Issue #1072 Business

Issue no: 1072/141

• AUGUST 7 - 9, 2018

• PUBLISHED TWICE WEEKLY

FOCUS

PRICE: GEL 2.50

In this week’s issue...

ON INVESTMENT VESTMENT The Adjara investment tment climate and an exclusive interview with dor Meunier French Ambassador PAGE on the French in Georgia

5&6

1,039,027 Int'l Travelers Visit Georgia in July NEWS PAGE 2

Washington Post Writes about Georgian Adjika NEWS PAGE 4

Denying the Stink Bug – A Success Story BUSINESS PAGE 7

America Still a Winner after the Helsinki Summit

European Chamber Names Georgia among Best EU States for Business

BY THEA MORRISON

E

uropean Chamber (EuCham) has included Georgia in its report ‘Best European Countries for Business 2018.’

In the report, Georgia is ranked 18th among 46 European countries with a score of 69. Last year, Georgia was in the 20th position, which means that it has improved its position by 2 points this year.

With this new position, Georgia has scores better than its neighboring countries. Turkey has 55 points and takes 38th place, Armenia came 39th with 54 points, Russia takes 42nd place with 52 points and Azerbaijan gained 51 points and was ranked 45th.

Nordic countries, Denmark, Norway, Finland, Sweden and the UK rank at the top of the European countries that are the best to do business in.

The European Chamber ranks European countries based on their business environment. The EuCham score used for the ranking originates from the average of the World Bank’s Distance To Frontier score (DTF) and Transparency International’s Corruption Perception Index (CPI).

Continued on page 2

POLITICS PAGE 8

Eastern Promotions & TBC Status Present Concert of the Legendary British Band ‘The Chemical Brothers’ CULTURE PAGE 11 Prepared for Georgia Today Business by

Markets As of 03ͲAugͲ2018

Price

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BONDS

Price

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Bank of Georgia (BGEO LN)

GBP 17.55

Ͳ3,3%

Ͳ6,1%

GEOROG 04/21

102.26 (YTM 5.84%)

+0,5%

+1,1%

Georgia Capital (CGEO LN)

STOCKS

GBP 9.95

Ͳ0,5%

Ͳ3,0%

GEORG 04/21

106.60 (YTM 4.24%)

Ͳ0,4%

Ͳ0,0%

GBP 2.66

+2,9%

+2,3%

GRAIL 07/22

106.58 (YTM 5.85%)

+0,1%

+1,0%

GBP 17.46

+2,7%

Ͳ0,1%

GEBGG 07/23

100.09 (YTM 5.98%)

+0,0%

+0,3%

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

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

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CURRENCIES

Price

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m/m

73,21

Ͳ1,5%

Ͳ5,9%

GEL / USD

2,4488

+0,0%

+0,1%

Ͳ0,8%

Ͳ3,0%

GEL / EUR

2,8283

Ͳ0,7%

Ͳ0,8%

GEL / GBP

3,1845

Ͳ0,7%

Ͳ1,3%

INDICES

Price

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GEL / CHF

2,4625

+0,3%

Ͳ0,1%

FTSE 100

7 659,10

Ͳ0,5%

+0,9%

GEL / RUB

0,0383

Ͳ1,8%

Ͳ1,3%

Ͳ1,1%

Ͳ0,1%

GEL / TRY

0,4819

Ͳ4,6%

Ͳ7,9%

DAX

12 615,76

Ͳ1,9%

+2,2%

GEL / AZN

1,4400

Ͳ

+0,2%

DOW JONES

25 462,58

+0,0%

+5,3%

GEL / AMD

0,0051

Ͳ

7 812,02

+1,0%

+4,1%

GEL / UAH

0,0905

Ͳ1,5%

Ͳ2,7%

159,87

Ͳ0,1%

+2,3%

EUR / USD

0,8645

+0,8%

+0,8%

0,7692

FTSE 250

NASDAQ MSCI EM EE

20 635,33

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1 073,33

Ͳ1,7%

+1,5%

GBP / USD

+0,8%

+1,5%

SP 500

2 840,35

+0,8%

+4,7%

CHF / USD

0,9941

Ͳ0,0%

+0,2%

MSCI FM

2 754,30

+0,3%

+3,7%

RUB / USD

64,3063

+2,5%

+1,9%

GT Index (GEL)

1 582,68

Ͳ

Ͳ

TRY / USD

5,0818

+4,7%

+8,8%

GT Index (USD)

1 208,13

Ͳ

Ͳ

AZN / USD

1,7007

+0,2%

+0,2%

MSCI EM

Source: connections.be

Price 1 214,90

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NEWS

GEORGIA TODAY

AUGUST 7 - 9, 2018

1,039,027 Int'l Travelers Visit Georgia in July

BY THEA MORRISON

Linas Linkevicius: We Stand by Georgia

BY THEA MORRISON

M

inister of Foreign Affairs of Lithuania Linas Linkevicius has released a video address which expresses support to Georgia. The video was released in connection with the 10th anniversary of the Russia-Georgia August war, which left 20% of Georgian territories occupied by the Russian Federation.

