittances) is far from encouraging. In May, money inflows declined by 1.7% suggesting that the economic slowdown in Russia and Europe is negatively affecting the wellbeing of Georgian households. Electricity consumption, another key indicator of economic activity, grew by a very modest 2.2%, which is particularly disappointing given its solid 10.1% growth in April. Finally, ISET-PI’s Consumer Confidence Index, which is not included in our forecasts, is also reflecting the rollercoaster-like nature of Georgia’s economic recovery. After dropping to -7.6 points in March, it inched up to -6.4 in April, but then fell again to -11.2 in May. ISET Policy Institute

EXTERNAL MERCHANDISE TRADE OF GEORGIA IN JANUARY- JUNE 2013 Source: online search, July 2013 In addition to applying (moderate) downward pressure on airfares, Kutaisi Airport and Wizz Air help increase the overall volume of passenger traffic, making Georgia more accessible for European hikers and Ukrainian skiers, on the one hand, and making travel abroad (or back home) more affordable for many young Georgians, on the other. This conforms to the view of Georgian Airports Union’s director Ketevan Aleksidze, whom we interviewed in November 2012. According to Aleksidze, the two airports (Kutaisi and Tbilisi) serve different clientele: “those using Kutaisi airport are completely different, for instance, backpackers from Europe who wouldn’t have come otherwise”. While perhaps true in the short run, with the further advancement of the East-West highway, and to the extent to which the state-owned “Georgian Railway” wakes up to the new Georgian dream, we are likely to see a significant portion of cargo and passenger traffic diverted to Kutaisi. This will apply strong pressure on airport fees charged by the Turkish monopoly (TAV) operating the Tbilisi and Batumi airports while creating the conditions for additional low cost carriers to enter the Georgian market. Finally, we should not forget that Kutaisi is the geographic center and historical capital of Western Georgia. The new David the Builder airport thus serves an important regional development function. As discussed on the YFN blog, in addition to supporting the regional tourism industry, Kutaisi airport will add to the limited air freight capacity from Batumi, opening up new possibilities to develop highvalue horticulture exports of cut flowers, citrus and fresh herbs from Western Georgia. Importantly, Wizz Air is not the only carrier operating out of Kutaisi Airport. Regular flights and charters are also offered by Ural Airlines, S7 Airlines (Sibir), Belavia and Georgian Airlines, connecting Imereti to Russia, Belarus and even Israel. And this is just the beginning. ISET Policy Institute

xternal Merchandise Trade of Georgia in January- June 2013 (Preliminary) External Merchandise Trade (excluding non-organized trade) of Georgia amounted to USD 4713 million in January-June 2013 (preliminary data), 3 percent less from the previous year. The value of export grew by 9 percent and reached USD 1236 million, while import decreased by 7 percent with respect to the same period of the previous year and amounted to USD 3477 million. Trade deficit amounted to USD 2241 million and share in trade turnover reached 48 percent.

The tables below shows dynamics of the external merchandise trade statistics indicators in JanuaryJune 2009-2013.

8 ADB ASSISTS NATIONAL BANK OF GEORGIA TO INTRODUCE BASEL II REGULATORY RISK-BASED STANDARDS

rom 15 to 19 July 2013 the Asian Development Bank (ADB) and National Bank of Georgia (NBG) host a training seminar on Financial Reporting & Disclosure as part of an ADB-financed Financial Regulators and Supervisors Capacity Building Initiative. Ms. Kathie Julian, ADB’s Resident Representative in Tbilisi, Georgia thanked NBG for their excellent efforts in hosting this seminar with wide regional participation. In her welcome speech she stressed that “the seminar is part of ADB’s ongoing support to help the NBG to introduce Basel II regulatory risk-based standards. This assistance package taps into the large potential for growth of economic activity and employment through the adoption of Basel banking standards, and best practice supervision of securities markets (IOSCO principles) to achieve banking stability, transparency and good governance.” The week-long seminar is attended by 25 financial regulators from central banks, ministries of finance and securities regulatory agencies from 8 countries in the region including Afghanistan, Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan, Turkmenistan, Uzbekistan as well as Georgia. The seminar is being presented by banking experts from Pakistan and Australia who will provide insight into best practices and the practical aspects of implementing international standards. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including cofinancing of $8.3 billion.

BANK CONSTANTA PROFITS IN 2Q13 MARKED 5.4 MILLION GEL

ank Constanta reported net profit of 5.4 million lari for the 2nd quarter. This volume has increased by 15.9%, if compared with the same quarter of previous year. In the reporting period, total assets of Constanta amounted to 301.76 million lari (year-on-year growth – 44.3%). Net loans amounted to 236.68 million lari (year-on-year growth – 1.5 times). Ratio of idle credits to total loans made up 3.8% against of 2.09% in the same period of 2012. Return on assets (ROA) made up 3.9% against of 5.11% in the same quarter of last year, while return on equity (ROE) – 27.57% against of 35%. Ratio of liquid assets to total assets made up 10.67% against of 14.74% in the same quarter of 2012. Total liabilities of Constanta amounted to 258.54 million lari (yearon-year growth – 44.5%). Demand deposits totaled to 5.38 million lari (decline – 61%), fixed deposits – to 52.36 million lari (growth – 2.3 times). In the 2nd quarter, Constanta’s shareholder structure has changed: TBC Bank owns 86.29% (86.69%, as of March 31), OikoCredit – 9.39% (9.43%), private individuals Levan and Tamar Lebanidze – 2.69% (instead of 2.54%).

FINANCIAL DATA OF BASIS BANK SHARPLY IMPROVED

SC Basis Bank competed first half 2013 with 4,34 million GEL profit (first quarter - 3,348 million GEL). BY July, deposit portfolio (without banks’ deposits) is 183 million GEL (first quarter - 117 million GEL), loans 141,4 million GEL (first quarter - 114 million GEL). In the second quarter deposits increased by 56%, loans - by 24%. Overall obligations are increased to 237 million GEL (first quarter - 162 million GEL). Bank actives have increased by 71% from the beginning of the year and equaled to 342,8 million GEL by the end of the second quarter. Chinese Hualing made $30 million injection in the Basis Bank’s supervisory capital. Stock capital also increased and share of Chinese company increased to 96,03% in the bank (first quarter - 93,49%). Total issued stocks (declared capital) as well as sold stocks (cashed capital) was 9 078 780 by the end of the first quarter. Among them sold stocks amounted to 15 433 924 GEL. Bank’s stock capital is 106 million GEL now (first quarter - 54 979 887).

