Issue #980 Business

facebook.com/ georgiatoday

Issue no: 980/95

• SEPTEMBER 12 - 14, 2017

• PUBLISHED TWICE WEEKLY

In this week’s issue...

FOCUS

Winery Khareba Wins Gold at Mundus Vini

ON SAAKASHVILI Back In Ukraine... we take a look at how he did it and the repercussions he and his supporters now face

PRICE: GEL 2.50

NEWS PAGE 2

Quarter 3 Forecast Revised Downward, but Strong Tourism & Export Performance Set to Boost Growth

PAGE 2

ISET PAGE 4

Top Rosneft Manager Caught Accepting Bribe BUSINESS PAGE 7

Singapore & China Host Georgian Wine Festival BUSINESS PAGE 8

Reassessing Putin’s Power Photo source: www.kyivpost.com

POLITICS PAGE 10

Georgian Finance Minister Meets OECD Representative

Black Sea International Folk Festival Ends with a Massive Gala Concert at Black Sea Arena Maestro Zubin Mehta to Conduct in Tsinandali

BY THEA MORRISON

D

imitry Kumsishvili, Georgia’s First Vice-Premier and current Minister of Finance, met with Bill Thompson, the representative of the Organization for Economic Co-operation and Development (OECD) in the Eurasian Region.

At the meeting, the sides discussed the broad spectrum of the Georgian-OECD partnership, with particular attention paid to the projects implemented by the OECD in cooperation with Georgia, including in the direction of tax.

Future cooperation priorities were also discussed.

Kumsishvili introduced his guest to the current economic situation in Georgia and spoke about the planned reforms, in particular the Four Point Reform Plan of the Government of Georgia which envisages modifying Georgia's income tax rules, improving governance, accelerating infrastructure projects and developing higher education.

CULTURE PAGE 10

SOCIETY PAGE 11 Prepared for Georgia Today Business by

Markets As of 08ͲSepͲ2017

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

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

The meeting highlighted the significant progress Georgia has made in combating both anti-corruption and tax fraud.

It was agreed by both Kumsishvili and Thompson to further develop mutual cooperation.

The OECD is an intergovernmental economic organization with 35 member countries, founded in 1960 to stimulate economic progress and

world trade. It is a forum of countries describing themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seeking answers to common problems, identifying good practices and coordinating the domestic and international policies of its members. OECD is an official United Nations Observer.

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2

NEWS

GEORGIA TODAY

SEPTEMBER 12 - 14, 2017

Saakashvili “Triumphantly” Returns to Ukraine

Photo source: AFP

BY THEA MORRISON

F

ormer Georgian president and ex-governor of Ukraine’s Odessa region, Mikheil Saakashvili, has returned to Ukraine to reclaim his Ukrainian citizenship, which according to him, was illegally stripped

by President Petro Poroshenko on July 26.

Saakashvili crossed the Polish-Ukrainian border on September 10, with the help of his Ukrainian supporters, despite being denied entrance due to his allegedly invalid documents.

Late on Sunday, a group of Saakashvili supporters broke through the line of security forces guarding the border and literally pulled Saakashvili from neutral territory between Poland and Ukraine onto Ukrainian territory.

Ukrainian officials say he entered illegally, and 16

border guards and National guardsmen were injured in the ensuing scuffle.

After crossing the border, Saakashvili thanked his supporters, naming them all ‘heroes’.

"We had absolutely peaceful intentions. You saw how they provoked you. You saw how they incited the violence,” Radio Free Europe/Radio Liberty quoted Saakashvili.

Yury Lutsenko, Prosecutor General of Ukraine, said late on September 10 that participants and organizers of the illegal border crossing in Shehyini will be held responsible.

“Fighting for power, Saakashvili’s supporters are destroying the State…The law requires the bringing of those who organized the illegal border crossing, led these actions, or promoted them...to criminal accountability,” he stated.

Meanwhile, Ukraine’s Interior Minister Arsen Avakov said that Mikheil Saakashvili needs to complete a form stating the fact of his border-crossing

at the Shehyini checkpoint or immigration service.

He added that all participants of the breakthrough process must appear at the police department.

“Border guards and police officers were prohibited from using weapons at the cross-point,” Avakov said.

The Lviv police started an investigation into Saakashvili’s border crossing. The Ukrainian police website posted a statement reading that the violators face from 5 to 8 years in prison.

Saakashvili was the third president of Georgia between 2004-2007 and again in 2008-2013.

Poroshenko granted him Ukrainian citizenship in May 2015, when appointing him the Governor of Odessa. In December 2015, Georgian authorities stripped Saakashvili of Georgian citizenship as dual citizenship is not allowed in Georgia. In November 2016, Saakashvili quit his post and formed an opposition party and was seen heavily criticizing the Ukrainian authorities, which led to a disagreement between Poroshenko and the ex-Georgian President. Poroshenko stripped Saakashvili of his Ukrainian citizenship in July.

The State Migration Service has said that Saakashvili submitted incorrect information when he applied for citizenship in 2015, “failing to state that he was under investigation in Ukraine or abroad”, while in fact he was being investigated in Georgia for various charges.

Saakashvili claims the President of Ukraine merely aims to rid himself of a political opponent, and that it was illegal to strip him of his Ukrainian citizenship.

The “Man without a Country” also denies charges raised against him in Georgia.

Last week, Georgia’s Prosecutor General’s Office sent a third request to the Ukrainian Justice Ministry and the Prosecutor’s Office, asking them to detain and extradite the ex-president to Georgia when he entered Ukraine.

Sergiy Petukhov, Deputy Justice Minister, stated last week that according to the Georgian Prosecutor General’s Office, Saakashvili is accused of abuse of power committed by violence or use of weapons, deliberate infliction of grievous harm to health and abuse of office.

Winery Khareba Wins Gold at Mundus Vini

BY KATIE RUTH DAVIES

W

inery Khareba won the top award, a gold medal, at the prestigious competition MUNDUS VINI International Wine Award 2017 in Germany, for its Mukuzani

Dry Red Wine.

Nearly 164 international wine experts from 41 countries judged wines from more than 150 wine growing regions all over the world in the globally recognized MUNDUS VINI 2017 summer competition.

