Issue #886 Business

facebook.com/ georgiatoday

Issue no: 886/48

• OCTOBER 11 - 13, 2016

• PUBLISHED TWICE WEEKLY

In this week’s issue...

FOCUS

Transparency International on Violations Reported in Georgian Elections

ON POLITICAL RESULTS

A round-up of the weekend's elections

PRICE: GEL 2.50

PAGE 2 - 5

POLITICS PAGE 2

RETAIL FPI| Food Prices Keep Going South AP Photo/Sergei Grits

PAGE 6

A

zerbaijan’s Energy Minister Natig Aliyev announced on October 7 that his government and their Kazakh counterparts are in the final stages of negotiations over the construction of a 739-kilometer oil pipeline that will extend under the Caspian Sea. “The construction of this pipeline will enable Kazakhstan to export its oil to ports in both Georgia and Turkey. The new pipeline’s capacity will amount to 23-25 million tons per year, with the possibility of a future expansion to 56 million tons,” Aliyev said.

Kazakhstan has one of the world’s proven reserves of hydrocarbons, which accounts for 5.5 billion tons of oil and 3 trillion cubic meters of gas.

Kazakhstan is to produce 33.6 billion cubic meters of gas and 80 million tons of oil per year, but has no guaranteed reliable and secure export route except the Baku-Tbilisi-Ceyhan.

Three other existing pipelines that pass through Russia and the Caspian Pipeline Consortium, that carries oil from Kazakhstan’s huge Tengiz oil field to Russia’s Black Sea port Novorossysk, are incapable of meeting the country’s growing export potential.

Aliyev said the new pipeline will be part of the Kazakhstan Caspian Transportation System (KCTS).

PAGE 7

Azerbaijan Slashes Defense Budget as Oil Revenue Plummets

Azerbaijan and Kazakhstan Plan New Pipeline

BY NICHOLAS WALLER

Lessons, Challenges and Best Practices from IDP Livelihoods Experience in Georgia

PAGE 10

Marijuana Editor at Denver Post on the Cannabis Legalization in Colorado Today PAGE 11 The KCTS consists of oil terminals on the Kazakh coast of the Caspian Sea, as well as tankers, vessels and oil terminals on the Azeri side of the Sea. All of the facilities are connected to the BakuTbilisi-Ceyhan Pipeline.

Georgia Make an Overdue Point in Wales SPORTS PAGE 12 Prepared for Georgia Today Business by

Markets As of 07ͲOctͲ2016

STOCKS Bank of Georgia (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

w/w

m/m

GBP 30.43

+4,8%

+1,3%

GEOROG 04/21

105.50 (YTM 5.37%)

Ͳ0,1%

Ͳ0,2%

GBP 3.18

+7,3%

+6,1%

GEORG 04/21

BONDS

112.12 (YTM 3.91%)

Price

+0,0%

Ͳ0,4%

GBP 12.65

Ͳ0,4%

+17,4%

GRAIL 07/22

112.69 (YTM 5.17%)

Ͳ0,3%

Ͳ0,3%

BGEOLN 07/23

103.63 (YTM 5.35%)

Ͳ0,1%

+0,2%

Price

w/w

m/m

51,93

+5,8%

+8,2%

CURRENCIES

Price

w/w

m/m

1 257,08

Ͳ4,5%

Ͳ6,5%

GEL / USD

2,3350

Ͳ0,2%

+1,3%

GEL / EUR

2,5878

Ͳ2,1%

Ͳ0,1%

Price

w/w

m/m

GEL / GBP

2,9095

Ͳ4,2%

Ͳ5,5%

FTSE 100

7 044,39

+2,1%

+2,9%

GEL / CHF

2,3887

Ͳ0,7%

+0,6%

FTSE 250

17 995,16

+0,7%

Ͳ0,4%

GEL / RUB

0,0375

+0,3%

+4,5%

DAX

10 490,86

Ͳ0,2%

Ͳ2,4%

GEL / TRY

0,7653

Ͳ2,3%

Ͳ2,5%

DOW JONES

18 240,49

Ͳ0,4%

Ͳ1,5%

GEL / AZN

1,4647

+2,2%

+8,2%

5 292,41

Ͳ0,4%

+0,2%

GEL / AMD

0,0049

Ͳ2,0%

Ͳ

NASDAQ MSCI EM EE

132,20

+2,4%

Ͳ0,3%

GEL / UAH

0,0904

Ͳ0,2%

+4,6%

MSCI EM

914,81

+1,3%

Ͳ1,2%

EUR / USD

0,8929

+0,3%

+0,4%

SP 500

2 153,74

Ͳ0,7%

Ͳ1,5%

GBP / USD

0,8042

+4,4%

+7,3%

MICEX

1 980,02

+0,1%

Ͳ3,6%

CHF / USD

0,9775

+0,6%

+0,8%

MSCI FM

2 530,03

Ͳ0,1%

Ͳ1,8%

RUB / USD

62,3160

Ͳ0,9%

Ͳ2,9%

GT Index (GEL)

908,54

Ͳ

+8,0%

TRY / USD

3,0510

+1,7%

+3,9%

GT Index (USD)

768,04

Ͳ0,3%

+6,4%

AZN / USD

1,6028

Ͳ2,4%

Ͳ5,9%

2

POLITICS

GEORGIA TODAY

OCTOBER 11 - 13, 2016

Central Elections Commission on 2nd Round of Elections

BY THEA MORRISON

T

he Central Elections Commission (CEC) of Georgia has stated that, according to preliminary results, a second round of elections will be held in 18 out of 22 precincts of Tbilisi.

The CEC said that all polling stations in the capital have been counted and the second round of elections will be held in all precincts where the 50 percent barrier could not be crossed.

The Election Code of Georgia envisages that the second round must be held within 25 days of the first round. The two candidates who show best results in the first round will take part in the

second. The one who gets more votes in the second round will be declared winner. If they get equal votes, a third elections will be appointed.

In Tbilisi a second round will be held in Mtatsminda, Vake, Saburtalo, Krtsanisi, Isani, Samgori, Didube, Chughureti and Gldani districts.

