Issue #930 Business by Georgia Today

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Issue no: 930/70

FOCUS

• MARCH 21 - 23, 2017

Source: http://topyaps.com

ON STARTUP EXPERTISE Angel Investor Zach Lawrence talks entrepreneurship & the benefits for Georgia

• PUBLISHED TWICE WEEKLY

PAGE 6

PRICE: GEL 2.50

In this week’s issue... Hungarian Foreign Minister Visits Georgia NEWS PAGE 3

Has the Orthodox Church Been Too Successful? ISET PAGE 4

Georgian Minister of Economy Meets with Latvian Vice Premier

Mayor’s Office Restricts Street Trading in Tbilisi BY THEA MORRISON

he Tbilisi Mayor’s Office has reignited works to restrict illegal street trading in the capital of Georgia, claiming illegal stalls in the busiest and most crowded places of the city prevent movement on the sidewalks, create problems of cleanliness and hygiene, and disturb the local population and tourists with noise and unsanitary conditions. City Hall explains that despite the fact street trading is not permitted under Article 153 of the Administrative Code of Georgia, this does not prevent people from doing so. Continued on page 2

PAGE 5

Armenia to Build FEZ on Iranian Border PAGE 7

Georgian Foreign Minister to Participate in Global Coalition Ministerial Meeting SOCIETY PAGE 9

Trump’s Populism & its Impact on Liberalism in Georgia POLITICS PAGE 11 Prepared for Georgia Today Business by

Markets As of 17ͲMarͲ2017

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

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

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110.65 (YTM 4.01%)

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GBP 14.97

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110.38 (YTM 5.47%)

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51,76

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3,0798

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GT Index (GEL)

1 177,93

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NEWS

GEORGIA TODAY

MARCH 21 - 23, 2017

Mayor’s Office Restricts Street Trading in Tbilisi

Continued from page 1 On Sunday, representatives of the Mayor’s Office removed stalls from the Aghmashenebeli Avenue and Marjanishvili Metro Station area. The Mayor’s Office plans to continue preventative measures in other districts of Tbilisi, including central parts of the city. The statement of City Hall says that the rights of those citizens for whom street trade is the only source of livelihood will be met. “The government of the capital offers such vendors alternative places in dif-

ferent markets. At the moment, talks are underway with the directors of the markets in order to offer spaces to street vendors for free over several months,” the statement of the Mayor’s Office reads. The state first began intervening in the small trade markets after the Rose Revolution of 2003 as the prevalence of kiosks and vendors in the public space did not fit the modernization agenda of the post-revolutionary government. The government has been trying to control the illegal vendors, however, traders are developing diverse, often creative tactics to subvert governmental regulations and avoid punishment.

Tbilisi International Airport Named among Best Airports in Eastern Europe BY THEA MORRISON

bilisi International Airport has been named one of the best airports in Eastern Europe for the fourth year in a row at the Skytrax World Airport Awards 2017 held in Amsterdam. TAV Georgia says that as a result of surveying air-travelers, the international airports of Budapest, Tallinn, KievBoryspil, Riga, Belgrade, Tbilisi, Sofia, Bratislava, Bucharest and Skopje were named as the Top 10 airports of Eastern Europe of 2017. TAV Georgia also reports that the construction of a new terminal at Tbilisi International Airport is underway and will be completed by September. After construction is finished, the airport will have five boarding bridges and six bus gates. Both terminals will be able

to receive 3,500.000 passengers annually. The Skytrax World Airport Awards are the most prestigious accolades for the airport industry, with votes given by customers in the largest, annual global airport customer satisfaction survey. The 2017 Awards are based on 13.82 million airport survey questionnaires completed by 105 different nationalities of

Ministry of Foreign Affairs of Georgia on the 3rd Anniversary of Crimea Annexation

he so-called referendum conducted in Crimea three years ago under the pressure of Russian armed forces led to the illegal occupation and annexation of the Autonomous Republic of Crimea and the City of Sevastopol by the Russian Federation. These acts were committed in complete disregard for the Constitution and legislation of Ukraine, as well as for the fundamental norms and principles of

airline customers during the survey period. The survey operated from July 2016 to February 2017, covering 550 airports worldwide and evaluating travelers’ experiences across different airport service and product key performance indicators - from check-in, arrivals, transfers, shopping, security and immigration through to departure at the gate. The World Airport Awards are a global benchmark of airport excellence, and widely known as the Passengers Choice Awards. The Top 10 World Airports are: 1 Singapore Changi Airport 2 Tokyo International Airport (Haneda) 3 Incheon International Airport 4 Munich Airport 5 Hong Kong International Airport 6 Hamad International Airport 7 Chubu Centrair Nagoya 8 Zurich Airport 9 London Heathrow Airport 10 Frankfurt Airport

Source: blogs.ft.com

international law, announced the Ministry of Foreign Affairs of Georgia. “The Ministry once more condemns the aggression committed against Ukraine and attempts to forcefully change the borders, “an experience our country has already come through,” the statement reads. “This practice of occupation and annexation undermines the established international order, posing a serious threat to international security and stability. Today, as never before, the firm and con-

solidated position of the international community is of utmost importance in order to resist the ongoing aggression against sovereign states and to ensure peace and stability through the establishment of meaningful international security mechanisms on the ground.” The Ministry of Foreign Affairs, in its statement, goes on to reaffirm its support of the sovereignty and territorial integrity of Ukraine within its internationally recognized borders.

NEWS

GEORGIA TODAY MARCH 21 - 23, 2017

Hungarian Foreign Minister Visits Georgia

BY THEA MORRISON

eorgia’s Prime Minister, Giorgi Kvirikashvili, met the Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto, on the latter’s visit to Tbilisi last week. The officials discussed prospects of mutual cooperation, including strength-

ening ties in trade and economy. The importance of the scheduled visit of the Hungarian Prime Minister, Victor Orban, in April was also highlighted. Within the visit, a joint business forum will be held, in which, along the Georgian businessman, representatives of around 50 Hungarian companies will take part. Szijjarto congratulated the Georgian PM on the country’s success in its visaliberalization process.