BANKING NEWS July 22, 2013 #14

caucasian business week

BOTSWANA DELEGATION VISITED NBG

ational Bank of Georgia (NBG) hosted today Botswana delegation, which has visited Georgia with funding of the World Bank. During the meeting, experience of reforms was shared, NBG reported. As NBG’s president Giorgi Kadagidze said, delegation of Botswana (which has no outlet to the sea) expressed interest in connection of Georgia’s access to the sea. To note, Georgia and Botswana established diplomatic relations in 2010. According to Georgian National Tourism Administration, no visitors have arrived from Botswana during 6 months of this year, while there was only one visitor in the same period of last year. Trade turnover between the 2 countries is too small. According to Sakstat, Georgia’s export to Botswana in 2001-2012 totaled to $18,900, while import to Georgia from this country – to $9,300.

ZOLOTAIA KORONA LEADS IN TERMS OF REMITTANCES TO GEORGIA

ational Bank of Georgia reported that in terms of remittances, transferred to Georgia in the 2nd quarter of this year, Zolotaia Korona occupies the first place. During the reporting period, this system accounted for $79.23 million (22% of total remittances transferred to the country), increasing the volume by 23.9% if compared with the 1st quarter. On the other hand, transfers from Georgia amounted to $9.7 million (25.7% of total volume, growth – 24.4%). Western Union occupies the second place, moving forward by one place since the previous quarter. Remittances of $50 million (13.9% of total, quarter-on-quarter growth – 40.4%) were transferred to Georgia through this system. Western Union occupies the first place in transfers abroad – $11.53 million (30.4% of total, growth – 56%). Intel Express occupies the third place, accounting for 13.2% ($47.2 million, growth – 6%). Remittances abroad through this system amounted to $4 million (10.6% of total, growth – 11.5%). National Bank of Georgia reported that 3 countries accounted for 58.8% of total remittances, transferred abroad in the 2nd quarter of the current year ($37.9 million). These countries were still Russia, Ukraine and Greece. Russia still occupies the first place, accounting for 33.5% of total volume. In the reporting period, $12.7 million was transferred to this country, increasing by 27%, if compared with the previous quarter. Ukraine occupies the second place (14.2% of the amount). To this country, $5.4 million was transferred (quarter-on-quarter growth – 8%). Greece occupies the third place (11.1% of the amount), accounting for $4.2 million (growth – 35.5%).

VTB BANK GEORGIA OFFERS 1-MONTH LOANS TO SALARY PROGRAMS’ MEMBERS

TB Bank Georgia announced that those clients, who get salary through the bank, may apply for 1-month loan. Minimal volume of the loan is 50 lari, while maximal – 300 lari. Commission fee makes up 10%, but no less than 20 lari, the bank said, not indicating any rate of interest. The loan may be prolonged automatically, though borrowers will be charged monthly by 10% commission off their account balance, VTB Bank Georgia told Sarke.

LIBERTY BANK WILL INTRODUCE A NEW MORTGAGE CREDIT

iberty bank offers preferential mortgage loan. Liberty Bank’s director general George Arveladze will make Presentation of the new loan product on July 19. New loan’s interest rate is significantly lower than previous offer of Liberty. Currently mortgage credits are issued with annual 14% interest rate. Share of mortgage loans does not exceed to 10% of the bank’s portfolio. Low share is defined with the fact, that this direction is not especially priority for the Liberty, as universal bank. Product presentation will be held on July 19, at 12:00 in the Liberty Bank’s head office.

LIBERTY INTRODUCED UNIVERSAL MORTGAGE

iberty Bank offered customer universal mortgage loan of 8,99%. George Arveladze, director general of the bank presented loan conditions to the journalists on Friday. The credit is denominated in GEL, loan amount is 5 000 - 300 000 GEL, for 6 months to 15 years. Interest rate starts from 8,99%, depending on the customer’s income. Getting Mortgage loan is possible to buy a car, renovate or build land, residential or commercial areas, for consumer aims, also consolidation or refinancing of the loans issued by 1 or several other banks. Debtors will get bonuses; free basic package of Liberty account, which is 18 GEL for single payment, 2 GEL monthly; Free prime multi-currency Smartivi Card, with monthly accrued on GEL balance, annual 10%. Free credit card magic Card (which costs 20+20 GEL), with double credit limit of the debtor monthly salary; premium VISA or MasterCard; on the GEL account, accrued 7% annually; free; Internet banking and electronic services coming soon.

PROCREDIT BANK GEORGIA ENDS JANUARY TO JUNE PERIOD IN 7.6 MILLION GEL PROFITS

SC Pro Credit Bank (Georgia) completed first half 2013 with 7,58 million GEL profit (first quarter 2013 - 3,3 million GEL). June profit is 1,2 million GEL. BY July 1, deposits amount 5,5,3 million GEL, credit portfolio - 693,03 million GEL, overall obligations 852,8 million GEL. Bank’s actives equal to 979,8 million GEL. JSC Procredit Bank is a member of international banking group, operates in Georgia since 1999. It’s mainly oriented on the crediting of small and medium-size businesses. 100% of the bank stocks belong to Procredit Holding (ProCredit Holding AG &Co. KGaA). Out of 9 beneficiaries, more than 10% belongs to: IPC (17,88%), KFW (13,74%), DOEN Foundation (13,44%), IFC (10,39%). Stock capital of the bank equals to 127 million GEL .

CARTU BANK ENDS 1H13 IN 28.5 MILLION GEL PROFITS

SC Cartu Bank completed January-June 2013 with 28,5 million GEL profit (first quarter 2013 - 1,938 million GEL). By the end of the second quarter, bank’s deposit portfolio is 109,8 million GEL, loans - 317,8 million GEL, overall obligations - 252,6 million GEL. For the reporting period, bank actives equal to 414,4 million GEL (first quarter 2013 - 397,6 million GEL). Bank operates since 1998, 100% of the stocks belong to Uta Ivanishvili. Bank’s stock capital is 161,8 million GEL (first quarter 2013 - 135 million GEL).

BTA ENDS 1H13 IN 1.806 MILLION GEL LOSSES

SC BTA Bank (Georgia) completed January-June 2013 with 1 806 143 GEL loss (01/06/13-1,463 million GEL). By July 1, bank’s deposits (without banks’ deposits) are 42 million GEL (01/06/13 - 40,5 million GEL), credit portfolio - 73 million GEL (01/06/13 -75 million GEL), overall obligations 102,4 million GEL (01/06/13 - 101 million GEL). Bank actives equaled to 127 million GEL (01/06/13 -124 million GEL). BTA Bank operates since 2001 on Georgian market. 49% of the stocks belong to JSC BTA BANK, 51% - to Silk Road Financial Groups. Large beneficiaries are fund Samruk Kazian (39,9%) and George Ramishvili (31,6%). Stock capital of the bank equals to 24,7 million GEL.