The gold medal winner was Mukuzani Dry Red Wine, made of the saperavi grape variety grown in the Mukuzani microzone, Kakheti, eastern Georgia, where the winemaking tradition streches back to antiquity. With a dark ruby color, a fine fruity bouquet and a full, fresh and harmonious taste, it is best served with mutton and fresh vegetables.

10th International Forum of Local Economic Development to Be Held at The Biltmore

BY KATIE RUTH DAVIES

T

he two-day International Forum of Local Economic Development will be opened at The Biltmore Hotel Tbilisi on September 13, the 10th of its kind since the annual forum was established

in 2007.

The Forum is said to be a unique regional platform for discussing issues related to the development of municipalities. In addition, forum participants have the opportunity to share ideas and experience and to establish future cooperation between the private and public sectors, local and international experts and members of civil society.

This year’s International Economic Forum for Local Economic Development is a large-scale event based on sessions of multilateral topics and numerous rapporteurs and will see representatives attending from numerous countries: the US, Austria, the UK, Germany, Spain, Italy, France, Sweden, Moldova, Ukraine, Holland, Denmark, Jordan, Poland, Slovakia, Belgium, Israel, Turkey, Azerbaijan, Armenia and Kazakhstan.

The forum will be attended by up to hundred international speakers, includ-

ing Director General of the European Commission Neighborhood Policy and Enlargement Negotiation Director, Christian Danielsson; Asian Development Bank Knowledge Management and Vice President of Sustainable Development, Bambang Susantono; EBRD Chief Economist, Kathyl Twadt; EBRD Consultant, Robert Bailey; Executive Director of Barcelona Tourism Council, Jord Williams Carnes; and more.

The conference part of the event will last for two days. 16 Topic Sessions will be held: Good Governance, Cities for Economic Growth, Urban Resilience, Resilient Future, Smart Environment, Energy Efficiency, Future Cities, Goals & Visions, International Relations, EAP & Enlargement, Invest in City, Entrepreneurial Opportunities in Global Trade, City Tourism, Innovative Positioning and Branding Strategies, Integrated Approaches for Territorial Development, and Open Government Partnership.

16 moderators will moderate the forum, with around 100 presenters, including 50 invited international speakers.

As a result of the Forum, Tbilisi City will receive recommendations, consultations and specific projects for development of the city as well as economic, urban and environmental development: Developing international relations and establishing new contacts; the city’s investment potential presentation; Introducing the wide range of activities in the field of electronic management in Tbilisi; Sharing successful experiences from different cities in energy efficiency and green towns; and future views of the city.

The ‘Green City Action Plan’ will be presented at the conclusion of the Forum and Tbilisi will be awarded the Club Membership Certificate for ‘Mayors for Economic Growth’.

4

BUSINESS

GEORGIA TODAY

SEPTEMBER 12 - 14, 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.

Quarter 3 Forecast Revised Downward, but Strong Tourism & Export Performance Set to Boost Growth

BY DAVIT KESHELAVA & YASYA BABYCH

I

SET-PI has updated its forecast of Georgia’s real GDP growth rate for the third quarter of 2017. Here are the highlights of this month’s release: • Geostat has recently released its rapid estimate of economic growth for the second quarter of 2017, which now stands at 4%. As a result, estimated real GDP growth for the first half of 2017 reached 4.5%.

• The ISET-PI real GDP growth forecast for the third quarter of 2017 was revised downward to 5.3%.

• Based on June data, we expect annual growth in 2017 to be 5.0% in the worstcase or “no growth” scenario, and 5.3% in the best-case or “average long-term growth” scenario. We started forecasting the annual growth rate at the beginning of 2014 (see our January 2014 and February 2014 publications for a note on methodology). Typically, the annual forecast accuracy improves significantly after the second quarter data comes in.

Growth in the second quarter of 2017: good enough, but lower than expected According to the recent release, the official estimate of growth, which is based on VAT taxpayers’ turnover data, now stands at 4%. The official estimate is 1.8 percentage point below ISET PI’s forecast. The forecast error comes from the unexpectedly low growth figures in April (only 2.1%) that significantly hampered the quarterly growth rate. This puts the government well within reach of the 4% annual growth target, although the Q2 figure is still lower than was initially anticipated by the ISET-PI forecast. Consequently, the Q3 forecast has been revised downward to 5.3%. Other factors that influence the ISET-PI forecast model continue to show remarkable stability.

However, a handful of variables have demonstrated significant monthly and

10 Galaktion Street

yearly changes. In particular, increased money supply, improved external sector statistics, and recovered business and consumer confidence all had a positive impact on the Q3 forecast, while high inflation remains a negative contributor to growth predictions.

The first set of variables that had a significant positive effect on our forecast are related to currency in circulation.

Facing increased appreciation pressure on the exchange rate, the National Bank of Georgia purchased $70 mln worth of foreign exchange reserves in four separate auctions. Overall, all monetary aggregates increased by around 15% relative to the same month of the previous year. In particular, the largest M3 and M2 aggregates increased by 17% and 14% respectively in yearly terms, while the most liquid Currency in Circulation (CCIR) went up by 16% year on year.

According to economic theory, increased money supply encourages business expansion and consumption spending, which leads to a rise in aggregate demand.

The other set of variables that had a significant positive effect on the predicted GDP growth were related to the external sector. In June, exports increased by 37.4% in yearly terms (the main contributor was re-exports of copper and concentrates), while imports experienced a moderate annual reduction of 0.03%.

As a result, net exports (the trade balance) improved by 13.3%. Overall, the reduction in the trade deficit made a significant positive contribution to the real GDP growth forecast.

Remittances and tourism, together with the foreign direct investment (FDI), are among the main sources of foreign funds coming into Georgia. In June, remittances increased by 17.1% relative to the same

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge

month of the previous year. Once again, the main contributors to this growth were Israel and Russia. Regarding the number of visitors, Georgia experienced a 28.5% increase in yearly terms. Moreover, inbound tourism increased by 43% year on year.

As Georgia is among those countries in which remittances and income from tourism form an important part of household income, their growth had a positive impact on the projected real GDP growth.