Prior to meeting PM Kvirikashvili, Peter Szijjarto was welcomed by his Georgian counterpart, Mikheil Janelidze the key issue of their discussion being deepening of trade and economic relations between the two countries. Janelidze welcomed the increased interest of Hungarian companies towards planned infrastructural and other projects in Georgia. After the face-to-face meeting, the ministers held a joint press-conference at which Janelidze spoke about the developments in Georgia’s occupied regions of Abkhazia and South Ossetia. He condemned the decision on the integration of armed forces of so-called South Ossetia and Russia and said that Georgia would aim to find a peaceful solution through international support. “The aggressive steps carried out by the Russian Federation need to be condemned by the international community,” Janelidze said. Szijjarto emphasized that Hungary respects and supports the sovereignty and territorial integrity of Georgia. “Nobody can blame us for not talking loudly and unanimously in support of Georgia [but] we will always help your country,” he said. "We have always supported Georgia and we are confident that Georgia deserved to have a visa-free regime much earlier than it did. You did everything; you fulfilled all the requirements,” he said. Check out the next issue of GEORGIA TODAY for an EXCLUSIVE INTERVIEW with the Hungarian Minister of Foreign Affairs and Trade, Peter Szijjarto.

Spanish Police Detain 48 in Operation against Georgian Gangs

BY THEA MORRISON

he official webpage of the Spanish National Police reports that 48 individuals, including Georgians, were arrested in a large-scale operation against criminal gangs. The detained are accused of participating in group house burglaries, robberies and theft. The police searched 15 flats in which the detained resided in various cities of

Spain and found pieces of jewelry, electrical appliances of illicit origin, EUR 13,000, documentation, and tools allegedly used to commit robberies. The police say that most of the detained Georgians have extensive criminal records for crimes committed in both Spain and Georgia. The recovered items will be displayed in the Headquarters of the Police in Madrid and any robbery-victims will be able to visit the exhibition until the end of March in order to identify their belongings and jewelry. The robberies took place in 2016-2017.

BUSINESS

GEORGIA TODAY

MARCH 21 - 23, 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.

Has the Orthodox Church Been Too Successful? BY TAMTA MARIDASHVILI AND FLORIAN BIERMANN

or a long time, it has been a taboo to criticize the Orthodox Church in Georgia. Quite recently, however, the clergymen themselves lifted this taboo by publicly carrying out their conflicts. The visit of Pope Francis in September 2016 sparked a plethora of mutual accusations. Archpriest Davit Isakadze was against the Pope’s visit and blamed the two other Archpriests, Toedore Gignadze and Aleksandre Gagnidze, for being sectarians and church enemies. These accusations were rebutted by Archpriests Levan Mateshvili and Ilia Chigladze, who called for protecting Gignadze and Gagnidze from these attacks. The open confrontation culminated in February 2017 with the allegation that Archpriest Giorgi Mamaladze, serving as the deputy head of the

Patriarchate’s property management service, attempted to poison the Georgian Patriarch’s personal secretary with cyanide in order to gain a greater share of the power within the Church. The main witness to Mamaladze’s alleged poisoning attempt, his friend and relative Irakli Mamaladze, testified that the priest had asked him to provide potassium cyanide in exchange for a good position within the Church. Irakli Mamaladze also reported that Giorgi Mamaladze intended to poison other high ranking clergymen and that he was backed by a group of supporters, among them other clergymen. Ominously, Archbishop Peter Tsaava talked about a shadow rule in the Patriarchate and named those clergymen who were intentionally or unintentionally involved. For the first time, internal turmoil of this kind became public, potentially threatening the reputation of the Orthodox Church, which had been flourishing over the recent decades.

HOW THE CHURCH BECAME SO STRONG

Religiosity and Trust in Churches (%). Source: World Value Survey

Early in its existence, the Soviet Union turned Karl Marx’s anti-religious views (“religion is the opium of the people”) into official policy, when atheism was prescribed to the Soviet citizens. Yet this atheism was superficial and did not take hold in the hearts of the people. After the collapse of the Soviet Union, the successor countries were not only shaken by dramatic economic, political, and social transformations, but there was also an ideological vacuum. In some post-Soviet countries, like Georgia, religion could partly fill this vacuum. In the case of Georgia, the revival was indeed significant: while in 1970, only 47% of Georgians were affiliated with a religion, in 1995 that number had gone up to 80% of the population (Froese, 2004). One of the reasons behind this resurgence was that in the aftermath of the Soviet breakdown, Christianity had been perceived as part of the traditional pre-Soviet cultural environment and a crucial component of ethnic identity. In this way, religion was a bridge to pre-Soviet times and created cultural continuity with pre-Soviet Georgian history. Consequently, it was not surprising that the first President of Georgia, Zviad Gamsakhurdia, while fighting for independence, always emphasized the Orthodox Church as the symbol of national identity and unity. Moreover, as the newly gained independence started with severe crises (two civil wars in the 1990s, corruption, high crime rates, economic and social insecurity), the Orthodox Church became for many the bedrock of stability and unity and a beacon of hope. In this time, the weak state and its leaders tried to become affiliated with the Church in order to raise their own legitimacy and reputation in society, e.g., in 1995, the government of the second president Eduard Shevardnadze granted the Georgian Orthodox Church legal recognition, various privileges, and direct financial assistance from the state budget. The growing reputation and influence of the Church did not cease after the Rose Revolution. The new government of the United National Movement tried to move the discourse towards a form of civic nationalism (which included the defence of religious freedoms and pluralism) and curb “religious nationalism”, but this was not very successful. While the State subscribed to an agenda of modernization, reforms, and liberal values, many people felt left behind and therefore kept their traditional allegiance to the Orthodox Church. It seems that the Orthodox Church, as an ideological rival to the UNM government, rather strengthened its status as an institution of high moral authority and trustworthiness. Statistics reveal the same positive trend described above. According to the World Value Survey, all of three variables confidence in churches, importance of religion and church attendance have been continuously increasing since 1994. Interestingly, church attendance is not as wide-spread among Georgians than confidence in the Church, showing that the importance of the Orthodox Church extends beyond religious feelings and practices. In Georgia, the non-religious also trust the Church! This was already pointed out by Charles (2009), who argues that Georgia is a somewhat atypical case, as in many

countries, like Poland, Ethiopia, Rwanda and Brazil, church attendance is more wide-spread than trust in the Church. This idiosyncrasy might make the Georgian Orthodox Church more vulnerable to the internal conflicts.

