Issue #936 Business by Georgia Today

facebook.com/ georgiatoday

Issue no: 936/73

• APRIL 11 - 13, 2017

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Georgian Airports Show Passenger Numbers Up NEWS PAGE 2

FOCUS

ON ENERGY

Largest regional HPP and Russia's northern-most well opened, while Georgia sees a growth in PAGE domestic consumption

ISET PAGE 4

Electricity Market Watch GALT & TAGGART PAGE 6

Tourism Market Watch 5-10

Turkish Ambassador on the Referendum, the West & Georgia INTERVIEW BY VAZHA TAVBERIDZE

If You Could Choose Where to Be Born What Country Would You Pick?

urkey is bracing itself for a historic referendum, and it comes at a time when the relationship between President Erdogan and with the West, with the EU chiefly, is at its skewered worst we’ve seen thus far. Why do some in Europe think that, as the Foreign Policy put it, “Turkey is using democracy to undermine democracy”? Has the relationship with NATO also been strained, as Russian media would lead us to believe? Is Turkey being isolated or is it entering a self-exile? Is there a real alliance brewing between Putin and Erdogan? These were the questions Panorama Talk Show and GEORGIA TODAY put to the Turkish Ambassador in Georgia, Zeki Levent Gumrukcu, and the Ankara envoy duly obliged with some top-notch commentary. Continued on page 12

GALT & TAGGART PAGE 8

OSCE Chairman on Geneva Talks & Tskhinvali's “Alania Referendum” POLITICS PAGE 13

Georgians Remember April 9 Heroes SOCIETY PAGE 14

Georgia Has First National Maternal and Newborn Health Strategy

SOCIETY PAGE 15 Prepared for Georgia Today Business by

Markets As of 07ͲAprͲ2017

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

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

INDICES

Price

w/w

m/m

Price

w/w

m/m

GBP 34.14

+6,0%

+18,0%

GEOROG 04/21

105.30 (YTM 5.28%)

Ͳ0,1%

Ͳ0,2%

GBP 3.51

Ͳ4,4%

Ͳ4,9%

GEORG 04/21

BONDS

110.80 (YTM 3.93%)

Ͳ0,1%

Ͳ0,3%

GBP 15.00

+0,2%

+7,5%

GRAIL 07/22

110.68 (YTM 5.38%)

+0,1%

BGEOLN 07/23

101.07 (YTM 5.79%)

+0,0%

Ͳ0,6%

Price

w/w

m/m

55,24

+4,6%

Ͳ1,2%

CURRENCIES

Price

w/w

m/m

1 254,53

+0,4%

+3,2%

GEL / USD

2,4045

Ͳ1,4%

Ͳ1,9%

GEL / EUR

2,5452

Ͳ1,3%

Ͳ1,7%

Price

w/w

m/m

GEL / GBP

2,9721

Ͳ2,3%

Ͳ0,6%

FTSE 100

7 349,37

+0,4%

+0,1%

GEL / CHF

2,3829

Ͳ2,0%

Ͳ1,5%

FTSE 250

19 229,69

+1,4%

+1,8%

GEL / RUB

0,0420

Ͳ3,2%

DAX

12 225,06

Ͳ0,7%

+2,2%

GEL / TRY

0,6444

Ͳ3,9%

Ͳ3,2%

DOW JONES

20 656,10

Ͳ0,0%

Ͳ1,3%

GEL / AZN

1,4281

+1,2%

+4,3%

5 877,81

Ͳ0,6%

+0,8%

GEL / AMD

0,0050

NASDAQ

Ͳ0,2%

MSCI EM EE

148,07

+0,8%

+2,5%

GEL / UAH

0,0892

Ͳ1,0%

Ͳ1,9%

MSCI EM

961,61

+0,3%

+2,7%

EUR / USD

0,9443

+0,6%

Ͳ0,2% Ͳ1,4%

SP 500

2 355,54

Ͳ0,3%

Ͳ0,5%

GBP / USD

0,8083

+1,4%

MICEX

2 020,23

+1,2%

Ͳ0,2%

CHF / USD

1,0091

+0,6%

MSCI FM

2 623,62

+1,9%

+2,7%

RUB / USD

57,2650

+1,8%

Ͳ1,6%

GT Index (GEL)

1 177,93

+0,1%

TRY / USD

3,7332

+2,7%

+1,4%

GT Index (USD)

887,17

+5,1%

AZN / USD

1,7035

Ͳ1,1%

Ͳ4,3%

Ͳ0,4%

NEWS

GEORGIA TODAY

APRIL 11 - 13, 2017

Georgian Airports Show Passenger Numbers Up Georgian Gov’t to Look into Free Trade with India BY NINO GUGUNISHVILI

he Georgian government is working to start negotiations on achieving a free trade agreement with India, said Georgian Prime Minister Giorgi Kvirikashvili during the government meeting last week. He noted that a pre-study will be carried out prior to the process of starting the free trade agreement negotiations, in order to evaluate all the factors and the potential related to said free trade agreement. The PM noted that Georgia has free trade agreements with neighboring

countries, the EU, and member states of the EFTA, while a free trade agreement is planned with China and HongKong in the near future. It is believed that a delegation headed by George Gakharia, Minister of Economy and Sustainable Development of Georgia, is to visit Delhi, and, according to the results of the research undertaken, expected to be ready in several months, negotiations on a free trade agreement signing with India will begin. “Signing a free trade agreement with India is of very high importance, as Georgia has the potential to become a regional hub in that direction and the advantages of such existing possibilities should be taken,” PM Kvirikashvili said.

Licenced Georgian App Store on the Way in 2017

BY NINO GUGUNISHVILI

eorgian Innovation and Technology Agency (GITA) representatives met with high rank Apple executives during a visit to Silicon Valley, together with David Bakradze, Ambassador of Georgia to the US. On its official Facebook page, GITA claims Georgia is to be put on the list of

priority countries where Apple is to plan its presence expansion. GITA says an App store will be opened by the end of 2017 in Georgia and that negotiations between the parties have begun in this regard. Georgian App Store customers will have a long-awaited chance to use licenced Apple products and services, while App accelerator developers will create better and improved applications in the IOS ecosystem, raising awareness of Georgian products.

BY NINO GUGUNISHVILI

or the first three months of 2017, the number of passengers moving through Georgian airport has increased by 43.62 %, while air cargo operations increased by 86.96% according to information announced by the Georgian Civil Aviation Agency (GCAA). 621,828 passengers were transported through regular and charter flights by Georgian airports in the first three months of 2017, which makes 43.62% (188,869 more passengers compared to the same period from the previous year- 432,959). The GCAA states the passenger num-

ber increase is seen in all Georgian airports. Tbilisi International Airport has served 528,145 in the past three months, showing a 41.29% increase compared to the same period in 2016, as the number of passengers served in 2016 was 373,812. Kutaisi International Airport has seen an 81% increase in the number of passengers served, reaching 68,369 in the first three months of 2017, while Batumi Airport served 23,696 passengers in the same time period, which is 14.19% higher year-on-year. The GCAA states that that these are not the highest peaks for passenger numbers for Batumi International Airport, as the number of regular and charter flights are expected to grow during the summer season.

Mestia airport, meanwhile, served 1,424 passengers in the first three months of 2017, making 107.88% more passengers year-on-year. The Ambrolauri airport received passengers for the first time and from mid-January to mid-March served 194 passengers. The Georgian Civil Aviation Agency states there were 3,467 passenger and cargo flights operated (2,799 regular and 668 charter) which is 32% higher compared to the previous year (2,622). Overall Georgian air space usage has increased by 11.56%: 27,627 flight units in 2016 and 30,822 flight units in 2017. The first three months of 2017 also showed an increase in air freight, reaching 8.982, 414 tons which is 86.89% more year-on-year.

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BUSINESS

GEORGIA TODAY

APRIL 11 - 13, 2017

THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS

www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

If You Could Choose Where to Be Born, What Country Would You Pick? BY MAKA CHITANAVA AND NORBERTO PIGNATTI

he ISET team conducted an online survey that began with the following question: if you could choose where to be born, what country would you pick? We intentionally formulated the question in this way, which is very different from asking “where would you like to travel or to migrate?” This formulation was meant to allow us to look into characteristics of countries to determine which ones individuals find interesting and appealing, if a veil of ignorance is added about their initial standing in the society (e.g. in family and/or social class status at birth). One might argue that respondents do not think too much about all the implications when choosing a country in which to be (re)born. Still, we believe that one can learn something interesting from this exercise. The survey was conducted using a questionnaire written in Georgian, through Facebook, in March 2017. Our respondents’ characteristics are provided below. Our sample is not representative of the whole country because of the chosen channel, but the answers provided are nevertheless quite interesting. The survey was filled mainly by young individuals (with an average age of 29 years), of which more than 70% were female. Our respondents have a relatively high education level, and are relatively wealthy. 97% of them are Georgians, and 80% have

traveled outside of the Caucasus region. A total of 501 individuals responded.