Recovered business and consumer confidence were among the other positive contributors to the real GDP growth forecast. The Georgian Business Confidence Index (BCI), a barometer of business sentiment in the country, shows yearly improvement for the first three quarters of 2017. It is notable that businesses seem to be much more optimistic this year than they have been in recent years. In addition, the Consumer Con-

fidence Index (CCI) shows some recovery. As a result, we observe a notable increase in consumer credit-related variables. For instance, in June, the Total Volume of Commercial Banks’ Consumer Credit increased by more than 30% relative to the same month of the previous year. The level of consumer confidence is an important factor that determines consumer willingness to spend, borrow and save. A high level of consumer confidence will encourage a higher marginal propensity to consume, leading to more vibrant consumption and an improved growth environment.

In June, six months had passed since the Georgian government increased excise on a variety of goods. As a result, the annual inflation rate reached 7.1% (the highest level in the past three years).

Furthermore, inflation on imported goods reached an even higher rate of 9.8%. In the meantime, core inflation (which excludes fuel and food prices) was lower than general inflation and amounted to 4.5%. The excise tax increase is temporary and will have a one-time effect on the price level (it is expected that this effect will be exhausted by the end of the year); nevertheless, our forecasting model still identifies the inflation rate increase as a negative contributor to future GDP growth.

Our forecasting model is based on the Leading Economic Indicator (LEI) methodology developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian economy, which assumes that all economic variables, including the GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published.

For each quarter, ISET-PI produces five consecutive monthly forecasts (or “vintages”), which increase in precision as time goes on. Our first forecast (1st vintage) is available about five months before the end of the quarter in question. The last forecast (5th vintage) is published in the first month of the next quarter.

BUSINESS

GEORGIA TODAY SEPTEMBER 12 - 14, 2017

5

Minister of Economy Participates in International Transport Conference in Ukraine

BY NINO GUGUNISHVILI

G

iorgi Gakharia, Minister of Economy and Sustainable Development of Georgia, participated in the International Transport Conference in Odessa, Ukraine.

Volodymyr Groysman, Prime Minister of Ukraine, opened the forum, which has a focus on establishing competitive advantages of the transport links between Europe and Asia.

Topics of discussion included transit corridors, connections between countries and their economies, and the corridor linking the Chinese market to the European.

Apart from Georgia and Ukraine, Romanian, Bulgarian, Azerbaijani, Kazakhi, Polish, Lithuanian and Chinese official governmental delegations and private sector representatives participated in the conference. Georgian Railway, Batumi Port, and Batumi Container Terminal representatives also attended.

Georgian Railway CEO, Mamuka Bakhtadze, made a presentation at the forum.

Photo Source: Ministry of Economy

“This is a strategic direction for the development of our economy,” said Giorgi Gakharia. “We discussed the vital role Georgia plays as a gateway [between East and West] which may

Number of Passengers in Georgian Airports up by 47.92% January-August

Photo source: Tbilisi Airport

BY THEA MORRISON

T

he latest statistics from the Georgian Civil Aviation Agency of the Ministry of Economy and Sustainable Development of Georgia show that in the period of January-August 2017, Georgian airports served 2,703.117 passengers, which is 47.92% higher than the data of the previous year. In 2016, in the same period, Georgian airports received 1,827.393 passengers.

In the given period, Georgia’s three main airports: Tbilisi Shota Rustaveli International Airport, Batumi International Airport and Kutaisi David Aghmashenebeli International Airport, served 875,724 passengers more y/y.

Kutaisi International Airport served 282,945 passengers throughout the first eight months of 2017, 82.59% more y/y; in 2016, it served 154,966 passengers.

Tbilisi International Airport alone

served 2,071.720 passengers between January-August, which was a 42.78% increase.

The Batumi International Airport served 342,264 passengers during the first eight months of 2017, a 56.36 % higher indicator compared to the same period of 2016.

The Airport of Mestia, Svaneti served 4,933 passengers, which was a 98.03% increase y/y.

Ambrolauri Airport opened mid-January and in its first eight months served 1255 passengers.

The Civil Aviation Agency statistics also read that usage of Georgian air space increased by 15.00%. In the first eight months of 2016, the number of overflights amounted to 83,196, while this year the number reached 95,677.

“Growth was also recorded in terms of freight transportation. The volume of cargo transported by air is 23,182.669 tons, which is 4,060.25 tons or 21.23% higher compared to the cargo transported during the same period of the previous year,” the Ministry of Economy states.

have an important function on both eastern and western, and on the southnorth corridors. That’s why we’re always present at such forums, trying to convert talks into concrete results, results

like the Baku-Tbilisi-Kars railway, Anaklia Deep Sea Port and more”.

During the conference, a plenary session was held with the participation of the Prime Minister of Ukraine. The

development of the integrated European and Asian transport corridors, transport policy harmonization and the formation of transport flows in the direction of Europe and Asia were discussed.

6

BUSINESS

GEORGIA TODAY

SEPTEMBER 12 - 14, 2017

Land Deeds Follow the Money BLOG BY IFACT.GE

W

hile some residents protested the construction of a new electricity power line through the bucolic Sno Valley located just inside Georgia's border with Russia, others maneuvered to register land plots in locations where they would have a better chance of compensation. The Georgia Public Registry does nothing to stop this practice, and at least one local official profits from it.

Local residents claim that lots located in the area of the power line project have been registered by people who don’t actually own them. Some of these have already received compensation from the government. The compensation is being paid because the power lines will make it unsafe to use the land.

In 2015, the Ministry of Energy announced plans to build a power line in Sno Valley. Since then, about 200 land plots have been registered in four villages: Achkhoti, Sno, Karkucha and Akhaltsikhe, all located near the electricity transmission line.

The Kazbegi Interconnection Project is a 500-kilovolt Ksani-Stepantsminda electricity transmission line being constructed as part of a regional electrification project. The nearly 100 km project is scheduled to be completed this November by government-owned Energotrans Ltd., the Georgian State Electrosystem, and Finnish-based company ELEL-EMC. The German Reconstruction Bank signed a contract on June 17, 2015, with a project cost of EUR 21.6 million plus VAT (18% in Georgia).

The state electricity system has signed agreements on 27 land plots in Sno village and two in Karkucha village. The owners give up the land, temporarily or permanently, in exchange for compensation. About EUR 3.08 million was allocated for land compensation, aid to financially vulnerable families, and administrative expenses.