AND THE FUTURE? According to Avner Greif, an eminent economist at Stanford University, institutions are optimally adjusted to the exogenously given conditions prevailing in society. At the same time, the institutions themselves may lead to a change of the parameters under which they operate (he calls such parameters, which are influenced by an institution, “quasiparameters”). For example, the Roman Republic was a great success and led to enormous conquests and expansions of the Roman Empire. Yet, this successful development required an ever more powerful military apparatus, which finally, led by Julius Caesar, caused the downfall of the Republic and its replacement by a dictatorship. Similarly, medieval guilds in Europe may have fostered industrialization and in this way caused the demise of the crafts and trades that were organized in these very guilds. In both cases, successful institutions had an impact on the parameters under which they operated, and at some points these institutions were not optimally adjusted anymore to the circumstances they had created themselves. Could a development like this also affect the Georgian Orthodox Church? A poor church without influence or wealth does not yield incentives for its members to start power struggles. There is nothing to be gained anyway. Success, on the other hand, may give rise to infighting, as there is more to fight for. In this sense, what we see may be the consequence of the Church’s unprecedented success in the last 25 years. Will the Church keep up to this challenge and survive it without damage? Only God knows.

Photo by Roedolf Thorpe

BUSINESS

GEORGIA TODAY MARCH 21 - 23, 2017

Georgian Minister of Economy Meets with Latvian Vice Premier BY NINO GUGUNISHVILI

uring his visit to Latvia last week, Giorgi Gakharia, Minister of Economy and Sustainable Development of Georgia, met with Arvils Aseradens, Vice Premier and Minister of Economy of Latvia, to discuss strengthening trade and economic relations between the two countries. “This was the first introductory meeting,” Gakharia said. “I hope that the cooperation between Georgia and Latvia will increase- our countries always had a very active political dialogue and we’ve aimed at adding an intensive economic collaboration to that. We’re planning concrete activities in the business and legislation spheres most notably in the foreign direct investment and tourism areas”. The Georgian Minister of Economy attended the 3rd two-day Latvia-Georgia inter-governmental meeting of the TradeEconomic and Science-Technical Commission during his visit in the Latvian capital, Riga, where the possibilities of fostering collaboration in the tourism, trade and investments, transport, energy, environment protection, agriculture, innovation and technologies, education and intellectual property sectors were highlighted. Sharing experience in tour-

Giorgi Gakharia, Minister of Economy of Georgia, Meeting Latvian Vice MinisterMinister of Economy

ism was stressed as one of the most important issues, with Gakharia emphasizing Latvia as a priority and growing market for Georgia. Cooperation in the agricultural sector was also highlighted as significant, with Georgia to share Latvia’s experience and harmonize the process of moving closer towards the EU legislation standards and fulfilling its DCFTA requirements. As a part of deepening ties in the edu-

cational sector, the parties discussed the opportunity of realizing joint projects in the science sphere and establishing direct contacts with the educational institutions of the two countries. The Georgian delegation expressed its readiness to also share Latvian experience in the sports and youth spheres. Giorgi Gakharia and Arvils Aseradens signed a minute of the meeting at the end of the session.

Japan Tobacco International in Georgia Certified Top Employer Outstanding Employee Offerings Acknowledged in Georgia, Europe, and Asia-Pacific Region

ompany Japan Tobacco International (JTI) in Georgia has been once again certified for its outstanding employee offerings, with independent research by the Top Employers Institute highlighting just how well the company looks after its staff. JTI in Georgia achieved the exclusive Top Employers Award for Georgia, Europe and Asia Pacific Region in 2017, showcasing its dedication to the development of its employees. “At JTI, we invest in our employees with a long-term horizon in mind. We offer opportunities to grow and develop, as well as a work environment that ensures our people can excel,” says Paul Holloway, General Manager of JTI in Caucasus. “We are proud that this is again recognized by Top Employer and we are the only company in Caucasus region to have achieved this status.” The annual international research undertaken by the Top Employers Institute recognizes leading employers around the world: those that provide excellent employee conditions, nurture and develop talent throughout all levels of the organization, and which strive to continuously optimize employment practices. The Top Employers Institute assessed JTI in Georgia’s employee offerings on the following criteria: • Talent Strategy • Workforce Planning • On-boarding • Learning & Development • Performance Management • Leadership Development • Career & Succession Management • Compensation & Benefits • Culture David Plink, CEO of the Top Employers

Institute: ““Our extensive research concluded that JTI in Georgia forms part of a select group of employers that advance employee conditions worldwide. Their people are well taken care of. Now that they have received the Top Employers Asia Pacific 2017 certification, they can truly consider themselves at the top of an exclusive group of the world’s best employers. Reason to celebrate!” In Georgia, JTI employs over 110 local employees. Beyond being named Top Employer in Georgia, JTI was once again awarded the Top Employer Certification Europe, Middle East and Asia-Pacific. JTI, a member of the Japan Tobacco Group of Companies, is a leading international tobacco manufacturer. It markets brands such as Winston, Camel, Mevius and LD. JTI is a global player in the e-cigarette market with E-Lites and Logic, and has been present in the heated tobacco sector with Ploomsince2011.HeadquarteredinGeneva, Switzerland, and with operations in more than 120 countries, JTI employs around 26,000 employees worldwide. Its core revenue in the fiscal year ended December 31, 2015, was USD 10.3 billion. The Top Employers Institute globally certifies excellence in the conditions that employers create for their people. Optimal employee conditions ensure that people develop themselves personally and professionally. This in turn enables companies to grow and to develop, always. Headquartered in the Netherlands, the company, previously known as the CRF Institute, has recognized Top Employers around the world since 1991.