As for the regions, majoritarian elections ended in the first round in 17 precincts. A second round of majoritarian elections will be held in 34 out of 51 precincts.

Candidates of the ruling party Georgian Dream (GD) and the opposition party United National Movement will take part in the second round of elections in 32 out of 34 regional precincts. In the remaining two precincts, the GD candidates will compete with the Free Democrats and the Industrialists.

Transparency International on Violations Reported in Georgian Elections

BY ZYGIMANTAS KAPOCIUS

T

ransparency International, an international NGO observing Georgia’s parliamentary elections, reported 70 voting irregularities and violations as of 4:00 pm local time on October 8.

According to Transparency, the most serious cases were reported in numerous districts across the country where commission members connected to the opposition United National Movement (UNM) refused to participate in the ballot draw process.

Reports of such incidents were observed in precinct offices across

Georgia, including in Zugdidi, Batumi, Chkhorotsku, Sagarejo, Gurjaani and Akhaltsikhe.

Transparency International's election observers also noted that a precinct office in Zugdidi, located in western Georgia, opened 45 minutes late after the necessary polling equipment was not delivered on time.

The NGO later reported at 2:00 pm that voting in the same precinct had to be temporarily suspended as a fight involving UNM supporters broke out in the polling station.

In at least four districts - Batumi, Krtsanisi, Kutaisi and Gori - Transparency International observers were barred from entering the polling stations. These incidents were, however, resolved after an intervention by the national election

commission.

Significant polling delays were observed in Sagarejo, as members of the precinct’s electoral commission were reprimanded for their low qualifications and inability to speak Georgian.

Transparency International also reported on numerous other irregularities, including cases when voters with expired IDs were allowed to vote; multiple people being allowed to enter polling booths at one time, as well as voters being permitted to vote without making a mark.

The organization, however, emphasized that the elections proceeded smoothly and relatively peacefully.

Transparency International deployed 400 observers to monitor this year’s parliamentary elections in Georgia.

POLITICS

GEORGIA TODAY OCTOBER 11 - 13, 2016

3

Foreign Observers of NDI and IRI Assess Georgia’s 2016 Elections

BY THEA MORRISON

T

wo foreign observers’ delegations of the National Democratic Institute (NDI) and International Republican Institute (IRI) actively observed Georgia’s October 8 parliamentary elections throughout the country and made assessments. They said the whole process was mainly calm, but also highlighted some major and minor violations.

NDI stated that, following a vibrant and competitive campaign, citizens were able to cast their votes freely and, in most places, counting proceeded in a calm and orderly manner. In some electoral precincts, however, counting was disrupted or terminated by unruly and, in some cases, violent crowds.

Members of the NDI delegation, which included former ambassadors and parliamentarians, representatives of nongovernmental organizations, and regional specialists from eleven countries, visited more than 80 polling stations in ten regions across the country, appearing at the opening, voting, closing, and counting processes in their assigned regions.

The NDI observers said that the elections day started smoothly, and the vast majority of Georgian voters, poll workers, party activists, and candidates demonstrated their commitment to democracy by participating peacefully in the election process. However, they also said

in the evening the situation deteriorated in some areas.

“Violence has no place in any election.

Although this detracted from the democratic contributions of the many Georgians who had voted and administered polling stations in good faith earlier in the day, it did not appear to substantially interfere with the ability of most Georgians to express their will through the elections,” the NDI statement reads.

The NDI also gave certain recommendations to the Central Election Commission to immediately address the irregularities in and disruption to the counting process to determine the necessity of recounts or reruns, particularly in those majoritarian races where the outcome could be affected.

“Georgia has run-off elections later this month, followed by local and presidential elections over the coming two years. The conduct of those processes will depend on accepting valid results and resolving disputes from this October 8 peacefully,” the organization stated.

IRI also noted that, in general, the elections were carried out in a peaceful environment and reflected the will of the Georgian voters.

However, the organization underlined that the October 8 vote was one step in a process that would include a number of run-off contests and urged Georgians to take an orderly, deliberate approach to political competition in the days following the first round.

"In the face of political tensions at home and ever-present pressure from

Following a vibrant and competitive campaign, citizens were able to cast their votes freely outside its borders, it was encouraging to see Georgians participate in these elections, whether as voters, candidates, party agents or election officials," said Ambassador Mark Green, president of IRI and chairman of the Institute's international observation team. "We hope that same approach and level of engagement will take place in the coming weeks."

IRI's report is based on the observations of 20 teams of short and long-term observers from 14 different countries.

The Election Day observers visited more than 200 polling stations across Georgia,

in both rural and urban areas. IRI’s observers also included two teams of observers in Ukraine observing polling at the Georgian Embassy in Kyiv. Those observers reported a calm and orderly environment.

The organization gave several recommendations: • The CEC must take steps to provide better accommodation for the needs of disabled and aged voters.

• The CEC needs to enhance procedures for the tabulation of ballots in polling stations in order to improve effi-

ciency, transparency and to shorten the time involved in the counting of votes.

• The Georgian parliament needs to thoroughly investigate and take appropriate action to strengthen laws prohibiting the abuse of administrative resources during the pre-election period.

• The CEC should create expanded enforceable boundaries around polling places to prevent voter intimidation and congestion in voting areas.

On the whole, IRI assessed the October 8 elections as “imperfect, but improved election procedures and administration.”

4

POLITICS

GEORGIA TODAY

OCTOBER 11 - 13, 2016

Parliament Opens 2017 State Budget Draft Discussion Georgians Living in Russia Barred from Voting

BY NATIA LIPARTELIANI

G

eorgian citizens living in Russia were denied the right to vote in Saturday’s Parliamentary Elections after the Kremlin refused to allow the Georgian government to set up polling stations for its citizens.

The Georgian government opened 55 polling places worldwide to allow its citizens abroad the ability to cast their votes. Georgian citizens living abroad were only able to vote for individual parties, not majoritarian candidates.

Russia is home to the world’s largest

number of Georgian emigrants. Up to 200,000 Georgian citizens, who are eligible to vote, live in the Russian Federation.