SO, WHERE WOULD OUR RESPONDENTS LIKE TO BE BORN? It is interesting to observe that only 18% of respondents picked Georgia (the number one choice) as their country of birth. The top ten countries following Georgia, in respondents’ order of preference, are: USA, Italy, UK, Germany, Switzerland, Norway, Sweden, France, Netherlands and Spain. These are all developed countries and are all in Western Europe, with the Table 1. Ranking of country of birth by gender

Ranking

Females

Males

Georgia

USA

Italy

Switzerland

Norway

Germany

Sweden

Germany

Switzerland

Netherlands

Norway

New Zealand

France

Italy

Spain

Iceland

Canada

Sweden

exception of the USA. In total, respondents named 39 countries, of which only 12 were in Asia or South and Central America. Only one respondent reported that he would like to be born in Russia. All the countries mentioned are shown on the map above in red (top 10 + Georgia) or in yellow (the rest). Curiously, two respondents named a specific locaTable 2 Top three reasons of choosing a country for males and females

Rank Males:

Females:

Personal free- Good quality of educadom - 49%; tion and healthcare system - 36%

Better prospects for professional development - 38%

Income level of Nature and climatethe country/ 27% GDP per capita - 36%

Better prospects for professional development & Personal freedom - both 33% each

tion inside Georgia (Zugdidi and Tusheti); two other respondents reported that they would like to be born in Camelot, and in another galaxy. Apart from a common preference for Georgia and the USA (at the top of the ranking), males and females seem to have quite different preferences: Italy ranks third for Georgian females, while it is ninth for males; France, Spain and Canada appear in females’ rankings, but not for males, while the Netherlands, New Zealand and Iceland appear in males’ rankings, but not in females’ preferences.

REASONS OF CHOOSING A COUNTRY: After asking our respondents to name a country, we asked them to name the top three reasons for their choice. Our respondents can be aggregated in two very different groups: Segment 1 - People who would choose to be born in Georgia (18% of the sample). The top three rea-

sons stated by individuals in this segment are: (i) nature and climate (mentioned by 34 % of respondents); (ii) food (33 %) and (iii) culture and people (21%). These categories summarize well what Georgians love in their country. In hindsight, we wish we had included wine as a special category to denote its significance for Georgians, separated from all other food and cultural aspects. When choosing the “other” option, respondents note that they simply love their home country and would want to live here (again). Segment 2 - People who would choose to be born in a country different from Georgia (82% of the sample). The top three reasons stated by this segment are: (i) personal freedom (named by 42% of respondents); (ii) good quality of education and healthcare (42%) and (iii) better prospects for professional development (41%). Georgians are usually perceived as “traditionally minded,” so we did not expect to observe such a high ranking of the “personal freedom” motivation to be born in another country (the number one reason, actually). The result, however, looks much less surprising once we remember that our sample is comprising mostly relatively young, well-educated, and wealthier individuals with some travel experience. There are also some differences between male and female respondents, as it can be seen in Table 2. Both males and females rank personal freedom and better prospects for professional development in the top two positions. However, for females these two reasons come after the presence of good quality education and healthcare systems in the destination country, which can be associated with better prospects for personal development and, possibly, a better quality of life (given a certain level of income). Also, the difference in the third rank confirms this gender difference, with men focusing on the GDP per capita of the receiving country, and women mentioning nature and climate. Other interesting reasons stated by respondents were very “country specific”: football (for those choosing Spain or Argentina), handsome men (Italy) and beautiful women (Iceland), tolerance towards LGBT community (Czech Republic), beer (Germany), name of the country (Nepal). Our sample Where to be born rank Index rank USA

Italy

Germany

Switzerland

Norway

Sweden

France

Netherlands

Spain

28 Continued on page 5

BUSINESS

GEORGIA TODAY APRIL 11 - 13, 2017

Georgia Welcomes Largest HPP Ever

BY THEA MORRISON

eorgia has officially welcomed the largest Hydroelectric Power Plant (HPP) in the country – Dariali HPP. The HPP is situated in north-east Georgia, Kazbegi Municipality on the river Tergi 160 km away from Tbilisi. Total cost of the project is estimated at $123 million. In August 2014, the company Dariali Energy JSC and European Bank for Reconstruction and Development (EBRD) signed a loan agreement for up to $80 million for the financing of the development, construction and operation of Dariali HPP, which comprises the first project financing and first successful public private partnership project in energy sector of Georgia. The state contribution in financing of

the project is 23 percent. The capacity of the Dariali HPP is 108 Mega Watts and its expected annual electricity output is 510 GWh. The HPP was opened on Saturday by Prime Minister of Georgia, Giorgi Kvirikashvili, the EBRD Director for the Caucasus, Moldova and Belarus, Bruno Balvanera, and members of the Georgian government. The project is the first energy project to deliver carbon neutral construction in Georgia. It also includes a reforestation component which targets the full compensation of all greenhouse gas emissions associated with the project over its lifecycle through the capture of carbon in vegetation. The construction of the HPP was launched in 2014 and its construction created 420 jobs for local residents. After it becomes operational, around 70 permanent jobs will also become

available for locals. The PM noted that the HPP is the most powerful plant and distinctive in its design, which has laid the foundations for construction of other power plants in Georgia. "It is a unique plant in the history of independent Georgia. It is the largest hydroelectric power plant not only in Georgia, but also in the region,” he added. Kvirikashvili underlined that energy security and independence are the most important political and economic factors at present. “I am very pleased that we were able to build a plant of this scale in Georgia,” the PM said. Deputy Prime Minister and Energy Minister, Kakha Kaladze, noted that the Georgian energy sector has never seen so much development and so many revolutionary steps as in recent years. “Dariali HPP will contribute to the country's economic development, as well as to its energy independence,” Kaladze stated. He also added that the new HPP will reduce the country’s dependence on imported energy in the winter months by 200 million GWh annually. The Finance Minister and the first Vice-Premier, Dimitry Kumsishvili, pointed out that the exploitation of Dariali HPP will bring GEL 2.5 million to the local budget as property tax alone every year. “It is the first successful project of partnership between the public and the private sectors in the hydropower sector of Georgia," said Kumsishvili.

If You Could Choose Where to Be Born, What Country Would You Pick? Continued from page 4 Marital status seems to affect the ranking of choices to only a limited extent. Married individuals tend to choose Georgia more compared to unmarried ones (23% vs 16%), and to prefer countries that are “closer” to Georgia. Overall, however, for most individuals (married or not) the top choices outside Georgia are the USA and Western Europe.

HOW “GOOD” ARE OUR RESPONDENTS’ CHOICES? In order to see how “good” our respondents’ preferences would look to an objective observer, we compared our survey results to the Where to Be Born Index (WTBBI) calculated by the Economist Intelligence Unit (previously called the quality-of-life index, abbreviated QLI). This index attempts to measure the opportunities for a healthy, safe and prosperous life provided to its citizens. It is based on a method that links the results of subjective life-satisfaction surveys to objective determinants of quality of life. The latest ranking available is from 2013.

Our statistical analysis of the data confirms what can be easily seen just looking at the table: our sample choices differ substantially from the ranking according the WTBB index, with a bias towards Western Europe and the USA. Surprisingly, some very successful Asian countries which are very highly ranked in WTBB index, like Singapore (#6), Hong Kong (#10) Taiwan (#14), do not appear in our sample choices at all. On the other hand, some countries which are more familiar to Georgians, and to which Georgians feel closer, like France, Germany, Italy, UK, and Spain, perform better in the minds (and hearts) of Georgians than the index would suggest. Country choice, therefore, seems to be affected to a large extent by the perceived degree of “geographical and/or cultural proximity” more than from purely economic considerations. These are the preferences of our respondents. We are very thankful to them for giving us the opportunity to analyze this very interesting data and providing some interesting insights about the attributes they value in a country.

Figure 1 Reasons of choosing a country for respondents choosing Georgia and the rest

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BUSINESS

GEORGIA TODAY

APRIL 11 - 13, 2017

The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research. For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at gt@gt.ge.

Electricity Market Watch BY MARIAM CHAKHVASHVILI FOR GEORGIA TODAY

ector research is one of the key directions of G a l t & Ta g g a r t Research. We currently provide coverage of Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our energy sector coverage, we produce a monthly Electricity Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.

EU4ENERGY REGIONAL OFFICE OPENED IN TBILISI ON MARCH 10, 2017 EU4Energy is a four-year European Union technical assistance project launched in June 2016. The overall objective of the 3rd component of EU4ENERGY, with a budget of EUR 6.8mn, is to

in February 2017. Electricity exports were negligible, while electricity transit from Azerbaijan to Turkey amounted to 16.3 GWh in February 2017.