BUSINESS

GEORGIA TODAY

MARCH 21 - 23, 2017

Start with an Idea: BIA Business Forum & Startup Grind Georgia to Host Top US Expert called Startup Genome that looked at thousands of successful and unsuccessful startups and one of the key determinants of success has been identified as there being at least two founders of different skill sets, technical and non-technical for example; a couple of people with a diversity of talents and diversity of thoughts.

INTERVIEW BY NINO GUGUNISHVILI

ach Lawrence, an expert in investing and startup fundraising, Senior Director of Ohio Tech Angel Fund, and a contributor to the Columbus and Ohio startup ecosystems, is visiting Georgia to participate in the BIA Business Forum and a Startup Grind event this coming Wednesday, March 22. Startup Grind is a global network of over 200 chapters around the world and an important opportunity for Tbilisi. “There are formal governmental programs and activities but the soul of the entrepreneurial community is the entrepreneurs themselves,” said Colin M. Donohue, an American now resident in Georgia who is actively involved in Startup Grind Georgia and who invited Lawrence to speak to the Tbilisi audience. GEORGIA TODAY met with Zach Lawrence to find out about his extensive experience in startup investing and development and his participation at the BIA Business Forum and Startup Grind.

TELL US ABOUT YOURSELF AND YOUR EXPERIENCE IN WORKING WITH STARTUPS I’m based in Columbus, Ohio, and have a consulting firm there called Venture Corp Dev; I focus on critical stage finance and strategy consulting for privately held growth companies. I’ve been doing that for about 2.5 years and I spend a lot of time both helping entrepreneurs directly and also providing services to investors, not those in the same deals, but those who invest in the same companies. I get compliments from both sides for what I’m doing, having a deep understanding of how deals work for both sides of the table. One of the beautiful things in angel investing is buying a share of a big public company where you have to wait for someone else to perform or not perform, making the investment go up or down in value. The great thing of being an angel investor is the ability to actually control the destiny of your investment by providing value to the entrepreneur, whether through informal advice or formally as a board member; being able to apply your business experience to help the entrepreneur and therefore help increase the value of that investment and the chance of that investment being successful.

WHAT DO YOU THINK OF THE GEORGIAN STARTUP SCENE?

Zach Lawrence and Colin M. Donahue

WHY DO YOU THINK STARTUPS ARE IMPORTANT? HOW CAN THEY BE GOOD FOR GEORGIA? I think startups are important for many reasons. I’m still doing my research, and learning more about the climate in Georgia, so a lot of my empirical data would be based on my experience in the US, but I found startups to be a tremendous vehicle for economic development and for talent cultivation. For example, the Ohio Tech Angel Fund’s portfolio of companies, in the last stats I saw published, almost 3000 companies had employed over 400 people with an average salary above $85,000- and these are companies that didn’t exist a few years ago and were started by entrepreneurs who had a great idea, a strong conviction in that idea, and partnered with angel investors and a number of publicprivate development groups who had access not only to capital but also to experts and expertise that really pulled things together. I think it’s also good for entrepreneurs and economic development because it’s a rare breed of someone who can turn an idea into a business that has a market that can actually generate revenue and grow, and the more people that can get experience doing that, the better. What often happens, even with unsuccessful startup companies, is that you have people that get very valuable experience working in the startups in roles they may be able to transfer to other business ventures or startups. One team of five, even if their company

doesn’t make it, can turn into entrepreneurs who set up their own companies down the line, and it really has growth potential because of the experiential value that is built within the entrepreneurial communities.

WHAT ARE THE COMPONENTS OF A SUCCESSFUL STARTUP OR OF BEING A SUCCESSFUL ENTREPRENEUR? It’s always complicated and there are always several factors that are going to determine that success. You have to have a strong, conscientious entrepreneur, a strong management team; you have to have a good idea, whether a specific technology or a business model; you have to have a sort of a defensible competitive edge somehow, and it has to be able to be applied to a large market. Even the greatest idea in the world can’t succeed if only five people want to buy it, whereas you can have maybe the least sophisticated solution but can reach millions of people. Another big part of it is access to mentors; to experts who can provide insights from their experience and connections to other resources. Finally, there has to be access to capital and usually that’s private capital. One of the more successful models in the US is publicprivate partnership, where the

government enters either through direct support, through matching dollars or private investment, or through tax policy or even through tax incentives.

WHAT ARE THE MAIN CHALLENGES FOR ENTREPRENEURS AND STARTUPS? It’s always a balancing act; there are always more things to do than there is time to do them. I wouldn’t say it’s a lack of anything, maybe just unfamiliarity, new aspects of the business that they are looking at for the first time. So, maybe one of the biggest challenges is finding complimentary talent. There’s a group

ROUTING

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When I heard about some of the exciting things Colin is doing with Startup Grind and some of the other opportunities within the Tbilisi technology scene, I realized there are a lot of entrepreneurs here who are willing to work and experts willing to mentor and provide relational expertise and access to their networks, plus a pool of capital that is willing to take some risk. It sounds like there’s an opportunity to take some of those raw resources and cultivate, and put a more formalized process or formalized structure to make it a more concerted, comprehensive support network for entrepreneurs or entrepreneurial investors. I just started my trip and I’m very excited to participate in the BIA Forum while I’m here, as well as to be a guest at Startup Grind this week. I think Tbilisi is an absolutely beautiful city and I’m excited to see all the strong cultural heritage of this very old and very interesting city. For the BIA Forum, my contribution to the panel will mainly be focused from the investor side for best practices of due diligence; pre-investment steps that can be taken to increase the chance of investment success. For the Startup Grind, I will focus more on the entrepreneurial point, and how the investor looks at entrepreneurs and startups, and how that can help an entrepreneur understand the investor mindset. What I’ve found with my experience with Startup Grind in Columbus, is that no matter what company you’re running, whether it’s a software startup, a medical device company or even a retailer, no matter how many differences there are in the business, there are going to be common challenges and common experiences they share. Being able to have that networking with each other is very valuable and it’s a key to success. Without entrepreneurs, there are no angel investors, there are no venture capital funds- it all starts with an entrepreneur who has an idea.