BEER FESTIVAL 2013 July 22, 2013 #14

caucasian business week

NATAKHTARI STARTED BEER FEST FROM TBILISI It is the fourth year that Natakhtari organizes Beer Festival at the Rose Square. The only Georgian analogue of festivals held in various countries of America and Europe was organized on the last weekend by Company Natakhtari. Natakhtari and the Backgammon Federation even organized a tournament. The competition was held among individuals as well as among clans. The best five winners were representatives of Mchedlishvili Clan who defeated the Bregvadze clan. The finalists were awarded by Natakhtari with special prizes. Any person could attend the festival. Guests had the opportunity to take part in many entertaining events or witness those. In addition to some interesting contests, a competition was held in beer drinking. Festival guests had the opportunity to listen to live music of Mallow, Svansikh, Loudspeakers, Salio, Zarebi, Zurgi and Elene Kalandadze. The event was finalized with the Group Shin. It is remarkable that Natakhtari offered different products to festival participants this time. Keiser and Kozel appeared for the first time at the festival. Apart from these beers, visitors could taste Natakhtari, Mtieli and Efes. Do not think that only beer fans were allowed to attend the event: there was a special corner arranged for kids. Parents had the opportunity to leave children with Natakhtari Lemonade at the mini-entertainment center and drink beer themselves. Nino Surmava, Natakhtariâ&#x20AC;&#x2122;s PR Manager: - The festival is getting more and more popular. The number of participants in the first year was 10,000 and 25,000 last year. We do not know yet what will be this year number, however if we judge by the volume of consumed beer it could

be even more. This shows that beer festival is successful and people enjoy it. We have grown during this period, those small deficiencies that were noticed in previous years were determined by lack of experience. We gradually improved those. First of all, it needs to be noted that beer fans can attend the festival with their kids, who can enjoy staying at childrenâ&#x20AC;&#x2122;s corner while parents have beer. Kids will be entertained by animators. - As far as we are informed this year Natakhtari plans to organize the festival in various cities of Georgia. - In our opinion, we already have sufficient experience in holding festivals and have the ambition to offer similar events to that part of Georgian population who could not attend festival because of various reasons. Therefore, we decided to reach these people. Every weekend, prior to August 25, beer festivals will be held in 7 other cities. Rustavi is selected for the next weekend, then Telavi, Gori, Zugdidi and the festival will end at the black sea cost in Poti and Batumi. Otho Lezhava, the Organizer: - The idea of having the festival appeared four years ago. It is a large-scaled event growing and developing every year. In addition, new beer brands are being added. What is the most important, people like the festival, visit it and consume much beer. - Is it planned to expand the festival and present foreign beers as well? - Foreign beers were presented at this festival. For instance, Kozel is a Czech beer while Kaiser German. This means that Natakhtari is developing. Moreover, festivals proved that many people in Tbilisi like beer, especially Natakhtari.

10 Azerbaijan

h European Bank for Reconstruche tion and Development (EBRD) is considering an opportunity of participation in financing of the Trans-Adriatic Gas Pipeline (TAP) and the Trans-Anatolian Gas Pipeline (TANAP) projects, the EBRD president Suma Chakrabarti said at a press conference. “These projects are very important for Azerbaijan and the entire region,” Chakrabarti said. “Azerbaijan can play an important role in Europe’s energy security through these projects. We consider this possibility and discuss the prospects for cooperation in this sphere with the Azerbaijani government. Before making a decision, a wide range of issues must be discussed and much work must be conducted.” The consortium of Azerbaijani Shah Deniz field development officially announced the selection of TAP as the route to transport its gas to Europe. Another pipeline vying for Azerbaijani gas transportation to Europe was Nabucco West. The TAP project is designed to transport gas from the Caspian region via Greece and Albania and across the Adriatic Sea to the south of Italy and further to Western Europe. TAP’s initial pipeline capacity will be 10 billion cubic metres per year, but is easily expandable to 20 billion cubic metres per year. TAP’s shareholders are AXPO of Switzerland (42.5 per cent), Norway’s Statoil (42.5 per cent) and E.ON Ruhrgas of Germany (15 per cent). The TANAP project envisages gas transportation from the Shah Deniz field to Europe via Turkey. The initial capacity of the pipeline is expected to reach 16 billion cubic meters per year. Around six billion cubic meters will be delivered to Turkey and the rest to Europe.

AZERBAIJAN TO BUILD RESORT WORTH €500 MILLION IN MONTENEGRO

zerbaijani investors will build a new luxury resort worth €500 million in Montenegro, Russian media reported referring to the Montenegrin government. The statement was made following a meeting of Montenegro Prime Minister Milo Dukanovic with businessmen on July 12. The resort with the area of 25 hectares will be located on the shore of the Bay of Kotor on the site of the old barracks in Kumbor town. It is planned to build here a hotel with apartments and villas and a mooring for common and mega yachts, pier for fishing boats and fish market, some 70 shops, cafes, restaurants, a tennis center, a heliport and other facilities. A tender for the lease of the former military facility for a 90-year period was held in Montenegro in 2012. Azerbaijan’s State Oil Company SOCAR, represented by Triangle Investments and Development Limited, won the tender. Azerbaijan established Azmont Investments LLC to realize the project in Montenegro. Azmont initially was to invest €250 million in the project within eight years. However, later a decision was made to increase the amount of investment up to €500 million. The new facility will include a network of One&Only resorts, focused on the very wealthy clients. This hotel in Montenegro will become the first of the network in Europe. The owner of One&Only network, Southern African billionaire Sol Kerzner, said “this place is ideal for our first European resort”. Earlier in May, Prime Minister Milo Dukanovic met with Azerbaijani President Ilham Aliyev in Podgorica, Montenegro. According to Dukanovic, relations between the two countries have been developing dynamically, which resulted in concrete projects in tourism and investment sectors. The project related in Kumbor is the greatest Azerbaijani investment project in tourism outside the country.

AZERBAIJAN caucasian business week

July 22, 2013 #14

MOODY’S: AZERBAIJAN’S BANKING SYSTEM REMAINS STABLE

he outlook on Azerbaijan’s banking system remains stable, Moody’s Investors Service said in a new report Banking System Outlook: Azerbaijan, published in London on July

16. The key drivers of the outlook include a favorable operating environment, improving asset quality, sufficient capital buffers to absorb losses. According to the report, the credit-positive factors will remain counterbalanced by the banking system’s structural weaknesses, related to the lack of diversification in Azerbaijan’s economy,

banks’ limited access to long-term funding, low transparency and corporate-governance deficiencies, and high exposure to single borrowers and related parties. “Supportive macroeconomic conditions will remain a key factor that underpins our stable outlook for the banking sector over the 12-18 month outlook period. According to our forecasts, Azerbaijan’s GDP will increase by 3.5 percent in real terms in 2013 (2012: 2.2 percent), driven by a continued strong performance in the non-oil economy which benefits from government-led investments in large-scale infrastructure proj-

ects,” says Lev Dorf, a Moody’s Analyst and the report’s author. According to him, the strong growth in Azerbaijan’s non-oil sectors will, in turn, boost banks’ asset quality, leading to a fall in the level of problem loans (overdue by more than 90 days, and restructured) to around 11 percent of gross loans during the outlook period, from 14 percent at year-end 2012. In Moody’s view, the trend of improving asset quality metrics will also continue to contribute to the stability of capital levels. The rating agency says that most banks have sufficient capital to absorb losses under the agency’s central scenario, and it expects most banks’ funding and liquidity profiles to remain stable, supported by sufficient levels of liquid assets, low reliance on market borrowings and growing customer deposits, the report said. Moody’s notes that improvements in asset quality metrics should also lead to marginal improvements in banks’ profitability over the outlook horizon against the background of favourable credit conditions and lower loan-loss provisions in Azerbaijan. However, the rating agency says that the system-average profitability metrics will remain constrained by weak net interest margins driven by low-interest corporate loans that dominate most banks’ loan portfolios.