DOMESTIC CONSUMPTION INCREASED 13.0% Y/Y IN FEBRUARY 2017

GROWTH IN DOMESTIC CONSUMPTION MET MOSTLY THROUGH IMPORTED ELECTRICITY

Domestic consumption increased 13.0% y/y in February 2017, with the Abkhazian region and eligible consumers driving the growth. Consumption of distribution companies increased 9.1% y/y: consumption was up 8.3% y/y by Telasi, 4.9% y/y by Kakheti Energy Distribution, and 10.0% y/y by Energo- Pro. Consumption of the Abkhazian region was up 19.9% y/y and accounted for 23.1% of domestic consumption. Consumption by eligible consumers was up significantly (+24.8% y/y), albeit from a very low base in February 2016. The largest eligible consumer, Georgian Manganese (81.1% of direct consumption), posted 33.1% y/y growth, also from last year’s low base, and contributed significantly to the overall growth in energy demand

GEORGIAN GOV’T DECIDES TO SELL THE NEWLY COMMISSIONED WIND POWER PLANT TO PRIVATE INVESTORS The wind farm is currently owned by “Qartli Wind Farm” Ltd, whose shareholders are state-owned companies Georgian Energy Development Fund (GEDF) and Georgian Oil and Gas Corporation (GOGC). Shares of the Qartli wind farm will be sold via public auction, after an evaluation by an independent audit company. The terms of the auction will be announced after the final audit report is issued. The WPP has supplied on average 0.5% of monthly electricity demand since it commenced operations in November 2016.

ance project is part of the wider EU4ENERGY EUR 21mn initiative, which also includes Central Asian countries and is comprised of five components.

improve the beneficiary countries' legislative and regulatory environment in the energy sector, in line with their EU obligations and best practices. For Moldova, Ukraine, and Georgia, the focus is on improving the energy legislative and regulatory framework and implementing policy recommendations, in line with the Energy Community Treaty / Association Agreements / DCFTA requirements. For other benefi-

Total electricity supply from domestic sources was flat (-0.5% y/y), while imports more than doubled (+106.2% y/y) in February 2017. Only one third (34.2%) of domestic consumption needs was met by hydro generation; the rest was satisfied by thermal (41.7%) and imported (23.6%) electricity, while the newly built wind power plant accounted for 0.5% of total electricity supply. The main reasons for the change in the electricity supply mix were bad hydrological conditions affecting most HPPs, and Enguri HPP’s 10-day closure. The HPP halted operations to allow experts interested in the Enguri tunnel rehabilitation consultancy tender to walk through the tunnel and evaluate the scope of work. Total

ciary countries (Belarus, Armenia, Azerbaijan), the focus is on EU best practices in selected areas. The regional office in Tbilisi will coordinate the EU4ENERGY project’s activities aimed at improving the legislative and regulatory framework of the energy markets in Armenia, Azerbaijan, and Georgia. A second regional office covering Belarus, Moldova, and Ukraine will operate in Kyiv. The current govern-

ROUTING

TBILISI ISTANBUL ATATURK AIRPORT ISTANBUL ATATURK AIRPORT TBILISI TBILISI ISTANBUL SABIHA GOKCEN AIRPORT ISTANBUL SABIHA GOKCEN AIRPORT TBILISI BATUMI - ISTANBUL ISTANBUL - BATUMI

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FLIGHT NUMBER

TK 387 TK 385 TK 383 TK 386 TK 384 TK 382

hydro generation decreased 33.1% y/y, with generation down 39.5% y/y by Enguri/Vardnili, 35.8% y/y by other regulated HPPs, and 11.9% y/y by deregulated HPPs. The drop in hydro generation was compensated by TPPs (+62.2% y/y) and imports (+106.2% y/y). Most of the TPPs operated at full power for the entire month, while GPower and one of Tbilsresi blocks mainly provided reserve for the system. Almost half of the imported electricity came from Azerbaijan (47.3%), with the rest imported from Russia (42.6%) and Armenia (10.2%). The rationale for this diversification of import sources was to ensure security of supply while the Enguri HPP was halted. 44.5% of the Abkhazian region’s consumption was satisfied by Enguri / Vardnili generation, while the rest was met through other sources, including imports from Russia via the Salkhino line.

ELECTRICITY PRICES IN GEORGIA AND TURKEY Wholesale market prices in Georgia decreased 7.0% y/y to USc 5.1/ kWh, 5.7% above the Turkish market clearing price in February 2017. Turkish electricity prices increased 30.8% y/y to USc 4.8/ kWh from a significantly low base in February 2016. 31.8% of total electricity supplied to the grid in February 2017 was traded through the market operator, with the rest traded through bilateral contracts. The average price of imported electricity in Georgia decreased 22.6% y/y, notably from the very low base in February 2016. The main reason for such a meaningful decrease was the subsidized price of imported electricity from Russia (via the Salkhino line), which was mainly directed to the Abkhazian region to meet its continuously increasing demand.

WEEK DAYS

DEPARTURE

ARRIVAL

EVERYDAY

05.50 11.45 18.10 01.40 07.30 13.55

07.25 13.25 20.00 04.55 10.50 17.15

07.40

09.00

20.45

00.10+1

17.50 13.55

19.10 16.55

TK 381 EVERYDAY TK 380 TK 393 TK 392

EVERYDAY

BUSINESS

GEORGIA TODAY APRIL 11 - 13, 2017

The Azerbaijan StreamKyiv’s Unrealizable Dream

BY DIMITRI DOLABERIDZE

meeting of the Ukrainian-Azerbaijani group on energy cooperation was held this month, during which the diversification of routes for delivery of Azerbaijani hydrocarbons to the European and world markets was discussed. The Ukrainian authorities seem to be beginning to realize that in the near future they may completely lose the transit of Russian gas through their territory, but the idea of ensuring the loading of a gas transportation system with the help of Azerbaijan is unlikely to promise any real prospects for Kyiv. Leading expert of the Energy Security Fund, Igor Yushkov, says “Azerbaijani gas today has two ways into Europe: through the Balkans and through Russia. The second of these routes is complicated by the well-known transit policy of Gazprom: first to purchase gas from a third country, and then to transport it”. "If Azerbaijan wants to supply gas to Ukraine, then it must first sell it to Gazprom, not to mention the

Russian-Ukrainian gas supply contract, which Kyiv does not want to fulfill, and which has become the subject of proceedings in Stockholm,” Yushkov adds. Therefore, for the Azerbaijani gas there remains only the southern route to Europe - through Turkey and Romania. In Yushkov's opinion, theoretically, Ukraine can buy gas from Azerbaijan and then drive it through Turkey and all the Balkans to feed the south-western regions of the country. However, in practice, this is impossible because Baku does not have excess gas - otherwise, these extra volumes would have been delivered to Europe long ago, since the EU leadership wants to diversify gas suppliers to its domestic market. At present, the construction of the transadriatic gas pipeline TAP-TANAP is under way, which will supply Azerbaijani gas to Europe, but its capacity, as Yushkov says, is only 20 billion cubic meters, half of which will go to the Turkish market, and the lion's share of the remaining gas (8 billion cubic meters) will be sent to Italy. The rest will be equally divided between Greece and Bulgaria. "All this allows us to conclude that Azerbaijan simply cannot physically extract the 8-10 billion cubic meters of gas necessary for Ukraine.

BUSINESS

GEORGIA TODAY

APRIL 11 - 13, 2017

Tourism Market Watch BY KAKHABER SAMKURASHVILI FOR GEORGIA TODAY

ector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our tourism sector coverage, we produce a monthly Tourism Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.

FIRST INTERNATIONAL BRANDED HOTEL IN KUTAISI OPENED ITS DOORS IN MARCH 2017 The 3-star Best Western hotel in Kutaisi features 45 hotel rooms. The midscale brand is already present in the capital, with a 48-room hotel that opened in 2014. There are three more Best Western hotels in the pipeline for 2017 – Executive Residency in Gonio, VIB in Batumi, and Best Western Plus in Bakuriani. Kutaisi, the second biggest city in Georgia, is lacking in accommodation supply, with only 1,065 rooms and 120 accommodation units available, most of which are family hotels and guesthouses. Notably, this year Kutaisi will host the 2017 World Rugby Under-20 Championship, to be held May 31 through June 18.

GEORGIAN RAILWAY STARTS CONSTRUCTION OF A NEW RAIL STATION NEAR THE KUTAISI INTERNATIONAL AIRPORT The project entails connecting the Kutaisi International Airport with the main railway line, so passengers can travel by rail from the airport to various parts of the country. There are also several hotel projects planned in the airport’s vicinity, which will alleviate the accommodation problem for late night arrivals. The number of international arrivals at the Kutaisi International Airport was up 62.6% y/y in January-March of 2017 to over 17,000, after 53.7% y/y growth to almost 91,000 international visitors in 2016.

TRAVEL INFLOWS UP 11.9% Y/Y TO US$ 2.2BN IN 2016, ACCOUNTING FOR 15.1% OF GDP, UP FROM 13.9% IN 2015 The share of tourism revenues in service exports has been on the rise, reaching 64.7% of service exports in 2016, up from 61.8% in 2015. Foreign card operations of international travelers were up 11.4% y/y to GEL 1.6bn in 2016 and up 33.9% y/y to GEL 293.0mn in the first two months of 2017.

VALUE ADDED FROM TOURISM INCREASES 11.8% Y/Y TO GEL 2.1BN IN 2016, ACCOUNTING FOR 7.0% OF GDP, UP FROM 6.7% IN 2015 The transport segment was the main driver (+22.7% y/y), contributing 5.5ppts to the overall growth and making up 26.5% of tourism-related services. Travel service agencies hold the biggest share (34.1%), but that segment was stagnant

(-0.4% y/y) in 2016. In US$ terms, value added from tourism increased by 7.3% y/y to US$ 870.5mn. FDI in the hotels and restaurants sector was down 20.2% y/y to US$ 110.8mn in 2016 and accounted for 6.7% of total FDI.