“It is impossible to treat the wounds of war. It is very difficult to recover sovereignty and territorial integrity, but that will come because Georgia is backed and supported by the democratic international community. Lithuania stands

by Georgia,” Linkevicius said.

Together with the foreign ministers of Poland, Jacek Czaputowicz and Latvia, Edgars Rinkevics, as well as Vice Prime Minister of Ukraine, Pavlo Rozenko, Linas Linkevicius will arrive in Georgia on August 7 to express solidarity to the Georgian people.

I

n July 2018, Georgia hosted around 1,039,027 international travelers, which is 10.5% more compared to the same period of last year.

The information was released by the Georgian National Tourism Administration (GNTA), which says that out of more than a million travelers, 564,977 were tourists. It is a 15% increase compared to July 2017.

The biggest share of international visitors is attributed to neighboring countries, led by Russia (+13.8%), Azerbaijan (+9.8%), Turkey (+20.5%) and Armenia (-4.2%).

The positive trend was maintained from the European Union countries: Romania +260%, Estonia +83%, Germany +59%, Czech Republic +56%, Netherlands +55%, United Kingdom +44%, Poland +42%.

Photo source: GNTA

A significant increase in the number of visitors was observed from China +115%, Republic of Korea +83%, Belarus +55%, the US +54%, and Saudi Arabia +44%.

The GNTA noted that in the first seven months of 2018, Georgia hosted 4,600,988 international visitors (12.9% increase) and 2,498,751 tourists (21% increase).

In January-July 2018, the number of international visits reached 3,843,036, an increase of +15.1%. The number of tour-

ist visits was 2,498,751, which is 433,624 more than in the January-July 2017 (growth +21%).

During this seven-month period, the majority of visitors came to Georgia from: Azerbaijan (+10.4%), Russia (+24.1%), Turkey (+20.4%) and Armenia (+2.1%).

In the first quarter of 2018, international visitors amounted to a total of 1,582,382, a 14.2% increase compared to the first quarter of 2017.

European Chamber Names Georgia among Best EU States for Business Continued from page 1 An economy’s score is reflected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the best.

The DTF score from the World Bank (from Doing Business report) measures the distance of each country’s economy to the frontier, mirroring the best per-

formance on each indicator across all economies (e.g. starting a business, paying taxes, trading across borders, property registration).

The difference is shown on a scale from 0 (lowest performance) to 100 (frontier) a score of 70 means that the economy is 30 points away from the frontier.

The CPI from Transparency Interna-

tional was used to determine how corrupt each country’s public sector is seen to be on a scale from 0 (highly corrupt) to 100 (very clean). A low score can be a sign of widespread bribery, lack of punishment for corruption, or a government not responding to social needs.

The EuCham score used for the ranking is the weighted average of the CPI

and the DTF scores (50% weight each).

A high score indicates the country is favorable to do business in, while low scores refer to least favorable countries for business.

The EuCham score measures the overall business context constituted by corporate environment, legislation, government policies, social climate and conditions which enable or prevent

private sector activities from starting, operating and expanding, both in the short and long term.

The European Chamber is an independent, non-governmental, privatelyorganized institution representing the interests of national and international companies doing business in Europe, improving the business environment they are active in.

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NEWS

GEORGIA TODAY

AUGUST 7 - 9, 2018

Washington Post Writes about Georgian Adjika

Information and photo source: Washington Post

T

he Washington Post has dedicated an article to Georgia’s spicy condiment adjika, saying it brings fire to the table called Supra in the small country, not state, of Georgia.

“Unfortunately, unless you travel to Georgia — specifically Abkhazia (itself a subject of dispute) and Samegrelo, in the west — you’ll probably not taste adjika in its truest form,” the article reads.

The author of the article says that thanks to the increased popularity of Georgian cuisine in America, you can at least taste a hint of this complexity.

The author notes that at the Georgian

restaurant in Washington - Supra, chef Malkhaz Maisashvili makes three types of the sauce — green, red, and roasted — and serves each with various dishes on the menu.

“You can even purchase acceptable jars of adjika in nearly any Eastern European market (although purists will tell you otherwise). Adjika is fiery and a tad peculiar, with plenty of garlic and hints of coriander and often unidentifiable spices. No two cooks make adjika the same way, of course, and it ranges from paste to sauce-like in texture. You may even find it in powdered form at spice shops,” the article reads.

Outbreak of African Swine Fever in Chinese Pigs

BY DIMITRI DOLABERIDZE

O

n August 3, the Ministry of Agriculture of China announced an outbreak of African swine fever in the Chinese province of Liaoning, located in the north-eastern part of China. The first case was found during a standard check by experts of the Chinese Epidemiological Center.

The area in which the sick animals were found was immediately cordoned off and the infected or exposed pigs are gradually being destroyed. In parallel, specialists are disinfecting the area.

A further outbreak of African swine fever was recorded on August 1 when infected livestock were found on a farm in Shenyang City.

Because of the dangerous situation, the authorities decided to ban the transport of live pigs from the contaminated area to other localities in China. The export

of animals outside the city was also banned. At present, representatives of the Ministry of Agriculture of China state that the situation is under control.

African swine fever is a particularly dangerous viral disease easily spread among animals. It is not communicable to humans. The concern here is its effect on the agricultural sector, since infected livestock must be destroyed. It is possible to stop the further spread of African swine fever through strict quarantine measures.