Due to undefined boundaries in the old documents of land ownership, locals began registering new documents that did not list where their land was actually located, but instead where compensation would be paid.

Every landowner in Sno valley has a document proving ownership. Georgians call these 1990s documents “Shevardnadze passports” because they were

issued during the post-Soviet presidency of Eduard Shevardnadze. The two-page documents contain a cadastral code for the land plot, a map, and the identity of the owner.

If the National Agency of Public Registry decides a land document in Sno is incomplete or incorrect, it asks the Kazbegi municipal government to send a representative to check the site. The Sno valley representative, local resident Elberdi Papiashvili, says he sometimes checks 20-30 land plots a day.

Papiashvili compares the land with documents presented by the applicant and then writes a report on whether the documents match. He admits that in more than half the cases, he is unable to confirm ownership, and so relies on neighbors as witnesses, even though they are usually close relatives of the applicant.

"When I write that I cannot confirm the accuracy of the survey map against the land document, why does the Public Registry still register the land?” Papiashvili asks.

Vakhtang Bokhashvili, Head of Administrative Operation in the Legal Department of the National Agency of Public Registry, explains that if the Registry cannot find anything suspicious, it should register the land. Suspicious circumstances include land plots that seemingly overlap or that include land set aside for national parks.

“The registrar does not have the right not to register the land. They are obliged by law to trust citizens applying for ownership,” Bokhashvili told iFact reporters.

"In 2013-2014, when documents did not prove ownership for a particular person, the registrar wouldn’t register the plot.

Citizens then started a lawsuit against the Public Registry. At the trial, witnesses confirmed the applicant's ownership of the land, and such cases were won by citizens. How many disputes could we lose?”

According to Bokhashvili, this situation was created because of land registration mistakes in the 1990s. “At the time, the exact location of land plots was not indicated in the documents. Now the government has no other choice but to trust the owner,” Bokhashvili says.

THE REAL LOCATION OF LAND PLOTS IFact reporters were able to determine the true location of several recently registered land plots. Previous cadastral codes for plots are also listed on the

website of the National Agency of Public Registry. Using these old codes, we went to the Kazbegi municipal offices and found out who owned land bordering these lots. The reporters then went to Sno village and asked residents to show the land they owned.

We found that one 28-year-old had changed the location of his 900 square meters when he registered it, and, as a result, received compensation of EUR 4,315.

According to his old land document card, his land was located on territory that locals call Padinebi. A female neighbor’s land was supposedly adjacent and she vouched for his ownership.

But now this same registration number is on a land plot three kilometers away in the area where the electricity transmission line is due to pass.

It cannot be confirmed by the documents whether the young man or his

ancestors really owned the original land plot. Archive records from 2002 show that his father owned a 20 square meter house, but information about the land plot is not specified.

Other families also changed the location of their lands. Another male resident is also known to be trying to change his land, but part of his new plot appears to be inside the Kazbegi National Park. We met one woman who had successfully changed the location of her land and moved it into the project compensation area.

We asked the public registry lawyer Bokhashvili why his department could not find the real location of the land plots as the reporters had, to which he replied that after all the plots were studied individually, he would be able to give an answer.

WHO RECEIVED THE MOST MONEY IN SNO VALLEY?

The 28-year-old, along with his brother, received more than EUR 50,000 as compensation for six land plots. According to archival records, their family owned 2,400 square meters in 1987-1989. Today, their registered land exceeds 12,000 square meters.

The man claims he has registered only those lands which were fenced in by his grandfather for agriculture. But at least one of his lots is neither fenced nor used for agriculture purposes, instead, his village uses it as a dump.

He sees no problem in moving cadastral codes. “Say I have 10,000 square meters in Sno and I’m using it for hay, and I’m going to register this land. I also have another 1,000 square meters somewhere else. If I add this second land to the first in order to register them together and get more compensation, why is it a problem? Either way, it's mine," he said.

Such “land movement” creates conflict between neighbors. The residents in Akhaltsikhe village used land along the Snostskhali River for pasture. This land is now the private property of a local notary, who is supposed to confirm that land documents are accurate. This notary herself now owns 4,600 square meters in the valley.

Village residents are now filing lawsuits to claim back their lands from other residents. One trial is scheduled to begin in Mtskheta Court on September 20, while another court case is ongoing between one lady and her neighbors in Sno over a land plot eligible for compensation. She recently tried to register the plot, but several neighbors had already registered different pieces of it.

"I had a (professional) survey map made. I brought it to the public registry, but because of the (claims by neighbors), the registration process was stopped," she says.

Those neighbors received more than EUR 8,500 altogether as compensation for these land plots.

Some families are divided by those who managed to register land and get compensation, and those who oppose them. The opponents say they will not give up their own land claims, and vow they will stop construction of the transmission line.

The two brothers who are now EUR 50,000 richer have some advice for those who want to stop the power line. "People should take the compensation," he said. "Otherwise, they will get nothing and the line will still be built".

First International Competition of Qvevri Wine Announces Winners

BY THEA MORRISON

T

he fourth International Symposium of Qvevri Wine, held at the Ikalto Qvevri School-Academy, has announced the winners of the competition.

The competition was held on September 2-3 within the frames of the Sym-

posium and 60 Georgian and 5 foreign wine companies took part.

23 gold, 20 silver and 29 bronze medals were awarded to 150 wines presented at the competition. The award-ceremony took place at the Ikalto Monastery Complex.

The Georgian National Wine Agency (NWA) reports that the wines which won gold medals will be presented at the World Wine Civilization Center, Bordeaux, France, where the exhibition Georgia, The Cradle of Wine, is under-

way from July 31 to November 5.