INTERNATIONAL ARRIVALS TO GEORGIA NUMBER OF INTERNATIONAL ARRIVALS UP 13.1% Y/Y TO 0.51MN IN MARCH 2017 Of the top five source markets, there was strong growth from Armenia (+11.2% y/y), Azerbaijan (+11.1% y/y), Russia (+16.3% y/y), and Ukraine (+16.5% y/y). The number of arrivals from Turkey was down (-17.3% y/y), largely due to the maintenance works at the Sarpi customs clearance, which have led to long delays

in crossing the border. Arrivals from the EU were up 9.5% y/y to over 15,000 visitors.

NUMBER OF INTERNATIONAL ARRIVALS UP 11.4% Y/Y TO 1.27MN VISITORS IN JANUARY-MARCH OF 2017 The number of visitors increased from all major countries except for Turkey (-14.0% y/y). Armenia (+15.2% y/y) and Russia (+28.1% y/y) were the largest contributors to overall growth, with Ukraine also posting double-digit growth (+17.3% y/y). The number of visitors from Azerbaijan posted a modest increase of 4.2% y/y from the high base of 1st quarter of 2016 (+24.6% y/y).

TOP FOUR SOURCE MARKETS ACCOUNT FOR 83.2% OF

INTERNATIONAL ARRIVALS IN JANUARY-MARCH 2017, SECONDARY SOURCE MARKETS ALSO POST ROBUST PERFORMANCES The number of Indian visitors was up 2.5x to almost 12,000, while the number of Israeli visitors increased 80.4% y/y to over 8,000 visitors. Arrivals from the EU were up 16.2% y/y in January-March to almost 39,000 visitors, with Germany (+27.5% y/y), Poland (+33.8% y/y), and United Kingdom (+16.3% y/y) driving the growth. After an almost six-fold increase in the number of Iranian visitors in 2016, solid growth persisted into March 2017, with a 194.8% y/y increase to more than 40,000 arrivals. 129 chartered flights were added by Georgian

and Iranian carriers March 17 through April 4, as Iranian visitors celebrated Novruz Bairam in Georgia.

TOURIST CATEGORY CONTINUES TO DRIVE ARRIVAL GROWTH IN MARCH 2017 The number of overnight visitors (‘tourist’ category) was up 28.6% y/y and accounted for 43.0% of total international arrivals. Same-day arrivals were down 0.6% y/y, while the number of transit visitors was up 14.3% y/y in March 2017. The number of tourist arrivals is up 25.7% y/y to 0.51mn in January-March, compared to 0.41mn in the 1st quarter of 2016. The number of same-day visitors is down 1.6% y/y, while the number of transit visitors is up 17.5% y/y in January-March of 2017.

BUSINESS

GEORGIA TODAY

APRIL 11 - 13, 2017

Russia Drills the Northern-Most Well in the World BY DIMITRI DOLABERIDZE

resident Putin launched via videoconference the exploratory drilling of the northern-most Russian well, Central Olginskaya-1. Oil reserves there are estimated at 9.5 billion tons, with huge additional gas reserves. Getting to the peninsula of Hara Tumus is not easy. First by plane to Krasnoyarsk or Norilsk, then by local airlines to the village of Khatanga, and then the last 300 kilometers to the Khatyngsky Bay area by helicopter. There is no housing and no civilization. Reindeer breeders with herds appear there only during the short northern summer. The well is located 70 meters from the coast, and is to be drilled at an angle of 5 kilometers under the very waters of the bay. The Head of State personally gave the head of Rosneft the go-ahead to start the work. Almost immediately, the weather turned bad in the drilling area. Despite this, drilling began, making it the first deposit well in the Eastern Arctic. The drill has already passed 40 meters, and scientific data is expected to be received by autumn, while preparations for the start of work are to fall in the most difficult and longest season here - winter. According to some estimates, by 2050, production on the Arctic shelf will account for up to onethird of all Russian oil production. Mastering the resources and even any talk about the mining of minerals in the Arctic is preceded

by an extensive scientific study. The research station is 16 km from the drilling site. The veteran of many expeditions of the Institute of the Arctic and Antarctic, Dog Archie, who is well known to polar explorers, has been brought to the base, where, he says, he feels quite at home. 24 people will be in the camp and 20 more in the field expedition on an ice floe of 80 kilometers. If the weather goes bad, scientists from the camp can be evacuated only by helicopter. Expedition ‘Kara-summer-2016’ was allowed to conduct unique experiments and for the first time in Russia, technology for changing the trajectory of the drift of large icebergs was tested, and as a result, an iceberg was towed with a mass of over one million tons. As emphasized in Rosneft, preservation of the unique Arctic ecosystem will be given the utmost attention. One of the specific results already achieved, which the scientific community can use, is the restoration of the system of meteorological observations in the Arctic. However, as the polar explorers say, when someone enters this region, even a large state company, it becomes an event, often cardinally changing the life of an individual and the whole team. "We solve complex problems of interaction between the natural environment and man, because the ice is a carrier platform which absorbs all the information of human activity,” said Evgeny Makarov, head of the Khatynga-Zima expedition. “We study ice as an environment for life because it is a memory of planet Earth and displays all the processes that occur in the air and water environment".

POLITICS

GEORGIA TODAY APRIL 11 - 13, 2017

Tbilisi Condemns So-Called Presidential Elections, Referendum in Breakaway Tskhinvali BY THEA MORRISON

fficial Tbilisi has condemned the so-called presidential elections and referendum held on April 9 in the occupied Tskhinvali (South Ossetia) region of Georgia. Georgia’s Ministry of Foreign Affairs (MFA) released an official statement, saying any so-called elections or referendum in the occupied territories of Georgia are illegal and can have no legal effect. “This provocative act by the Russian occupation forces grossly violates the sovereignty and territorial integrity of Georgia and represents yet another attempt to legitimize the consequences of several waves of ethnic cleansing, military invasion and ongoing occupation of Georgian regions,” the statement reads. The MFA says that holding the so-called referendum on changing the name of one of the oldest Georgian regions into “Republic of South Ossetia — State of Alania” is similar to one of the federal subjects of the Russian Federation and aims at laying the ground for its illegal annexation. “This intention has been vividly dem-

onstrated also by the recently signed so-called agreement on incorporation of the unlawful military units of the Tskhinvali region into the armed forces of the Russian Federation,” the MFA stated. It further states that by these provocative actions, Russia is intentionally impeding the efforts of peaceful conflict resolution, including within the Geneva International Discussions, and hindering confidence-building between the communities divided by occupation lines. The MFA also called on the international community to give a proper assessment to the illegal so-called elections and referendum and calls upon the Russian Federation to respect the fundamental principles of international law and withdraw its military forces from the Georgian territory. “It is a mockery to hold so-called elections and referendum on April 9 by several thousand people on the occupied territory while ethnic Georgians still remain IDPs,” Georgia’s Foreign Minister, Mikheil Janelidze, stressed. The Prime Minister of Georgia, Giorgi Kvirikashvili, also released a statement regarding the issue. “We would like to clearly say again that any ‘elections’ or referendum on Georgia’s occupied territories are illegal and have no lawful results,” the PM said,

Photo source: Tass.com

adding that the international community and certain countries have already expressed a clear position regarding Georgia’s sovereignty and territorial integrity and confirmed that they unanimously condemn the illegal elections and referendum of breakaway Tskhinvali. “I believe that we, Georgians and Ossetians, will find ways towards each other, to overcome the non-historical estrangement, and will together take care to build our motherland – Georgia,” the PM’s statement reads. President Giorgi Margvelashvili stated that the recent development in breaka-

way South Ossetia resembles the scenario of annexation of Crimea in 2014 by the Russian Federation. “Such action represents a severe pressure on Georgia and is aimed at further escalation of the situation in the Black Sea and the South Caucasus region,” the President’s statement reads. Russian state-led news agency Tass reports that more than 78 percent of voters supported the proposal to rename South Ossetia the “State of Alania”. Tass says that according to the head of South Ossetia’s Central Election Commission (CEC), Bella Pliyeva, these fig-

ures referred to 27 polling stations, while there were 77 polling stations in total. As for the so-called Presidential elections, South Ossetia’s election officials say Anatoly Bibilov, the speaker of the breakaway Georgian region's parliament, has taken the lead. "According to our team, we won by gaining 54.9% of the votes. There will be no second round of the election because 54.9 of the people have cast their votes for me," Biblov told TASS. However, according to the exit poll conducted by NGO “Academy of Sociological Analysis” (ASA), incumbent defacto President Leonid Tibilov is leading in the so-called presidential elections and says a second round will likely be needed. Breakaway South Ossetia news agency PEC reports that the “presidential elections” were observed by members of the CEC of the Russian Federation, who “ensured that the polling stations were opened in time.” The “elections” and “referendum” in breakaway Tskhinvali were condemned by the European Union (EU) and the United States State Department on April 8. Earlier last month, Japan, Poland, Ukraine, the UN Human Rights and Security Councils also condemned the developments in the occupied South Ossetia region.