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BUSINESS

GEORGIA TODAY AUGUST 7 - 9, 2018

Adjara Investors Planning for the Future

BY SHAWN WAYNE

K

nown as the Pearl of the Black sea, Batumi is a favorite amongst tourist spots and its popularity is increasing steadily. Tourists are not the only people looking to Batumi for new experiences though: business men and women are investing in real-estate and construction, and since the beginning of the 21st century, architects have undertaken multiple projects in Batumi, making sure their marks are etched into the Black Sea city.

Today, Batumi is a hub of innovative architectural design and change, but like a pearl being shaped over time, Batumi is far from finished, and with Batumi Stadium, one of the more massive and influential constructions underway, it is evident that Batumi will become an even more valuable asset to the region and country.

Construction of the stadium commenced on January 21 by order of the Ministry of Economy and Finance of the Autonomous Republic of Adjara, the cost of construction being estimated at around about $40 million. A project this size will catch the attention of many investors, be it veterans looking for a new playground or new kids on the block looking for a safe investment. The influence of such a construction does not simply hover over sports as, while being built, it provides more than 500 new jobs, and when finally completed, estimated for late 2020, the stimulation to the economy of Batumi and in turn Georgia will circulate vigorously, pulling in tourists, football fans and investors alike.

“This very important project will enable us to host very important events in Batumi,” said Mamuka Bakhtadze, the Georgian Prime Minister, after observing the construction of the new football stadium in Batumi on 5 August. “This is very important not only for sports events but to attract more tourists to the city and Adjara. In addition, we have plans to encourage the urban development of Batumi and to establish European standards. A stadium is a necessary attribute of any successful European city.”

Construction is one of the most dynamically growing sectors in Batumi. Having kicked off some 10 years ago, with more than 1.5 mln. m2 construction area, competition is fierce on the market, making the sector very promising in terms of growth and development. Apart from international companies, local firms are prospering and expanding their activities abroad as a result of a very profitable and in-demand atmosphere in the sector.

Investing in something, be it in a single apartment or a major building, is something to consider carefully. But Batumi makes it a bit easier by offering so many options that it makes the old adage “don’t put all your eggs in one basket” a simple guideline of how to invest in Batumi. So, if not all in real estate, what else?

Batumi has undergone serious changes and reforms that have led to the significant improvement of its worldwide image and investment climate, the new stadium only being one of the more recent projects.

The hospitality market in Batumi is developing at a fast pace, as increased inflow of foreign visitors, businesspersons and delegations attract well-known international hotel chains like Hilton, Radisson Blu and Marriott International. Tourism at the moment is booming, with more than 80% of tourists com-

ing back again for a visit or even staying permanently in Georgia, and investors have noticed, making up over 33% of investment in Batumi. This is due to the fact that no license is needed for operating a company in the tourism sector, and there is no license fee for opening casinos in hotels with more than 100 rooms. Georgia knows how important tourism is, and treats it as a precious mineral.

Once the stadium is finished, tourism will flourish.

With one egg in tourism and the other in construction, another can be placed with energy; specifically, in hydroelectricity. Hydro resources are the most significant natural wealth of the Adjara region, with the hydro power potential of the region strong and within-year inflow distribution of rivers diverse. There are five hydro power plants in Adjara operating under the license of the Georgian National Commission on Energy Regulation. Their overall capacity is 22.2 thousand kilowatts/hour and annual energy generation is 28.5 million kilowatts/hour, which is only 0.8% of the whole potential of Georgia. Five completed and eight on-going international hydro power plant projects are the main focus in the energy sector and, according to experts’ calculations, the potential annual capacity of Adjara is 1000 megawatts, which generates 8760 million kilowatts/hour. Investors are needed in this area in order to reach these heights, and they are on their way, with the energy sector being the leading investment sector in 2017, making 45% of private investments.

Agriculture is a part of any country, and Georgia does not shy away when it comes to this. In the Adjara region specifically, 45% of the population lives in villages and is constantly engaged in agriculture; however, a total of around 50% of the population is engaged in agriculture overall.

The land for agricultural purposes in this region alone covers 72,862 ha, including a cultivated area of 10,309 ha, which is mainly used for corn, beans, soybean, potatoes, vegetables, tobacco, and perennial plants - 15,899 ha, citrus - 5200 ha, tea – 5700 ha, fruit - 4340 ha, 54 ha for subtropical persimmon, 80 ha for bay-leaf, 525 ha for others, a mowing area of 7159 ha, pastures 37,759 ha and fallow land of around 1736 ha. It is noteworthy that despite the existing potential of fruit and vegetable production, vegetable growing has subsidiary status and is mainly performed by small household farms.

Only up to 20% of total current demand is produced locally, mainly during the early-summer and autumn period. The shortage is compensated for mainly by import from Turkey, with products such as potato, tomato, onion, cucumber, pepper, garlic and eggplant. Growth in the number of visitors to the region will lead to considerable growth of demand. There is an urgent need for investment in agriculture and food production, considering different factors such as environment, availability of state-owned land for privatization and natural resources, any potential investor has certain opportunities for developing various kinds of successful food production schemes not only limited to fruits and vegetables.