Gold medal winners who will be sent to the Bordeaux exhibition are: Beroza Wine Cellar’s Saperavi Dry Red 2015; Giuaani’s Mtsvane Qvevri Dry White 2014; Binekhi’s Saperavi of Qvevri Red Dry 2015; Binekhi’s Mtsvane Qvevri Dry White 2015; Makashvili Wine Cellar’s Cabernet Dry Red 2016; Glekhuri’s Rkatsiteli Qvevri White Dry 2015; Kasreli’s Chitistvala White Dry 2016; Koncho&Co’s Mtsvivani Kakhuri White Dry 2016 and White Dry 2014; Duruji Valley’s Saperavi Qvevri Red Dry 2013 and Rkatsiteli Qvevri White Dry 2013; Manaveli’s Mtsvane Premium Qvevri White Dry 2015; Monastery Wines’ Mtsvane Qvevri Dry White 2015; Sagvareulo Marani’s Saperavi Dry Red 2016; Tchotiashvili Vineyards’ Rcheuli Qvevri Mtsvane Dry White 2015 and Rcheuli Qvevri Khikhvi Dry White 2014; Chelti Estate Winery’s Chelti of Qvevri White Dry 2016; Vita Vinea’s Kisi Amber Dry 2014; Dakishvili Family Selection’s Amber Dry 2015 and Red Dry 2015; and Avtandil Bedenashvili Wine Manufacture’s Tsarapi Dry White 2014 and Dry White 2015.

The jury of the First International Competition of Qvevri Wine was represented by Georgian and foreign professionals, including the famous American master of wine, Lisa Granik.

Photo source: Georgian Wine Association

The Symposium was first held in Georgia in 2011. As a result of that first symposium, the United Nations Educational, Scientific and Cultural Organization (UNESCO) put the traditional Georgian method of Qvevri winemaking on the list of Intangible Cultural Heritage Monuments.

The Symposium organizers and supporters are: the Ministry of Agriculture of Georgia, the National Wine Agency, the Association of Georgian Wine, and Alaverdi Metropolitan David.

Scientists, wine experts, sommeliers and journalists from various countries attended the Symposium.

BUSINESS

GEORGIA TODAY SEPTEMBER 12 - 14, 2017

Top Rosneft Manager Caught Accepting Bribe

BY DAVID DRUMMERS

O

ne of the top managers of Rosneft was this weekend caught in an act of bribery. The head of a subsidiary of Rosneft, RN-Sakhalinmorneftegaz, Andrei Bardin, was detained on receiving 1 million Rubles from a Moscow businessman.

"According to the investigation, the General Director of RN-Sakhalinmorneftegaz entered into a criminal conspiracy with a group of persons aimed at illegally obtaining money through commercial bribery," the press release of the Investigative Committee, whose employees, together with employees of the Security Service of Rosneft, stopped the crime.

Bardin is said to have demanded a bribe to the amount of 1 million Rubles not to interfere with the participation of one of the capital city's companies in a tender, apparently announced by RNSakhalinmorneftegaz. Bardin went to Moscow to

get the money, at which point he was arrested “redhanded� on September 9.

Bardin is to be charged by the Moscow department of the UK-instituted criminal proceedings under Part 8 of Article 204 of the Criminal Code for Commercial Bribery. If the top manager is found guilty, he can receive from seven to twelve years imprisonment with a fine of up to fifty times the amount of the commercial bribery.

Based in Yuzhno-Sakhalinsk, Russia, LLC RNSakhalinmorneftegaz produces oil and gas. As of June 2006, the company has been operating as a subsidiary of the Open Joint Stock Company Rosneft Oil Company.

Sakhalinmorneftegaz operates on Sakhalin Island as an operator for more than 30 licenses for the development of Sakhalin's oil and gas fields.

All oil produced by Sakhalinmorneftegaz is transported through a pipeline to the Komsomolsk Refinery located on the Amur River. Gas is supplied to domestic customers via the Daltransgaz pipeline.

RN-Sakhalinmorneftegaz is the operator of development of the Odoptu-Sea offshore oil and gas field (the Northern Dome).

Foreign Direct Investments at $346.6 million in Q2 2017

BY NINO GUGUNISHVILI

T

he National Statistics Office of Georgia (Geostat) published preliminary data on the Foreign Direct Investments (FDI), according to which $346. 6 million was invested in the second quarter (Q2) of 2017, down 14.3% y/y.

Geostat states that topping the list of major investor countries in Q2 2017, is Azerbaijan, followed by the Netherlands, Turkey, United Kingdom, Czech

Republic, Panama, Luxemburg, United States and China.

The share of the FDI by top three major direct investor countries is: Azerbaijan (36.6%), the Netherlands 12.4%) and Turkey (11.3 %).

GeoStat claims the share of foreign direct investment by the top three main economic sectors, transport, communication and construction, reached 66.3% in Q2 2017, with the largest share of FDI said to have been allocated to transport and communications ($130.4 million), with the construction sector in second place ($70 million), and hotels and restaurants allocated $29.3 million.

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BUSINESS

GEORGIA TODAY

SEPTEMBER 12 - 14, 2017

Singapore & China Host Georgian Wine Festival “Georgian wine is well-known in Hong Kong but the presence of wine-makers and wine companies at the event was the key to success in the market,” she said.

“This is a place of relationships; people met, tasted the wine and then had the confidence to move forward with it”.

Meiburg said Georgian wine is particularly popular in Shanghai.

“In my opinion, Georgian wines, such as Saperavi, and the special technology used in Georgian wine production perfectly correspond to this market. I cannot wait to see what's next for Georgia in China,” she added.

Chief specialist of the Marketing and Public Relations Department of the NWA, Giorgi Sikharulidze, stated that Georgian wine tasting held during the festival in Asia had made a great impression on local wine professionals.

“The tendencies and demands of the Asian local market have opened up to the Georgian side, giving us the opportunity to move ahead with the right strategic planning and realization of Georgian wine on South-East Asian market,” he stated.

BY THEA MORRISON

S

ingapore and Chinese cities Shanghai and Hong-Kong hosted the Georgian Wine Festival August 28- September 1. It was attended by local wine importers, masters, representatives of media, restaurants and hotel chains.

The festival was organized by Debra Meiburg, Master of Wine and head of the Georgian National Wine Agency (NWA) contractor company Meiburg Wine Media.

Meiburg assessed the festival as successful, especially in Singapore, where Georgian wine tasting was organized for the first time in such a format.

“Both during and after the festival, the majority of Singaporean importers expressed interest in Georgian wine,” Meiburg said, adding that she had presented 10 Georgian wines and their pairing with five local meals at the tasting.

In China, Meiburg arranged a tasting and seminar on Georgian wines in Shanghai and Hong-Kong.