President’s Annual Report Covers Most Important Issues of the Year BY THEA MORRISON

he President of Georgia, Giorgi Margvelashvili delivered his annual address to the nation at the parliament building in Kutaisi on Friday, covering the most acute and important issues of domestic and foreign policy. At the beginning of his speech, the President remembered his address to the new parliament in November 2016, when the ruling party Georgian Dream (GD) obtained constitutional majority with its 116 MPs in a 160 seat legislative body. “I stated that holding a constitutional majority by a single party within Parliament was a threat of concentration of power, but at the same time, it was an opportunity for bold reforms and initiatives. What have we actually received after five months?” the president asked. Margvelashvili stressed that the alleged political threat has turned into a serious problem, while the dynamics of reforms is not promising. “Unfortunately, the ruling party has rejected the dialogue process and isolated itself,” he said. “I look forward to the time when the winning political power starts seeking allies, not enemies; as I believe that unification of the country and society must be the greatest ambition a politician has,” the president said, calling on the GD to get engaged in a dialogue and institutional cooperation. The President also talked about his campaign ‘Constitution for All,’ which aims at making amendments to the constitution of the country. “People need more democracy, not weakening but strengthening self-governance… Society wants more involvement in the decision-making process and clearer social protection guarantees to be reflected in the Constitution,” he said. The President referred to the alleged plans of the GD to change the rule of the election of President from a direct one

to indirect. “We cannot deprive people of the right to elect the President. The presidential election need to be adjusted to the interests of society, nor to the wish of current or former presidents or prime-Ministers, for the creation of an effective balance of power,” he stressed. On economy, the President said that the most acute problems remain unchanged. “Jobs, poverty, increasing prices, miserable pensions and national currency instability - these are the actual problems of our society, which is obvious without any research,” he noted. Margvelashvili believes that state and private sectors need to work jointly for mutual reinforcement of the country’s economy. “It is decisive for the country to further stimulate local production. With this aim, I have initiated the campaign ‘Ask for Georgian’, which contributes to economic growth, job creation and strengthening the national currency. In the frame of this campaign, in parallel to popularization of local production, we have created a loyalty card which allows consumers to get bonuses when purchasing Georgian products,” the President explained, and had distributed said special cards to the MPs to get them involved in his campaign. While delivering his speech, the President also mentioned Georgia’s relation-

ship with the European Union (EU) and NATO, saying entry of visa-free travel for Georgian citizens to the EU’s Schengen Area was a significant achievement. “Georgia’s current goal is to return to the European family and become an EU member with a strong democracy, stable institutions, human rights protection, rule of law, economic development and a European legal system,” he said. Margvelashvili called on the country’s foreign partners to raise their voices on Georgia’s behalf at the upcoming NATO Summit this May in Brussels, which will gather only the member states of the Alliance. The President noted that Georgia actively contributed to the global security by sending its soldiers to various peacekeeping missions. He said Georgia is also participating in the strategic Black Sea security dialogue. “The security of the Black Sea starts from Georgia. A secure Black Sea is a precondition of economic cooperation and long-term peace in the region,” he added. One of the main painful issues raised by the President was the annexation Georgia’s breakaway regions by the Russian Federation. “In response to our success, the Russian Federation takes actions towards the factual annexation of Georgia’s occupied

territories. Therefore, as in the case of the non-recognition policy, it is necessary to create the anti-annexation policy of Georgia’s occupied territories with the active engagement of our allies, and to take coordinated steps to deter the annexation,” he said. According to Margvelashvili, the State needs to react promptly on the new dividing lines and installation policy of barbed wires, cases on the prohibition of education in Georgian language in Gali schools, as well as kidnapping of Georgian citizens and destruction of cultural heritage. “I hope that one day artificially built walls will be destroyed…That the time will come when the divided society of Abkhazia and Tskhinvali regions will be united, when Georgians, Abkhazians and Ossetians will be able to find one who will unite us, and when the refugees will return home safely,” the President said, adding that it was crucial to update the country’s National Security Concept, elaborate a national security strategy and further enhance the national security system. “The proper military reserve and mobilization system, together with a strong professional army, is the main pillar of our defense capability,” he stressed. Margvelashvili went on to lament that recent developments have demonstrated a continuing crisis in the judiciary sys-

tem of the country. The President reiterated his earlier offer to invite EU experts “to identify the exact reasons and find solutions to the crisis.” Margvelashvili added that the judges themselves should become the main actors in improving the state of the judiciary system. “The struggle for independence of the judiciary system should happen in every court, every courtroom, every office and every conference room; everyone should assume this burden. Regretfully, the judges keep silent over these important issues,” he underlined. To conclude, the President underlined that he had decided to support the appeal of citizens on the so called Law on Wiretapping, which has created a lot of concern in the recent period. “I will address the Constitutional Court with a different status - the status of a friend of the court, that will give me an opportunity to support the court in making a better decision,” he said. The President’s speech was criticized by the GD majority. “From my point of view, the address does not reflect the reality our country is experiencing,” Parliament Speaker, Irakli Kobakhidze said, while majority member Gia Volsky said “the President should have been more prepared for his presentation.” The opposition believes the President’s report was adequate and covered all necessary issues and problems of the country. “The President voiced all problems facing our society,” opposition United National Movement (UNM) member Nika Melia said. Parliamentary minority Movement for Freedom-European Georgia leader, Davit Bakradze also approved the President’s address, however, noted that it should have contained more details and analyses. The Head of the President’s Administration, Giorgi Abashishvili, said that the President’s report was fully based on people’s thoughts and needs and did not reflect the visions of any political forces.

POLITICS

GEORGIA TODAY

APRIL 11 - 13, 2017

Turkish Ambassador on the Referendum, the West & Georgia Continued from page 1

THE UPCOMING REFERENDUM IS WIDELY CRITICIZED WORLD-WIDE, NAMED AN AUTHORITARIAN MOVE TO STRENGTHEN PRESIDENTIAL POWERS, A PUTINESQUE MOVE TO DIMINISH PARLIAMENTARY POWERS, AND SO ON. WHAT DO YOU SAY? First of all, I don’t think the entire world is critical of it; yes, there are certain circles in Europe which are highly critical of this change, but I think they are getting it wrong. First and foremost, the whole process is very democratic. What we are doing is changing our constitution and moving from a parliamentary system to a presidential system, which happened and happens in many different countries in the world. This is a very basic democratic right of every country; to look into its constitution from time to time and to see if there are any changes that need to be made based on the current realities of both the country and the international system. I think what we need to see here, before the substance, is the process itself and whether the process is democratic or not. And we in Turkey are proud that we have a very democratic process in terms of amending our constitution. For example, the amendments were taken up at the parliament, at a commission in which all the big parties are represented. It was a very democratic process; it took weeks of discussion on items to be amended. Then it came to a plenary session, where we again had about two weeks of discussion, which was broadcast live on television, so the Turkish public could also watch the process; what this amendment brought, what it meant, what it entailed and such. And now, even though the parliament has adopted that with a 2/3 majority vote, we are obliged – even if that wasn’t the case, the government has committed itself before the vote in the parliament – to take it to a referendum, so that it’s not only up to the 550 MPs in the assembly to decide on it, but to all Turkish people. They all are given a say on this change, because it is an important one. In terms of the process itself, no one can criticize what has transpired in Turkey so far. Now if you look into the substance of it, transition from a parliamentary system to a presidential system is very common thing that happens in many countries. Georgia, for instance, is now moving in the opposite direction, but every country has its own peculiar situations and conditions. And in Turkey, we have come to a certain stage when we have tripled our national income, extended our foreign policy horizons, created a much larger network of relations in our region and beyond. And now the government believes that we need a quicker pace of decision-making and more political stability in the country so that we can do things that we believe need to be done in order to take Turkey to a different level of economic development and political stability. That’s why the governing party wants to move to a presidential system, but without taking away anything from the separation of powers or strength of the parliament, aimed at creating a more executive decision-making process under the auspices of the president. But again, the president will be elected by the people; he will be there for just two terms - just like in the United States, for example – and he will be monitored and held accountable for his actions: first of all by the parliament and then by the public vote when it comes to the ballot box. So, I don’t think the presidential system itself, or any change in the system in this direction, is necessarily undemocratic. Furthermore, we don’t even know yet what the result of the referendum will be, and that’s the beauty of it. That is in itself a sign of democracy in Turkey.

We’re only ten days away from the referendum, which is going to be held on April 16, and we still don’t know what the result might be. All the polls are showing a neck-to-neck race between the “yes” and the “no” campaign. So, in the end, it will be our people who decide, and they are not under any pressure towards either direction. And all our politicians, from the president to the most junior politicians, whatever the people decide, we will agree to it; we will respect it and we will act accordingly.

LET’S DISCUSS TURKEY VS. EUROPE. WE’VE HEARD SEVERAL STATEMENTS FROM ERDOGAN- CALLING GERMANS FASCISTS, TO MENTION JUST ONE EXAMPLE. WHAT’S IT ALL ABOUT? WHY THIS FIGHT WITH EUROPE? When it comes to Turkey-EU relations and what’s going on between them, your question somewhat implies that Turkey is moving away from the EU, whereas the EU seems to be doing everything it can to maintain a relationship with Turkey. But unfortunately, this is not the case. When you look at Turkey-EU relations, it’s the EU that fails to deliver on its side of the deal. But before I come to this let me say that the Turkish-EU relationship is based on, first and foremost, common interests and values, which I believe are still there. So whatever you see now is not going to change the basic, fundamental nature of this relationship. I believe that with the common sense prevailing on both sides, we will be able to maintain and sustain this very intricate, very close relationship in the years to come, because we will both be either winning or losing with this relationship depending on how we treat it.