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05.50 11.45 18.10 01.40 07.30 13.55

07.25 13.25 20.00 04.55 10.50 17.15

07.40

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20.45

00.10+1

17.50 13.55

19.10 16.55

TK 381 EVERYDAY TK 380 TK 393 TK 392

EVERYDAY

BUSINESS

GEORGIA TODAY MARCH 21 - 23, 2017

Armenia to Build FEZ on Iranian Border BY DIMITRI DOLABERIDZE

he creation of a free economic zone (FEZ) in Meghri, Armenia, on the border with Iran, is to begin before summer, Minister of Economic Development and Investments of Armenia, Suren Karayan, said on March 16. “Preparatory works are underway, and the corresponding development program will soon be submitted to the government for approval,” he said. The total cost of building the FEZ is estimated at $32 million, out of which $28 million is capital expenditure. The total area on which the relevant buildings will be located is 10-15 hectares, with the possibility of expanding to 45-50 hectares. According to the Ministry of Economy of Armenia, exploitation of the FEZ on the Iranian border will create 2,500 jobs, raising exports from Armenia by about a third. 100-120 companies are expected to operate there, whose revenues over 10 years will amount to more than $50 million. The total investment of all companies for 10 years is planned to increase to $350-400 million. The functioning of the FEZ is enshrined in the Customs Code of the Eurasian Economic Union (EEU). Goods produced will be exported to Iran, the countries of the EEU, the Middle East, Turkmenistan, etc. Collaborating businesses will be exempt from VAT, income tax, and property tax. These preferences are calculated to be introduced for a period of two to four years, depending on the type of business. In addition, individuals can allow purchases through the dutyfree system without customs duties. The Armenian Ministry of Economy expects that Iran, Russia and other EEU members will agree on a list of goods for which customs duties will be reduced or canceled. Iran and the EEU countries,

including Armenia, will have to solve the problem of certification of their goods and optimize the mechanism of bank transfers. The construction of the FEZ on the border with Iran is one of the priority investment programs of the Armenian government. The primary goal is the development of trade and economic relations with Iran and other countries of the region, the development of the strategically important Syunik region, the consolidation of Armenia as a hub linking Iran with the EEU countries and with Georgia. In the course of the February visit of Prime Minister Karen Karapetyan to Tbilisi, preliminary agreements on the sustainable work of the ferry route between the ports "Caucasus" (on the shore of the Kerch Strait in the Azov Sea) and the Georgian port Poti were apparently reached, which will largely solve the problem of Armenia's transport isolation from Russia. Various companies have expressed a desire to start work in the FEZ - more than a dozen companies from Russia, Iran and Europe. The relevant issues were discussed during the RussianArmenian negotiations at the level of the heads of government in Bishkek and Moscow. Earlier, the Ministry of Economy of Armenia announced that several large Iranian companies (some of which are pharmaceutical companies) made written proposals on opening their production facilities for the EEU market on the territory of the free economic zone. The Chinese were also interested in the conditions of work in the zone. "We offered our Russian, Georgian, Kazakh and Belarusian partners use of the site of the Meghri FEZ to enter the Iranian market. The Iranian side is negotiating the creation of a special company in the FEZ to export large volumes," said the Armenian PM. At present, the level of trade with Iran is extremely low about $75 million, except for the energy

sector, where a barter scheme operates (Armenia, in exchange for receiving 1 cubic meter of gas from Iran, supplies 3 kW/h of electricity). As such, this is an opportunity to achieve "phenomenal growth", bringing the volume of mutual trade to $1 billion. Being a member of the Eurasian Economic Union, the Republic of Armenia actively develops relations with the EU. "Armenia, having clearly assessed the economic and financial aspects of membership in the EEU, has made a very conscious decision that membership in the EEU is economically more expedient than signing a free trade agreement with the European Union,” Armenian Defense Minister Vigen Sargsyan said at the outgoing meeting of the Valdai Club in Yerevan. “Then, and now, we proceed from the premise that our membership in the Eurasian Economic Union in no way hinders the development of deep relations with the European Union in terms of political dialogue, and in terms of developing economic ties. Today, Armenia has a trade system with the European Union GSP+, and

this allows Armenian producers to easily enter European markets. In Russia itself, there are manufacturers who understand that making a product in Armenia makes it much easier to get the product into the European market. We are developing a very intensive dialogue with Iran”. Earlier, speaking at the Carnegie Center in Brussels, Armenian President Serzh Sargsyan stressed the readiness of his country to promote mutually beneficial rapprochement of the positions of the EEU and the EU. "At the initial stage, Armenia's membership in the EEU was taken as hostile by some Western partners, but I'm glad that time has put everything in its place. We are ready to promote mutually beneficial rapprochement of the positions of the EU and the EEA. Armenia is interested in all-European cooperation," Sargsyan said. He also noted that the close economic, political and cultural ties between Yerevan and Teheran make Armenia a good place for European companies to enter the Iranian market: "Armenia can become the most reliable and shortest transit

route connecting the Persian Gulf with the Black Sea ports ... Cooperation Armenia - a member state of the EEU and Georgia - an associative member of the EU, testifies to new opportunities for mutually beneficial relations". Meanwhile, the leaders of the border Meghri and the Iranian Noraduz discuss issues of cross-border cooperation. In particular, the measures on qualitative servicing of large flows of people and cars. The issues of fees levied on vehicles entering Armenia and on passenger cars heading to Iran are being considered. During the spring Novruz holiday, the flow of Iranian tourists to Armenia has traditionally increased and the launch of new production facilities in Meghri will give a new dimension to ArmenianIranian relations. In addition, by the end of March, Iranian President Hassan Roukhani is epected to visit Moscow. “During the visit, an agreement may be signed on the establishment of a free trade zone (FTZ) between Iran and the EEU,” said Russian Energy Minister, Alexander Novak.