ADB TO ALLOCATE $50 MILLION TO AZERBAIJAN BANK

he Asian Development Bank plans to allocate a large loan to AccessBank in Azerbaijan, ADB said. According to ADB, the $50 million credit will be directed to supporting the activity of AccessBank in financing micro, small and medium-sized enterprises in Azerbaijani regions. The funds allocated by ADB will support the diversification of the regions of Azerbaijan and the non-oil sector, the bank said. “Due to the well-organized control and dialogue with the management of AccessBank, ADB will also support the efforts of the bank on implementing high standards of corporate governance, social, environmental and other standards, as well as on expanding risk management,” it said. In June, ADB forecast that Azerbaijan’s non-oil

sector will be a major driver of growth in 2013 and over the next few years. Azerbaijan is a member of ADB since 1999. The country’s share in the bank’s capital is 0.5 percent. AccessBank was established to provide financial services for Azerbaijan’s micro and small businesses as well as families with middle and low income. It is recognized as the most reliable bank in Azerbaijan by international rating agency Fitch (“BB+ outlook - stable). At the annual awards ceremonies of Global Finance (2011) and Euromoney (in 2012, 2011 and 2010) AccessBank was named The Best Bank in Azerbaijan and won The Banker’s award “Bank of the Year” in 2011. AccessBank is owned by six international financial institutions, including AccessHolding, operating in micro financing as a strategic investor, the

European Bank for Reconstruction and Development, the International Finance Corporation, the Black Sea Trade and Development Bank, German state development bank KfW, and German company LFS Financial Systems GmbH. The bank, founded in 2002, has 37 branches with 1,565 employees.

SWITZERLAND TO INVEST OVER $30 MILLION IN AZERBAIJAN

witzerland will allocate 29 million Swiss francs (about $30.6 million) to Azerbaijan in the next four years to implement various projects, the Swiss embassy in Azerbaijan said on July 16. Switzerland’s investments will be directed to three different areas. One of them is economic development and employment, and most of the funds will be spent for this purpose. A special emphasis will be on the development of the market. Another area the investments will be channeled to is governance and public services to provide assistance to the local self-government bodies. The funds will also be designated for defense and human security. The other two South Caucasus countries, Georgia and

Armenia, will also receive Swiss investments. Armenia will receive the same amount, while 41 million Swiss francs (about $43 million) will be allocated to Georgia.

In April Azerbaijani Economic Development Minister Shahin Mustafayev said that Swiss companies have invested $87.7 million in the non-oil sector of Azerbaijan. Switzerland is one of the largest investors in the non-oil sector of the fast-growing Azerbaijani economy. More than 70 companies with Swiss capital are registered in the country. Azerbaijani companies are also interested in the Swiss economy. Azerbaijan’s state energy company SOCAR has invested 380 million Swiss francs ($322.3 million), and a representative office of the company is operating in Switzerland. Azerbaijani-Swiss economic relations are successfully developing and expanding. Currenty, there is legal framework for expansion of cooperation, which opens up vast opportunities for further development of trade.

ARMENIA July 22, 2013 #14

FIRST FREE ECONOMIC ZONE IN ARMENIA WILL BECOME EFFECTIVE FROM AUGUST 1

he first free economic zone in Armenia will come online from August 1 this year on the territories of Mars plant (77,000 square meters) and the Yerevan Research Institute of Mathematical Machines (27,000 square meters), economy minister Vahram Avanesyan said today at a Cabinet session. Earlier on February 2 last year the Armenian government approved a project designed to create free economic zones in the territory of Mars plant in Yerevan and at Yerevan Scientific Research Institute of Mathematical Machines. Both were handed to Russia to clear Armenia’s $100 million debt . It also approved an application from Sitronix company to manage the free economic zones. The free economic zone will host high tech companies. Earlier preliminary agreements were reached with companies from USA, Iran, India and Great Britain. JSC Sitronix is one of the largest high-tech companies in Russia, CIS and Europe, specializing in telecommunications, information technology and microelectronics. It is an affiliate of JSFC Sistema — the largest diversified public financial corporation in Russia and CIS, serving more than 100 mln consumers. Sitronix is listed on the London Stock Exchange since February 2007, and its shares are also traded on RTS.

caucasian business week

EBRD PRESIDENT SIR SUMA CHAKRABARTI TO VISIT ARMENIA

he President of the European Bank for Reconstruction and Development (EBRD), Sir Suma Chakrabarti will arrive on his first official visit to Armenia on 18 July, during his tour of the South Caucasus countries. During the 2-day visit Mr. Suma is to meet with Armenia’s government officials, including President Serzh Sargsyan, Prime Minister Tigran Sargsyan, Minister of Economy and Armenia’s governor to EBRD, Vahram Avanesyan, the Minister of Finance, Davit Sargsyan; the Mayor of Yerevan, Taron Markaryan; the Chairman of Central Bank, Artur Javadyan as well as the representatives of the local partner banks and businesses. Sir Suma Chakrabarti’s visit to Armenia coincides with the 20th anniversary since EBRD commenced its activities in Armenia which the Bank marks this year, with a press conference on Friday, 19th July at 17:30 at the Elite Plaza Building to be followed by a reception. Suma Chakrabarti was elected EBRD president

in 2012 and assumed his position on 3 July becoming the sixth President of the Bank. Earlier, Sir Suma held the post of Permanent Secretary at the Ministry of Justice of the United Kingdom and before that he was holding the same post in the Ministry of International Development. He is a graduate of Oxford and Sussex universities and has worked in the British government from 1984 and was awarded the title of Knight of the Order of the British Empire. The EBRD has been active in Armenia since 1993 and to date has invested over €656 million into 120 projects. Based on the current EBRD country strategy for Armenia approved in May 2012, the Bank’s key priorities are to develop the financial sector and improve access to finance especially for MSMEs, to improve municipal and transport infrastructure, to develop agribusiness and high value-added industrial companies and support sustainable energy and mining projects with high standards of environmental and social protection. In 2012, the EBRD signed 15 projects worth a total of €94 million in Armenia.

