Issue #1234 Business by Georgia Today

Issue no: 1234/222

• MARCH 10 - 12, 2020 • PUBLISHED TWICE WEEKLY

FOCUS ON WASTE MANAGEMENT DEVELOPMENT Deputy Minister of Environment & Agriculture rounds up the 6-year program

PAGE 6

PRICE: GEL 2.50

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

Georgian PM Vows Stricter Measures against Femicide NEWS PAGE 3

Number of Tourists Drops in Georgia Amid Coronavirus Outbreak BUSINESS PAGE 4

Job Market Intricacies in Georgia BUSINESS PAGE 4

Coronavirus’ Impact on Georgia’s Economy Will Remain Limited

Fitch Places Crystal on Watch Negative on FINCA's Acquisition BUSINESS PAGE 7

Coronavirus Updates – Georgia & The World SOCIETY PAGE 10

OP-ED BY EMIL AVDALIANI

Afghanistan's Doha Agreement & Its Geopolitical Implications

nalysts and many politicians have begun fearing that Georgia’s economy, highly dependent on its revenues from tourism and trade with its immediate neighbors, might suffer. However, as will be shown below, there is a number of developments in Georgia’s economy that even in the worst case scenario still forecast a considerable economic growth throughout 2020.

POLITICS PAGE 11 Prepared for Georgia Today Business by

Markets As of 06ͲMarͲ2020

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First for the negatives, flight bans and limitations of various degree put in place since February 23 with Iran, China and EU states, decrease the number of foreign visitors to the country expected for 2020. Some numbers are revealing. For example, in 2019, with 14 flights per week from Tbilisi and Kutaisi airports to Iran, approximately, 140,000 Iranians visited Georgia, which means fewer Iranian tourists will be visiting the country this year.

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NEWS

GEORGIA TODAY

MARCH 10 - 12, 2020

Forbes: Why Does Everyone Suddenly Want a Free Trade Deal With Georgia? @entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: The ‘Georgian Drivers Academy’ (GDA) is set to speed up development of the tourist sector. Rento Group, the “best transportation management company in Georgia,” is working with Opera Management to improve the quality of transportation service in the country, and bring it to the highest level. This includes English language courses and a cycle of trainings on transport service protocol, international etiquette, and more. Tsvara is a Georgian company that in its design traditions dates back to the V-VI cc. BC Georgia. Making it a contemporary business is the work of scientist, painter and jeweler, Vazha Kutateladze, whose handmade pieces are unique. 25 galleries in Georgia have Tsvara’s beautiful jewelry on display, as do online platforms, and the personal store of Tsvara. Soon, Tsvara is planning to show the world the wonders of Georgian jewelry traditions. Bottiglia Di Vino’s wine is made in Kakheti, at the base of a wine factory, but the company is building its own branded factory on its own land in 2020 as it is currently producing 200,000 bottles a year. The brand offers 9 kinds of wine: Saperavi, Mukuzani, Kindzmarauli, Khvanchkara, Alazani Valley White, Alazani Valley Red, Pirosmani Red, Pirosmani White, Akhasheni, Rose, and Tsinandali. The company is already exporting to China, Greece, and Lithuania and has plans to expand further afield. Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge

BY ANA DUMBADZE

hy does everyone suddenly want a Free Trade Agreement (FTA) with the small, Black Sea nation of Georgia? The answer to this question can be found in an article recently published by Forbes, a leading American financial-economic magazine. The author of the article, Kenneth Rapoza, notes that the idea is that free trade deals with smaller nations don’t really hurt the American blue-collar labor force as they are not going to be ideal places to relocate corporate resources to, or build new factories in. "Georgia’s been supportive in Afghanistan, a war Trump finally wants to wind down after more than 18 years there. How about giving them something in return? That’s part of the sales pitch," the author emphasizes. The article reads that in November, former Congressman from Florida James Bacchus, the ex-Chairman of World Trade Organization’s Tribunal, wrote in favor of an FTA with Georgia in the Financial Times. An FTA with them “would reassure other countries in the region that…the US continues to offer an alternative to acquiescence to the authoritarian regimes that surround and threaten them,” he wrote, an obvious nod to the Russians. Georgia shares a border with Russia. President Trump prefers one-on-one trade deals rather than to follow World Trade Organization norms for tariff rates among member nations. As such, “until we can revive the multilateral negotiating process, we should be negotiating bilateral trade agreements with some of the economically emerging countries that are our friends as well as with our major

The National Bank Decides to Simplify Regulation of Lending to Individuals BY MARIAM MERABISHVILI

he Financial Stability Committee of the National Bank of Georgia has decided to simplify the regulation of lending to individuals. As the National Bank explains, mitigat-

ing the regulation means reducing the administrative burden for credit lenders, increasing risk management flexibility and reducing the number of income margins determined for loan service coefficient. It is not yet known exactly how much the loan margin will be lowered. “It should be noted that the basic principle of regulation is unchanged and the lending organization should not impose a

trading partners,” Bacchus said in an interview. “Georgia should be on this list.” In addition, the author notes that a month prior, James Carafano and Alexis Mrachek from the conservative Heritage Foundation made similar arguments. "Their support centers around Heritage’s popular Economic Freedom Index. It ranks Georgia on par with Luxembourg. Actually, in 2019, it ranked one point ahead of them," he claims. The Forbes article notes that Georgia was invaded and occupied by Soviet Russia in 1921. "It became independent during the unwinding of the Soviet Union in 1991. But the Russians came back in 2008 and illegally occupied territory in Georgia’s South Ossetia and Abkhazia regions." The author writes that the main directions of the Georgian economy are: services, tourism, raw materials, wine and light manufacturing. It is ranked 7th in

the world in the World Bank’s Ease of Doing Business index, one place behind the US, ahead of the UK, Norway, and Sweden. They have a six-year-old Association Agreement with the European Union, meaning there is free movement of goods and people between the EU and Georgia, and already have FTAs with China and Turkey. "Heritage has been pushing for a USGeorgia FTA for roughly eight years, citing the China free trade deal with them as another reason why the US should do it. "The idea resurfaced out of the Washington think tanks and into congressional offices in 2015 during the Obama Administration. The timing of the push for a Georgia FTA coincided with Russia’s push to annex parts of Ukraine. A Georgia FTA was viewed as both a shrewd political and commercial move to bolster security and American business opportunities," reads the article.

Coronavirus Leads Ryanair to Reduce Flights from Italy to Georgia

financial obligation on the debtor whose service is of considerable financial difficulty to the consumer”. The provision on lending to individuals came into force on January 1, 2019. At present, loan servicing ratios are divided into four groups according to their monthly income: up to GEL 1000, GEL 1000 to 2000, GEL 2000 to 4000 and more than GEL 4000.

BY ANA DUMBADZE

rish budget airline Ryanair will reduce flights from Italy to Georgia due to the new coronavirus outbreak, the airline said on its official website. “Ryanair has been forced to cancel up to 25% of all Italian short-haul flights for a three week period from the 17th March to 8th April, in response to the Covid19 virus. "All impacted customers have been notified by email and SMS and given the option to request a refund, rebook or re-route their journey,” the airline said

in a statement. Ryanair said Milan-Tbilisi flights would be performed until March 7, while the number of flights will be reduced to two from March 8 to April 7. Bologna-Kutaisi flights were carried out until March 7, and suspended from March 8 to April 7. Some restrictions are being imposed on flights from Italy to Joran, Israel, Czech Republic, and Montenegro. Hungarian low-cost airline Wizz Air has also reduced the number of flights from Kutaisi Airport to several Italian cities due to the coronavirus risk. The company representatives claim that the reason for the restriction is a decline in demand for flights to Italy.