Photo source: Wines of Georgia

New Projects to Be Launched Following Expo 2017

Fuel Prices Up in Almaty, Kazakhstan

BY DIMITRI DOLABERIDZE

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asoline prices have grown in Almaty, Kazakhstan by an average of 2 Tenge ($0.0059).

In the networks of large petrol stations in Almaty, there is a rise in the price of both gasoline and diesel fuel.

At gas station KazMunayGas, the cost of a liter of AI-92 gasoline since the beginning of August has risen by 3 Tenge, up to 144 Tenge ($0.42). Gasoline brand AI-95 also went up by 3 Tenge to 158

BY DIMITRI DOLABERIDZE

E

xpo 2017 is an International Exposition which took place from June 10 to September 10, in Astana, Kazakhstan, focusing on ‘Future Energy,’ and aiming to create a global debate between countries, nongovernmental organizations, companies and the general public on the crucial question: ‘How do we ensure safe and sustainable access to energy for all while reducing CO2 emissions?’

On September 10, Expo 2017 came to an end. Speaking at the closing ceremony, Kazakh President Nursultan Nazarbayev noted that the exhibition had become a significant event for the country.

“The completion of the exhibition will signal the launch of several new largescale projects. First of all, the International Financial Center ‘Astana’, a financial hub and a center for attracting investments, which will take a worthy niche in the international financial sys-

tem," the Kazakh president said.

The head of state also mentioned projects to create an International Center for the Development of "Green" Technologies and Investments and an International Technology Park for IT startups.

For this purpose, the Expo infrastructure will be put to use.

"The exhibition complex of EXPO will continue to serve the tasks of innovative and sustainable development. I invite everyone to active cooperation in the work of the new centers," Nazarbayev said.

He then thanked everyone who had participated in the organization of the exhibition and expressed special gratitude to its guests.

"I now announce the closing of the international specialized exhibition EXPO-2017. I express my gratitude to the people of Kazakhstan for their support in implementing the idea of the exhibition. Thousands of people worked for the successful organization and I am very grateful to everyone for participating in such a significant event for the Kazakh land!" the President concluded.

Tenge ($0.46), diesel increased in price by 4 Tenge from the beginning of August to 144 Tenge per liter.

The prices for gasoline at the gas stations of Royal Petrol are, for AI-92: 145 Tenge per liter (in comparison with 143 Tenge in August), while diesel now costs also 145 Tenge, having risen by one Tenge, and fuel of mark AI-95 stands at 159 Tenge ($0.47).

At the gasoline station Sinooil, a liter of AI-92 went up by 2 Tenge, to 145 Tenge while the price for a liter of diesel fuel and AI-95 gasoline went up by 1 Tenge to 144 and 159 Tenge, respectively.

At refueling stations, Helios AI-92 is sold at 145 Tenge, diesel fuel - 146 Tenge,

and AI-95 - 159 Tenge.

The highest price was recorded in the network of gas stations Gazprom NeftKazakhstan where AI-92 is sold for 147 Tenge, having risen in price by 2 Tenge, diesel fuel, after a rise in price, for 147 Tenge per liter, and AI-95 gasoline for 168 Tenge ($0.49).

In the first half of 2017, Kazakh oil refineries processed 7.4 million tons of oil.

This is 5.4% more than in the same period in 2016. Pavlodar Petrochemical Plant processed 13.1% more oil than last year - 2648.7 thousand tons, Shymkent Refinery 19.8% less at 1 895.5 thousand tons, and Atyrau Refinery 19.6% more than in 2016 with 2 508.3 thousand tons.

POLITICS

GEORGIA TODAY SEPTEMBER 12 - 14, 2017

The King is Law: Georgia’s NeverEnding ‘Perestroika’ OP-ED BY ARCHIL SIKHARULIDZE

C

onstitutions in Western democracies are based on a principle perfectly expressed by the Latin phrase "Non rex est lex, sed lex est rex" (lat., The King is not the law, but the law is king).

For years, Georgia tried hard to set the same framework by changing the country’s main legislative document, but instead of settling the superiority of the law, it was used to strengthen the superiority of particular political groups.

The current government’s constitutional reform is highly criticized by various actors for being a unilateral decision not backed by society and lacking a common agreement among political actors.

Some say it may even trigger the worsening of domestic processes, though, generally, this is a false statement. In fact, the reform is a continuation of Georgia’s never ending “perestroika” and will not significantly change the environment, due to problems with political willingness rather than with the constitutional amendments themselves.

WHAT IS IT ALL ABOUT? Georgian “perestroika” is a process of re-shaping and re-building state institutions, laws and other things to improve on the “misdeeds” of the previous government. Predictably, every political group wants to make the country better than it was, but the local scenario is complex. According to wellestablished Georgian political tradition, every predecessor is “corrupt” in the eyes of the current power holder, and the “perestroika” frequently means the demolishing and abandonment of pretty much everything that was initiated before. So far, Georgia has been stuck in a close circle of rarely useful never-ending reforms. The constitutional changes perfectly reflect this paradox. Every government sees flaws in it and is highly motivated to make respective amendments to the document, forgetting the importance of political willingness to give up the reins of power and decentralize power vertically. Briefly, the political elite would like to make a better Constitution but are not ready to lose seats in parliament to do so. Logically, this is hardly manageable in real life. So, amendments are made but the political situation remains unchanged and the process starts all over again.

MISLEADING ASSUMPTIONS The current constitutional reform process is so frequently discussed by various actors in a negative way that it is natural to share the popular assumption that something really bad is happening; something that will undermine Georgia’s democracy and institutional stability. In fact, it is a misleading assumption based on two false statements regularly used by the political opposition and a number of local non-governmental actors.

The first argument expressed by NGOs is that there was never a demand for constitutional change, but as the government initiated the process, it must be dealt with in accordance with democratic standards. Since the first Constitution was approved in 1995, Georgians were and are too busy with every-

day challenges such as unemployment, poverty, elite corruption, military conflicts and occupation to focus particularly on this comparatively less important issue. Furthermore, there is no survey where “constitutional reform” is even mentioned by interviewees. For years, political elites have been making amendments based on their own initiatives and positioning rather than decisive demands from the electorate.

Secondly, Georgia’s strategic partners are worried by the absence of a common agreement on a variety of issues among the government, political opposition and civil society regarding the reform.