Relations between Moscow and Tbilisi have been strained since the 2008 fiveday war between the two former Soviet republics over Georgia’s breakaway region South Ossetia resulted in hundreds dead, thousands displaced and Russia’s occupation of more than 20 percent of Georgia’s territory.

The 200,000 eligible Georgian voters living in Russia could have been a key bloc of swing voters in an election that came out close.

3.5 million Georgians were registered to vote in the October 8 elections.

BY NATIA LIPARTELIANI

T

he Parliament of Georgia is to start 2017 state budget draft discussions.

While the CEC counts the votes of the 2016 elections,

the Finance - Budget Committee will discuss the main financial document. After the committee hearings, it will be approved by the newly elected 9th Parliament. One of the subjects of discussion will be implementing an ‘Estonian Model’ in relation to Income Tax. The Deputy Chairman of the Budget and Finance Committee said that the

costs of infrastructure, health and education are rising.

“In terms of particular articles, the draft budget presented goes beyond the plans and objectives of Georgian Dream. This project will be reviewed and a number of elements will be seriously altered in the social section of the document," said Gia Volsky, member of Georgian Dream.

Rebel-Controlled South Ossetia BUSINESS Closes Border for Export Development Georgia’s Elections Canada (EDC) Plans to

Cooperate with Georgia

BY THEA MORRISON

G

eorgia’s breakaway region of South Ossetia sealed its de facto border with Georgia as a security precaution during Georgia’s parliamentary elections on Saturday.

“The Security Committee decided that nobody will be allowed to cross the border until 7:00 am on October 9,” South Ossetia’s Russian-backed rebel government said in a statement.

Separatist officials in the regional capital Tskhinvali said the decision to close the border was made after the local government claimed it received intelligence information from Moscow saying the Georgia planned “a destabilizing provo-

cation” against the rebel region.

Georgia’s Reconciliation and Civil Equality State Minister of Georgia Ketevan Tsikhelashvili slammed the decision, calling South Ossetia’s claims “illegitimate and dangerous”.

“This is a deliberate attempt by the Moscow-backed authorities in Tskhinvali to quash Georgian citizens’ rights by not allowing them to cross the border and express their political views,” Tsikhelashvili said.

She noted that South Ossetia had barred Georgian citizens from crossing the administrative border during an election season in the rest of the country since the 2008 Russian-Georgian five-day war.

The war resulted in 20 percent of Georgian territory being occupied by Russia, after which thousands of Georgian citizens became internally displaced.

BY NINO GUGUNISHVILI

N

odar Khaduri, Minister of Finance of Georgia, met with representatives of Export Development Canada (EDC) and Canadian company Behlein Industries repre-

sentatives last week to discuss the longterm cooperation prospects for the two countries.

EDC Agency representatives declared their readiness to provide USD 120-150 million financial resources for the realization of large-scale investment projects throughout Georgia.

Minister Khaduri debriefed the two company representatives on the invest-

ment climate in the country and introduced the spatial rearrangement reform.

He also discussed the transport and transit possibilities Georgia has to offer.

Behlain Industries is already building sports complexes in Telavi, Batumi and Gori with 33 USD 850,000 investments allocated. It plans to expand in railway, roads and recycled goods storage construction as well as infrastructural development.

BUSINESS

GEORGIA TODAY OCTOBER 11 - 13, 2016

5

INTERVIEW: Lessons from the Baltics Lithuanian Ambassador Giedrius Puodziunas

BY ZYGIMANTAS KAPOCIUS

L

ast weekend was critically important not only for Georgians. Voters in Lithuania, which is a staunch ally of Georgia on its path to European integration, also took to the polls to elect the country’s new parliament.

GEORGIA TODAY sat down with the Lithuanian Ambassador Giedrius Puodziunas to discuss the two elections in comparative perspective, and draw parallels and contrasts between the two partners.

BOTH GEORGIA AND LITHUANIA CELEBRATE MORE THAN 25 YEARS OF INDEPENDENCE. WHAT DISTINGUISHES AND WHAT UNITES THE TWO COUNTRIES IN TERMS OF POLITICAL DEVELOPMENT? First and foremost, it is necessary to emphasize the common fundamental experience of both Lithuanians and Georgians in their aspirations for self-determination. The 1989 April 9 tragedy in Tbilisi, and the 1990 January events in Vilnius became embedded in the collective memory of the two Peoples.

We both paid a high price for our liberty, and it remains a driving force in our political aspirations.

Notwithstanding, there were some crucial differences. Lithuania adopted a staunch Europe-oriented course really early in the 1990s, which was followed by series of ambitious reforms. The logical conclusion of these reforms was the integration of Lithuania in the EU and NATO by 2004. In Georgia’s case, the economic and political development was hindered because of the civil war, which has political repercussions to this day. Nonetheless, it is crucial to bear in mind that today Georgia is the only country in the South Caucasus region that ratified a EU Association Agreement earlier this year. Georgia is also a major Transatlantic partner, as reaffirmed in the Bucharest and Warsaw summits. Thus, despite the initial difficulties over the first decade of independence, today Georgia possesses all the instruments necessary for further EU and NATO integration.

THIS WEEKEND HAS BEEN CRUCIAL FOR THE TWO COUNTRIES, AS BOTH GEORGIANS AND LITHUANIANS ELECTED THEIR LEGISLATORS. COULD YOU COMPARE AND CONTRAST THE POLITICAL CLIMATE IN THE TWO COUNTRIES? Free, fair and transparent elections are key to any functioning democracy. As reported by numerous observers, this year’s poll in Georgia, in spite of several irregularities, conforms with democratic standards and is a step in the right direction. The increasing polarization of the leading political parties, however, might eventually prove to be counterproductive. Naturally, political competition is a fundamental part of the democratic process. Notwithstanding, there is a need for a clear consensus over Georgia’s broader strategic goals. Lithuania’s bid to become a member of the EU and NATO was energized by a memorandum over strategic goals, signed by Lithuanian political parties. This has conditioned for a more productive political environment as far as the European and Transatlantic integration processes are concerned. In the context of the October 9 Seimas (Parliament of Lithuania) elections, the key values of this agreement remain intact, thus reaffirming Lithuania’s European course.

