Issue #1050 Business

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Issue no: 1050/130

• MAY 22 - 24, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Georgia Hosts Regional Dialogue on Climate Change NEWS PAGE 3

2018 Growth Forecasts Inch Upward - Positive External Trends, Higher Gov’t Expenditure on Capital ISET PAGE 4

Efforts to Claim Energy Autarky

FOCUS ON FLIGHTS

Georgian Air Traffic Control gets an upgrade and Wizz Air introduces PAGE a new aircraft

2,3

Russia Signs Contract with Swiss Company on Cargo Deal with Georgia

BY THEA MORRISON

BUSINESS PAGE 5

Georgia: Finally Free from Tobacco Smoke BUSINESS PAGE 7

Leading Design Company BergerABAM to Design Anaklia Deep Sea Port

Photo: Russian Foreign Ministry. Source: Sputnik

T

he Russian Federation has signed a contract with the Swiss company SGS (Société Générale de Surveillance SA), a mediator which will monitor implementation of the agreement made between Georgia and Russia in 2011 on cargo movement.

The information was released by the Russian Foreign Ministry, which stated on May 19 that the agreement had been signed between the Government of the Russian Federation and the Federal Council of the Swiss Confederation for the realization of the Main Principles of Monitoring of Customs Administration and Commodity Trade.

Continued on page 2

BUSINESS PAGE 8

Georgia Today Presented at European Newspaper Congress 2018 BUSINESS PAGE 11 Prepared for Georgia Today Business by

Markets As of 18ͲMayͲ2018

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NEWS

GEORGIA TODAY

MAY 22 - 24, 2018

Wizz Air Opens New Flights Image source: kobasworld.wordpress.com

BY SAMANTHA GUTHRIE

L

ast Thursday, May 17, Wizz Air held a ceremony at Kutaisi’s Davit Aghmashenebeli International Airport to celebrate the addition of a second Airbus A320 to its Kutaisi-based fleet, and its first flight

from Paris to Kutaisi. With the additional aircraft, flights are opening to five new destinations: Paris, Rome, Prague, Barcelona, and Athens. Additional flights will also be added between Kutaisi and German destinations Berlin and Dortmund. Attendees to the ceremony included the First Vice Prime Minister of Georgia, Minister of Economy and Sustainable Development Dimitry Kumsishvili, the Director of the JSC United Airports of Georgia,

Ketevan Aleksidze, and Johan Eidhagen, Wizz Air’s Chief Marketing Officer.

Wizz Air, a low-cost, no-frills airline based out of Hungary, has been operating in Georgia since 2012. The company choose Kutaisi International Airport as its base in part to avoid the high fees of Shota Rustaveli Tbilisi International Airport. The low-cost flights have brought many tourists to Georgia and encouraged many people to explore Kutaisi and its surroundings, who may not otherwise have visited. According to the Ministry of Economy and Sustainable Development, Wizz Air carried more than 222,000 passengers in 2017, and has already carried 111,000 passengers in the first four months of 2018.

Wizz Air currently offers flights from Kutaisi to 20 destinations in 14 European countries, including some of the most popular tourist destinations – Spain, France, Italy, Greece, and the Czech Republic. Flights are generally once or twice a week to and from each destination. There are many options for transportation between Tbilisi and Kutaisi, including MetroBus, Georgian Railways, and shared taxis or marshrutkas from Okriba Bus Station (located at Didube metro station).

At last week’s ceremony, Minister Kumsishvili

praised the Hungarian company’s contribution to the Georgian economy, noting that 2017 saw 43% growth in the airport sector, and 34% growth so far in 2018. In addition to direct flights, which help increase tourism inflows, “new flights will also result in the creation of direct and indirect jobs.

To date, Wizz Air has invested $100 million in Georgia via one of the aircrafts based here, and since the second aircraft is to be based here starting today, it means that the company’s investments in Georgia have already reached $200 million. The company has created 70 direct and 250 indirect jobs thus far and the second aircraft will generate another 37 jobs,” said Kumsishvili. The ground and flight crews that service Wizz Air passengers and aircrafts in Kutaisi are all Georgian citizens.