NEWS

GEORGIA TODAY MARCH 10 - 12, 2020

Georgian PM Vows Stricter Measures against Femicide BY TEA MARIAMIDZE

eorgian Prime Minister Giorgi Gakharia said that the fight against femicide and violence against women needs a more complex approach. Femicide is the killing of a woman or girl, in particular by a man and on account of her gender. The PM made the statement just before Women’s International Day, celebrated on March 8, and also referring to the recent case of femicide in Georgia’s town of Khashuri, where a woman of 25 was brutally stabbed by her ex-husband. “We have seen eight women killed by a family member in the last two months and this is a very difficult picture; a problem that requires a complex approach, and all relevant agencies have an important role to play in this process. We need to take more active steps to combat this problem,” he said during a meeting conducted on the issue at the governmental administration on Saturday. The PM mentioned that in recent years, the law has been tightened several times, and now gender-based crime is seen as an aggravating circumstance. “Abuse-monitoring, risk assessment and restraining order enforcement systems have also been established. And while investigators are constantly trained, the situation requires coordinated action by all agencies,” he said. The meeting also resulted in the decision to launch a far-reaching campaign for combating violence against women,

with the engagement of the Interior Ministry, Chief Prosecutor's Office, Justice Ministry, Regional Development Ministry, Ministry of Health, Ministry of Education, the Office of the State Minister for Reconciliation and Civic Equality, and the Administration of the Government. The Prime Minister's Human Rights and Gender Equality Adviser Lela Akiashvili urged all state and public institutions, politicians, NGOs, representatives of the international community and the public, to join the campaign. Akiashvili said the meeting was held under the aegis of the Human Rights Council and was attended by representatives of all relevant institutions involved in both the elimination of crime and in the development of social programs for survivors of violence. “We spoke about our joint campaign. In light of the Prime Minister's statement, we expect all state and public institutions, politicians, NGOs, representatives of the international community, and the public at large to join us in this campaign in order for us to stand together and proclaim that we do not condone violence," she said. At the end of the meeting, the participants emphasized the need for stronger coordination between state institutions and, at the same time, urged all members of society toward active engagement in the campaign designed to raise public awareness of the unacceptability of violence. Moreover, before March 8, PM Gakharia took to his Facebook page and stressed that fighting violence against women is not only the responsibility of women,

Image source: Imedi News

but all members of society. The post reads that although Georgia has a good legislation and much has been done with a common effort, the fact is that even more effort is needed as the picture gets worse. “In the last two months, eight women have been killed by their family members. Working together has produced some serious results, so all public agencies, civil society, media and international partners must continue to come together and fight this problem,” Gakharia said. Last month, Georgian President Salome Zurabishvili also condemned violence

against women. She released a statement on femicide, emphasizing that any kind of violence against women is unacceptable and all cases of murder “are terrifying.” Zurabishvili pointed out that when a woman is killed because she is a woman, it is a problem within society, and that the active involvement of the state and education system in culture and civic awareness-raising is crucial. “It is necessary to raise public awareness. Joint work and efforts from state, public, and religious organizations are important to prevent violence,” the statement reads. The non-governmental sector and

Georgia’s Public Defender Nino Lomjaria have many times raised the issue of violence against women and the femicide rate in the country. NGOs held a performance-rally on March 8 at the Tbilisi Concert Hall, expressing their protest and concern regarding the issue. “This year, femicide has become an everyday issue. In just two months, eight women have been killed. We all tend to blame others for this, but femicide has become a social problem and it is time for each of us to feel responsible,” reads the statement released by the protesters.

Agreement between GD & Opposition Named an Important Step to Democracy BY ANA DUMBADZE

acilitators of the dialogue between Georgia’s political parties released a statement on the agreement achieved between the opposition and the government on Sunday March 8. “We congratulate the participants of the political dialogue on [Sunday’s] successful agreement, which represents a crucial step towards the depolarization and normalization of the political environment in Georgia in the run-up to the parliamentary elections later this year. "Today’s agreement foresees an election system for 2020 based on 120 proportional mandates and 30 majoritarian mandates, a fair composition of election districts, a 1% threshold, and a cap recognizing that no single party that wins less than 40% of the votes should be able to get its own majority in the next parliament. "The agreement is accompanied by a joint statement among the sides outlining the agreement and recognizing the wider objective of holding free and fair elections, including the necessity of addressing actions that could be perceived as an inappropriate politicization of Georgia’s judicial and electoral processes and of avoiding any such actions in the future. "We recognize today’s agreement as a stepping-stone on Georgia’s democratic path. We call on all sides to adhere to it and to safeguard its successful adoption in Parliament and subsequent imple-

mentation, for the benefit of the people and country of Georgia,” reads the statement. After four rounds of talks and negotiations that ended without results, representatives of the Georgian government and opposition on March 8 reached the agreement on the electoral model. The above decision was announced after a meeting held at the US Ambassador's residence, which was attended by a newly appointed US Ambassador to Georgia Kelly Degnan and EU Ambassador to Georgia Carl Hartzell. "This is a great benefit for all Georgians," Hartzell said after the meeting. “All parties achieved an agreement…I want to congratulate everyone that a compromise has been achieved,” the Ambassador said. The US Embassy to Georgia released the text of the Memorandum of Understanding signed between the opposition

and the government. “The undersigned parties agree to support changes to the election system based on the following draft text of the Constitution’s transitional provision defining the rules for the 2020 Parliamentary Elections,” the MoU reads. "The elected Parliament shall consist of 120 members elected through the proportional system and 30 members elected through the majoritarian system. The electoral threshold for proportional elections shall be set at 1%. "A capping mechanism will define that no single party that receives less than 40% of the votes cast is allowed to receive a majority of seats in the Parliament. Further caps and provisions will be introduced in the legislation with the aim of facilitating a more proportional distribution of mandates relative to the votes received by the parties. "The 30 electoral districts will be drawn

in compliance with the relevant ruling of the Georgian Constitutional Court and the Venice Commission recommendation, suggesting that the deviation from the average electorate size of districts should not exceed 15%. Preference should always be given to creating districts within the same region unless the distribution of the electorate requires otherwise. Up to three limited exceptions from the above districting rules can be introduced throughout the country in the interest of encouraging the representation of ethnic minority groups, citizens residing in mountainous regions, or for accommodating particular geographic needs. "The Parliamentary majority will publicly present its proposed mapping of electoral districts, in line with the principles described above, no later than ten days from initiating the constitutional amendments in the Parliament. "Should there be early parliamentary elections between 2020 and 2024, the first such election will be held based on the election system guiding the 2020 elections. Any subsequent elections will be held based on the fully proportional election system as foreseen for the 2024 Parliamentary Elections. "The undersigned party declares full support for the above changes and commits to ensuring its affirmative votes in the Parliament to pass the constitutional amendments”. Congressman Adam Kinzinger, who is Co-chair of the Friends of Georgia Group in the United States Congress, responded to the agreement. "My heartfelt 'congrats' to the people

of Georgia for reaching an agreement on the 2020 parliamentary elections. Democracy is hard work, but worth it. Speaker Talakvadze and many others deserve appreciation for their work," the Republican Congressman tweeted. Kinzinger was among those US congressmen who warned the Georgian Dream of the possible complications to expect if they failed to reach an agreement on the 2020 parliamentary election system with opposition members. Prime Minister of Georgia Giorgi Gakharia on Monday responded to the agreement reached between the ruling party and opposition representatives, emphasizing its importance in terms of strengthening democracy. The head of government expressed gratitude to international partners for their significant contribution to reaching an agreement. “A significant agreement has been reached on the electoral system, which is an important step towards strengthening democracy, stabilizing the political environment, reducing polarization in the country and sustaining economic development in the electoral year. "Thanks to our international partners for their significant contribution to reaching an agreement,” Gakharia said. "The agreement reached between the sides on our electoral system is a victory for all," President of Georgia Salome Zurabishvili wrote on social media. "Through compromise and prudent steps, we now have the conditions for peaceful and fair elections. Peace, stability, and democracy are the common goals for us all," she tweeted.