BUSINESS

GEORGIA TODAY

MARCH 21 - 23, 2017

Government of Georgia Presents Key Areas of Rural Development in 2017-2020

Key players at the Strategy presentation. The implementation of the Strategy promotes local entrepreneurship and civil engagement while improving the quality of people’s lives

n March 16, the Government of Georgia presented the national Strategy for Rural Development 2017-2020 and the Rural Development Action Plan 2017 to representatives of the national and local authorities, civil society organizations, diplomatic missions and international agencies. The event was opened by the Prime Minister of Georgia, Giorgi Kvirikashvili, who highlighted the importance of a new approach to rural development grounded on the best European practices in this field. Levan Davitashvili, Minister of Agriculture of Georgia, introduced key areas of the Rural Development Strategy 2017 – 2020 and the Action Plan 2017. "The implementation of the Strategy promotes local entrepreneurship and civil engagement while improving the quality of people’s lives,” Minister Davitashvili said. The adoption of the first ever Rural Development Strategy of Georgia was welcomed by Janos Herman, Ambassador of the European Union to Georgia, and Niels Scott, Resident Coordinator of the United Nations in Georgia. “The European Union will continue supporting rural development to open economic and social opportunities for people in every region of Geor-

gia,” Ambassador Herman said. The Rural Development Strategy 2017 – 2020 was adopted by the Government of Georgia in December 2016 with support from the European Union (EU), in cooperation with two United Nations agencies – United Nations Development Program (UNDP) and Food and Agriculture Organization (FAO), under the EU-funded European Neighbourhood Program for Agriculture and Rural Development (ENPARD). The adoption of the Strategy was followed by the establishment of an Interagency Coordination Council on rural development led by the Ministry of Agriculture with the support of the European Union (EU) and technical assistance from UNDP under the EU-funded ENPARD program. The Council coordinates the implementation of the Strategy and considers specific initiatives in the regions of Georgia. The European Union is supporting rural development in Georgia through its ENPARD Program. Implemented since 2013 with a total budget of EUR 102 million, the main goal of ENPARD is to reduce rural poverty in Georgia. The first phase of ENPARD in Georgia focused on developing the potential of agriculture. The second phase focuses on creating economic opportunities for rural population that go beyond agricultural activities.

Central Eurasia Leadership Alliance Holds Regional Conference in Tbilisi BY NINO GUGUNISHVILI

he Central Eurasia Leadership Alliance (CELA) held a regional conference to discuss ‘Georgia’s Transformation in the XXI Century Economy through Innovations,’ at Rooms Hotel Tbilisi as part of a three-day CELA reunion program. CELA is an ambitious multi-cultural initiative aiming at strengthening regional cooperation between Afghanistan and the countries of Central Asia and the Caucasus, by creating a platform for sharing experience and professional knowledge, and linking the young and successful leaders of the region. Georgian government officials: Aleksandre Jejelava,

Vice-Premier Minister of Georgia; Dimitry Kumsishvili, Minister of Finance of Georgia; Mikheil Janelidze, Foreign Minister of Georgia; and Levan Davitashvili, Minister of Agriculture, were among the attendees and speakers at the event which united international organization and private sphere representatives with conference delegates from the Caucasus, Central Asia, and the US. Founded in 2002 by the Society of International Business Fellows (SIBF), CELA now unites almost 400 leaders from Georgia, Armenia, Azerbaijan, Kirgizstan, Turkmenistan, Tajikistan and Afghanistan. Following the success of CELA, SIBF supported the creation of the two similar networks in the different parts of the world – the Middle East Leadership Alliance (MELA) and South East Asia Leadership Alliance (SEALA), organizing events and activities in 30 countries globally.

SOCIETY

GEORGIA TODAY MARCH 21 - 23, 2017

Court Sends Nine Georgian Foreign Minister to Pre-trial Detention to Participate in Global Coalition Ministerial Meeting over Batumi Clash

eorgian Foreign Minister Mikheil Janelidze arrived in Washington for a working visit to take part in the meeting of foreign ministers of the Global Coalition working to defeat ISIS, scheduled for 22 March. Secretary of State Rex Tillerson will host the meeting which will bring together foreign ministers of 68 countries.

The participants of the ministerial meeting will discuss threats emanating from ISIS, and the Coalition’s military efforts, including those towards maintaining international security and stability. Georgia has been a member of the Global Coalition since 2014. The first meeting of Foreign Ministers took place in Brussels, on 3 December 2014. The aim of the Coalition is to develop a

long-term strategy against ISIS and to enhance efforts to counter terrorism and the humanitarian crisis in the region. Within the framework of his working visit to Washington, the Georgian Foreign Minister will meet US senators and congressmen, as well as representatives of US expert communities and think-tanks. Minister Janelidze will also hold meetings with his colleagues from various countries.

BY THEA MORRISON

T The participants will discuss threats emanating from ISIS and the Coalition’s military efforts, including those towards maintaining international security and stability. Photo: Sergey Ponomarev/ New York Times

he Batumi City Court judge has ordered the pre-trial detention of nine individuals accused of participating in hooliganism, police resistance and assault on police officers during the March 11-12 clashes in Batumi, Georgia’s Black Sea City of Adjara region. At present, 15 people are in pre-trial detention over the case and will remain in custody until the investigation is over. The relatives of the detained disapprove of the court decision and plan to hold protest rallies and demand the release of the detained.