BY “NOT DELIVERING ON THEIR SIDE OF THE DEAL,” YOU MEAN REFUGEES? No, it doesn’t even come to that. That’s a very specific latest example. Go earlier than that: the Turkish-EU relationship reached a different level in 2004, when Turkey was given the status of a candidate country and we started our accession negotiations. And since then, do you know what has happened? We’ve been able to open only four or five chapters out of more than 30 chapters of negotiations, but we were not given the opportunity to close even one of them – even the cultural and scientific chapter. And for the last four or five years, we were not allowed to open even a single chapter of accession negotiations. They are almost frozen. And the reason is the EU, for certain political reasons, is not allowing this process to continue. It is Turkey who is constantly asking to take this process forward, who is constantly knocking on the doors of the EU in order to be able to have this dialogue, this cooperation, the level playing ground given to all other candidate countries. So, when you look at this relationship, Turkey is not the party that doesn’t want this relationship to work. On the contrary, we are doing our best, despite years and years of rejection. In other words, as a candidate country, Turkey is not treated in the way it should have been. There are so many examples of double standards. But, lately, there’s something even more serious that worries us in terms of what’s happening in Europe: I’m sure you will agree with me that now in Europe there is an undeniable rise of far-right political parties and movements. And what does this mean for countries that are trying to integrate with Europe? That’s not only a problem for Turkey, I believe, but for Georgia, too. Unfortunately, we see a more xenophobic, Islamophobic and introverted Europe, which is not really as eager as it was in the past to expand its space of values, standards and principles to the neighboring regions. What brought European countries

together as the EU in the first place was not merely geography, but their commitment to these common and universal values. If they move away from them, then that is a dangerous sign for all of us. This is the reason Turkey is paying so much attention to what is happening in Europe, and sometimes becoming a bit emotional maybe. But that has nothing to do with Turkey’s internal political processes or narrow domestic interests, because, for us, EU membership is still a strategic objective. So, when we see such worrisome trends in Europe, of course we are the first to express our feelings and thoughts about it. We still want to be part of the EU, but we don’t want to be part of an EU which is xenophobic, inward-looking and no longer producing any values and standards for its neighboring regions. And I believe that Turkey’s criticism is constructive. The remarks by President Erdogan you mentioned came after a very serious crisis between us and the Netherlands. I don’t want to criticize anyone, but just take an objective look at what happened – one of the Turkish ministers traveled to the country and was denied even a meeting with her own country’s General Consul, which is against every single article of the 1963 Vienna Convention which arranges these diplomatic privileges and immunities. Such a violation, of course, draws our reaction. But once again, I hope that in the near future, common sense will prevail and we will be able to see things more clearly and sensibly. Then we’ll understand what’s at stake for our common interests and thus find a way to work together rather than against each other.

AND STILL, IT’S HARD TO BELIEVE THAT YOUR PRESIDENT PUTS AS MUCH STOCK IN COMMON SENSE AS YOU DO. AFTER ALL, IT WAS ERDOGAN CALLING MERKEL “A FASCIST” AND NOT MERKEL CALLING HIM “AN OTTOMAN’. WHERE DO YOU SEE COMMON SENSE HERE? First and foremost, it’s not productive to go over each and every statement made by this or that politician. I think we need to be able to have a wider outlook on what is happening between Turkey and Europe. And when you look at that, it is Europe, it’s a fact, not delivering on its end of the bargain, and then criticizing Turkey for not complying with democratic standards. This is something we cannot agree with. We have well established formats of dialogue where we can constructively criticize each other and work together. But doing so publicly and unilaterally is not the way to proceed. And let us not forget that in certain European countries the level of attacks against Turkey has gone beyond democratic and agreeable terms. For example, do you know what happened just a week ago in Switzerland? In front of the parliament building, there was a demonstration by the members of a terrorist group, PKK, which NATO, EU, US and everyone else agrees as being a notorious terrorist organization. And yet, its members were allowed to have a demonstration in front of the parliament building. But the story doesn’t end there: then they opened a large banner with a picture of President Erdogan and a gun put to his head. The inscription on the banner read “Kill Erdogan”. And nobody has so far been brought to justice. When something like this happens in the heart of Europe, of course Turkey reacts to it. And we do so also because we care for our common values and principles. Because, if you allow this kind of thing to happen, then we’ll have real problems within Europe, too. This is not the way we want to go. We want cooperation and integration which is going to be beneficial for all of us. For instance, you mentioned the refugee agreement. With or without Turkey being

a member of the EU, whatever happens in Iraq, Iran, Syria or Afghanistan also has direct repercussions on the European Union. So, isn’t it much better for us to work together when we are faced with such common risks and opportunities? In a nutshell, what we want is to work together on the basis of our common values and interests. Turkey is ready to realize the promise of our great potential with the EU.

YOU MENTIONED ISLAMOPHOBIA, AND RECENTLY FOREIGN MINISTER CAVUSOGLU PREDICTED SOME KIND OF RELIGIOUS WAR IN EUROPE. HOW JUSTIFIED OR REALISTIC IS THIS KIND OF STATEMENT? It’s not a prophecy and it’s not something we’d like to see happen. And this is not the first time this issue has been brought up. From the very first days of the postCold War period, people have been talking about a possible clash of civilizations. And, in fact, it has always been of paramount importance for us in Turkey, together with our partners and allies, to deny that sort of grim possibility. Indeed, we have been trying to prove that a clash of civilizations is not our fate and that, instead, an alliance of civilizations is possible. But this can only happen if we have a real dialogue between different cultures and religions. We believe that between Turkey and Europe, Far East or Latin America, there is so much more that unites us all under the wide umbrella of humanity than what divides us on the basis of our cultural and religious belonging. We have to underline our commonalities rather than our differences. This is what Minister Cavusoglu wanted to say in essence. If those ultraright politicians start categorizing people daily on the basis of their cultural or religious belonging, then this will inevitably bring a clash of civilizations. A person in a European country or anywhere else in the world should not identify himself or herself merely along religious or ethnic lines. We have to focus on our common values and aspirations. And we have plenty of those.

THERE ARE CONCERNS THAT THERE IS A GROWING RIFT BETWEEN NATO MEMBER COUNTRIES AND TURKEY. WHAT IS YOUR TAKE ON THAT? I’D ALSO LIKE TO MENTION THE RECENT DECISION BY NATO TO BOLSTER ITS SECURITY IN THE BLACK SEA REGION. CAN GEORGIA ACCOMMODATE ITSELF IN THIS PROCESS? I agree that now there is a kind of problematic period between Turkey and the EU, but when it comes to NATO, it’s a completely different platform. I don’t see the sort of problematic relationship between Turkey and some European countries spreading over to NATO. When it comes to NATO, we are all allies and we focus on real issues in terms of risks, threats and opportunities. So, I do not see any problems between Turkey and other members of the Alliance. We will have a historical summit at the end of May, with the participation of the new US President, where we will renew our commitment to the basic principles and ideals of NATO. So, all these stories about Turkey possibly leaving NATO are completely false and I would like to assure the Georgian public of that. Regarding Black Sea security, on the other hand, it is obvious that what has been happening since 2014, with the invasion and annexation of Crimea and the war in Eastern Ukraine- you can in fact take it back in time to 2008 war between Russia and Georgia -has drastically changed the balance of power in the Black Sea. And simply put, we are very worried about that. Because Turkey has always argued for regional cooperation and regional ownership for the achievement of lasting security in the Black Sea area. This is why we support the work within the

Alliance to analyze the recent developments in the region and come up with ways to strengthen the security of its members and partners. To this end, we made a set of decisions at the Warsaw summit last year, where NATO discussed Black Sea security and agreed on certain measures with land, air and sea components. For us, one of the critical elements of our approach to Black Sea security this is that whatever the NATO and regional countries are doing, this has to be in compliance with the Montreau Convention which is a very important regulator of Black Sea maritime affairs. It’s not an obstacle for anything, but is a very important regulator that gives us reliability and predictability for the future. As to Georgia’s involvement in the discussions on Black Sea security, we believe that it has so much to contribute. This is why, within the Alliance, we are one of the first countries to argue for the inclusion and involvement of Georgia and Ukraine in the Black Sea discussions, even though they are not members. We think that NATO is going to benefit a lot from any input Georgia is going to provide both for the discussion and in terms of actual operations. Finally, I want to stress that we should be very careful not to provoke unnecessary tension while we are dealing with this complex issue. We always need to keep in mind that the Black Sea maritime area has been kept out of hot conflicts for decades because of the sensible policies of the regional actors and all other international stakeholders. We need to make sure that it remains so.