BUSINESS

GEORGIA TODAY

MARCH 10 - 12, 2020

Number of Tourists Drops in Georgia Due to Coronavirus Outbreak BY TEA MARIAMIDZE

eorgia’s National Tourism Administration (GNTA) has released the latest tourism statistics in the country, saying the total number of arrivals to Georgia in February 2020 decreased by 0.7%. The information reads that last month, 466,409 people visited Georgia. The number of visits by international visitors, defined as visits by people who are over the age of 15 and travel for less than one year, came to 386,859 which is 0.6% less compared to February 2019. Of the visits of international visitors, 257,547 visits were tourists, which is 4% less than in the same period last year. However, in January-February 2020, the number of arrivals by international travelers amounted to 1,099,610. which is a 10.2% increase, while the number of visits by international visitors amounted to 910,548, a 10.2% increase. In the same period, the number of tourist visits were 67,517, which is 12.2% more compared to the same period of last year. The National Tourism Administration says there were 951 visits from China to Georgia in February, a decline of 59.5% compared to the same period last year. Also, during January-February, there were 4002 visits from China to Georgia, a decrease of 2.2%. Regarding the other countries, last month visits by international visitors increased from Azerbaijan by 12.8% and Turkey by 3.8%. However, visits from Armenia and Russia dropped by 18.2%

and 25% respectively. Despite the decrease in the total number of visitors, visitors increased in February from some EU countries: Estonia 161.5%, Poland 84.8%, Italy 81.2%, France 52.4 and Germany 38%. From non-EU countries, increased visits were recorded from Kuwait 58.5%, Belarus 52.3%, Israel 39.5%, USA 29.1% and Saudi Arabia 17.7%. The total damage which the spread of Coronavirus (COVID-19), a respiratory illness affecting 104 countries and territories around the world, inflicted on Georgian economy is as yet unknown, but as Georgian Economy Minister Natia Turnava stated in late February, it will be at least GEL 30 million per month (about $10.79m) as Georgia stopped flights with China, Iran and recently even with Italy. Turnava said this weekend that the government will do its best to help the tourism sector overcome the challenges. "We have agreed on one thing with the tourism sector: that Georgia is a safe and healthy tourist market. This is a key message and we will all talk about it," she noted. The Minister said it is important that representatives of the tourism sector support the authorities in protecting the country from coronavirus through preventive measures, even if they impose certain restriction on travel. “The tourism industry encourages us, and we agree that Georgia is exemplary in many ways in terms of our security and epidemiological security,” she said. Turnava emphasized that Georgia is a safe country for tourists. “This is the way our country is positioned today: it is a well-known fact that

Image source: visitgeorgia.ge

it is safe for both citizens and tourists, even in the times of coronavirus,” the Minister said. To note, the Georgian government has imposed restrictions on crossing the state border for both local and foreign citizens. The government established that citizens are obliged to present a PCR certificate on COVID -19 when

crossing the border. The decision was announced at the meeting of the Interagency Coordination Council against Coronavirus on Friday and reads that upon entering Georgia, a citizen of Georgia, or any foreigner traveling from countries with a high risk of Coronavirus outbreak, is obliged to undergo an intensive check-

up at the border crossing point and a mandatory 14-day quarantine procedure. "At the border, they are obliged to present a PCR certificate on Coronavirus (COVID -19), issued by the relevant laboratory of the country of departure, and in the case of transit, by the relevant laboratory of the transit country,” the Government Administration said in the statement.

Job Market Intricacies in Georgia OP-ED BY NUGZAR B. RUHADZE

he labor market is not a physical marketplace but an imaginary part of our existence where a state or a business owner looks for a worker and those who want to work search for jobs. There is huge competition in that market, where an everlasting interplay between different labor forces is rampant at all times. This happens within the macro-world of economy, where the process of seeking employment determines if the fruits of the employeremployee interaction help the standard of living, or vice versa, damages it. One of the most noticeable factors effecting the operational excellence of a job market is the overall wage and salary level, as well as the number of available jobs, which on its own depends on labor demand and supply, varying from sector to sector of a given country’s economy. The stronger the employment opportunities, the higher the chance of good life in reality, including in Georgia. As a rule, employers generate demand on labor force, and Georgia is ok in this respect, as there is no lack of employers here who want to fill vacancies, eager for productive minds and hands. It is also true that employees provide supply. Sadly, this part of the labor market in Georgia is paradoxically dire: there is a considerable demand for labor, and the supply is excessive, but the available labor force is not qualified enough, or not qualified at all, to fill the current openings with potential winsome results. This fact takes us in a totally different direction, called the realm of education, which happens to be a major part of any economy: no education means zero qualification and the absence of qualifi-

cation is equal to unemployment, which consequently creates crisis in a job market, and the labor market collapse reflects on the quality of life, which is the bottomline of any economic effort. Here, the happiest development would be unison between the demand for jobs and the compatible supply of labor. There are countries in the world that are good enough to have that happy junction in place, but Georgia is not yet among them. On the other hand, it clearly feels that the labor market of this nation is gradually acquiring the sense to choose the hands qualified enough to do this or that job well. In other words, in the now

capitalist Georgia, businesses and even the State give preference to skill and knowledge rather than to friendships and relations, as it used to work in our socialist economy, saturated with communist ideology. Another question is how healthy Georgia’s economy is to create enough jobs to employ the men and women fit and available to work. According to obtainable and hopefully truthful stats, the picture is not delightful, and we know it: the country’s economy needs tons of reforms and even more capital investment, saying nothing about skilled labor force and fresh ideas. The evaluation of

Image source: ge.undp.org/Daro Sulakauri/UNDP

a job market starts with its size. In Georgia, there are more than two million people who can work and produce if given a chance, but their employment rate is not very high, so the biggest challenge for our decision-makers is the reduction of unemployment. The experts insist that the augmentation and diversification of the private sector will remedy this, but this may well be hampered by the asymmetrical market, the mobility of the labor force, low productivity and the insufficient qualification of workhungry wannabes. There is one more characteristic feature of the Georgian labor market that

attracts attention: with almost 13% of unemployment, many people get frustrated as a result of unsuccessful job search and give up on further attempts to find desirable employment, which might be conducive to imminent social degradation. And this is not only unattractive but extremely dangerous for society. On top of all that, ours is a country of an underdeveloped labor culture, within which the average net salary is only several hundred dollars. Of course, there can’t be an overnight breakthrough in this part of our job market, but the light at the end of the tunnel is probably starting to twinkle.

BUSINESS

GEORGIA TODAY MARCH 10 - 12, 2020

Large-Scale Real Estate ExhibitionSale Area Expo 2020 Postponed Area Expo, Georgia’s largest real estate exhibition-sale, which traditionally hosts up to 2000 visitors, is a platform whereby Georgian developers get a chance to offer special prices and terms to those interested in purchasing residential or commercial spaces. Area Group is holding the event for the third time in Tbilisi. Area Expo represents an annual exhibition-sale where the developers and financial institutions presented on the Georgian market gather in one space to provide access to diverse products and financial resources for people interested in acquiring real estate. The exhibition is likewise interesting for those who want to find information about the real estate market and study it. Here, one can observe market trends, discover business players in the field, and choose a business partner to invest in a real estate business.