The confrontation between Batumi locals and law enforcement officers began on March 11 when a man and his companion refused to accept a fine for parking in the wrong location. When the police arrested six people for resistance, this led to a larger protest of hundreds of locals, who gathered at the police department to demand the release of the detained and the resignation of the police head. The situation escalated, with the young rioters throwing stones, damaging cars, and setting fire to nearby vehicles, to which the police responded with tear gas and rubber bullets. A total of 33 people required medical attention- 15 of them members of law enforcement. The investigation is ongoing.

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POLITICS

GEORGIA TODAY

MARCH 21 - 23, 2017

Tbilisi-Based Dutch Professor on Dutch Elections, Erdogan and Saakashvili INTERVIEW BY VAZHA TAVBERIDZE

n March 15, parliamentary elections were held in The Netherlands. Despite most polls predicting a victory for “Dutch Trump” Geert Wilders, the liberals and acting PM, Mark Rutte, won. However, none of the parties managed to achieve a parliamentary majority. What should we in Georgia know about Dutch elections, or, more importantly, why they should matter for us? A Dutch professor at Ilia University, Robert van Voren, was all too happy to explain it to GEORGIA TODAY and Panorama Talk Show.

BRUSSELS, AND EUROPE IN GENERAL, SIGHED IN RELIEF FOLLOWING THE RESULTS OF THE DUTCH ELECTIONS. FOR THE SAKE OF THEORY, LET’S PRETEND THAT WILDERS WON THE ELECTIONS – WHAT WOULD HAVE HAPPENED? NEXIT? Had Wilders won, The Netherlands would have had an impossible political situation as all political parties stated very clearly beforehand that nobody was

willing to go into a government with Geert Wilders. Which doesn’t mean that current negotiations for the government will be easy. I think the best possibility is a kind of a center-left coalition which brings in the Christian Democrats and the Green Leftist party. In general, it’s fantastic news for Europe as it seems that we’ve reached a ceiling of populism. You mentioned Geert Wilders as a European, or Dutch, Trump. When Trump won the presidential elections, there were lots of populists in Europe who were buttering up to Trump and saying “we’re the Dutch Trump” or

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“we’re the French Trump”, “we are the same”, thinking it would help them. But what happened was the opposite because everybody now understands that Trump is, as a president, quite hopeless, that he is a man with serious psychological problems, and that the political development in the United States is quite horrific. And so identifying oneself with Trump became a liability – not a positive thing, but a negative thing. This worked quite nicely against Wilders. If you think you’re like Trump – well, we don’t like Trump, so we don’t like you; so we better vote for someone who is more reasonable and has more sense. And that was the liberal party leader, Mark Rutte. Nexit would never happen. This is the line that Geert Wilders is always on, but this is populism – you know, you overexaggerate things and try to win votes.

MARK RUTTE, DESPITE BEING A LIBERAL, IS NO SOFT FIGURE. AFTER THE ELECTIONS, HIS WORDS WERE THAT THE DUTCH PEOPLE “REJECTED THE WRONG KIND OF POPULISM”. DOESN’T THAT MAKE RUTTE’S OWN NARRATIVE THE RIGHT KIND OF POPULISM? IS HE PLAYING BY WILDER’S RULES? He’s a shrewd politician. I wouldn’t automatically call him a populist; but he is a shrewd politician and he got support from an unexpected corner, which is Turkish leader Erdogan.

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Yes. And I think Rutte immediately saw the chance to make use of this in order to push himself as a strong leader. The whole diplomatic scandal in the Netherlands might help Erdogan in his attempt to become the sole leader of Turkey and basically a dictator, but at the same time, he helped Rutte to become prime minister of the Netherlands again.

WHAT IMPACT WILL IT HAVE ON EUROPEAN POLITICS? WE SAW THAT AFTER THE ELECTION RESULTS WERE ANNOUNCED, THE EURO STRENGTHENED. SHOULD MARINE LE PEN BE WARY?

Parliamentary Delegations of Nordic, Baltic Countries Arrive in Georgia BY THEA MORRISON

he Speakers and ViceSpeakers of the Parliaments of the Baltic and Nordic states are visiting Georgia on March 20-22 to meet with the Georgian Parliamentary Speaker, other officials of parliament, the President, Prime Minister,

State Minister on EU and NATO Integration and the head of the Georgian Orthodox Church. The parliamentary delegations of Denmark, Finland, Iceland, Norway, Estonia, Latvia and Lithuania will also meet with European Union Monitoring Mission (EUMM) representatives and visit the villages of Nadarbazevi and Khurvaleti to assess the situation at the Administrative Boundary Line between the breakaway Tskhinvali region and

the rest of Georgia. The Nordic and Baltic countries make up Nordic Baltic Eight (NB8) cooperation format, which facilitates open discussions on international topics and topics vital to the Nordic-Baltic region. NB8 is a network for political dialogue and practical cooperation between equal partners, which in its essence is flexible and problem-focused. The focus is on concrete cooperation that delivers tangible results.

If I were Marine Le Pen, I would start taking sleeping pills, because the tide is turning. I think she herself is in big trouble – her diplomatic immunity has been taken away because of a corruption scandal, so her name is tainted. Her main opponent, Fillion, is also involved in a corruption scandal. So I think in France we might see another candidate, Emmanuel Macron, coming to the fore. And this is good news for Europe: it means that we might finally get this right-wing populism – in some countries, it’s almost neo-fascism – under control. Putin has been very much involved in all these issues in European politics and the United States. He was probably involved in Brexit, and he was definitely involved in the election of Trump. He’s playing his game with his hybrid cyber-war. But things are now coming out. Basically, it’s a boomerang; it’s coming back to Putin and it’s connected with business corruption, oligarchs, and lots of money. I think people start to understand that they have been taken for a ride, and this means they are taking back their votes. And so, I think we’ll see a new type of politics arriving in Europe, which is very exciting.

Putin is his buddy in fighting Western liberalism, etc. As such, we have a very complex situation and Georgia is squeezed in-between. At the same time, because the fight is mainly with Europe, I have this feeling that Georgia is something that will be dealt with later – let’s first focus on Europe proper, and when we settle this problem, let’s focus on the Caucasus.