BY PROVOKING YOU PROBABLY MEAN RISKING THE IRE OF RUSSIA? THERE IS TALK IN THE WEST ABOUT ERDOGAN BEING IN LEAGUE WITH PUTIN… Some Western analysts argue that if Turkey has somewhat drifted off the EU, we’re getting closer and closer to Russia. This is not the case, because, first of all, Turkish-Russian relations cannot be alternative to the relations Turkey has with NATO, the EU and the United States. Turkey-West relations are based on such a deeply entrenched foundation of common principles and values that nothing can substitute them. But does it mean that Turkey is not going to have relationship with other parties? Of course not. Given where we are, you cannot expect Turkey to have a one-dimensional foreign policy, ignoring its relations with Iran, the Middle East, China, Africa and, obviously, Russia. Turkey is a very important regional power with a multidimensional foreign policy that has global implications. So, against that backdrop, Russia is of course a very important player in the region, and that’s why we’re trying to have a close reliable and mutually-beneficial relationship with Russia, where we can both protect and maintain our interests. Turkey is a country that can only benefit from peace, security and stability in the region - this is a key component for us realizing our potential. And in this context, we know that Russia is an important actor for the resolution of the conflicts in the region. We need to work with Russia and find ways to act on a common ground with them. And that’s what we’re doing. We’re talking with them about Syria, about Nagornokarabakh, and we’re talking with them about the Georgian conflicts, too. And when we’re doing that, at each and every meeting, we always say that we’re committed to Georgia’s territorial integrity and sovereignty and advise Russia to be more constructive when it comes to the resolution of the Abkhazian and South Ossetian problems. So, neither in Georgia, nor elsewhere should people have any concerns about the nature of the Turkish-Russian relationship. Turkish foreign policy is geared towards generating peace and stability in our neighborhood and beyond, and in all our relationships, this is what drives us.

POLITICS

GEORGIA TODAY APRIL 11 - 13, 2017

EU Parliament SEDE Chair Criticizes Developments in Georgia’s Occupied Regions BY THEA MORRISON

he Chair of the Subcommittee on Security and Defense (SEDE) of the European Parliament, Anna Fotyga, expressed deep concern over the latest developments in the occupied Abkhazia (Sokhumi) and Tskhinvali (South Ossetia) regions of Georgia in her statement released on April 6. The MEP namely condemned the parliamentary elections that took place in the occupied region of Abkhazia on March 12 and the presidential elections in the occupied Tskhinvali region to be held on April 9. “These elections are taking place against a background of waves of ethnic cleansing in both regions and serious violations of human rights. Any attempt to legitimize the forcibly changed demographic situation of both regions is unacceptable,” Fotyga writes. Moreover, the Polish MEP condemned the referendum planned for April 9 in the Tskhinvali region to change its name.

Fotyga says the referendum “is aimed to prepare ground for its illegal annexation.” The MEP also denounced the signing of the agreement on incorporation of the unlawful military units of the occupied Tskhinvali region into the armed forces of the Russian Federation that took place on March 31. Fotyga determined this step to be the continuation of the policy of Georgia’s annexation by the Russia Federation, that began with signing the treaties of alliance and integration/strategic alliance between Russia and its occupation regimes in Sokhumi and Tskhinvali. “Integration of Georgia’s occupied regions into the military system of the Russian Federation also adds up to Moscow’s continued refusal to commit to the non-use of force in the region and to comply with the 12 August 2008 Ceasefire Agreement. The EU should make it clear that by these provocative actions, the Russian Federation is seriously harming the Geneva International Discussions and intentionally obstructing any potential progress in the peace process,” she added. The Chair of SEDE also criticized the

closure of crossing points along the administrative boundary line with breakaway Abkhazia which, according to her, “aggravates even more the situation on the ground. “

“This measure is aimed at further restricting freedom of movement and people to people contacts which has been an important factor of confidencebuilding in the conflict-torn region”,

she stressed. The statement also reads that the SEDE will continue to closely monitor and assess the situation in the occupied regions of Abkhazia and South Ossetia.

OSCE Chairman on Geneva Talks & Tskhinvali's “Alania Referendum” that, we wouldn’t know how to deal with certain issues. There is a conflict, there is no consent among the participants, but this is how we do things in this kind of setting: if you have a conflict, you need to talk. You need to have a dialogue.

INTERVIEW BY VAZHA TAVBERIDZE

f Georgia is going to continue to provoke us, we’ll leave the Geneva talks – this was the collective message, or threat (you decide) coming from Russian diplomats over the last two weeks, notably following the condemnation of the so-called elections in Abkhazia by the international community. With the recent name-change “referendum” and “presidential elections” in South Ossetia likely to meet the same fate, the clock might well be ticking on the Geneva International Discussions, which have, since initiation after the August 2008 War, quietly trudged on to an impressive 39 meetings and are approaching the 40th one. What is the future for the Geneva format and what changes might the Ossetian “referendum” bring? Panorama Talk Show and GEORGIA TODAY sat down with the former Ambassador of Switzerland to Georgia, Gunther Bechler, who is now the OSCE Chairman at the Geneva Discussions.

WE’VE HEARD SOME ALARMING STATEMENTS FROM RUSSIAN DIPLOMATS RECENTLY, ONE FROM THE RUSSIAN AMBASSADOR TO THE UN WHO OPENLY HINTED TOWARDS SUSPENDING THE GENEVA TALKS; THE LATEST ROUND WAS ADJOURNED BEFORE FINISHING AS THE SIDES COULDN’T REACH A CONSENSUS. HAS THE GENEVA FORMAT EXHAUSTED ITS POTENTIAL? I’m one of the co-chairs of the Geneva talks; there’s a total of three: one from the EU, one from the UN, and myself from the OSCE Chairmanship. At the moment, we are planning the 40th round of Geneva talks. It’s a very sustainable and long-term endeavor and it has worked quite well so far compared to other conflicts, where we have no format. Let’s take Nagorno-Karabakh, for example:

ON TO THE OSSETIAN ISSUE AND THE SO-CALLED REFERENDUM ON CHANGING ITS NAME TO ALANIA. WAS IT DISCUSSED AT THE GENEVA TALKS AND WHAT’S YOUR OWN TAKE ON THIS ISSUE? IS IT A PRELUDE TO A WIDER REFERENDUM ON JOINING SOUTH OSSETIA TO NORTH OSSETIA AND, ULTIMATELY, TO THE RUSSIAN FEDERATION?

this situation is much more stable and predictable in comparison. To date, we’ve had different phases. In the beginning, it was very stormy: after the August 2008 War, the parties had difficulties talking to each other. And then there was a phase when they tried to perform well to address a lot of issues in two working groups in

With [the “Alania”] referendum, a future referendum about integration with the Russian Federation or North Ossetia is unlikely

parallel – one on security and non-use of force, the other on humanitarian issues, return of IDPs, refugees and so on. And here I must say that, despite all the alarming signs, despite all media statements of all participants, the situation was rather stable. The last round of Geneva talks just a week ago was extremely fruitful; we came close to a non-use of force statement, there are talks between Russia and Georgia about that. We also addressed a lot of issues in the working group that are very important for the local people: humanitarian and environmental issues. We have this problem of diseases in the Black Sea region, with the box tree moth infecting trees and diseases of hazelnut plantations. So, last week, we had a workshop in Vienna dealing with all these issues together: with Abkhazia, Russia and Georgia. It’s a problem-solving exercise; we’ve had our ups and downs and even some threats, but, in general, it works quite well and I think nobody wants to give that up.

THE CHIEF BENEFIT OF THESE DISCUSSIONS IS AN ONGOING, EVEN IF SOMEWHAT STORMY DIALOGUE BETWEEN THE SIDES. HOWEVER, ONE WOULD

ALSO ARGUE THAT THERE IS NO POINT IN DIALOGUE IF NEITHER SIDE IS WILLING TO COMPROMISE. WHAT SUCCESS HAVE THE GENEVA TALKS BROUGHT IN THIS REGARD? I would really insist that they work well compared to other formats or situations that lack a formal process. The Geneva talks have a very limited mandate as a result of the Sarkozy-Medvedev agreement: we have two working groups on security and humanitarian issues. As this was linked to the 2008 war, we do not have a mandate for comprehensive peace talks and we do not have the power as co-moderators of the Geneva format. If the participants decide one day to enter a peace process, then this would be the next step, but it would change the format of Geneva. At the moment, you can say it’s a postconflict format that still reflects the situation from 2008: security, returns, humanitarian issues; the lives of people affected by the conflict. So it’s very much a postconflict format. However, since we had 39 rounds, you could say that there is something here, that the parties are interested in talking, participating and dealing with concrete issues – problem solving, in short. And this is a value in itself. If we stopped

This issue was not discussed in Geneva and it’s not on the agenda. This is something that is taking place in Tskhinval and is an issue between Tskhinvali and the Russian Federation. It is not on the table of the Geneva talks; here we concentrate on security issues for Georgia and Russia, so Geneva talks are a platform to discuss issues between the Russian Federation and Georgia. The same holds for Abkhazia. This is part of the 2008 agreement brokered by Sarkozy. Concerning the “referendum,” of course, it’s about the name. It seems it has a certain importance for Tskhinvali, to mark and give a signal of a certain independent status. At the same time, you could also say that with this referendum, a future referendum about integration with the Russian Federation or North Ossetia is unlikely.

WHY DO YOU THINK IT IS UNLIKELY TO HAPPEN? It’s an assumption, a prediction. It’s very difficult to say, but with by changing the name of the “Republic of South Ossetia” to the “State of Alania,” they also mark that they are somehow an “independent” state. This is not accepted by Georgia, of course, but it also seems that the Russian Federation supports this renaming and thus would not necessarily support a referendum on integration.