ARMENIAN GOVERNMENT OFFERS TAX EXEMPTIONS TO THE COMPANY INJECTING AMD 1.25BLN INTO GREENHOUSE CONSTRUCTION

ARMENIAN, BELARUSIAN ENTREPRENEURS TO GATHER IN YEREVAN THIS FALL FOR FORUM

erevan will host an ArmenianBelarusian business forum this fall, Armenian National Assembly Vice-speaker Eduard Sharmazanov said Tuesday at a news conference summarizing the results of a session of Armenian-Belarusian Inter-parliamentary Commission held from July 7 to 14 in Minsk. He said representatives of the Belarusian Commerce and Industry Chamber and entrepreneurs will travel to Yerevan in September or October to attend the event. Sharmazanov said that both Armenian and Belarusian lawmakers stressed that trade and economic relations between the two nations are lagging behind their political dialogue. “To fill this gap it was decided to establish a subcommission as part of the inter-parliamentary commission for developing trade and economic ties between the countries,” he added. The vice-speaker also said that Armenian and Belarusian legislators also discussed ways to establish a free economic zone for the two countries in Brest. Martin Sargsyan, MP from the Republican Party of Armenia and a member of the Armenian-Belarusian Inter-parliamentary Commission, on his side, said that representatives of nongovernmental organizations interested in development of Armenia-Belarus trade and economic relations will be included in the sub-commission as well. He also said that necessary preparations are being made now to establish the Commerce House of Armenia in Belarus. “Armenia is interesting for Belarus for it is a member of the World Trade Organization, and Belarus is interesting for Armenia because it is a member of the Customs Union,” he said. “It means Armenian-Belarusian joint enterprises will have access to many markets.” According to the National Statistical Service of Armenia, Armenia’s trade turnover with Belarus amounted to $20.1 million in Jan-May 2013 after growing 19.7%, compared with the same period a year before.

overnment of Armenia decided Thursday to offer tax exemptions to Kaga Group company that invests in building greenhouses in Kotayk region of Armenia. The greenhouses take 3 hectares and the total investments stand at 1.25 billion drams. Prime Minister Tigran Sargsyan noted some investors are starting to inject funds into greenhouse construction in Armenia more and more often. It is the fifth time over the last month the govern-

ment has offered exemptions for the companies investing in greenhouses. “This is a profitable business that opens new job places, work all year round and has high export potential,” Sargsyan underscored. According to the revised law “On value added tax” in April 2009, VAT payment for the companies importing to Armenia goods, new technologies or equipment in the amount of over 300 million drams or investment package of which exceeds the mentioned amount, are delayed for three years. ($1 – 410.30 drams).

GDP GROWTH OF ARMENIA ACCELERATED TO 7.5% IN 1Q: EDB RESEARCH

rmenia’s GDP growth accelerated to 7.5% in the first quarter of 2013, according to “Macro-monitoring of the CIS” published by the Eurasian Development Bank. Such economic activity in Armenia is due to high industrial growth rate as a result of increase in agricultural output processing, metal ore mining and primary metal manufacturing, as well as due to relatively strong domestic demand risen by migrants’ transfers (+8.7%). The experts also say despite some growth in export-oriented sectors of Armenia economy, the foreign economic activity has deteriorated. It occurred due to reduction in international reserves and devaluation of the national currency. “EDB anticipates a slowdown of GDP in Armenia to 5% in 2013. Inflation rate is expected to reach at least 5.5%,” the document says. As a whole, the EDB analysts note the industri-

al production tumbled in the CIS (-0.2%) amid slowdown of export and investments. Therefore, annual GDP of the CIS dropped by 1.7%. At the same time, EDB forecasts 3.3% hike in CIS economies in 2013 and acceleration to 4% in 2014. “We suppose that the economic growth in the CIS was not full in 2012 and first half of 2013. If no significant outer or inner shocks occur, the CIS economy may bound back to its post-crisis growth rate (2010-2011),” the research states. According to the National Statistical Service of Armenia, economic activity in Armenia rose by 5.3% in January-May 2013 from a year earlier. The GDP is projected at 6.2% in 2013. EDB was established by Russia and Kazakhstan in January 2006 with the purpose of support to market economy of participant-states. Charter capital of the bank exceeds $1.5 billion. Participant-states of the bank are Russian Federation, Kazakhstan, Armenia and Tajikistan.

PRICES FOR BUYING GOLD DROPPED BY 17.9% TO 16, 345.92 DRAMS OVER 6 MONTHS

he State Depository of Precious Stones and Metals Agency, an affiliation of Armenian Finance Ministry, has set new prices for government agencies to buy and sell precious stones and metals which are effective for this week. The gold is to be bought at 16,345.92 drams (-17.9% or 3584,58 drams from earlier this year) and sold at 17,767.3 drams (-49,81 drams); Gold price per ounce dropped by 28% to $1192 in June, according to the World Gold Council. Prices for buying gold this week rose by 0.76% or 115.63 drams to 15,268.40 as of 15 July, and to be sold at 16,596.09 (up by 125.69 drams). ($1 – 410.30 drams).

CENTER OF REMOTE ACCESS TO EDUCATION RESOURCES TO BE OPENED FOR CIS ENGINEERS IN YEREVAN

center of remote access to educational resources will be opened for CIS engineers in the State Engineering University of Armenia Friday, supported by Rossotrudnichestvo rep office in Armenia. The access center will give opportunities of distance learning in 56 technical and technology training programs, spokesperson of Rossotrudnichestvo office in Armenia Liana Azoyan said. The center will be opened by Armenia’s ministry of education, the Moscow State technical University after Bauman, Rossotrudnichestvo rep office in Armenia, representatives of Armenia’s higher schools, enterprises and organizations, she said. Similar centers have been already opened in Yerevan State University, as well as in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan and Ukraine. In the framework of the project a training course on global navigation satellite systems will be carried out for the audience of State Technical University of Armenia.

“MIKA CEMENT” PLANT RESUMES OPERATING DUE TO FUNDING FROM VTB BANK ARMENIA

ika Cement” plant resumes functioning as it receives lending from VTB Bank (Armenia). “The bank allocated non-revolving line of credit to “Cement Service.” One part of the funding was delivered for “Mika Cement” plant’s purpose loan to fulfill its loan commitments, including natural gas and salary debt redemption, securing of money for guarantees at VTB Bank (Armenia),” the bank’s press office reported Thursday. The rest of funding was spent on upgrading equipment and some other expenses. VTB Bank (Armenia) General Director Yuri Gusev said the bank had been cooperating with “Mika Cement” for many years, and “we are happy our bank is supporting one of the two most important cement producers in resuming its operation.” “Our goal is to reproduce cement, assist the plant in boosting and improving the quality and volumes of cement. We hope our partnership will go on developing furthermore,” he said. “Mika Cement” plant produces nearly 10 brands of Portland cement. The plant exports its production to Iran, Iraq, Europe and the Russian Federation. VTB Bank (Armenia) joined VTB Group in April 2004. VTB, the second largest bank of Russia, holds 100% of shares of Bank VTB (Armenia). Bank VTB (Armenia) has 67 branches all over Armenia’s territory. Bank VTB (Armenia) is traditionally reckoned among leaders for general indicators.