There is an assumption that the unwillingness of the ruling party to cooperate and take into account critical suggestions undermines legitimacy of the process in general. We need to remind ourselves of some statistics, here. During the first years of the post-Revolutionary government, both executive and legislative bodies were under the total control of Mikhail Saakashvili and his United National Movement. From 2004 to 2008, the ruling party had 135 seats in Parliament, while the political opposition had just 15. The situation worsened when, in 2008, only 11 seats were occupied by members of the non-ruling party. In the first months of his governance, Saakashvili managed to make at least 40 amendments to the Constitution, transforming the country into a super-presidential system with no checks or balances.

Finally, the 2010 reform that gave Georgia a parliamentary model raised fears that Saakashvili was going to repeat the so-called Putin-Medvedev scenario (a case when, after two-terms of presidency, Vladimir Putin replaced Dmitry Medvedev in the position of Prime Minister, thus de-facto keeping his grip on power). These changes were mostly made without serious panel discussions with either the political opposition or civil society. And still, there were no doubts about the legitimacy of the regime or Constitution. It should be added that the 2012 parliamentary elections allocated 65 seats to the political opposition while the last one: 35.

The Georgian Constitution has been a subject for continuous reforms for years; and, frequently, the ruling party has the tendency to use its constitutional majority to unilaterally pass amendments that they believed were important or even crucial despite there being no demand for these particular changes nor any general agreements to do so among local actors. Georgian Dream is trying to ensure, as every single political force has before them, that the electoral system is government-friendly. But this process is in accordance with the established practice. There are no significant aberrations that raise concerns that the political environment in the country will get better or worse purely due to these amendments.

Finally, we need to keep in mind that constitutional reform in Georgia was never about superiority of the law over politics, but rather about the superiority of politics over this law; and by changing the country’s main legislative document, local political elites inform other actors that a new boss has arrived and “perestroika” is coming. It is a state of condition when “rex” (lat., king, or the constitutional majority in our case) is “lex” (lat., law) and not vice versa.

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POLITICS

GEORGIA TODAY

SEPTEMBER 12 - 14, 2017

Reassessing Putin’s Power OP-ED BY EMIL AVDALIANI

L

ast weekend, Russia held regional and local elections which saw opposition forces making some notable progress in various areas of the country.

But, overall, the ruling United Russia party is expected to win. What is important here, though, is that these elections were marked by the lowest possible turnout. In Moscow alone, only 15% of voters cast bulletins, and these elections are set to be the last before the next, presidential polls, scheduled for March 2018.

Putin is preparing for his fourth term, but there are clear signals that it will be tougher for him to explain to the Russians why he should be re-elected. There are many facts and arguments which could be used against him. For the past four years, there have been several serious failures on Russia’s part in foreign policy. When Euromaidan in 2014, Russia lost Ukraine. Moldova, Ukraine and Georgia further distanced themselves from Moscow by signing the EU Association Agreements in 2014. The countries have also considerably increased security and military talks with NATO and the US. I have already written how Russia experiences problems with breakaway territories across the former Soviet Union.

Previously, Moscow used the conflicts in Abkhazia, South Ossetia and Transnistria to limit the ability of those countries to enter the EU/NATO. Nowadays, Moscow’s ability to maneuver in so many diverse conflicts is becoming tougher.

Various political players are trying to

play their own game independently from Moscow, and anti-Russian sentiments are growing among the local population.

There is also a geographic factor which complicates the Russian ability to project power. For instance, Transnistria, where Russia has approximately 2,000-1,500 troops as Russian soldiers and peacekeepers, was essentially separated from Russia once Ukraine closed transit routes through its territory.

Russian foreign policy misfortunes can also be seen in other directions. For example, in the past several years, Russian influence in the energy-rich Central Asia has receded. Despite the fact that Russia is the biggest military power in the region and has bases in Tajikistan and Kyrgyzstan, on the economic front there is a completely different story.

China has substituted Russia as the region’s biggest trade and investment partner. Beijing has even made some progress in the security realm through holding exercises with Tajik and Kyrgyz militaries.

On a larger, geopolitical, level Russia is now feeling pressure from the US and the EU. It is unlikely that the sanctions imposed on Russia will be lifted any time soon and, despite Trump’s at times positive statements about Russia, the US’ overall foreign policy thrust is decidedly anti-Russian. The EU, too, is now much reinvigorated as Putin’s gamble to revive left-wing parties across the continent largely failed with Emmanuel Macron winning in France.

However, for the Kremlin, the situation inside the country is far more problematic. In his previous pre-election campaigns, Putin was building his bid on the Russian population’s wider needs, such

If Putin wins his next presidential term, it is sure to be a far different one. Source: businessinsider.com

as security against terrorism and Chechen insurgency, or the big economic progress which happened prior to 2014. Nowadays, however, Russian major media outlets revealed several indications that there is a lack of ideas which would be attractive to the Russians. This could potentially jeopardize Putin’s rule in the long run.

There is also another important development. More Russians are expressing their concerns as to why Putin’s presidency should continue for yet another term of six years. Putin has been in power

for 17 years and in 2018 he will become Russia’s longest ruler since Stalin. Already, an entire generation of young Russians which has seen only Putin as Russia’s ruler, is expressing its discontent. And this is a very dangerous development for the Kremlin. Youngsters have become more opposition-minded in Russian society; for example, when country-wide protests hit Russia in 2016, most of protesters were of the younger generation.

Putin still has not found a platform on which to run. He could explain his par-

ticipation by the need to oppose a unified western front against Russia. Protests have shown, however, that many Russians think that Russia-West standoff developed because of Putin’s mistakes. Other platforms such as the struggle against terrorism and separatism would not work as they did in the early 2000s. In other words, Putin still has to convince the Russians and particularly the younger of them, of the need for his continued rule.

If Putin wins his next presidential term, it is sure to be a far different one.