BY ELENE DZEBISASHVILI

rea Expo 2020, which was to be held at the Sheraton Grand Tbilisi Metechi Palace on April 4-5, has been postponed due to the spread of COVID19 virus in Georgia. Area Group considers holding the exhibition impossible given the high probability of spreading the virus in public spaces. The company regards such measures indispensable for taking care of the health of visitors, participants and the public in general. The new date for the event will be announced in one week’s time, following thorough observation of the circumstances. Area Group wishes you good health and urges you to follow preventative measures.

Oil Price Crashes Due to the Coronavirus Outbreak BY BEKA ALEXISHVILI

Jan/Feb 2020: Georgia Exports 12.1 million Bottles of Wine to 39 Countries

il prices collapsed by as much as 30% after Saudi Arabia fired the ‘first shots’ in the latest scrambling price war, which comes amidst the Coronavirus outbreak. This plunge in oil price is the crude oil’s biggest one-day fall since the instigation of the 1990's Gulf War. Riyadh’s realistic threats to cut its crude price and raise production pressured the global price of Brent crude to plummet to as low as $31.02 per barrel. West Texas Intermediate which sets the US benchmark, fell to $27.71 per barrel. "It shows a level of nervousness in the market which I haven't seen in a long time," says Justin Urquhart-Stewart, founder of an Investment firm. Stockholders are selling shares at an alarming rate since they cannot calculate or predict what OPEC country Saudi Arabia or Russia might do. The oil-exporting intergovernmental organization OPEC last week arranged to cut production in order to support prices. The organization also demanded non-OPEC oil manufacturers, such as

BY ANA DUMBADZE

G Russia, to agree to the prearranged production cuts. Predictably, Russia rejected the plans on Friday. As a reaction, Saudi Arabia cut its legitimate selling prices for oil and plans to upsurge production. The move is seen by analysts as Saudi Arabia ‘flexing its

muscles’ in the oil industry to make Russia fall into line. “[The market] has gone from an issue over economic demand into more of a political game of poker," Mr. UrquhartStewart, a British Investor analyst, said. "It's already a very volatile situation".

eorgia exported 12.1 million bottles of wine to 39 countries in January-February of 2020 and generated about $31 million from the sale of wine abroad, the Georgian National Wine Agency reports. The value of exported wine is $31 million, which means that revenue has increased by 7% compared to the same period of 2019. The head of the National Wine Agency, Levan Mekhuzla, notes that there is an increasing trend of exports to the European, Japanese and Canadian markets. "It is also noteworthy that the rate of

increase in the value of wine exceeds the quantitative value, which confirms the trend of increase in the price of Georgian wine. Chacha (Georgian pomace brandy) and brandy exports are also stable," notes the National Wine Agency. At the beginning of the year, 140 companies exported wine, brandy, and chacha. As a result, $46.8 million was generated, which is 7% more compared to the same period of last year. The top five countries that imported the most bottles of Georgia wine in January-February 2020 were: Russia – 13 % (7.585.000 bottles) Ukraine +35 % (1.314.750 bottles) Poland +77% ( 1.1103.84 bottles) China – 6% ( 562.664 bottles) Kazakhstan -21% (274.068 bottles)

Coronavirus’ Impact on Georgia’s Economy Will Remain Limited Continued from page 1 Losses are likely to be felt from the ban on China too. The influx of Chinese tourists to the South Caucasus overall, and Georgia in particular, has been increasing over the past several years (by 40-50% in 2019 in comparison with 2018). For example, by the Georgian National Tourist Administration’s estimates, about 50,000 Chinese citizens visited Georgia last year (in comparison, in Armenia and Azerbaijan Chinese tourists constituted 15,000 and 25,000 people respectively), and approximately the same number is expected for 2020. Negative effects for the Georgian economy are also expected from a possible drop in bilateral trade with China. According to the 2019 data, Georgia exported from China goods worth $858 million, which is significant for Georgia’s minor economic potential. This makes China among the country’s top three importers, with a steady rise in comparison with previous years (2017 – $732.6 mil-

lion, 2018 – $833.9 million). What should be also feared is the effect of the coronavirus as a disincentive for minor and small scale business representatives to travel to China, Iran, Azerbaijan and Armenia (the latter two recently reported their first cases of coronavirus). Government officials also expect that more travel limitations with other countries will follow as the number of states across Eurasia effected by the virus increases. What could be far more damaging for Georgia is if certain limits are imposed on the land route with Russia and Turkey. Both are among Georgia’s top trading partners and a major source of foreign visitors. For instance, a decrease in the number of Russian tourists could impact Georgia’s economy as Russians comprised 19% of inbound visitors to Georgia in 2019; even with the air travel ban imposed in June 2019 this constitutes almost 1.5 million people visiting Georgia in 2020. A worst case scenario predicts the

overall decrease in demand for Georgian products, which will mean a decrease in the volume of the country’s exports. There could also be a considerable decrease in foreign investments in the light of a possible reduction of exported capital globally. Another likely possibility could be the diminution of remittances (a significant portion of Georgian fiscal revenue) from Georgian emigrants, especially in Italy and other European states.

POSITIVE TRENDS Despite the abovementioned negative trends, there is a whole set of long-term positive trends which can limit the negative impact on Georgia’s vulnerable economy. First is the fact that the tourist season in Georgia has not yet started; it is expected that by April-May, when the first large numbers of foreign tourists are expected in the country, the coronavirus will likely have been contained. Moreover, so far the trajectory of the

number of tourists visiting Georgia is actually on the rise. For instance, in comparison with the previous year, the number of foreign visitors to the country rose by 19%. Even with a very limited number of tourists from Iran and China, the impact on the Georgian economy is unlikely to be large, as throughout 2019 these two groups of tourists spent only $190 million – not a critical amount even for Georgia’s small economy of $18 billion (out of which the tourism sector amount to $3.5 billion). There is also the factor of the Lari, Georgia’s national currency, which, after depreciating throughout 2018-2019, became significantly stronger by levelling at 2,79 to 1 USD. Moreover, underscoring a likely limited shock to the Georgian economy because of the travels bans with Iran and China, here are the following figures: $2.5 million of losses from the diminution of Chinese tourists. In 2019, Georgia received $300 in revenue from China, which is 1.7% of the GDP; in Iran’s case, the losses

amount to $8 million per month. In 2019, Georgia received $177 million in revenue from Iran, which is 1.0% pf the GDP. Indeed, according to the projections set by the Ministry of Economy of Georgia, the possible economic losses for the country would, under the current circumstances, likely amount to only $11 million per month. A further stabilizing long term factor is Georgia’s expected economic growth of more than 4% for 2020. Given the above negative factors and considering the likelihood that negative effects will remain for most of 2020, it is likely that the growth will still remain at least near the 3.5% mark. Thus, though there is an expectation in Georgia of immediate economic losses from travel bans and likely diminution of trade with China and the immediate neighbors, unless there are travel and trade limitations with Turkey and Russia, long term positive perspectives will limit the existing negative effect on the Georgian economy.