12 Kazakhstan

ichard Branson’s Virgin Group is going to enter the telecommunications market of Kazakhstan. The head of Kazakhtelecom, Kuanyshbek Yessekeyev, and board member of Virgin Managеment, Peter Norris, signed license agreement. Guests with the Kazakhs are going to reach targets prescribed in the program document - “the use of telecommunication networks and existing infrastructure of Kazakhtelecom and innovative solutions of Virgin Group”. During the implementation of the agreements, the parties intend to explore the possibility of launching commercial services under the brand name Virgin in Kazakhstan, using the networking capabilities and infrastructure of JSC Kazakhtelecom.

CIS caucasian business week

RUSSIAN STOCK MARKET LOST OVER $300 MILLION OVER NAVALNY VERDICT

election of Citigroup, JP Morgan and HSBC as lead managers of the upcoming issue of sovereign bonds of Kazakhstan in the amount of up to $ 1 billion was officially confirmed by the Ministry of Finance of Kazakhstan. The fact gave grounds to assume that the majority of investors in the transaction will represent the United States, the United Kingdom and Asia. On Monday, July 15, the department of government borrowing of the Ministry of Finance confirmed this information: “The competition ended last week. The winner was a consortium of Citigroup, HSBC and JP Morgan, but so far we have not concluded an agreement. Sides are still preparing the documents.” The department found it difficult to tell the time of the placement itself, it is possible that it could happen this fall.

Turkmenistan

hina, Iran and Kyrgyzstan may join Turkmenistan-Afghanistan-Tajikistan railway project. Construction of the Turkmenistan Afghanistan - Tajikistan (TAT) rail corridor which began in the beginning of June is of great importance to the strategic, political and economic interests of all countries participating in the project, according to the Strategic Planning Institute under the Ministry of Economy of Turkmenistan. The report notes that “China, Iran and Kyrgyzstan may also join the project later.” It is planned that the 400 kilometers-long new TAT railway will come into operation by 2015. Moreover, the Turkmen railwaymen will also lay the Afghan section of the road. “The future rail network will not only connect the countries of the region, but also provide them with access to the markets of more distant states. Such routes will allow the continental and closed Central Asian countries to fully realize their economic potential,” according to the report. This route will open a new corridor between Central Asia and global markets through the ports on the Indian Ocean.

Uzbekistan

ogmec company to conduct uranium exploration in Uzbekistan. The Japan Oil, Gas and Metals National Corporation (“Jogmec”) and Navoi Mining and Metallurgical Combine (NMMC) signed an agreement in Uzbekistan this week. According to it, the Japanese company will conduct uranium exploration at prospective areas in the Navoi region. According to the document, Jogmec will carry out geological exploration in Juzkuduk and Tamdiykuduk-Tulyantash prospective areas upon the terms of business risk for five years. The minimum amount of funding for the first year of operations is $3 million. According to the terms of the agreement, if the plan for the first year is not fulfilled, the investor must pay the cost of the unfulfilled operations to Uzbekistan. If deposits are revealed in the contracted area, the Japanese company will have the exclusive right to conduct direct negotiations and conclude a production sharing agreement with Uzbekistan. It was reported that Uzbek President Islam Karimov has allowed the Japan National Oil, Gas and Metals Corporation (Jogmec) to conduct geological exploration. According to the Uzbek President’s decree, the Japanese investor was provided with significant benefits. Jogmec is exempt from all taxes and mandatory payments to the Social Funds of the Republic, as well as from customs duties on imported equipment for a period of five years. This will be a first for Uzbekistan. Never before has a foreign investor had the right to explore and develop sandstone uranium deposits.

July 22, 2013 #14

310 million following the momentous losses stoked by the 5-year prison sentence of anti-corruption blogger and opposition leader Aleksey Navalny, who was found guilty of embezzling nearly $500,000 in state funds. According to the National Association of Securities Market Participants, the capitalization of the Russian stock market is 817 billion rubles, or roughly $25.2 billion. The MICEX index fell by 1.32 percent, and the RTS dollar-based index managed to fall by 1.52 percent. Therefore the ‘Navalny damage’ can be calculated to be at least $300 million, or 10 billion rubles, according to a Forbes estimate. At 12:30 pm Moscow Standard Time, minutes after the verdict was delivered, Moscow’s two main indexes simultaneously nose-dived. The MICEX dropped 0.7 percent in the first hour and later by 1.51 percent, hitting 1371 points at 13:20 MST. The dollar-based RTS followed, dropping 1.1 percent to 1377 points. At 12:56 pm Moscow Standard Time, Mos-

cow’s main index MICEX dipped 1.04 percent to 1,416.97. All indexes remain in the red with the exception of the RTS Siberia Index, which is has made a collective gain of 1.06 percent since opening this morning. Russian shares hit a four-week low and the ruble has dropped 0.29 percent since the judge handed down the sentence. Russia’s market heavyweights have all posted staggering losses. Sberbank, the country’s largest lender, dropped 2.61 points down 2.58 percent, and VTB, the second largest bank, closed with a 2.56 percent loss with shares valued at 4.67 kopeks. Gazprom, the state-owned oil giant lost 2.17 percent and closed trading at 129.25 rubles, and Rosneft, the world’s largest publicly traded oil company, is down 1.32 percent. Lukoil, the largest private oil company, dropped 0.92 percent but is nearing neutral territory at a 0.06 loss at 16:20 MST. Crude oil, Russia’s leading export, dropped 0.20 percent to $106.28 in New York. Brent Crude oil

dropped 0.46 percent to $108.11. Various brokerage firms estimate the single court ruling could have a negative effect of millions on the RTS index today. Exchange on Thursday morning started to show steady growth, but at 12.25 MSK began to fall on the announcement of the guilty verdict. It is rare for a political event to carry such weight in market activity, especially the case of Navalny, whose fate was announced by the Kirov court on July 5. The sentencing of Navalny has raised doubts among foreign investors, as the numbers show traders eager to sell-off Russian equities in exchange for other emerging markets. The accused denies any wrongdoing and has repeatedly described the case as ‘politically motivated’ and retaliation for organizing mass demonstrations against Vladimir Putin in 2011. The court found Navalny, and Peter Ofitserov, guilty of embezzling roughly $500,000 by buying 10,000 cubic meters of lumber below market value from Kirovles company between May and September 2009. Putin has led a very public campaign to ‘de-offshore’ Russia’s wealth, and to keep investment inside the Federation, and not in offshore investments. In 2012, an estimated $56 billion in capital fled the border, as investors, both foreign and Russian, looked for ‘safer’ investment climates. Many of the transactions were illegal transfers of money. Wealthy Russians stash their wealth in tax havens around the world. Minister Arkady Dvorkovich believes at one point there was over $30 billion in Russian holdings in Cyprus. Navalny’s conviction is “another negative headline for Russia, another reason why funds will hold back and locals will continue to stash money offshore,” Tim Ash, head of emerging market research at Standard Bank Group, told Bloomberg.