Investment in Batumi is needed for the growth of Georgia. Looking at the near future and movement of investors, there is a certainty amongst them that there is great opportunity and potential that they do not want slipping away. The Adjara region is doing great things and is definitely a spot for new and veteran investors to join in fierce and rewarding competition.

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BUSINESS

GEORGIA TODAY

AUGUST 7 - 9, 2018

France, a Discreet Partner in Georgian Economic & Cultural Development American study, such a method gives an average of 10 to 15% cost savings in comparison with the traditional procurement through tenders where the design is made by a consultant.

WHAT WILL THE NEXT STEP BE FOR FRENCH COLLABORATION?

Minister of Regional Development and Infrastructure of Georgia, Maia Tskitishvili, Ambassador Extraordinary and Plenipotentiary of France, Pascal Meunier and the Head of French Development Agency in South Caucasus, Assayag Gaelle discussing investment in April this year.

EXCLUSIVE INTERVIEW BY ANTOINE DEWAEST

A

t first sight, France might seem distant to the Georgians, but if we take a closer look, we realize that Georgia benefits from France in many ways, including business, culture, and policy. GEORGIA TODAY met with Ambassador of France to Georgia Pascal Meunier, here since 2016, who agreed to answer to our questions.

Pascal Meunier first worked for the Ministry of Foreign Affairs. Then, after serving in the French embassies in the Czech Republic, Poland, Sweden and Japan, he switched to the private sector by working for Thales (former ThomsonCSF). Thereafter, he was appointed Ambassador to Azerbaijan in 2012 and to Georgia in 2016.

LET’S TALK ABOUT FRENCH BUSINESS France is among the 10th main investors in Georgia. Of course, Azerbaijan is the first, and the United Kingdom maintains high investments thanks to BP. It is one of the oil leaders operating in Georgia today, a country serving as a crossing

point between Azerbaijan and Europe.

But, France should not be overlooked.

One of our best successes has been Lactalis, a key investor in the country thanks to the acquisition of Santé but also a partner of our flagship project, the FrancoGeorgian university, for the creation of which an intergovernmental agreement was signed during our foreign minister’s visit on May 26. This one focuses on agriculture (including viticulture and food safety) tourism and computer sciences. Possibilities of internships are offered to students as part of their training.

Then there is Orange Group and it is affiliated company Sofrecom which just opened a branch office in Tbilisi. They have developed a fruitful cooperation with Silknet/ Geocell group which will have a huge impact on Georgia’s capabilities in state-of-the-art IT services.

France doesn’t only focus on Tbilisi; we have invested in Batumi and Kutaisi (Atlantic Group electrical heaters) and will soon do so in Telavi. In Batumi, a French SME launched a large-scale public bicycle sharing system. The Georgian region of Kakheti benefits from wine technology transfers, and Georgia received recognition within the recent Bordeaux exhibition as being the cradle of wine. It also benefits from a string

cooperation with Yonne region in the field of treatment of hepatitis and tuberculosis So, yes, the French investment is strong.

IN THAT CASE, WHY DOES FRENCH INVESTMENT APPEAR TO BE STAGNATING? There are three barriers. The first is a lack of awareness. Investors know little about Georgia, and I plan to speak to the MEDEF (the Movement of the Enterprises of France) in September. The second problem is a lack of financial means on the Georgian side. In terms of rail transport for instance, France has old know-how, and Alstom, a multinational company operating worldwide in rail transport markets, passenger transportation, signaling and locomotives could support Georgia to modernize its network. Then, tenders here are often divided into small packages in order to promote local business, whereas French groups prefer to work on the whole project, sharing their expertise in engineering. We are promoting different concepts of procurement of sophisticated infrastructure such as Public Private Partnership schemes and the Design & Build concept where a constructor is responsible for the whole project or can propose alternative solutions. According to an

Georgia plans to enhance its roads and build highways. France is well placed for it. In addition, in terms of environment, Veolia and Suez, French companies working in the field of water management, waste management, transport and energy services, are already operating on the territory and currently are working on tenders that I hope they will get. In the coming years, Georgia will be facing environmental issues which could affect tourism. The government is working on it, and we are eager to bring state of the art know-how. I am optimistic and confident that in the coming months, we will achieve some results.

WHY SHOULD A FIRM INVEST IN GEORGIA? Georgia is a safe country. There is no doubt that it is a democracy free of corruption. Georgia is the “success story” of the Eastern Partnership. Moreover, the country is the link between West and East and is developing itself. $5 billion projects are funded by international financial institutions here. So there is room for French companies to compete and win projects.

WHAT IS THE KEY SUCCESS OF THE EUROPEAN

ASSOCIATION AGREEMENT? You are right to mention the European Union, which is the main partner for Georgia. One of the successes related to the Agreement has been the end of the visa regime. Georgian citizens are free to spend three months in the EU without a visa in a period of six months. But there is a lot of other benefits Georgia gets from the EU in the field of agriculture, for instance, through ENO. In the autumn, Jean-Claude Juncker [President of the European Commission] alongside different commissioners, will meet the Georgian Prime Minister and members of Georgian government to review in a high-level new format the different aspects of EU-Georgia cooperation. That reflects the EU’s commitment to Georgia.