BUSINESS

GEORGIA TODAY

MARCH 10 - 12, 2020

'Development of Waste Management Sector Can Create More Job Oportunities' - Solomon Pavliashvili, Deputy Minister of Environmental Protection & Agriculture will create additional work opportunities. The establishment of waste recycling companies in Georgia is the basis for the development of a circular economy. This is exactly the type of economic model that should be a priority for our country. Circular economy means proper management of waste flow: this entails prevention of producing waste, sorting recyclables, their subsequent collection and transportation for final recycling. This model helps reduce environmental pollution and ensures the wellbeing of our citizens. The wellbeing of our citizens is also determined by creation of more job opportunities, which the waste management sector can offer if and when the circular economy practices are gradually established.

ver the past year, GEORGIA TODAY has been actively covering issues related to environmental protection, particularly waste management and environmental pollution on the one hand to raise people’s awareness about their polluting habits, and on the other to let our readers know what they can do to contribute their share to protecting the environment. GT has been working in partnership with CENN/USAID’s Waste Management program, a program that has ensured novel steps toward reducing waste, starting a sustainable recycling system and putting the right policies in place for a safer and more responsible environment for all. The month of March marks the end of this six-year program and today we take a look back at the key milestones achieved in how waste is managed and how the country’s journey began in transforming its resource management, something that affects us all. For this, we spoke with Solomon Pavliashvili, the Deputy Minister of the Environmental Protection and Agriculture, Doctor of Economic Sciences, Vice President of the Georgian Academy of Economics, Paata Gugushvili Prize Laureate; and Nana Janashia the Executive Director of CENN, the leading environmental NGO.

WHAT ARE THE SIGNIFICANT DEVELOPMENTS IN THE WASTE MANAGEMENT SECTOR IN THE COUNTRY? Solomon Pavliashvili: Georgia has very high standards of environmental policy, and thus the country has developed a number of strategies and action plans, among them the Waste Management Codex, National Strategy for Waste Management 2016-2030, the National Action

Plan 2060-2020 and the National Program for the Environmental Protection for 2017-2020. In order to effectively implement the abovementioned policy documents, several technical regulations and bylaws have also been developed on issues such as waste import, export and transit as well as regulations on plastic and biodegradable bags, which is a huge topic at the moment due to the excess use of plastic bags. The standards set for landfills, how they are built and operated, are an important aspect for the country. Complying with these standards means protecting citizen’s health and preventing the negative effects on the environment. A complete revolutionary step forward in the waste management sector will be the introduction of the Extended Producer’s Responsibility (EPR), which is based on “the polluter pays principle”. This approach ensures the producers, sellers and distributors are held responsible for managing the waste produced by their products. This means that besides protecting the environment, additional job opportunities will be created.

WHAT WAS THE SCOPE OF COOPERATION WITH CENN? The ministry has been working closely with CENN since 2014 in waste management, with the financial support of USAID. It was in cooperation with CENN that we developed and adopted several guidance documents and policies to support the implementation of the waste man-

support to the private recycling sector and the establishment of the recycling system (separated waste collection) in Tbilisi and regions in cooperation with local governments.

WHAT ARE THE FUTURE CHALLENGES IN WASTE MANAGEMENT FOR THE COUNTRY? The biggest challenge awaiting Georgia in the near future is the introduction of the Extended Producer Responsibility. All the relevant legal framework has already been developed, now it’s necessary to constructively engage the private sector in this process. Another challenge facing Georgia is the construction of sanitary landfills that comply with the European standards. Overall, it is important that we share this social responsibility across the government, private sector, citizens and NGOs, as caring for the environment is everyone’s responsibility.

WHAT HAVE BEEN THE MAIN ACHIEVEMENTS OF THE WASTE MANAGEMENT PROGRAM? Nana Janashia: CENN, with financial

In addition, we developed guidelines for municipal waste management plans and even developed the municipal waste management plans for 19 municipalities, all of which were adopted. Of course, this was all relatively new to the municipalities and we decided to continue working with them to help them implement these plans. These plans basically help the municipalities design proper waste collection systems and gradually switch to waste separation and recycling. There are many steps to follow but the step-by-step plans are now in place. Afterwards, we provided major support to the Agency of the Protected Areas (APA) of Georgia, creating the guidelines and waste management plans for three protected areas. This was particularly important for supporting the country’s tourism development. We also shouldn’t forget the program’s role in strengthening the private recycling sector. The program established a Waste Management Association, which today unites 26 waste aggregation and recycling companies and represents a platform for lobbying the interests of the recycling sector. The program also disbursed grants to five recycling com-

WHAT HAS BEEN ACHIEVED AGAINST THE TARGETS OF THE EU ASSOCIATION AGREEMENT? HOW? All the above-mentioned documents are in line with the European standards. Thus, Georgia is ready to implement a model that is in line with the EU Association Agreement. The introduction of EPR, which will take place in the near future, will ensure that specific types of waste will be collected and recycled. This will prompt the creation of new companies in the waste management sector, which collect, process and recycle waste, and thus it

agement code. The program has been actively helping the municipalities in fulfilling the obligations set by the new regulations, which was of utmost importance for the ministry as it helped implement the requirements under the legislation on the ground. And that’s not to forget the program’s

support from USAID, has been working on modernizing the waste management sector since 2014 through the program Waste Management Technology in Regions (WMTR). The program has worked very closely with the government to achieve unprecedented steps in Georgia and has managed to help the sector kick-start a major transformation that will strengthen the country’s resource management and the economy. We started the program at a time when Georgia had no Waste Code or waste strategy, and there was no awareness of the concept of waste separation and recycling. Much has been done since then at the policy, technical and awareness levels, as well as to empower the private sector. It’s very difficult to single out specific achievements, as the list is long and all of it equally important. We probably have to start by talking about the legal framework for waste management we helped to develop. Within the program, in close cooperation with the Ministry of Environmental Protection and Agriculture, we developed a series of technical regulations in accordance with the Waste Management Code that were subsequently approved and adopted by the government. These regulations define how laws should be implemented; for example, how the country should build and operate sanitary landfills that are in compliance with the European standards and after the closure of landfills, how they should be maintained in order to minimise the negative effects of the landfills on the environment.

panies, with which they purchased modern equipment and increased not only their capacity but also their production. In my opinion, one of the most important achievements was the creation of a sustainable system for separated waste collection in Tbilisi, Batumi, Kobuleti and Khelvachauri, in cooperation with the local governments and private companies. Today, citizens in those cities and towns can recycle paper, plastic, glass and aluminum in recycling bins that are available to the public. In total, there are now 47 of these recycling corners. And this is only a modest list of the important things we achieved within the WMTR program!

WHY WERE THESE MILESTONES IMPORTANT? The program has supported the country in modernizing its waste management system and contributed to helping the country implement those requirements set by the National Waste Management Code, National Strategy and Action Plan, and helped the country to meet its obligations under the EU Association Agreement.

BUSINESS

GEORGIA TODAY MARCH 10 - 12, 2020

Fitch Places Crystal on Watch Negative on FINCA's Acquisition

Source: Fitch

itch Ratings has placed JSC MFO Crystal's (Crystal) 'B' Long-Term Issuer Default Rating (IDR) on Rating Watch Negative (RWN). The rating actions follow Crystal's announcement that it has agreed with FINCA Impact Finance to acquire FINCA Bank Georgia (FBG). The transaction is pending regulatory approval. Management expects to finalize the acquisition in April 2020, with full integration of Crystal and FBG in a single legal entity, branded as Bank Crystal, by the end of 2020.