Wizz Air has been rapidly expanding its flights from Kutaisi. In March of this year, flights were added to Riga, Latvia, and Wroclaw, Poland. There are plans to add flights to Bucharest, Romania from July 3, and to Vienna, Austria, from November 15.

The expansion of low cost flights to Europe from Kutaisi opens new routes of exploration for residents of Georgia, and “means the growth of our economy... new jobs and maximum promotion of the tourism development,” notes Dimitry Kumsishvili.

Russia Signs Contract with Swiss Company on Cargo Deal with Georgia Continued from page 1 “Thus, the Russian Federation has completed the implementation of the procedures necessary to begin the practical implementation of the Agreement on the Main Principles of Monitoring of Customs Administration and Commodity Trade signed with Georgia on November 9, 2011,” the statement of the Russian MFA reads.

The same contract was signed by the Georgian side in December 2017, during the final round of negotiations with the Swiss company held in Bern on December 19.

The next steps towards implementing the agreement will be discussed in Prague on May 24, during the regular meeting of the Georgian Prime Minister’s special representative for relations with Russia, Zurab Abashidze, and the Russian Deputy Foreign Minister, Grigory Karasin.

Abashidze stated that it is possible that a GeorgianRussian-Swiss joint working group will be set up to monitor the project’s practical implementation.

“We hope that Russia will honestly fulfill its obligations under the 2011 agreement,” the Georgian envoy stated.

As Georgia and Russia have had no diplomatic relations since the Georgia-Russia August war of

2008, the Abashidze-Karasin meetings in Prague are the only format of direct dialogue between the two neighboring states. The format was launched in late 2012.

Georgia and Russia signed the agreement on the Cargo Monitoring Movement on November 9, 2011, in Geneva, with the participation of Switzerland.

The two countries agreed to involve a neutral company to monitor the movement of goods. The Swiss Confederation was tasked with selecting a neutral private company in consultation with Georgia and the Russian Federation.

The agreement envisages the monitoring of cargo movement through three “trade corridors,” two of which run through the breakaway regions of Abkhazia and South Ossetia (Tskhinvali), and the third on the Zemo Larsi-Kazbegi border crossing point on the undisputed section of the Georgia-Russia border.

The mechanism’s functions include the gathering and sharing of information, ensuring transparency, data transfer, crime and smuggling prevention, and examining of suspicious cargo.

Georgia and Russia decided that the mechanism would entail both an Electronic Data Exchange System (EDES) and International Monitoring System (IMS).

NEWS

GEORGIA TODAY MAY 22 - 24, 2018

3

New Air Traffic Control Center Opens in Georgia

BY THEA MORRISON

G

eorgia has a new Air Traffic Control (ATC) center and a training center with 3D simulators, both of which were opened at Tbilisi International Airport on Friday.

The new ATC building and training center of Sakaeronavigatsia Ltd of the Ministry of Economy and Sustainable Development, are in compliance with the highest modern technological standards.

The Ministry of Economy reports that the new ATC Center is equipped with a modern system manufactured by the Spanish Company INDRA, while the S.P.A. sound system is from the Italian Company S.I.T.T.I. “These systems will make the ATC work much more comfortable and effective,” the Ministry reported. “The new system of INDRA has dual protection, which activates in seconds, imperceptible for air traffic controllers. The new system by INDRA has a third additional protection system - an independent system installed in Kutaisi, which completely excludes delay in the working process.”

Building a new ATC Center and providing for its compliance with modern standards was preconditioned by the unprecedented growth of air traffic in the airspace of Georgia.

“In 2017, the occupancy of the Georgian airspace increased by 13% compared to the previous year and, according to the

forecast of EuroControl, the growth will be maintained in the following years,” the ministry noted, adding that the new modern ATC will significantly increase flight safety and facilitate the further development of the ATC industry in Georgia.