HOW DO YOU EXPLAIN THE RECENT DECREASE IN EUROPHILIA HERE? It is quite hard to answer. Georgia remains a Europhile, but yes … I suspect it is related to an increase in income disparities. As UNICEF pointed out in a recent report, the level of poverty is still high and not everybody feels the benefits of the Association treaty in the population. Some people argue that the EU funds go essentially to European consultants and NGOs, or to large companies close to the government, leaving them unemployed.

It is something on which the EU will work by enhancing its communication about funded projects which have a direct impact on the population.

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BUSINESS

GEORGIA TODAY AUGUST 7 - 9, 2018

Annual Inflation Rate in Georgia at 2.8%

Image source: harringtonbrooks.co.uk

BY THEA MORRISON

I

n July 2018, the monthly inflation rate in Georgia decreased by 0.3%. Compared to the same period of the previous year, the Consumer Price Index change (CPI - annual inflation rate) posted a 2.8% increase.

The information was released by Georgia’s National Statistics Office (Geostat) which reports that this month’s inflation rate was influenced by price changes for food and non-alcoholic beverages, transport, footwear and clothing.

In particular, Geostat says the prices in the group of food and non-alcoholic beverages decreased by 1.1%, contributing -0.32 percentage points to the overall CPI change.

However, in the transport category the prices increased by 1.2%, contributing 0.15 percentage

points to the overall CPI change.

Prices in the group of footwear and clothing decreased by 1.4%, contributing -0.05 percentage points to the overall CPI change.

In the mentioned period, the prices decreased for footwear (-2.4 %) and clothing (-1.0%).

The annual inflation rate was mainly influenced by price changes for the following groups: Transport - prices in the group increased by 6.9%; Food and non-alcoholic beverages - increased by 2.3%; Housing, water, electricity, gas and other fuels 5.2% increase; Health - prices increased by 5%; Alcoholic beverages and tobacco – prices up by 4.4%; Clothing and footwear – 8.3% decrease.

In June 2018, the monthly inflation rate amounted to -0.6 % while the annual inflation rate saw a 2.2% increase.

Denying the Stink Bug – A Success Story

BY VAZHA TAVBERIDZE

S

tink Bug Pest Devastates Georgia’s Agriculture, Asian Invasion: Stink Bug in Georgia, Stink Bugs Invade Georgia – These are but a few headlines that local and international media chose to report that the brown marmorated stink bugs (BMSB), or Halyomorpha halys, or to call it by the Georgian name, Parosana, had arrived in hordes to devour Georgian agricultural produce. Although it was believed to have migrated to western Georgia in 2015 from Russia’s Sochi region, Moscow, in classic Kremlin fashion, blamed the US for alleged sabotage. But despite all the doomsaying and despite the significant, if unavoidable, damage that the Parosana caused to Georgian farmers, thing’s might be starting to look up as the efforts of the Georgian Ministry of Agriculture and National Food Agency’s program of complimentary spraying of pesticides in western Georgia, with significant aid provided

by United States Agency for International Development (USAID), are slowly but surely steadying the ship. The governments’ efforts have been praised by leading experts in the field, while the population seems to be adapting to the necessity of increased measures to protect their crops and fields.

Every now and then, there are some who manage to dupe the all-devouring bug altogether, leaving it totally empty-mandibled.

One such farmer is Goga Abuladze from Tsalenjikha. The young man has a sizeable hazelnut garden over a territory of 10 hectares. Parosana was obviously a threat to him too, although having served his garden a triple spraying session over

the season, he’s sure the danger has abated and is expecting a typically rich harvest.

Goga took no chances: he sprayed the hazelnut trees not only against Parosana but also to prevent powdery mildew and rot. His efforts didn’t go unrewarded as his hazelnut crop is virtually untouched by any of these plagues. The costs were also acceptable from his viewpoint – 300 GEL for each ha, acceptable costs when considering the profit he’s going to receive after selling the harvest: one hectare yields about two tons of hazelnuts.

“When you’ve done your spraying right, if you timed it right and chosen the right pesticides, then the results will be right too,” he said. “And it’s heartening to see that the government is on hand trying to help both practically and with advice.”

The 2018 Georgian national budget includes 4 million GEL ($1.6 million) for the fight against the BMSB, complemented by another 8 million GEL ($3.2 million) from USAID. International organizations, among them the International Plant Protection Convention as well as the European and Mediterranean Plant Protection Organization, are cooperating with the Georgian side to effectively counter the Stink Bug threat.

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BUSINESS

GEORGIA TODAY

AUGUST 7 - 9, 2018

The US Will Not Be Able to Compete with Gazprom in Europe

BY DIMITRI DOLABERIDZE

I

t is questionable whether the meeting between Vladimir Putin and Donald Trump in Helsinki changed the situation regarding the gas market in Europe. Representatives of Russia, Ukraine and the European Commission in tripartite consultation worked on the distribution of roles in the theater of energy activities. One can respectfully take with a pinch of salt the words of President of the USA Donald Trump about fierce competition for Gazprom in the European market if American producers of liquefied natural gas (LNG) get involved.

In reality, this just cannot be.