CULTURE

Black Sea International Folk Festival Ends with a Massive Gala Concert at Black Sea Arena ADVERTORIAL, TRANSLATED

BY NINO GUGUNISHVILI

T

he Black Sea International Folk Festival, which united folklore from seven countries, ended with a grandiose gala concert held at the Black Sea Arena. The festival started on August 31 at the Summer Theater in Batumi, and continued in Ureki, with stunning performances from Georgian folk groups and performers from Ukraine, Armenia, Poland, Italy and Turkey. This year, the festival was hosted not only by Adjara, but the Guria region as well, its initiator and organizer being the State Center for Folklore, in partnership and with the support of the ‘Check in Georgia’ program, Black Sea Arena, the Ministry of Culture and the Ozurgeti Municipality.

As the festival organizers promised, the Black Sea International Folk Festival Gala Concert put on a display of the best performances, with a fiery, dynamic flamenco show by La Moneta & Flamenco, as special guests, at the closing concert of the festival, joined by the best folklore groups from Poland, Ukraine, Turkey, Italy, Armenia and Georgia presenting their unique folklore traditions through song and dance. This year, Georgia was represented by the ensembles Rustavi and Basiani.

The Black Sea International Folk Festival was this year officially supported by the Diplomatic Missions of Ukraine, Italy, Poland and Turkey in Georgia, and it is with their support that the festival hosted a larger number of folklore groups in 2017.

“We established the Black Sea International Folklore Festival last year, borne from a love of folklore,” said Giorgi Donadze, Executive Director of the Folklore State Center. “Georgia is a country of folklore and we had a desire to share the Georgian stage with folklore ensembles from different countries. The first festival was held last year, and gained a huge interest. 24 ensembles and around 400 participants is already a considerable result,” he said, adding that the organizers expect future festivals to go from strength to strength.

“The festival started wonderfully and it will continue so through the ages. We had more countries and more participants this year, more folklore and more diversity. I would like to thank all the countries and visitors who came to our country and made this celebration happen, together with Georgians.”

“This is a very important festival, in which the entire Guria region participates, together with folklore groups from all over the country,” said Merab Chanukvadze, the Governor of Guria. “It is very important that the festival is being

held for the second year now, uniting seven countries, making it one of the major events for our region”.

“Folklore is a refined musical genre and it needs to be treated very carefully,” said Ana Kavlelishvili, the Black Sea Arena Director. “We have to preserve its tradition and values, although at every new event, you have to bring a new spirit to it to make it interesting and attractive for the new generations. It is a treasure to be transmitted from generation to generation; it’s the history of the country and the tradition of our country. Not-

withstanding the fact that our concert hall is huge, folklore is a genre we will never say no to and that’s why the Black Sea Arena played host to and functioned as one of the organizers of the Black Sea International Folk Festival. I’m proud to have been involved in the event and for the whole year, together with the State Center for Folklore, we’re going to work to make it even better. This year, the viewers were astonished with the culminating gala concert; the wow-factor coming from seeing Spanish women and Georgian man dancing together on stage”.

SOCIETY

GEORGIA TODAY SEPTEMBER 12 - 14, 2017

11

Maestro Zubin Mehta to Conduct in Tsinandali

Photo source: Telegraph

Wounded Georgian Soldiers to Be Transferred from Afghanistan to Germany

BY THEA MORRISON

T

he Georgian Ministry of Defense (MOD) on Friday reported that three Georgian peacekeepers who were injured last Wednesday during a blast at the Bagram Air Base in Afghanistan, were to be transferred to Germany for medical treatment.

All three injured men were NATO Resolute Support Mission Peacekeepers.

Two of them, Sergeant Giorgi Tsiskarishvili and 1st Class Serviceman Irakli Kuchukhidze received minor injuries, while the health condition of Lieutenant Iveri Buadze is more severe having undergone three serious operations over the course of two days.

"Medical treatment is currently underway, and once Lieutenant Buadze’s condition improves, all three soldiers will

be transferred to Germany,” the MoD stated.

A suicide bomber struck the largest US military base in Afghanistan on Wednesday.

Media sources report that responsibility for the attack was claimed by the Taliban Islamist militant group.

Georgian President Giorgi Margvelashvili wished a quick recovery to the injured soldiers who were fighting for global security.

BY KATIE RUTH DAVIES

T

he Silk Road Group is hosting the legendary conductor and art director of the Israel Philharmonic Orchestra, Maestro Zubin Mehta.

On 14 September, Khatia Buniatishvili and the Israel Philharmonic Orchestra, conducted by Maestro Mehta, will per-

form at the new 1000-seat amphitheater of the Tsinandali Estate. This performance will mark the start of preparations for the Tsinandali International Festival of Classical Music, that will be taking place in Tsinandali from 2019.

The Israel Philharmonic Orchestra, conducted by Maestro Mehta, has given more than 3,000 concerts over five decades, including tours spanning most continents and will now be playing in Georgia for the first time.

European Court Rules on Mirzashvili Cancer Treatment Case pean Court of Human Rights’ (ECHR) indication, he was placed in the prison hospital and was to be provided with adequate treatment.

The applicant complains under Article 3 of the Convention, he was not provided with adequate medical care during his detention.

The ECHR declares that there was indeed a violation of Article 3 of the Convention on account of the inadequate medical treatment provided to the applicant for his cancer in prison until 28 March 2008 but that there had been no violation on account of the medical treatment provided to the applicant in prison after 28 March 2008.

The applicant claimed EUR 3,000,000 for pecuniary and non-pecuniary damage, covering his medical care and food, legal costs, expenses, as well as postal and translation fees. The Court awarded the applicant with EUR 333 in respect of pecuniary damage and EUR 4,500 in respect of non-pecuniary damage. The ECHR has dismissed the remainder of the applicant’s claim for just satisfaction.

BY KATIE RUTH DAVIES

O

n September 7, the European Court published its judgment on a case against Georgia: Mirzashvili v. Georgia (no.

26657/07) The applicant, Nikoloz Mirzashvili, is a Georgian national who was born in 1971 and was at the relevant time serving a prison sentence in Rustavi Prison No. 2 (Georgia).

Before being placed in detention, he had undergone treatment for testicular cancer and had been diagnosed with chronic Hepatitis C (HCV). He was transferred to the prison hospital.

In March 2006, he was examined by an oncologist, who concluded that the cancer had returned and that the chronic HCV had worsened. Mirzashvili underwent chemotherapy on just two occasions following that conclusion.

In March 2008, following the Euro-

Photo Source: chuckgallagher.com

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