It is crucial to bear in mind that European integration is not only relevant on the institutional level, it starts in one’s back yard

In my opinion, the key political parties in Georgia should aim for a similar manifestation of unity in terms of foreign and defense policy. The coordination and continuity of these goals is of paramount importance, and Lithuania’s positive experience in this field could serve as an example.

DEMOCRACY PROMOTION IN THE EU EASTERN PARTNERSHIP COUNTRIES REMAINS A KEY PRINCIPLE OF LITHUANIAN FOREIGN POLICY. WHAT CONCRETE STEPS DID LITHUANIA TAKE IN ENCOURAGING DEMOCRATIC PROCESSES IN GEORGIA?

conscious process, which makes the country more fair, effective, democratic and liveable. Some of the problematic points are pertinent to some basic yet fundamental aspects of life, such as the appalling environmental record, as Georgia ranks 111th under the Environmental Performance Index. Hence, it is crucial to bear in mind that European integration is not only relevant on the institutional level, it starts in one’s back yard.

WHAT ARE THE PROSPECTS OF

BILATERAL COOPERATION BETWEEN LITHUANIA AND GEORGIA? I have no doubt that the mutual sympathy between the two nations is here to stay, notwithstanding the geographical distance and cultural and linguistic differences. I believe that Lithuania’s role in opening Europe’s doors to Georgia and vice versa is not a single issue question. It builds trust and cooperation, thus conditioning for vibrant and intense bilateral relations, ranging from cultural exchange to intense business ties and trade.

Rule of law, respect for human rights and other similar postulates serve as pillars of the European Union, hence there are certain criteria to be met if a country wishes to accede to the European Union. From our own experience, we as Lithuanians can attest that it is not easy to meet these strict standards. Thus, Lithuania aims to share its positive experience with colleagues in Georgia, and the range of cooperation is multi-layered. This includes the intergovernmental Commission of European and Euro-Atlantic Integration, which serves as a medium for exchange of relevant information. I am particularly proud of the intense cooperation between Lithuanian and Georgian municipalities on a local level. Lithuania is involved in numerous assistance development projects in Georgian regions, specifically pertinent to education, women empowerment and relief to internally displaced persons. The Georgian and Lithuanian cooperation is very intense and, I must say, not limited to the institutional level. Georgians are keen on adopting the positive experience of Lithuania in their own country, and so far have been very successful in doing so.

WHAT ARE THE MOST PROBLEMATIC POINTS THAT SHOULD BE ADDRESSED WITH RESPECT TO THE EASTERN NEIGHBORHOOD POLICY? European integration is not an easy and straightforward process. It took years of dedicated work for Lithuania and other Baltic States to fulfil the formal requirements of accession, which were not always self-explanatory. In the 1990s, full integration into the European Union seemed almost utopian for most Lithuanians. Today, they can attest that the work and even the sacrifices Lithuania made in its European aspirations are already giving returns. Lithuania and the Baltic States can be described as success stories in implementing ambitious reforms. The path of European integration has been a recipe for success for these countries.

Looking at Georgia today, it is one of the most progressive Euorpean partners among the Eastern Neighborhood countries, even though there is still room for improvement. The Georgian people must realize that the reforms need to be implemented not merely to fulfill the requirements of membership in the EU and NATO, but for the good of their country. It is not only an implementation of institutional schemes working in practice, but also a

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6

BUSINESS

GEORGIA TODAY

OCTOBER 11 - 13, 2016

RETAIL FPI| Food Prices Keep Going South

Georgian Delegates at 26th UPU Congress

Georgia Becomes a Member of the Universal Postal Union

BY NINO GUGUNISHVILI

G

eorgia has been elected as a member of the Universal Postal Union (UPU) Council at the 26th World Postal Union Congress held in Istanbul, Turkey, at which Georgia presented its candidature for the first time.

As a UN specialized agency since 1948, the Universal Postal Union is the world’s second oldest intergovernmental organization, established in 1847, with its headquarters in Berne, Switzerland.

The decision to elect Georgia as a member country of UPU Councils was announced at the congress, where the administration council (CA) and the postal operation council (POC) members were also elected.

Composed of 192 members, the UPU is an organ-

ization representing the interests of the worldwide postal sector.

The UPU Congress is held every four years to meet and discuss a new world postal strategy and future rules for international mail exchanges.

The Georgian delegation was headed by Davit Khutsishvili - Deputy Minister of Economy and Sustainable Development of Georgia.

B

y the end of September, ISET’s Retail Food Price Index decreased by 0.6% m/m and 2% y/y. In the second half of September, we recorded very large (seasonal) increases in the prices of plums (24.4%), peaches (20.2%), and eggplants (14.3%). Prices declined the most for grapes (-21.7%), beef (-8.5%), and milk (-7.9%).

Leaving seasonal price fluctuations aside, one should note that traditional Georgian products, such as grapes and plums, are significantly more expensive compared to the same period in 2015.

This may be a result of greater domestic demand, or weather conditions that adversely affected harvest quality. Grapes and plums are up 21.3% and 19.1% y/y, respectively. If the former, this is definitely great news for Georgian farmers.

MORE ABOUT GRAPES The significant drop (-21.7%) in the price of grapes during the last two weeks of September signals the beginning of the harvest season (Rtveli). Despite that, table grape prices remain 21.3% higher compared to September 2015. One possible explanation for this is the so-called “base-year effect”: an exceptionally bad harvest in one year can make the following year look good, even if only mediocre (and vice versa).

Indeed, last year was not a very good year for

Georgian grape producers and winemakers. Georgia’s wine exports in 2015 dropped by almost 50% due to major currency crises and recessions in Russia and other major export destination countries. This directly affected grape prices, bringing them well below the record levels achieved in 2013 and 2014 (thanks to the re-opening of the Russian market). Of course, table grape prices are not exactly representative of the situation in the wine grape market. Still, it is highly likely that when wine grape prices go up, so do prices for the table grape varieties.