SOCIETY

GEORGIA TODAY

APRIL 11 - 13, 2017

Georgians Remember April 9 Heroes Implementation of Georgia’s Human Rights Strategy and Future Approaches

O BY THEA MORRISON

pril 9 is a symbolic day in the history of Georgia, marking two important events – the April 9th tragedy and the restoration of Georgia’s independence from the Soviet Union. This year, Georgia celebrated the 26rd anniversary of its independence from the Soviet Union and the 28th anniversary of the April 9 tragedy, when the Soviet Union's armed forces dispersed a peaceful demonstration in the center of Tbilisi in 1989. Citizens of Georgia gathered at the memorial located in front of the old Parliament building in Tbilisi to pay tribute to the victims. 20 people were killed on April 9, 1989 in a peaceful demonstration demanding the country’s independence from the Soviet regime. Sixteen died at the scene

while four died later from injuries. Hundreds of others were injured, poisoned and taken to hospital. On April 9, 1991, the legislative body of the country and the first president, Zviad Gamsakhurdia, adopted the Declaration of Independence and announced Georgia’s sovereignty from the Soviet Union. Georgian leaders, officials and ordinary citizens brought flowers to the April 9 memorial and remembered the fallen heroes. “April 9 is a very significant date for us. We all should do our best to make Georgia united and independent again,” Prime Minister Giorgi Kvirikashvili stated while delivering a speech at the memorial. The President of Georgia Giorgi Margvelashvili noted that it is very important never to forget the people who sacrificed their lives for the independence of their country. Georgia’s Catholicos-Patriarch, Ilia II, conducted a special service to honor the April 9 heroes.

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n April 10, Tamar Chugoshvili, First Deputy Chairperson of Parliament, Shombi Sharp, Deputy Resident Representative of the United Nations Development Program (UNDP) in Georgia,Natalia Jaliashvili, Head of the Human Rights Secretariat, and Monica Azimi, Director of the Office of Democracy, Governance and Social Development – USAID/Georgia, presented the Implementation of Georgia’s Human Rights Strategy: Main Findings and Future Approaches at Tbilisi Marriott Hotel. The aim of the event was to present the findings of the report on the progress in implementation of the National Strategy for the Protection of Human Rights in Georgia (2014-2020) and recommendations as to future approaches that was prepared by international expert Maggie Nicholson. The report incorporates the findings of the

expert’s assessment visit in Georgia carried out between October 29-November 7, 2016, during which she met with various stakeholders, as well as subsequent events. The report welcomes the significant progress made, to greater and lesser degrees, in almost all subject areas addressed in the National Strategy. In addition to general recommendations, the report makes specific recommendations in relation to justice, penitentiary systems and the prevention of torture and ill-treatment, the right to privacy, freedom of expression, assembly and demonstration, minority rights, rights of children, persons with disabilities, internally displaced persons, migrants, gender equality and the right to work. It goes on to identify priorities for further action. It is hoped that these will assist the respective state agencies in assessing their own progress and refocusing on how to achieve the central

goals of mainstreaming human rights in all government policies and promoting a human rights culture in the country. The presentation brought together members of Government and Parliament of Georgia, as well as representatives of the Ombudsman’s Office, diplomatic corps, international organizations and civil society to discuss the current state of human rights in the country and possible approaches for the future. The presentation was supported by the US Government through USAID’s Promoting Rule of Law in Georgia (PROLoG) activity, which is implemented by the East-West Management Institute, and the United Nations Development Program (UNDP), and is in line with EWMI/PROLoG’s efforts to assist with establishing a system of continuous human rights reform in Georgia and the US government’s efforts to strengthen democratic principles in Georgia.

UNDP Presents Global and Regional Human Development Reports

he United Nations Development Program (UNDP) in Georgia presented two fundamental reports of 2016 that address global human development challenges as well as specific developmental issues faced by the societies in the region of Eastern Europe, Turkey and Central Asia. The event took place on Tuesday, April 11 at the International School of Economics (ISET) of the Ivane Javakhishvili Tbilisi State University (16, Zandukeli Str., Tbilisi). The presentation of the Human Development Reports is organized by the UNDP Georgia in cooperation with the UNDP’s Regional Hub in Istanbul and International School of Economics (ISET) of the Iv. Javakhishvili Tbilisi State University. Speakers and Presenters: •Niels Scott, Head of UNDP in Georgia • Ben Slay, UNDP Senior Regional Economic Advisor • Nino Javakhadze, Deputy Minister of Economy and Sustainable Development of Georgia • Eric Livny, ISET Director and head of ISET Policy Institute • Olivier Bürki, Regional Director of the Swiss Cooperation Office for the South Caucasus • Kaido Sirel, Head of Operations, Delegation of the European Union to Georgia • Nino Zambakhidze, Chairman of Georgian Farmers’ Association • Irina Khantadze, Chairman of Coalition ‘Education for All’ • Shombi Sharp, Deputy Head of UNDP in Georgia

HUMAN DEVELOPMENT REPORTS (HDRS) 2016 The global Human Development Report 2016 Human Development for Everyone,

released in March 2017, argues that human development progress continues to leave many people behind, with systemic, often unmeasured, barriers to catching up. The Report suggests that a stronger focus on those excluded and on actions to dismantle these barriers is urgently needed to ensure sustainable human development for all. TheregionalHumanDevelopmentReport Progress at Risk, released in October 2016, explains how many countries in the region of Eastern Europe, Turkey and Central Asia are facing growing threats to their human development accomplishments. It shows how popular concerns about inequalities—in terms of income and wealth, but also equality before the law — seem to be on the rise and identifies key policy reforms and programming areas for more effective responses to the region’s inequality challenges. The Statistical Annex of the 2016 HDR presents the 2015 Human Development Index (HDI) for 188 countries and UNrecognized territories. Georgia’s HDI value for 2015 is 0.769, which put the country in the high human development category, positioning it at 70 out of 188 countries and territories. Between 2000 and 2015, Georgia’s HDI value increased from 0.673 to 0.769, an increase of 14.3 percent. Between 1990 and 2015, Georgia’s life

expectancy at birth increased by 4.7 years, mean years of schooling increased by 0.5 years and expected years of schooling increased by 1.5 years. Georgia’s GNI per capita increased by about 17.1 percent between 1990 and 2015. Georgia’s 2015 HDI (0.769) is above the average of 0.746 for countries in the high human development group and above the average of 0.756 for countries in Europe and Central Asia. From Europe and Central Asia, countries which are close to Georgia in 2015 HDI rank and to some extent in population size are Armenia, and Bosnia and Herzegovina, which have HDIs ranked 84 and 81 respectively. Georgia’s HDI for 2015 is 0.769. However, when the value is discounted for inequality, the HDI falls to 0.672, a loss of 12.2 percent due to inequality in the distribution of the HDI dimension indices. Armenia, and Bosnia and Herzegovina show losses due to inequalities of 9.3 percent and 13.3 percent respectively. The average loss due to inequality for high HDI countries is 20.0 percent and for Europe and Central Asia it is 12.7 percent. The Human inequality coefficient for Georgia is 12.2 percent. More information about the Human Development Index for Georgia is available at: http:// hdr.undp.org/en/countries/profiles/GEO

SOCIETY

GEORGIA TODAY APRIL 11 - 13, 2017

Georgia Has First National Maternal and Newborn Health Strategy

BY THEA MORRISON

he Ministry of Labor, Health and Social Affairs of Georgia (MoLHSA) with support of the United Nations Population Fund (UNFPA) and the United Nations Children's Fund (UNICEF) released the National Maternal and Newborn Health Strategy (20172030) and a three-year Action Plan (20172019) on April 7 in Tbilisi. The strategy is aimed at giving direction and providing guidance for the improvement of maternal and newborn health (MNH) and the related reproductive health (RH) fields in Georgia. The main goal is to ensure that by 2030, there will be no preventable deaths of mothers or newborns, or stillbirths and that every child is wanted and every unwanted pregnancy is prevented through appropriate education and full access to all high quality integrated services. The three-year Action Plan (2017-2019)

will serve as a general framework for MNH, RH, and Family Planning areas and as a guide for interventions for the next three years. The document also provides strategic input that will support the development and execution of operating plans at country level to eliminate maternal and neonatal mortality in Georgia by strengthening and expanding policies and programs for the improvement of Maternal and Newborn Health (MNH) within the continuum of care; and gives direction and provides guidance for the fields of Family Planning and Adolescent SRH, as very important determinants of MNH. The presentation of the strategy brought together the representatives of the Ministry of Education and Science, Ministry of Sport and Youth Affairs, Alanna Armitage, Regional Director, UNFPA Eastern Europe and Central Asia Regional Office, UN Agencies, Donors, SRH professionals and representatives of foreign embassies and the professional associations, academia, civil society organizations. “Georgia can continue to accelerate

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progress in the direction of maternal and newborn health and the national strategy is an excellent way to achieve this goal. Georgian men, women and youth deserve to have the best health standards,” Armitage said. Deputy Minister of Health, Nino Berdzuli, noted that the National Maternal and Newborn Health Strategy and Action Plan are being implemented for the first time in Georgia. “The strategy consists of three main components: maternal and newborn health, family planning and sexual and reproductive health of young people,” the Deputy Health Minister noted. The National Maternal and Newborn Health Strategy (2017-2030) is closely linked to the recent international strategic documents, including the Sustainable Development Goals (2015), the new WHO European Action Plan for Sexual and Reproductive Health (2017-2021), Every Newborn Action Plan (WHO/ UNICEF) and WHO/Europe “Health 2020: the European policy for health and well-being.”

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