In order to bring LNG to Europe, the US needs a state company that controls all stages of this process - from extraction to unloading of gas carriers at LNG terminals in European ports. But US law does not allow such: the gas industry in America is extremely private, seeing, in parallel, a number of companies engaged in the production of shale gas; others in transportation to the liquefaction plant, and more still in getting LNG supplies to end users, this last being in the hands of international traders.

The extraction of shale gas is the highest costing in the gas industry and liquefying natural gas is also a very expensive technological process. “We will add storage and transportation of LNG through the Atlantic Ocean and get the result we have already discussed,” said Trump. As such, US LNG will cost European consumers 30% more than that offered by Russia.

In Washington on July 25, a meeting was held between Donald Trump and European Commission Chairman JeanClaude Juncker, the result of which, in terms of energy, many have been interpreted as a "done deal" for the supply of American LNG to Europe. But this is far from the case: one must realize

that the European Commission, like any other EU structure, does not determine the volume of purchases by European gas companies. The majority of national governments in Europe do not determine the volumes, prices of gas, or specific suppliers for gas companies of their jurisdictions. Therefore, in Washington, a certain "protocol of intent" was signed, nothing more.

The situation in the United States and Europe is radically different from that in Russia, where the Russian President has the right to determine the development strategy and actions of the state gas corporation Gazprom, which has exclusive monopoly rights for the export of pipeline gas. In Europe and the US, the governments have practically no option to interfere in the activities of its gas companies.

European prices for LNG this year fluctuated from extremely high during the winter at $425 per thousand cubic meters and $265 in the summer. Gazprom

did not spoil negotiations with a full disclosure of prices, but in February and March, when demand was at its maximum, Gazprom’s prices, judging by the responses of its European partners, did not rise above $225 per thousand cubic meters, while in summer, prices were kept at around $200.

So, the words of politicians are one thing, while the economic interests of real gas European companies are another entirely. The difference in prices is visible to the naked eye, and the mechanisms that would allow European Commission officials to force gas companies to abandon their own economic interests simply do not exist in EU legislation.

If we exclude political dictatorship, then the US can compete with Gazprom only at the expense of reducing the price. But Gazprom's "safety margin" is such that it can "drop the price" until American LNG traders are forced to abandon the continuation of the struggle. Competition with Gazprom in the

European market is a losing game for traders of American LNG. Competition for the sake of competing with the risk of losses? Are American gas companies ready for it? Will they fulfill the wishes of the political leader of the country and work "at a minus" solely in order to compete with Gazprom?

And one more question: is it profitable for American producers and traders to supply LNG for export? The first batch of LNGs from the Yamal LNG plant in December last year, after passing through a chain of intermediaries, was delivered to the US when anomalous frosts appeared in Boston: the gas price (in terms of cubic meters) in Massachusetts rocketed to $3,400 per thousand cubic meters. Nobody asked the question as to why at that moment traders working for Sabina Pass did not send a tanker instead.

According to the navigation portal Marine Traffic, the Gaslog Hong Kong

gas carrier, with a capacity of just over 100 million cubic meters (in terms of regular gas) with Yamal LNG (Russia) arrived at the Everett terminal on July 26.

On July 18, Gaslog Hong Kong left the port of Amsterdam, where the Boris Vilkitsky gas carrier had arrived, to transport LNG to Europe from Yamal.

Both ships left the Dutch port on July 18. The first went to the US, the second to Sabetta (a settlement in the Yamal district where the LNG plant is located).

One contained gas, the other was empty.

It is clear that while supplying LNG for export, the United States is simultaneously importing LNG for its own needs. Following the tenets of the liberal economy, the US as a state completely withdrew from the energy sector, hoping that it would be able to regulate it with the help of laws, taxes, duties and licenses. As a result, there are problems ensuring the country's energy security.

And that doesn’t bode well for Trump’s plans.

POLITICS

America Still a Winner after the Helsinki Summit

BY EMIL AVDALIANI

I

n the lead-up to the July 15 Helsinki Summit between Putin and Trump, three countries in the Eurasian landmass were expecting the meeting with particular fear and concern. The first is Ukraine, which struggles with pro-Russian forces in the east of the country. However, the summit was hailed by many Russian analysts as well as politicians as not really bringing about any changes. In fact, the strongest expression of the unchangeable US stance on Ukraine after the summit was the “Crimea Declaration,” released by the Department of State on July 25, where Russian moves against Ukraine were once again ostracized. From the geopolitical point of view, this might not mean a lot, but it further commits Washington to its previous policy of non-recognition of Russian territorial gains.

The US also announced it would give Ukraine around $200m to strengthen the country’s defense capabilities.

Though the Pentagon indicated that the funds would be for training, communications, medical, and other non-lethal operational needs, the timing of the decision is notable. Ukraine as a crucial component of the US containment.

Another theater in the former Soviet space is Georgia, a contested country between the West and Russia. Georgian officials were particularly worried that Trump might weaken support for the South Caucasian country amid Russia’s military pressure in the breakaway regions of Abkhazia and South Ossetia. The American response was productive, as the two-week-long US and Georgia-led Noble Partner military exercise started on August 1 near Tbilisi, the country’s capital. Over 3000 troops are taking part in the drills, including US military personnel and other participating nations such as France, Germany, Norway, Poland, Turkey, Ukraine and the United Kingdom. Knowing how the Russians are particularly sensitive to such moves in their neighborhood, the US move is undeniably directed at Russia.