AND GREAT BARGAINS! Competition among Georgian retailers is getting quite fierce. Vying for market share, retail networks continue to offer steep discounts on popular items in the hope of using them as “loss leaders”. For example, the entire 8.5% biweekly decrease in the price of beef is the result of one supermarket chain cutting their prices by 28.6%, from an average of 14 to 10 GEL. The prevalence of such bargains, as well as the general downward trend in food prices, suggests that the Georgian retail market is quickly maturing, straining less efficient operators, creating the environment for mergers and acquisitions in the sector, and providing an impetus for the strongest actors to expand beyond Tbilisi.

Table 1: In the spotlight

Product

Bi-weekly Change

Annual Change

Grapes

 -21.7%

 +21.3%

Plums

+24.4%

 +19.1%

Peaches

+20.2%

+3.7%

Beef

 -8.5%

0.0%

Milk

-7.9%

-3.3%

+14.3%

-12.9%

Eggplants

Shekvetili Construction Works to End in 2016

C

onstruction works on the Shekvetili 5-star hotel and spa complex, one of the many ongoing projects of the Tourism Development Foundation of Georgia, are due to end shortly.

The USD 80 million investment hotel will comprise 220 suites with sea views, a swimming pool cut 150 meters into the sea, other indoor and outdoor swimming pools, a winter garden, themed restaurants, a children’s entertainment center, sports playgrounds, a movie theater and footpaths to allow guests to take a leisurely stroll through

the extensive grounds. A further special feature is a 1,600 cubic meter aquarium. The complex will also provide spa and magnetic sand treatments and is adapted for persons with disabilities.

Autograph Collection, Marriott’s top category international brand, will operate the hotel.

The Co-Investment Fund of Georgia set up the Tourism Development Foundation to boost tourism infrastructure development. At present it is implementing 8 large-scale projects worth USD 680 million in Tbilisi, Guria, Adjara and Samegrelo regions.

BUSINESS

GEORGIA TODAY OCTOBER 11 - 13, 2016

7

Lessons, Challenges and Best Practices from IDP Livelihoods Experience in Georgia

Grigol Gogidze, First Deputy Minister, Ministry of IDPs from the Occupied Territories, Accommodation and Refugees of Georgia enjoys the pre-conference wares exhibition

BY NINO GUGUNISHVILI

E

xpo Georgia, Tbilisi, hosted a project closure event on Friday called ‘From Dependancy to Self Sufficiency: Innovative, Effective and Sustainable Livelihood Solutions in Georgia’ organized by Charity Humanitarian Center Abkhazeti (CHCA) and the Danish Refugee Council (DRC), with financial assistance from the European Union.

Prior to the conference, attendees had the chance to browse the exhibition of beneficiary crafts and produce and see a number of the small enterprises that have been set up through the project. The conference itself was both informative and detailed- through presentations the hosts made an indepth analysis of the situation of IDPs in Georgia, mapping the employment opportunities, discussing the challenges encountered during the implementation of the project, and giving recommendations on the next steps to be undertaken towards making social inclusion and economic empowerment of IDPs more effective.

The Danish refugee council (DRC) and the Charity Humanitarian Center

Abkhazeti (CHCA) carried out the joint ‘From Dependancy to Self Sufficiency: Innovative, Effective and Sustainable Livelihood Solutions in Georgia’ project with the primary goal of supporting IDPs, war affected communities and eco-migrants by providing sustainable livelihood solutions for their economic integration. The project was realized in Mtskheta - Mtianeti (Akhalgori), Imereti (Kutaisi and Tskhaltubo), Samegrelo (Zugdidi, Poti), Adjara (Batumi), and Abkhazia (Gali). 516 beneficiaries received project grants ranging from EUR 500 to 4,000 in three directions: Poverty Reduction Grant, Individual Business Grant and Small and Medium Entrepreneurs.

“We all know that the unemployment rate is very high and unemployment amongst IDPs and vulnerable groups is even higher,” said Svend Monrad Graunboel, Country Director of the Danish Refugee Council Georgia and South Caucasus. “The fact that IDPs have a lack of access to land, social skills and proper housing makes it even harder for them to escape poverty.”

He went on to stress the importance of joint initiatives and efforts from the government, NGOs and other entities to find alternative ways for IDPS and vulnerable groups to access jobs. “While working with IDPs, an individual

The conference finished with the signing of a memorandum of understanding between the DRC and the IDP Livelihood Agency

approach should be used in assisting them, and the delivery of the grants should be done in a very cost effective way. No IDP should be left behind and every effort should be made to ensure that IDPs and vulnerable groups have access to opportunities to build a better future,” Graunboel said.

Grigol Gogidze, First Deputy Minister, Ministry of IDPs from the Occupied Territories, Accommodation and Refugees of Georgia also talked about the value of increasing employment opportunities for vulnerable groups. “Support must not be limited to providing them with the necessary minimum of housing and food; support must be addressed towards creating possibilities of employment and income.”

Vincent Rey, Head of Cooperation, Delegation of the European Union to Georgia, agreed, highlighting the sig-

nificance of joint initiatives from state and private sectors and pledging the continued support of the EU in this regard.

A short documentary film featuring the project beneficiaries was shown at the conference, followed by detailed presentations from Eka Gvalia, Livelihood Project Manager, DRC Georgia; Maia Chenkeli, Program Coordinator, ACF South Mission; Nukri Milorava, Executive Director, CHCA; and Irakli Ujmajuridze, Executive Director, LEPL - IDP Livelihood Agency on livelihood grant schemes, the employment shuttle and employment opportunities, access to information and business consulting and action plans.

The conference finished with the signing of a memorandum of understanding between the DRC and the IDP Livelihood Agency.

GEORGIA TODAY met some of the entrepreneurs and small businesspeople displaying their wares. It was encouraging to see Baia Emkvari and Lasha Sharashenidze’s handmade jewelry and Nana Toloraia’s embroidery, all of them beneficiaries of the project.

“I’ve been interested in handmade

jewelry since my childhood,” Emkhvari told us. “The DRC project helped me to buy materials for my works and mannequins to display them.”