KEY RATING DRIVERS The RWN on Crystal's Long-Term IDR reflects a potential downgrade upon completion of the transaction, due to tight capitalization versus requirements and execution risk. The outcome would depend on the post-merger capital structure, capital adequacy levels and buffers above regulatory requirements, ability to enhance efficiency and maintain asset quality for the combined entity. In Fitch's view, the projected core equity Tier 1 (CET1) ratio for the combined entity will likely be weaker than Georgian peers' and may no longer be commensurate with a 'B' Long-Term IDR. It also deems the planned headroom by Crystal above its reported CET1 requirement for end-2020 as very tight, particularly in view of integration risks and of its business model, which lends to higher-risk microfinance borrowers in Georgia's volatile operating environment. Crystal is still exploring different options with the local regulator in relation to its capital level and structure after the acquisition, which Fitch will re-assess once the process is finalized. Fitch says it also sees elevated execution risk in the acquisition given the relative size, shifting regulation, as well as management-and-operational complexity of the merger. Fitch notes it does not expect a change in the business model following the acquisition of FBG. Bank Crystal will continue lending to mainly rural microfinance borrowers, but will also increase its exposure to loans to smaller SMEs (above

GEL100,000 of original loan size) to about 20% of loans. The acquisition will expand Crystal's client base and regional presence, which should be beneficial in the long term. However, the pricing power of the combined entity would remain limited relative to larger Georgian financial institutions'. Fitch also sees a positive impact from Crystal becoming subject to Georgia's prudent banking regulation.

RATING SENSITIVITIES Fitch announced it will review the rating upon completion of the transaction. In resolving the Rating Watch, the IDR and senior debt rating are particularly sensitive to the level of capitalization of the merged entity and the extent of capital buffer above the regulatory minimum. This will be assessed in the context of risks relating to execution as well as future strategy, asset quality, profitability trends. A tight capital adequacy buffer compared with that of peers focused on retail lending or a deterioration of asset quality (Stage 3 plus annualized writeoffs above 10%), pointing to looser underwriting, would also trigger a downgrade. Conversely, the IDR could be affirmed at 'B' if the quality and capital cushion above regulations are comparable to pre-merger levels, while asset quality and profitability are expected to be in line with the pre-merger trends. Upside is limited for Crystal's Long-Term IDR unless we see a more material strengthening of lending franchise and sustained improvements in both capitalization and funding franchise.

ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance for Crystal is a score of 3. This means ESG issues are creditneutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. Crystal has an ESG Relevance Score of 4 for governance structure, which reflects weaknesses in governance and high key-man risk. This has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors.

BUSINESS

GEORGIA TODAY

MARCH 10 - 12, 2020

UNSC in New York Condemns Russian Cyber-attacks on Georgia BY BEKA ALEXISHVILI

n Friday, in the framework of the United Nations Security Council (UNSC), The United States, Estonia and the United Kingdom publicly denounced the Russian cyberattack on Georgia carried out in 2019. “Today at the #UNSC @EstoniaUN, @UKUN_NewYork and @USUN condemned the extensive and disruptive #cyberattacks on Georgia by Russian GRU in October 2019. We thank our partners for their strong support to #Georgia in condemning this brazen act against Georgia and its people!” reads the Georgian UN page on Twitter. In 2019, cyber-attacks were carried out against 2,000 websites, including administrative websites of the Georgian gov-

ernment. The attacks even reached the courts of Georgia, NGOs and private organizations, making them inoperable. Although the Georgian intelligence service investigated and claimed that the Russian General Staff Main Intelligence Directorate launched the cyberattack, the Russian side denied any involvement. The three countries issued a joint statement, where it can be read: “We are clear that Russia’s military intelligence service, the GRU, conducted these cyber-attacks in an attempt to sow discord and disrupt the lives of ordinary Georgian people. These cyberattacks are part of Russia’s long-running campaign of hostile and destabilizing activity against Georgia and are part of a wider pattern of malign activity”. This was the first time the cyber-attacks were formally deliberated as an independent matter at the UN Security Council.

Minister of Defense Meets with Azerbaijani Officials in Baku BY BEKA ALEXISHVILI

eorgian Defense Minister Irakli Garibashvili met with Azerbaijani President Ilham Aliyev in Baku. The two sides discussed stra-

tegic cooperation and joint military projects, the Georgian Defense Ministry press office notes. “Garibashvili thanked Azerbaijan for supporting Georgia’s sovereignty and territorial integrity and stated that the relationship between the two countries is based on trust and strategic cooperation,” the press office statement reads.

After meeting with President Aliyev, Garibashvili attended an official welcoming ceremony by General Zakir Hasanov, in which they placed flowers on the fallen soldiers’ graves. During his two-day visit in Azerbaijan, the Defense Minister and the high-officials from the Azerbaijani side conferred on the three-way party military exercises comprising Turkey.

ADB: Coronavirus Could Cut Global Growth by 0.1% to 0.4%

he Asian Development Bank (ADB) said on Friday the coronavirus outbreak is set to cut global and developing Asia’s economic growth

this year. The outbreak could slash global gross domestic product by 0.1 to 0.4% while economic growth in China and developing Asia, excluding China, could be reduced by 0.3 to 1.7% and 0.2 to 0.5%, respectively, the ADB said in an analysis that outlined best-and worst-case scenarios. The ADB said the coronavirus outbreak could lead to sharp declines in domestic demand, tourism and business travel, trade and production linkages, supply disruptions, hurting growth in developing Asia. "Economic activity will be affected in many ways. There are several channels through which the COVID-19 outbreak will affect economic activity in the PRC, the rest of developing Asia, and the world. These include a sharp but temporary decline in domestic consumption in the PRC and other outbreak-affected economies, and possibly investment if the outbreak affects views on future business activity; declines in tourism and business travel; spillovers of weaker demand to other sectors and economies through trade and production linkages; supplyside disruptions to production and trade (which are distinct from demand-side shocks spilling over through trade and production linkages); and effects on health such as increased disease and

Source: The Asian Development Bank. Photo source: Reuters

mortality as well as shifts in health care spending. Each of these are taken in turn. "ADB developing members that will be significantly affected are those with

strong trade and production linkages with the PRC. In addition to tourismdependent economies, other developing Asian economies such as Hong Kong,

China; Mongolia; the Philippines; Singapore; Taipei, China; and Viet Nam will be materially affected by the COVID-19 outbreak. Many of these economies see

a significant share of tourists from the PRC and are affected through that channel as well," ADB said in an analysis published on its official website.

BUSINESS

GEORGIA TODAY MARCH 10 - 12, 2020

Coronavirus Plunges World Markets

Sources: The New York Times, Al Jazeera

BY NINI DAKHUNDARIDZE

lthough the coronavirus is showing signs of slowing down its spread in Southeast Asia, where it originated in the December of last year, it is not backing down from hurting the world economy, as the international markets got ready to face a tough week ahead on Monday. Investors are rattled as the coronavirus spread has countries’ economies on the lockdown, and now there’s a clash among the world’s biggest oil producers, Russia and Saudi Arabia. The recent move of Saudi Arabia in the scrambling price war had the oil prices fall by 30%. This marks the oil market’s biggest one-day plunge since the 1990's Gulf War. While Saudi Arabia and Russia’s competitive war in the oil market is not new, the market has been sensitive ever since the nearshutdown of Chinese markets in January, meaning the two state’s moves are dramatically effective. “While low oil prices can give consumers a boost, they can also disrupt countries that depend heavily on petroleum dollars to keep their economies running,” writes the New York Times. However, it’s not only the oil markets that are taking a toll: Moody’s Investors Service, a ratings firm, said on Friday that it was expecting a downgrade in growth expectations for the Group of 20 nations. “The full extent of the economic costs will be unclear for some time. Fear of contagion will dampen consumer and business activity. The longer it takes for households and businesses to resume normal activity, the greater the economic impact,” read the company’s note as published by the New York Times. Early Monday morning trading showed a decrease in Frankfurt and London exchanges by 8%, and in Paris by 4%. The New York Times further noted that “an index of Europe’s 50 biggest companies was down nearly 6%.” In China, the Shanghai Composite Index went down by 3.1%. Hong Kong’s Hang Seng Index and South Korea’s Kospi fell 4.2%. However, the biggest plunge was experienced by Australia in the Asia-