On Syria, the US-Russian military cooperation was praised by Putin and Trump, while the Russian President intended to build on this “de-confliction” and engage the US military in joint work on the return of refugees. Following the summit, the idea was firmly turned down by the commander of US Central Command, General Joseph L. Votel.

According to the general, there was simply no firm ground on which military cooperation with Russia in Syria can be strengthened.

Thus, following the Trump-Putin

Source: jamestown.org

meeting, the US-Russian military cooperation in Syria limited itself to preventing raids by the pro-al-Assad forces into the territory east of the Euphrates, controlled by the US-backed Syrian Democratic Forces (SDF).

Even on the diplomatic front, Russian efforts were rebuffed and the invitation extended to the US to attend the latest meeting of the so-called “Astana Process” which was held in Sochi on July 30, was turned down by Washington.

Beyond the immediate US concerns around Syria, following the Trump-Putin meeting, Republican and Democratic US senators introduced legislation on Thursday to impose new sanctions on Russia. The bill will probably include

restrictions on new Russian sovereign debt transactions, energy and oil projects and Russian uranium imports, and new sanctions on Russian political figures and oligarchs. It also expresses strong support for NATO and would require that two-thirds of the Senate vote in favor of any effort to leave the Alliance. This serves as yet another effort by lawmakers to punish Moscow over interference in US elections and its activities in Syria and Ukraine.

To further repudiate Trump’s claims at the Helsinki Summit, the heads of national intelligence, Homeland Security, the National Security Agency and the FBI stressed again that Russia was still attempting to undermine US democ-

racy through various means.

Thus, these foreign policy moves clearly indicate that the Russia-US standoff is unlikely to diminish in the near future. The Trump-Putin Summit discussed in the global context shows that despite Trump’s willingness for cooperation with Moscow, real improvement is not coming. And so we enter an interesting period in world history when geopolitics in Eurasia is gradually shifting. Global trends in trade as well as military affairs dictate that the US has to continue on its path to contain Russia in the former Soviet space and the Middle East. However, the same global trends also make Washington wary as the country is gradually bracing for a more troublesome China, with the White House likely to try to find common ground with Russia to enlist the latter in its containment of China.

However, in 2018, this scenario is still a distant one. Russia in Eurasia poses a more immediate threat to US interests and the above-given measures introduced by Washington following the summit express the willingness of the US officials to pursue the containment of Russia. In other words, the summit might have been an offense to American prestige among the country’s allies across the globe, but the country nevertheless did not give up any essential point to the Russian side.

10

SOCIETY

GEORGIA TODAY

AUGUST 7 - 9, 2018

Taxi Registration Website Criticized for its Complexity

BY SAMANTHA GUTHRIE

O

Georgian fusion restaurant "Meama" with an authentic taste tradition!

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n August 1, Tbilisi City Hall officially opened the online platform for taxi drivers to register for a license. Deputy Mayor Maia Bitadze announced the opening in a public press briefing.

In accordance with legislative amendments adopted by the Parliament of Georgia in January, Tbilisi City Hall and the City Assembly approved rules to regulate the taxi industry. By November, all taxi drivers will be required to register with City Hall by paying a fee of 100 GEL (50 GEL for a hybrid vehicle, free for electric cars), and presenting their driver’s license and personal identification documents. By January 2019, additional regulations will be in place – most importantly, mandatory annual inspections for all vehicles in the city, unified standards including a mandatory color for all taxis, and additional security norms.

The new regulations allow any taxi driver seeking a license to apply in person at City Hall or online. However, the online application system has received criticism for its complexity and inaccessibility. Since August 1, just 47 applicants have been granted permits.

“The website www.taxi.tbilisi.gov.ge has been launched,” said Bitadze on Wednesday. “It offers any seeker easy and flexible procedures to obtain a license. Passing the respective stages on the website needs only the uploading of personal data, driving license, and information on the vehicle. A license may also be procured at district government offices where staff from Tbilisi City Hall are allocated specifically to assist any license seeker to register.”

License seekers have until October 1 to register, and their license will be valid until October 1, 2019. “The license holder must print out the document and dis-

play it in a visible place in the vehicle. In the meantime, a yellow sign should be placed on the body of the vehicle. From October 1, a penalty of GEL 200 will be imposed on taxi drivers by the Patrol Police and department of transport of Tbilisi City Hall for taxis lacking the proper permit,” Bitadze said.

Critics of the website say it is nearly impossible to navigate without assistance from City Hall employees. Applicants are required to input a code that comes with a new ID card, which most people do not keep. To get a new code, you must apply for a new ID, which costs 35 GEL. Another challenge is that applicants must have an external ID card reader device to upload their ID. Specifics on the second stage of taxi regulation will be released in October, which will focus on the visual aspect of the vehicles, such as a unified color. According to Bitadze, discussions on projected regulations for the taxi industry have been ongoing over the past few months. The regulation process, including the creation of the website and other public support initiatives, involved Tbilisi City Hall, the Ministry of Internal Affairs, and the Parliament of Georgia. Experts from the European Bank for Reconstruction and Development also supported the municipality.