She plans to set up a studio in which she can work and from where she can sell her jewelry.

We asked her what she would say to others thinking of taking the plunge and starting their own businesses. “Risk is essential,” she said. “Knowledge comes slowly and then you get to know the market. You should decide exactly what you want to do, do research and then take a risk. That’s the only way to be successful.”

Nana Toloraia disagrees. She started embroidery some 15-20 years ago as a self-taught artist and still remembers her very first work, a parrot. For Nana, motivation and hard work is the key to success. Her plan is to teach embroidery to students and she was very happy with the chance to participate in the DRC project because many people came to the event and showed genuine interest in her works. She received a sewing-machine through the grant and now plans to expand her small business further.

8

BUSINESS

GEORGIA TODAY

OCTOBER 11 - 13, 2016

Georgian National Tourism Administration at Tourism Exhibition & Fair in Japan

Railway Administrations of Kazakhstan, Azerbaijan and Georgia to Create Transport Association

BY DIMITRI DOLABERIDZE

BY NINO GUGUNISHVILI

T

he Georgian National Tourism Administration (GNTA) attended Jata 2016, Tokyo, Japan, an international tourism exhibition and fair, in which they presented several Georgian tourist agencies: Visit Georgia, Caucasus Travel, Concord Travel, Sakura,

Georgia En Route, Georgian DMC and Explore Georgia. The Tourism and Resorts Department of Adjara also participated in the exhibition.

During the three day event visitors to the fair had a chance to taste Georgian wine and other Georgian products. Presentations showcasing the Georgian tourism industry where also made, while the Georgian stand featured in the local news.

1,161 companies from 141 countries participated in the fair.

T

he railway administrations of Kazakhstan, Azerbaijan and Georgia have signed a memorandum of association.

At the last meeting of the Coordinating Committee for the Development of the Trans-Caspian International Transport Route (TITR), heads of the railway administrations of Kazakhstan, Azerbaijan and Georgia discussed the creation of an International Association of TransCaspian international transport route.

Wyndham Group to Open 5 Star Hotel in Batumi

BY THEA MORRISON

T

he construction of a new 5 star hotel in Batumi, Georgia’s Black Sea region, is nearing completion. Wyndham Batumi is located on Memed Abashidze Street in the place of the former post office building.

Wyndham Hotel Group owns the hotel, which joins a total of 7,800 hotels in 72 countries worldwide. This is the first Wyndham Group hotel in Georgia.

An agreement will be signed between Active Batumi and Wyndham Group,

according to which Active Batumi will start operating the hotel under the name of Wyndham Group.

The hotel has 150 rooms, conference halls, spa-centers, restaurants, nightclubs, a swimming pool, Vitamin bar and administrative offices and will employ around 500 locals.

A 1400 m2 Casino Princess will also open there and expects to employ an eventual 400-500 people to monitor the 200 slot machines and 12 gaming tables.

Through this project, Wyndham Group is investing 60 million GEL in the region.

Chairman of Adjara Government, Zurab Pataradze, and the Finance and Economy Minister of Adjara, Ramaz Bolkvadze,

visited the hotel several days ago.

“This hotel will make our city even more beautiful. The opening of such hotels promotes tourism development in Batumi,” Pataradze stated.

A 2006 spin off from Cendant Corporation, Wyndham Worldwide Corporation is the holding company for Wyndham Hotels & Resorts, RCI and other lodging brands.

Wyndham Worldwide is headquartered in Parsippany, New Jersey, and has more than 40,000 employees around the world.

Wyndham Hotel Group includes 15 brands on six continents and offers lodging franchising, vacation ownership, vacation rentals and vacation exchange.

The Association, to be headquartered in Astana, will “focus on attracting transit and foreign trade cargo, and develop integrated logistics products from TITR." The Association will further work out issues of "an effective tariff policy, optimization of costs and value of integrated services,” and will create a single technology transportation process, contributing to the reduction of administrative barriers related to border and customs procedures and processing of cargo and containers in ports.

All these measures are aimed at ensuring the competitiveness of TITR compared to alternative routes, with the Coordination Committee currently dis-

cussing the establishment of preferential tariff conditions for a number of Kazakhstani export goods, including grain, oil and non-ferrous metals, on the territories of the member countries.

"During the existence of the Coordinating Committee, considerable work has been done to build an effective tariff policy, introduce a single technology for transporting goods and create a joint integrated logistics product of Nomad Express,” said Kanata Alpysbaev, Vice President of the Office for Logistics of Kazakhstan Railways. “Container trains are running, and the Trans-Caspian international transport consortium is set up.”

The new 5 star Hotel in Batumi is nearing completion.

Source: Adjara government

BUSINESS

GEORGIA TODAY OCTOBER 11 - 13, 2016

9

Russia May Partially Lift Ban on Import of Turkish Vegetables

BY DIMITRI DOLABERIDZE

R

ussia may lift its ban on the import of certain types of Turkish fruit and vegetables, but this is expected to happen in stages throughout the remainder of the year, claims the Head of the Ministry of Economic Development (MED), Alexei Ulyukayev, after a meeting with the Turkish Minister of Economy, Nihat Zeybekchi.

"This possibility is, of course, retained.

But we are preparing for it. We have prepared a number of proposals for the removal of the ban on access to some agricultural products. Not all, but some,” said Ulyukayev.

He did not specify, however, what

kind of products will be permitted for importation. According to Ulyukayev, the niche of fruit is not fully catered for by the domestic Russian market.

"Turkey offers a range of products which has no analogue in our country or is available to just a very limited extent. For example, citrus fruitsoranges,” he said.

Ulyukayev added that the Turkish minister also promised to deal with matters relating to Turkey's restrictions on the import of Russian meat and milk.

It was previously reported that an agreement on a free trade zone between Russia and Turkey may be signed at the end of 2017.

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Impact Hub Opens in Tbilisi CONTACT PERSON 557 12 38 90

BY NATIA LIPARTELIANI

O

n October 6, social enterprise community center Impact Hub was opened in Tbilisi, becoming a full member of a global network that offers a unique ecosystem of resources, inspiration, and collaboration opportunities.