GAZPROM TO PURCHASE KYRGYSGAZ BY AUGUST

irector General of KyrgyzGas Turgunbek Kulmurzayev said that Russian Gazprom will sign an agreement on purchase of all assets of Kyrgyzgas within 10 days, RIA-Novosti reported. The deal will be worth only $1. However, Gazprom will have to pay off KyrgyzGas’s $40 million debt. “The government will discuss this issue tomorrow,” Kulmurzayev said. “We can frankly say

that Kyrgyzgas is bankrupt.” Following acquisition of Kyrgyzgas, Gazprom will have the exclusive right to import natural gas to the country and will be protected against expropriation and nationalization in Kyrgyzstan as well as its subsidiaries. In turn, the Russian company guarantees to invest over 20 billion rubles in modernization and reconstruction of Kyrgyzgas’s gas infrastructure in five years.

TURKMENISTAN OPENS FLIGHT IN DIRECTION OF UKRAINE

urkmenistan Airlines will open new flight in the direction of Ukraine in August. The company reported that the regular passenger flights from Ashgabat to Lviv and Lviv to Ashgabat will start on August 4, 2013. Flights will be performed daily. Currently, Turkmenistan Airlines, besides domestic flights, also operates regular flights to Abu Dhabi, Amritsar, Almaty, Bangkok, Birmingham,

Delhi, Dubai, Kiev, London, Moscow, Minsk, Beijing, Istanbul, St Petersburg, Frankfurt and other cities. The further modernization of the Turkmen civil aviation fleet will bring the number of Boeing aircrafts to 31 in the 2016-2020 period. This will allow the opening of new flights from Turkmenbashi to St. Petersburg (Russia), and from Ashgabat to Jeddah, Medina (Saudi Arabia), Kochi, Ahmedabad (India), Samara

(Russia), Hanoi (Vietnam), Vienna (Austria), Sofia (Bulgaria), Budapest (Hungary), Manama (Bahrain), New York (USA) and Toronto (Canada). In April 1993, Turkmenistan became a full member of the International Civil Aviation Organization (ICAO), a specialized agency of the UN. Currently, work is being carried out on the accession of Turkmenistan to the International Air Transport Association (IATA).

WORLD NEWS July 22, 2013 #14

caucasian business week

BERNANKE SEES NEED FOR BACKSTOP FOR MORTGAGE MARKET

ederal Reserve Chairman Ben Bernanke weighed into the contentious debate over the future of the housing finance system on Thursday, saying some sort of backstop for mortgages was needed to protect the financial system in times of stress. However, he stopped short of explicitly endorsing a government role, which many Democrats see as the best approach. “I think a key issue is going to be ... making sure that there is some kind of backstop or protection for situations where the financial markets are in distress,” Bernanke told the Senate Banking Committee. A bipartisan group of senators has proposed winding down government-controlled mortgage financiers Fannie Mae (FNMA.OB) and Freddie Mac(FMCC. OB) over five years as part of an effort to reduce taxpayer support for the market. The two companies, which were seized by the government in 2008 as bad loans threatened their solvency, currently back nearly half of all new U.S. home loans. To fill the role they have played in ensuring a flow of housing credit in good times and bad, the senators would create a government backstop that would kick in times of stress after private creditors had ab-

sorbed large losses. A separate draft bill unveiled by Republicans in the House would also wind down Fannie Mae and Freddie Mac, but it would put much sharper curbs on government guarantees. Bernanke said that if lawmakers created a system in which the government was offering guarantees, they should ensure that the government is appropriately compensated. He also said they should make sure that firms that are repackaging mortgages into securities for investors hold enough capital to avoid taxpayers getting stuck with losses. “I think those would be very helpful if you come to a solution that involves a government role,” Bernanke added. Fannie Mae and Freddie Mac were chartered by Congress to expand mortgage finance but operated as private, profit-making companies. Given the central role they played in the financial system, the government felt compelled to bail them out in 2008 when they almost failed. They were propped up with $187.5 billion in taxpayer funds, but have since returned to profitability and have paid taxpayers about $132 billion in dividends. Reuters

AUSTERITY IN ACTION: GREECE APPROVES TO LAY OFF 25,000 TEACHERS, POLICE

emostrators hold a banner in front of the parliament during a protest as lawmakers The Greek Parliament approved the redeployment of 25,000 public sector workers by the end of the year in order to secure its next much needed aid installment of $9.2 billion (7 billion euro) from the Troika of creditors. A total of 12,500 public sector workers, mainly teachers and municipal police will enter a ‘mobility pool’, in which they are given eight months to find new work or be fired, and another 15,000 face the same fate next year. Prime Minister Antonis Samaras led his conservative coalition to narrowly pass the unpopular austerity scheme in the late evening hours on Wednesday. 153 members of parliament voted in favor out of a total 293 present, a bill which was a perquisite of the International Monetary Fund, European Central Bank, and European Commission to receive the next aid tranche. The decision was reached amid a backdrop of demonstrations, as anti-austerity protestors, many who will be directly affected by the massive government distribution of pink slips, who called for ‘no more sacrifices’ and to ‘fire the Troika’ hours before the vote. With unemployment at over 27 percent, and 60 percent of Greece’s young adults out of work, the public doesn’t resonate with the Parliament’s decision

to cut more jobs to heal the crippled economy. “I fully understand the hardship the Greek people are going through during the great crisis,” Finance Minister Yannis Stournaras said during the debate. “But I am fully convinced that the path we have chosen is correct.” The government also decided to cut VAT, valueadded tax, for the food service industry from 23 percent to 13 percent in an effort to lure more tourist spending. In a planned visit, German Finance Minister Wolfgang Schaeuble will visit Greece and hold talks with

Samaras. Wolfgang Schaueble said Greece is ‘on the right track’ and their austerity measures ‘will continue to pay off’. “Better days will come for our people. We will not let up. We will climb uphill and reach the end, which is not far,” Samaras said in a televised address before parliament convened for the vote. Greece has received over $315 billion (240 billion euros) since 2010, as the EU seeks to help pull out the troubled member state out of a deep 6-year recession which has spread throughout the continent.