The index of Europe’s 50 biggest companies was down nearly 6%

Coronavirus could cut French economic growth to below 1% in 2020 Pacific region, as the S&P/ASX 200 index dropped a little bit over 7%. The US market faced its own problems as yields on US government debt fell, and Government bonds signalled that investors treasure the security of a safe harbor now more than ever. As US Market Watch reports, Gold for April delivery US:GCJ20 on Comex rose $20.50, or 1.2%, to $1,688.80 an ounce, after surging 1.5% in the previous session. The New York Times called gold the “tried-andtrue indicator of investor skittishness”. “Futures markets suggested Wall Street would open nearly 5% lower. In bonds, yields on the closely watched US Treasury bond fell below 0.5%, about half the level of just a week ago,” the New York Times wrote of the American market. In Japan, the Nikkei 225 index fell more than 5%. Japan was already experiencing a shrink in its economy: as the country’s government said on Monday, Japan’s economic performance at the end of last year was worse than initially thought. Then the coronavirus outbreak in the country put its economy more at risk. The New York Times reported that Japan’s economy “had shrunk at an annualized rate of 7.1% in the three months that ended in December, revised down from an initial estimate of 6.3% last month.” Now that the coronavirus has added more pressure on businesses, as Japan is battling with the virus, could mean the economy will continue to shrink in the first quarter of 2020. This is most likely pushing the country into recession, which is generally defined as two straight quarterly contractions. The French and Italian governments share the fear for the health of their country’s citizens due to the coronavirus, and the fear of what the virus is doing to the states’ economies. Bruno Le Maire, the French Finance Minister, said the coronavirus could cut French economic growth below 1% in 2020 from a previous estimate of 1.3%. France’s finance minister is calling for a big European economic stimulus package, and the Italian government has urged the EU to adopt a package of measures to deal with the impact the Covid-2019 is heaving on the international economy.

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BUSINESS

GEORGIA TODAY

MARCH 10 - 12, 2020

EBRD First VP Positively Assesses Georgia's Economic Growth BY BEKA ALEXISHVILI

he First Vice-President of the European Bank for Reconstruction and Development (EBRD), Jurgen Rigterink, met with Prime Minister Giorgi Gakharia last week. The VP of the EBRD stated that he sees significant progress in the Georgian economy and he positively evaluates the economic growth rate. Mr. Rigterink spoke at the conference with the Georgian PM about the currency exchange value of the Georgian Lari, current account deficit and the pace of Georgia’s positive economic tendencies. The PM and VP of EBRD also discussed

the coronavirus outbreak and the toll it can have on the global economy. Attention was brought to the steps the government has to take in order to minimize the negative economic effects of coronavirus. “We had a very good and constructive meeting with the Georgian Prime Minister and the Finance Minister, who is also a representative in the EBRD from Georgia," Rigterink said. "The country’s progress in 2019 is significant. The economic growth index is very good, which is also shown in the investments of the EBRD, which amounts to 300 million Euros of capital investment. "We conferred on our future perspectives and discussed numerous possible projects where we can put combined investments, from both the public and private sectors.

"The economic challenges in 2020 for Georgia will not only transpire because of the planned elections in the 3rd quarter but because of coronavirus. This is

a challenge for every country. We discussed the possible economic effects of the virus with the Georgian PM. This will have an effect on the whole region

and on the GDP progress, especially in a country where tourism is an important factor for the growth of GDP,” said Rigterink.

SOCIETY

Coronavirus Updates – Georgia & The World BY NINI DAKHUNDARIDZE

he reports of March 9 say that coronavirus has spread to over 110 countries worldwide, infecting more than 110,000 people, of which 62,300 have recovered and 3831 have died. The majority of the fatal cases have been reported in China – the country now has up to 3100 lethal cases. However, the spread of the virus in the country is slowing down as the state reported 40 new cases on Monday, the lowest number since the National Health Commission started publishing China’s coronavirus data on January 20. Outside Hubei Province, which is the epicenter of the original outbreak of Covid-2019, China has reported no new locally transmitted cases, now for the second straight day. Following up with the positive side, the novel coronavirus has urged the country to further advance its technologies. Al Jazeera has reported that a Chinese company has claimed to have developed the country's first facial recognition technology that can identify people when they are wearing a face mask, and so help in the fight against the disease. What’s more, the Disneyland in Shanghai which shut its doors on January 25, is starting to accept guests again – it has opened some of it shops, restaurants and resort facilities. Of course, everyone has to go through major health checks and the Disneyland is only functioning on a limited basis, but it still seems like a big step forward. The rate of infected also appears to be slowing in South Korea. North Korea on the other hand, granted having reported no confirmed coronavirus cases so far, has evacuated 60 diplomats out of the country. AFP has reported that for that reason, on Monday, several embassies in North Korea were closed. Moving west on the world map will leave us feeling less hopeful about the new coronavirus, as Iran reported 49 new fatalities on Monday morning, bringing the country’s death toll to 194. The latest reports assured international society that the coronavirus cases in Iran were not more than 7000, however much of international media, like The Atlantic, writes that the cases in the country are higher in number than their government is letting on. Europe continues to think of more drastic measures to take up, as the continent as a whole tries to freeze the spread of the coronavirus. Despite the efforts, Albania has reported its first case, while the number of infected in France, Ger-

many, Italy and in other countries of central Europe continues to grow. Italy, the source of the European outbreak of coronavirus, has some 16 million people in the country’s geographical north in quarantine. 133 deaths were reported on Sunday, bringing the country’s total to 366. Over 7000 people in the country have been confirmed as having the virus so far. Both Italy and France have urged Europe to unite in the fight against coronavirus. The French Finance Minister Bruno Le Maire said that a “massive economic stimulus” plan is needed to defeat the virus. He has also reported that the plan will be discussed on March 16, when the French Minister meets his European counterparts. In the United States, coronavirus cases have reached and surpassed 500, and the country’s death toll has risen to 22. Texas Senator Ted Cruz and Arizona Representative Paul Gosar put themselves into a 14-day quarantine, having determined that they had contact with a man at the Conservative Political Action Conference who later tested positive for the coronavirus. Georgia continues its battle against the coronavirus. Monday’s reports show that the country has 15 confirmed coronavirus cases, one of the patients at the Tbilisi Infections Hospital being Amiran

Gamkrelidze’s son Nikoloz. Amiran Gamkrelidze is the Director of the National Center for Disease Control of Georgia, and his son, who announced on Saturday his having tested positive for Covid-2019, is the Head of Supervisory Board at Evex. The special website created by the Health Ministry of Georgia reports that the country has 141 people in quarantine and 51 in in-patient care. Worldometers website claims that there is one patient in Georgia in a serious condition. Medical Director of the Tbilisi Infections Hospital, Marina Ezugbaia spoke about the patient’s health to reporters on Monday, saying that although the condition of the 44-year-old man (the fourth Georgian citizen to get infected) is still serious, his life is not at any particular risk. Ezugbaia further assured Georgian society that all the coronavirus patients in Georgia are in a stable condition, and their lives are not being threatened by the disease. “The condition of the first three patients is mild and stable. The condition of the fourth patient with confirmed pneumonia remains severe, but not deadly. His fever persists at 38-39 degrees. According to laboratory data, his condition is stable. His life is not in danger at this stage, though constant observation and