The multifunctional center, with its flexible infrastructure aims to become the ideal platform for work, business meetings, knowledge sharing, and networking.

The functions of the Hub include: hosting events, implementing training programs, and offering discussions and presentations. Impact Hub Tbilisi will

also raise awareness on current and problematic issues.

Within the frames of international festival MitOst on October 6, Impact Hub held a panel discussion on the topic: ‘Creating a Sustainable Ecosystem for Social Change.’ Georgian and foreign

experts discussed the social entrepreneurship ecosystem in Georgia and successful social entrepreneurs held presentations of their work.

On October 7 another panel discussion was held titled: ‘Inclusive Cities: Urban Public Good.’

10

BUSINESS

GEORGIA TODAY

OCTOBER 11 - 13, 2016

Azerbaijan Slashes Defense Budget as Oil Revenue Plummets

BY NICHOLAS WALLER

I

n documents released late last week, it was revealed that energyrich Azerbaijan is being forced to cut its defense budget by 27 percent to just over USD 1 billion as the state’s coffers dry up with the sharp drop in oil prices, its main source of revenue, and following the freefall of the national currency, the Manat.

The move is a sharp about-face, as boosting the country’s defense capabilities has been a cornerstone of Azeri President Ilham Aliyev’s national agenda for several years.

Aliyev launched a major overhaul of Azerbaijan’s once beleaguered military over a decade ago, at a time when oil prices were hitting all-time highs.

The massive amounts of revenue that flowed into the energy-rich South Cau-

casus country at the height of the early 2010s commodities boom allowed Baku to stockpile vast quantities of highly sophisticated Russian-made equipment.

The sales shocked and angered archenemy Armenia, traditionally one of Moscow’s staunchest allies on the international stage.

Azerbaijan’s military spending increased 20-fold from 2004-2014 and eventually passed Armenia’s entire state budget.

The arms purchases and massive spending on defense issues further alarmed Yerevan as Azerbaijan's massive arms budget has been the cornerstone of Aliyev’s efforts to re-take the breakaway region of Nagorno Karabakh – an ethnic Armenian exclave that has been under Yerevan-backed separatists since 1994.

But with oil prices hovering at around USD 45 per barrel, down from an average of USD 105 in 2014, the Azeri government now has no choice but to curtail its defense spending.

The Rise of Russian Emigration

BY DIMITRI DOLABERIDZE

R

ussians are leaving the country in search of a better life- says Expert of the Committee of Civil Initiatives (OIG), Alexei Kudrin, when analyzing the official statistics on emigrants from Russia.

Experts point out that, according to Rosstat, in 2014 – 310.5 thousand people left the country; in 2015 – 353,000.

But, in their view, the real figure is three to four times higher and, they say, since the early 1990s more than 4.5 million people have left the country.

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Among the most popular destination countries are Israel, Germany and the United States.

According to Russian statistics, since the beginning of the 90s, more than 150 thousand Russians have moved to Israel, about 750 thousand to Germany and around 110 thousand to the US. A steady stream of emigrants is also leaving for Australia, the UK, Spain, Italy, Canada, Finland and France.

Annually, from 300 to 700 thousand Russians are leaving their country of birth.

In the period from 2002 to 2011 the country saw more than 93 thousand people with higher education leave, of which 640 were candidates of science

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02:35 06:35 22:55 01:40 18:10 21:15 04:25 05:05 19:40 10:35 20:15 06:25 16:20

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and more than 250 doctors of sciences.

The regions seeing the highest outflow are those with a relatively high standards of living, such as the St. Petersburg and Moscow regions, where there is the lowest unemployment rate in the country. OIG experts indicate that this fact shows the exhaustion of opportunities to improve the quality of life in the country.

Emigration primarily targets educated, energetic and motivated youth to change their quality of life. Such youth tend to be least satisfied with the situation in the economy and the social sphere, often seeing little to no possibility to change the situation for the better, the OIG explains.

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BUSINESS

GEORGIA TODAY OCTOBER 11 - 13, 2016

11

Marijuana Editor at Denver Post on the Cannabis Legalization in Colorado Today ‘FORTUNE‘ MAGAZINE NAMED YOU ONE OF THE 7 MOST INFLUENTIAL PEOPLE IN THIS INDUSTRY. HOW DO YOU USE THIS INFLUENCE? WHERE ARE YOU TRYING TO TAKE THE DISCUSSION? I don’t have an angle on this. All I care about is good information. Part of this for me really comes down to a childhood where I was lied to. And I wasn’t alone, whether we are talking about this country or other countries, you had teachers and parents, mayors and presidents, doctors and mentors lying to you about the dangers of marijuana use – to this day, it’s still on the list of schedule 1 substances – meaning it has no medical value, meaning it has a potential for abuse. We know cannabis has a 9 percent addiction rating. That’s less than alcohol. It’s less than nicotine. It’s way less than other stuff like cocaine and heroin and meth.

The “gateway drug” is something we still hear in 2016, this idea of cannabis being the first of something much worse. But anybody who studies federal data in America right now knows that there is one gateway drug, and it’s not marijuana, it’s alcohol.

You look at the percentage of teenagers and children who were exposed to different drugs at different ages and which ones really sent them down those paths that we should be concerned about, and it’s alcohol.

The most exciting thing about where we are right now is that we’re finally starting to get this data and are finally starting to understand its impact on our surroundings.

before went through the black market.

BY NATASHA MOZGOVAYA AND NANA SAJAIA, VOICE OF AMERICA GEORGIAN BUREAU

HAS LEGALIZATION WIPED OUT THE BLACK MARKET?

C

olorado was the first state in the US to legalize recreational marijuana.

After 55 percent of voters supported legalization in November 2012, Colorado has become what locals now call America’s Amsterdam, attracting more than 17 million tourists and with a marijuana market exceeding USD 1 bln in 2016.

Local Denver Post dedicated a special portal to the occasion ‘The Cannabist’- a home for ideas, people, and news centered around the culture of cannabis. Yet almost four years after legalization, many Coloradoans are having second thoughts as the state attracts large numbers of people wanting to stay, resulting in a shortage of real estate and skyrocketing house prices.