END TO EU INTERNET EQUALITY? DRAFT REGULATION ALLOWS TELECOMS SELL HIGHER SPEEDS

he EU is going to abandon its net neutrality policy which meant all videos, articles or web pages got the same amount of bandwidth. According to the draft regulation, richer internet providers will be able to buy themselves higher speeds. The idea of granting equal portions of online traffic for all content providers appears to be a utopia, as the European Union, which formerly pledged its commitment to the principle, might be getting ready to make a step in a different direction. “Content providers and telecommunications providers are free to negotiate agreements on volume tariffs and different qualities of data transmission for internet users,” the German business daily Handelsblatt, which managed to obtain a copy of a draft regulation by the European Union’s Executive Commission, cites the document as saying. If the regulation is passed, Internet service providers (ISPs) and telecoms will be able to charge their clients for better data transmission. Telecoms have long complained they have trouble keeping up with the growing volume of data traffic. The web users’ current uploading spree has prompted the US IT company Cisco to come up with a forecast that online video traffic – the most voluminous

thing on the web - will double by 2017. ISP’s have to constantly increase their capacity to deal with the situation, so they want the soaring expenses to be covered by both the content providers and by individual Internet users. The EU draft regulation is intended to ease the burden of inundated ISPs. As for content providers – giants like Google or Facebook will most probably be unaffected, as they are able to buy themselves a bigger slice of the bandwidth pie to ensure their data is prioritized in networks. Smaller sites however, will have to make do with virtual leftovers. In April this year, German telecommunications giant Deutsche Telekom announced a plan to reduce users’ internet speed once a certain monthly data limit had been reached. Those who want more surfing capacity would have to pay. The company said it would resort to the practice no earlier than 2016, a move that has incited outrage among the he German public. The EU Commission draft regulation, however, appears to be on the side of Deutsche Telekom. The concept of net neutrality is not completely gone from the document, but now it is being defined not as equal bandwidth for all, but as freedom of access to whatever content. The new document says that all

users will be free “to gain information and content, and to distribute, to run applications and services of their choice”. The new definition has hardly been met with universal approval. “What we’ve seen in terms of a draft law is not enough to ensure network neutrality,” Handelsblatt cites Philipp Rösler, German Economics Minister, who is one of major opponents to the new regulation. Currently only the Netherlands, Slovenia and Chile hold the principle of net neutrality concerning internet speeds codified in law.

TURKISHISRAELI MILITARY COOPERATION WOULD OPEN UP A CAN OF WORMS IN THE ARAB WORLD The re-creation of a historical alliance between Israel and Turkey against a “common enemy” would be seen as “bad news” across the Arab world, political analyst Chris Bambery told RT, adding that the move could also terribly damage Erdogan’s government. - f Ankara is involved in this and it is confirmed to be the case, what do you make of this certainly unlikely alliance between Turkey and Israel? Chris Bambery: Prior to Erdogan taking office a decade ago, Turkey and Israel were very close allies in the Middle East. Remember too that Turkey is a key NATO-frontline state with massive military aid given to it by the United States. So there’s a historical alliance between Israel and Turkey, fuelled by the dislike of many of the Arab states who both perceive as enemies. Under Erdogan, the military has been brought under some control in Turkey. I think the question must be twofold. Firstly, if Erdogan agreed to the use of a Turkish military base for the attack on Syria, this is going to fuel the discontent which it is already facing, with the demonstrations in Taksim Square and elsewhere. Given that Erdogan has gone out of his way to pose as being someone who supported Hamas in the Gaza Strip, has been a friend of the Palestinians, and has gone a long way back on a historic alliance with Israel, if Erdogan agreed to such an attack, it would do terrible damage for [those relationships]. - You are talking about tensions domestically, but what about the wider implications - with the Arab world, for example? How would they view Erdogan’s foreign policy on this? - Some countries in the Arab world - Saudi Arabia, Qatar and elsewhere - could not care who’s carrying out the attacks on the Assad regime. They would not care if Israel was doing it or anyone else because their agenda is so far up the ladder. But across the Arab world they would be seen as bad news...this is after all the fourth military attack on the Syrian territory that we know of and it is clear that the Israelis have carried out these attacks and if Turkish military have supported this attack in any way, it’s really going to open up a can of warms inside the region. An Israeli pilot salutes from the cockpit of his F-15 Eagle fighter jet (AFP Photo / Jack Guez) We know as well that Israel would like to use Turkey as a staging post for an attack on Iran. And if they are allowing the use of bases for an attack in Syria, will they use the same bases for an attack on Iran? And therefore there’s going to be a growing consternation across the region about possible coming back together again of some sort of alliance de facto between Turkey and Israel. - Apart from the threat from Iran, surely the immediate threat for Israel is weapons getting into the hands of Hezbollah? So if they did carry out those attacks, they are justified in self defense? - They might justify it as the supposed threat of Hezbollah but remember it is the Israeli aggression against Lebanon. Hezbollah was only defending Lebanon against the repeated incursions and invasions. So let’s get that one right. Also we should recall who the West is arming in Syria? They are arming al-Qaeda and other supporters. Maybe the Israelis might be a bit worried about some of those weapons going into the [wrong] hands. It is rather a strange topsy-turvy world where we have what seems to be a de facto alliance of Saudi Arabia on one hand and Israel in opposition to the Assad regime on the other. It shows how far things have come in the determination of various states to unseat the Assad regime, and how prepared they are to go in pursuit of that goal.

EXHABITION caucasian business week

July 22, 2013 #14

TBILISI GUIDE July 22, 2013 #14

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 4 Odessa St., Tbilisi Tel: 224-48-58 E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: 75 21 11, Fax: 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 91 01 94, 91 01 95, Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08 E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16

caucasian business week Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy 7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Resident Mission of the Asian Development Bank (ADB) Address: 1, G. Tabidze Street. Tbilisi Tel: +995 32 225 06 19, EXT:101 Cell: +995 577 900 128 e-mail: qtvalavadze.contractor@adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CHINA TOWN Tbilisi , 44 Leselidze St. (ent. from Chardin St.) Tel: 43 93 08, 43 93 80, Fax: 43 93 08 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 PICASSO Tbilisi , 4 Miminoshvili St. , Tel: 98 90 86 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30 LOFT 11. I. Mosashvili str, Tbilisi Tel: (+995 32) 230 30 30 RESTAURANT NERO 21 Abano Street, Tbilisi Tel: (+995 32) 292 10 15

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89 GEORGIAN NATIONAL MUSEUM - PICTURE GALLERY Tbilisi. 11 Rustaveli Ave. Tel: 98 48 14 KARVASLA’S EXHIBITION HALL Tbilisi. 8 Sioni St. Tel: 92 32 27, KOPALA Tbilisi. 7 Zubalashvilebi St. Tel: 99 99 02, Fax: 99 99 02 MODERN ART GALLERY Tbilisi. 3 Rustaveli Ave. Tel: 98 21 33, Fax: 98 21 33 M GALLERY Tbilisi. 11 Taktakishvili St. Tel: 25 23 34 ORNAMENT - ENAMEL GALLERY Tbilisi. 7 Erekle II St. Tel: 93 64 12, Fax: 98 90 13

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL

PUBLICITY caucasian business week

July 22, 2013 #14