monitoring are essential,” said Ezugbaia. Other coronavirus-infected patients show various clinical symptoms: fever, cough, cold and sore throat. Three patients have been diagnosed with pneumonia and are being treated. Although there are no life-threatening complications at this stage, it does not give us sufficient reason to remain calm, as this disease is characterized by progression,” she added. On Monday, two citizens of Bulgaria were admitted to the Gori Military Hospital. The latest reports claim that the hospital has 22 patients in its quarantine zone, four of which are militants, two citizens of Bulgaria, and one of Iran. Four citizens of Iran left the hospital on March 7. While the special coronavirus council of Georgia has strictly recommended cancelation of official and work trips abroad, unless an emergency, the country’s President has come up with a new challenge titled #SafetynotFear. President Zurabishvili has published photos and videos on social media, showing her traveling on public transport with a face mask on her face. "Challenge to world leaders: let’s spread #SafetynotFear. With the new #Coronavirus on top of world news, let’s show people that safety means remaining calm and being responsible by continuing our lives while following @WHO recom-

mendations," Zurabishvili tweeted on her official Twitter account. She challenged international leaders to join the campaign, in particular, Julie Payette, Governor General of Canada; Kersti Kaljulaid, President of Estonia; Sanna Marin, Prime Minister of Finland; Ursula von der Leyen, President of the EU Commission; Miri Regev, Minister of Culture and Sport of Israel; Emmanuel Macron, President of France; Tedros Adhanom, Director General of WHO; and Erna Solberg, Prime Minister of Norway, all of whom she asks to spread safety, not fear. Medics worldwide are now saying that the death rate of the new coronavirus is actually below 1%, since it’s evident that many people who have mild symptoms and appear to be dealing with the disease just fine on their own, don’t seek any help and so their cases go unreported. Although the death rates among confirmed cases fail to tell us about the precise risk in any single group, their patterns reveal who is most at risk. The data shows that the elderly, patients with pre-conditions like vascular diseases, diabetes, respiratory problems, and oddly enough, men in general, are more at risk of coronavirus cases resulting in fatality. The death rates have so far been lowest for the under 30s: eight deaths in 4500 cases. Deaths were at least five times more common among people with diabetes, high blood pressure or heart or breathing problems. A slightly higher number of deaths among men compared to women has also been reported. It has also been noted that medical staff who treat patients and get exposed to a lot of virus cases are more at risk. But even with these rates at hand, the statistics show that 90% will recover. The main advice to keep yourself from being infected remains to wash your hands with soap and water for at least 20 seconds, and try to do this every time you enter a new environment (come back home, arrive at work…). The virus can linger for 48 - 72 hours on a hard surface, such as the hand rail in the tube, though less time on a soft surface. Avoid touching your face to prevent the virus getting into your nose, mouth or eyes. There is still no specific cure for the new coronavirus almost three months after it was first detected, though many countries are working to create a special vaccine for it. The US government’s chief scientific adviser, Sir Patrick Vallance, said he did not think a working vaccine to protect people from the coronavirus would be produced in time for the current outbreak, but that a timeframe of a year to 18 months “was not unreasonable to assume,” according to The Guardian.

POLITICS

GEORGIA TODAY MARCH 10 - 12, 2020

Afghanistan's Doha Agreement & Its Geopolitical Implications OP-ED BY VAKHTANG MAISAIA, PROFESSOR, DOCTOR OF POLITICAL AND MILITARY SCIENCES

n February 29 a historic event took place in the capital of Qatar, Doha. The US government officials and the Taliban movement's delegation, accompanied by officials of Pakistan, Tajikistan, Uzbekistan and 30 other officials, signed a peace agreement that addresses several noteworthy aspects (the agreement was signed by US Special Representative for Afghanistan, Zalmay Khalilzad and Taliban leader Abdul Ghani Baradar): 1) Reducing the US military contingent to 8600 soldiers (today there are 14,000 NATO soldiers plus 17,000 NATO coalition troops in Afghanistan, including a Georgian contingent of 900 troops). If the Taliban complies with the terms of this agreement for some time, for at least 5-14 months, the US will contribute to withdrawing the NATO contingent. At the same time, the Trump administration is trying to reduce the losses suffered by NATO coalition forces and directly by the US contingent over 19 years (the US lost 2400 military personnel and the NATO coalition 3900 military personnel, including 34 Georgian peacekeepers); 2) Launching negotiations in Afghanistan on March 10 and negotiations with the government of Ghani, who at this stage, as well as the Najibullah government during the Soviet occupation, strongly opposes the withdrawal of foreign military contingents from Afghanistan; 3) Exchange of all prisoners, the release of 5,000 Taliban supporters and release of 1,000 Afghan government officials; 4) Abolition of

Image source: NewYorkTimes

economic and political sanctions against the Taliban and de facto and de jure recognition of this movement, to happen in May; 5) Joint coordination against international terrorist and non-state religious actors (Daesh and al-Qaeda) and the pledge of the Taliban to stop all cooperation with these jihadist groups; 6) In the wake of these talks, US President Donald Trump plans to meet with Taliban movement leader Mawlawi Hiba-

tullah Akhundzada, who represents a moderate wing of the movement. The mentioned process began quite dynamically and it is similar to the signing of the agreement between the Vietnamese Communist Government, the Vietcong Guerrilla Movement, and the US Government in January 1972, and is very close to the scenario in which the Democratic Republic of South Vietnam disappeared from political vocabulary in 1975.

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Almost the same thing can happen in Afghanistan, and it is unlikely that the current President Ashraf Ghani's government would maintain power once the US actually leaves Afghanistan, as the Taliban has already become a serious military-political entity and controls at least 45% of the territory of the country. With this agreement, President Trump is already launching an election campaign, thereby trying to further bolster his 49% support. Of course, this agreement is directly linked to Georgia and has two factors: 1) The fate of Georgia’s military contingent and their withdrawal can also be negotiated both with the US and the Taliban, as the withdrawal of US contingent increases the likelihood of the Taliban seizing power and also determining the status of this country’s contingent. 2) US withdrawal from Afghanistan may increase drug transit capacity. Based on the fact that as of 2014, it is not excluded that Georgia may become a target of such "black transit" and the volume of illegal Afghan heroin transit may increase, as 40% of Afghanistan's production of public goods comes from opium production and the Taliban will not hamper its exports, including illegal ones and it may even encourage it, but for internal consumption it may impose cruel rules based on Shia Law. 3) Revitalization of the international terrorist network (the same Daesh has a strong foothold in Afghanistan, and despite the Taliban’s resistance, it is unlikely that its influence will diminish); I don't know what position the Georgian government has on this issue and what it thinks about it, hopefully time will tell.

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However, summarizing, it is interesting to consider how the situation may evolve after the final withdrawal of NATO and the United States from the country still mired in a civil war. Once a foreign military contingent is withdrawn, the Taliban will seize power in Afghanistan and revive the project of Islamic Emirate of Afghanistan, which began in 1996 and ended in 2001. However, the country may be divided into several zones of influence and come to resemble a slice of "apple pie". The ethnic Uzbek and Tajik political forces will be strengthened in the north of the country, even under the command of Uzbek field commander General Dustum, who will be supported by Russia and Uzbekistan; and the socalled "safety zone" will be created to defend the post-Soviet space from Taliban and other jihadist groups. The central and eastern part of the country will be controlled by the central Taliban government, which will be supposedly backed by the Islamic Republic of Pakistan. In the southern part, it is not excluded that the Daesh Khorasan province and the al-Qaeda network may share areas of influence. At the same time, the Shiite group of Ismailis will continue to control the autonomous region of Badakhshan. This is what will happen as a result of the implementation of this agreement. The so called Haqqani drug cartel and local clan governors should be mentioned separately; they will have "friendly" relations with all of these groups, and it is likely that Afghan opium exports will increase further, at least three times, in all directions (at the expense of the Taliban and the so-called "Karachi drug cartels").

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