To summarize the consequences of legalized marijuana on local society, we spoke with the editor of The Cannabist, Ricardo Baca.

HOW DID COLORADO BECOME THE FIRST STATE TO LEGALIZE RECREATIONAL MARIJUANA? We voted on November 2012 and the Governor signed recreational marijuana into the state constitution the following month. The first legal sales started on January 1, 2014. So on that day we suddenly went from our regular medical regulated marijuana to a regulated recreational marijuana system, meaning you no longer need a medical marijuana license. Prove you’re 21 or older (through a passport or a driver’s license) and you can buy an ounce of cannabis or equivalent within the edible marijuana products or concentrates and extracts.

HOW BIG IS IT FOR THE STATE ECONOMY? It’s pretty decent. Last year there was about USD 996 million in sales of marijuana. This year we are going for USD 1.2 or 1.3 billion. And that overall translates the year to over USD 140 million dollars in taxes. When you consider the size of Colorado, with an annual operating budget of over USD 27 billion - it’s kind of a drop in the ocean. What’s interesting about it is this money didn’t exist five years ago. It’s new taxes which

Of course not. It will be here for a very long time.

But what kind of buy is the legalization taking into the black market? More than a billion – that’s substantial.

WHY DIDN'T IT DISAPPEAR? The marijuana black market has existed for decades and change happens slowly in this part of the world. The black market dealers can undercut the legal market - sell a gram for a lot cheaper than people pay in recreational markets. You’re paying upwards of 20 to 30 percent tax on retail marijuana.

That's just one simple rule. You know, old habits die hard. I have a friend who buys from the same dealer her parents did.

BUT CRIME WENT DOWN? For the most part, you look at the crime and it's a little bit down and it's a lot flat. It hasn't gone up, at least. And people who really felt it would go up after we legalized retail cannabis were pretty clueless as to what this whole thing would involve. Granted, a lot of us were clueless, because it was the first time it had been done in the modern world, but thinking crime was going to go up after cannabis went retail is just a little bit shortsighted. It has been scientifically proven through legitimate university studies that alcohol is a drug that can drive people towards violence.

Marijuana is a drug that drives people towards the couch, toward a more sedentary lifestyle.

Crime has not risen and so a lot of the fears that circulated before legalization simply never materialized.

WHAT IMPACT DID COLORADO LEGALIZING MARIJUANA HAVE ON SOCIETY? On some levels everything changed, and on other levels nothing changed. By legalizing recreational cannabis, it was suddenly normalized, this substance that people have been going to jail for for decades… What didn’t change is that you can walk down the street and smell- or not smell- cannabis.

You go three blocks away from here – and you’ll smell it, because there is a cultivation facility three blocks from my house, but it hasn’t changed the way you go to concert- Colorado has always had high teen and adult rate of cannabis use.

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GEORGIA TODAY

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Georgia Make an Overdue Point in Wales

BY ALASTAIR WATT

A

second-half header by Tornike Okriashvili earned Georgia a richly merited 1-1 draw against Wales at the Cardiff City Stadium in a World Cup qualifier on Sunday night.

Having fallen behind early in the game, Georgia bounced back with an impressive mixture of spirit and quality which might even have seen the visitors leave the Welsh capital with all three points.

Head coach Vlaidimir Weiss named an unchanged side from the one that had lost undeservedly in Ireland three days earlier, as Georgia sought to avoid a third straight defeat in qualifying.

That goal looked an uphill one after just 10 minutes as Joe Ledley’s corner kick was headed home by Real Madrid’s Gareth Bale from six yards, amid some questionable Georgian defending.

The Welsh, who reached the semi-finals of last summer’s European Championships, struggled to create many meaningful chances thereafter though as Georgia steadily grew into the game.

Jano Ananidze, a player finally threatening to fulfil his massive potential, clipped the top of the Welsh crossbar with a 20-yard free-kick to give the home fans their first moment of concern. And it wouldn’t be their last.

After half-time, the Georgians continued to press for a leveller, playing with

more adventure than any Georgian side for several years. Okriashvili pulled a 20-yard shot a meter wide of Wayne Hennessey’s right-hand post in the 55th minute, and a few minutes later the Krasnodar winger went one better.

Ananidze picked out the again excellent Vako Kazaisvhili on the left flank and his delicate cross picked out the perfectly timed run of Okriashvili whose downward header restored parity for rejuvenated Georgia.

Wales, who had taken four points from their opening two qualifiers against Moldova and Austria, pushed forward in numbers in search of a winner but Georgian goalkeeper Giorgi Loria was barely tested in the second period.

Indeed, it was at the other end where the most significant goalmouth action occurred. An outstanding run and pass from Okriashvili teed up lone striker Levan Mchedlidze for a one-on-one opportunity in the 73rd minute, but the forward’s finish was feeble and slid two or three meters wide of target. That was a massive let-off for the Welsh and not for the last time either.

Valeri Gvilia, a recent addition to the Georgian lineup under Weiss, curled a shot inches wide from the edge of the Welsh box and soon after Georgia went closer still when Kazaishvili’s shot battered the crossbar with Hennessey completely beaten in the 80th minute.

Even though Georgia did emerge with their first point of the campaign, there was for the third successive match a feeling that the result was unkind to

them. Indeed, Georgia could quite reasonably be sitting on four or five points right now, rather than one.

Nevertheless, Weiss’s Georgia have now shown they are a match for three teams who reached the European Championships and the progress made under the Slovakian is undeniable.

There is a confidence and team spirit

about this Georgia side, not seen since the early days of Temuri Ketsbaia’s reign.

Even in those times the Georgians would not have created the plethora of clear scoring chances they have done in the three matches with Austria, Ireland and Wales.

The long-standing problem of lacking a dependable striker has no doubt cost

Georgia points in qualifying so far, but Weiss is starting to get the most out of a squad that has underachieved for some time.

Reaching the World Cup is a fantasy too far at this point, but should this progress continue, there is no reason why Georgia cannot harbor realistic ambitions of a play-off spot for Euro 2020.