Tbilisi City Hall Signs Memorandum with NGOs on Waste Separation Awareness

BY SAMANTHA GUTHRIE

A

memorandum of mutual cooperation has been signed between Tbilisi City Hall’s Tbilservice Group, Caucasus Environmental NGO Network (CENN), and Waste Management Association of Georgia. The memorandum covers cooperation between the public, private, and civil sectors to promote the gradual adoption of waste separation by the public, including education and popularization initiatives. Cooperation will begin from September 2018, and aims to promote recycling through placing separation facilities in ten areas around Tbilisi and raising public awareness.

Deputy Mayor Maia Bitadze signed the memorandum on behalf of Tbilisi City Hall. “Today’s memorandum is the first step forward to start waste separation and sorting in Tbilisi. Separated trash cans will be placed by the end of this year. We hope citizens will support us to lay the foundation for a cutting-edge system of separation which will turn waste into products. Tbilisi will be very active in this regard,” Bitadze stated.

The memorandum is based on the Waste Management Code and National Strategy for Waste Management. At his weekly meeting on July 24, Tbilisi Mayor Kakha Kaladze said a final agreement was signed with the European Bank for Reconstruction and Development (EBRD) and for the first time, a

comprehensive waste management strategy for the city will be development. The strategy will be based on EU Association Agreement obligations and will lay the groundwork for the establishment of a waste separation and recycling system.

"Europe and the developed world are well aware that waste is not something we can avoid,” Mayor Kaladze stated. “It can be remedied and used for different purposes. This approach not only protects the general environment but also helps to create new jobs and develop a currently non-existent industry, which I think is important for our capital.

The strategy developed by the EBRD will be a prerequisite for Tbilisi to move into the waste management system gradually, which means that recycling bins will be placed on streets.”

According to Kaladze, a contract was signed for the construction of a waste processing plant but it did not take effect because the system the project proposed was outdated and no longer meets waste management code and waste management governance strategy under the Association Agreement.

"The document also opposed the idea of separating waste on site, which Georgia will gradually introduce from 2019. The draft contract...was rejected by the Georgian government and City Hall recommends that the contract conditions be adjusted, although negotiations have not been held. Furthermore, they refused to return the land which had been transferred for a term of 25 years, so we have a petition in court to restore the municipality's right to the property,” stated Kaladze.

SOCIETY

GEORGIA TODAY AUGUST 7 - 9, 2018

11

A Decade After the August War, Refugees Still in Distress

BY ANTOINE DEWAEST

I

n “South Ossetia,” an 84-year-old man looks to the horizon, his eyes reflecting sadness. His mouth, set in bitterness, finally opens: “It’s like living in a prison, here”.

Dato Vanishvili is a farmer who decided to stay in the breakaway Georgian region after the August 2008 war. However, some natives would like him to leave.

For 10 years, there has been ethnic cleansing: 81 Georgian families lived there, but Dato and his grandson are the last "survivors." All the others fled. In addition, according to Tbilisi officials, 126 Georgian civilians were arrested last year. In February, Archil Tatounachvili, a former soldier, was tortured to death in a Tskhinvali prison.

After the withdrawal of Georgian soldiers in 2008, the Tskinvali militia destroyed and looted property belonging to Georgian civilians and beat any citizens they found, says Human Rights Watch.

Yet Russia still accuses Georgia of having caused the post-war events by planning to conduct a genocide in the region.

Five years ago, Russian soldiers set up a barbed-wire boundary line separating

Photo : AFP

the so-called Republic of South Ossetia from Georgia. Since 2008, Dato has been living in a territory controlled by separatists, and since they set up the barrier in 2013, he has been refused permission to cross the "border."

In 2016, the International Criminal Court began an investigation into war

crimes committed by each side. 18,500 Georgians were forced to flee, hosted in refugee camps such as Khourvaleti.

“Russia invaded Georgia to prevent us from becoming a member of the European Union and NATO, to keep the Caucasus in its claws,” says 54-year-old refugee Gennady Zaridze.

CULTURE

Eastern Promotions & TBC Status Present Concert of the Legendary British Band ‘The Chemical Brothers’

BY ANNA ZHVANIA

O

n September 1, the 4-time Grammy Award winning British duet The Chemical Brothers will be performing at the Rustavi International Motor-

park.

The British duo, featuring Tom Rowlands and Ed Simons, will perform an unforgettable set using visual effects and modern technology to wow attendees.

Tickets are on sale now on tkt.ge.

The British electronic music group The Chemical Brothers, known worldwide for their high quality concerts, will arrive in Georgia on their last world tour stop. The duo will perform hits from their various studio albums from 1995 to present.

The Chemical Brothers is considered the pioneer of the electronic music genre, having released eight studio albums since 1995.

It’s been almost three decades since the band formed, and their popularity has brought such hits as ‘Block Rockin 'Beats,’ ‘Hey Boy Hey Girl,’ ‘Galvanize,’ ‘The Salmon Dance,’ ‘Do It Again,’ and ‘Swoon.’

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