LET’S ELABORATE MORE ON THE TURKISH ISSUE. THE TURKISH FOREIGN MINISTER PREDICTED THAT THERE WILL BE A RELIGIOUS WAR IN EUROPE. HOW DO YOU SEE FURTHER DEVELOPMENTS IN RELATIONS BETWEEN THE NETHERLANDS AND TURKEY AS WELL AS TURKEY AND EUROPE?

Yes. Whatever you think of Saakashvili, I think what he managed to do is pull this country out of Soviet times. The Sovietization of Georgia has gone much further than Ukraine. But after each period of growth and development, which went very quick in the country, there is always a period of stagnation. What you need is a political leader of a country which is able to grab a situation and pull it forward. You need leaders with ideas and with charisma, and I think this is a problem that exists in the whole region. There are no big, moral leaders in the former Soviet Union. None of the republics have them. In Czechoslovakia, you had Havel, in South Africa, you had Mandela. In this region, there was one man – Sakharov, and he died far too early.

The relationship with Turkey will not get better soon, because Erdogan now needs to win his referendum. And Holland is definitely not going to rock the boat. Erdogan wants apologies, the Dutch are not going to give them, and the Dutch want apologies that he won’t give.

IF HE IS ISOLATED, WILL WE SEE HIM FIRMLY IN LEAGUE WITH PUTIN? IT DOESN’T PAINT A PRETTY PICTURE FOR GEORGIA’S EUROPEAN ASPIRATIONS, PUTIN AND ERDOGAN TOGETHER… They are in the same camp for one simple reason – because their mentality and way of thinking is exactly the same. They are both heirs of old empires, they both suffer from post-imperium complexity. The Ottoman and the Russian Empire, both want to reestablish their reign in the region. For instance, between Turkey and Russia there is already one area of conflict, which is Crimea, because we have the case of Crimean Tatars who are severely repressed in Crimea. Nationalistically, Erdogan cannot deny support to the Crimean Tatars, because it’s a brother nation. Repression in Crimea is especially focused on them. Ten thousand have already become refugees in Ukraine. And so, Erdogan has to do something, but then at the same time,

SO THAT FOCUS WON’T COME UNTIL THE UKRAINE ISSUE IS SOLVED? Ukraine is a very sad story because we look now at what happens in Ukraine in comparison to the hopes and wishes that we had after Maidan. Most never materialized – corruption is still there, oligarchs are still in power, Poroshenko is a total failure. The man who could have become the hero of Ukraine goes down now in the position of continuing the old instead of bringing in the new. But in Ukraine you talk to young people and you see that they do not have this Soviet fear which is so endemic in this region.

DO YOU SEE THE SAME HERE IN GEORGIA?

DO YOU THINK THAT SAAKASHVILI COULD HAVE DONE MORE? WHAT ABOUT POPULAR BELIEF THAT HE MISUSED POWER? Saakashvili is definitely a guy with charisma, with ideas; a guy who energizes people, but his problem is that his style of ruling is very Asian. And so he reached the point at which he thought he’d done it all and sat back and started enjoying himself instead of ruling the country. When he left the Georgian political scene, he was gone politically, I would say. And his attempt in Ukraine was a failure as well, because he forgot one crucial thing – you can speak Ukrainian, you can be friends with Poroshenko, but you are not Ukrainian. The Ukrainians themselves need to develop their country, and he thought that he could become the new Ukrainian leader, which is nonsense. He basically made a fool of himself.

POLITICS

GEORGIA TODAY MARCH 21 - 23, 2017

Trump’s Populism & its Impact on Liberalism in Georgia BY ZURAB KHUTSIANIDZE

iberalism, says Fukuyama, is the “end point of Mankind’s ideological evolution” and the “final form of human government,” as it has no serious ideological competitor after the demise of the communist Soviet Union. Over the years, liberalism and democratic values have gained numerous followers in various countries- including post-Soviet Georgia and Ukraine. The global expansion of this political philosophy has been deemed as arguably successful. For some, democratization is a blessing; others see it as a Western instrument undermining the state’s sovereignty, yet both sides anticipate complications after the recent election of Donald Trump as the President of the United States. With the recent US elections and the surprising victory of Donald J. Trump, academics as well as international media organizations have debated the upcoming collapse of the liberal world order specifically because of President Trump’s controversial statements during his election campaign. The demonstrated Populism by a newly elected leader of the Free World has sparked fears in Europe as it created ground for European Populist politicians such as Marine Le Pen and Geert Wilders. Similarly, Trump’s announced American non-interventionist policy generated anxiety in newly democratized countries such as Georgia and Ukraine, as their key ally planned to leave them to face regional instabilities caused by Putin’s policies. What implications can Trump’s populism have on newly democratized countries such as Georgia? Does it threaten democracy and the process of West-

Source: poponomics.net

ernization? Populism itself is a political doctrine that proposes that the common people are exploited by a privileged elite, and which seeks to resolve this. It is important to note that the ideology of populists can be left, right or center. Statistically, the general electorate of the political elites consists of relatively young urban citizenry, while the electorate of the populist politicians tends to be rather more senior from a rural background. The example and the outcome of Brexit also acts as an indicator of the correlation between age and populism. In case of Georgia, the appearance of populist doctrine in the US should be perceived as a warning. While young people aged 10-24 make up only 19 percent of country’s population, nearly half of the population lives in rural areas, and as long as the economic situation remains

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unstable, Georgia might face populist politicians in the near future. To avoid this, it is crucial for the government to focus on addressing challenges related to further economic development and invest in education- especially in the rural regions of the country. Despite the fact that Trump’s noninterventionist policy might act as an impetus for increasing Kremlin’s influence, Georgia remains deeply embedded within the core liberal principles as the country strives towards European integration. The decision of the European Union in regards to the long-awaited visa liberalization for Georgian citizens should be valued as a retribution and a well-thought manoeuvre against Moscow’s intentions to weaken liberal traditions in Georgia.

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