The new training center is equipped with a modern 3D ATC simulator by INDRA, which allows the air traffic con-

trollers to enjoy practical trainings.

By introducing the new system by INDRA, Sakaeronavigatsia Ltd will have the opportunity to change the existing two-sector level to a three-sector level, further increasing the capacity of the airspace of Georgia.

“Activating the ‘upper sector,’ where aircraft of transit or distant routes fly, will also be possible, which is another

innovation for Georgian aviation. The new system from INDRA will also allow Sakaeronavigatsia Ltd to decrease the interval between airplanes from 10 to 5 miles in the air, while the interval in the runway zone will be decreased to 2.5-3 miles,” the ministry added.

The opening ceremony was attended

by Georgia’s Prime Minister, Giorgi Kvirikashvili, the First Vice Prime Min-

ister and the Minister of Economy and Sustainable Development, Dimitry Kumsishvili, the Regional Director of the European and North Atlantic Office of the International Civil Aviation Organization, Luis Fonseca de Almeida, the EuroControl Director General, Eamonn Brennan, Director General of Spanish Company INDRA, Gonzalo Gavin, and high officials representing the civil aviation sector and other state agencies.

PM Kvirikashvili stated that the opening of the two buildings is a step forward towards enhancing the level of Georgia's aviation safety and developing the aviation industry, which is directly tied to the development of the country's aviation, tourism, and economy in general.

“Georgian Air Navigation has enough potential to provide airlines with highstandard, safe, and effective services, this way establishing ties with more airlines as a partner with a safe airspace, efficient infrastructure, and highly qualified human resources,” he stated.

Georgia’s First Vice-Premier and the Minister of Economy, Dimitry Kumsishvili, said that 32 million GEL had been invested in the project.

“The opening of a new training center is important for Georgia. Now, we have a 3D simulator that enables us to train the air traffic controllers which we spent significant resources on. At the same time, we will be able to make this training center of regional importance and invite air traffic controllers from other countries to improve their qualification and knowledge,” he stated.

Georgia Hosts Book Launch at TBC Gallery: Memories of Tiflis, Regional Dialogue Edited by Nicolas V. Iljine on Climate Change

BY SHAWN WAYNE

T

BC Gallery last week organized a presentation of ‘Memories of Tiflis,’ a book edited by Nicolas V. Iljine, an Advisor to the Director of the Hermitage Museum. The event was held within the frame of TAF, the first international fair of modern art in

Tbilisi, whose official supporter is TBC Status.

“There are a lot of alternative art, liberal art and young artists with the possibility to present and sell their art because of the art fair that just opened, this is of course a good sign,” Iljine noted.

The book is a collection of essays by Levan Choghoshvili, Nana Kipiani, Giorgi Gersamia, Tamaz Gersamia, Giorgi Kalandia, Aka Morchiladze, Levan Tsetskhladze and Donald Reyfield, as well as photos

from various museums and collections depicting 20th century Tbilisi architecture, art, music, folk art, literature and photography.

Nicolas V. Iljine’s relationship with Tbilisi started in 1965, when a Georgian doctor visiting Germany presented him with Rustaveli’s epic poem, ‘The Knight in the Panther’s Skin.’ Later, he met the film directors Otar Ioseliani, Giorgi Danelia and Lana Ghoghoberidze, and watched several films by Sergo Parajanov.

He became fascinated by Georgian culture and first visited Tbilisi in 2008 to attend his friends’ wedding.

Inspired by the history, architecture, culture and residents of Tbilisi, Iljine decided to bring together stories about the city into one collection. He visited the city several times in the last 10 years and collected old postcards for the book.

In gathering historical evidence about the city, he was helped by the representatives of Georgian art and culture, Irine Popiashvili, Davit Lortkipanidze, Lika Mamatsashvili, Tamila Tsagareishvili, and Zurab and Vasil Tsereteli. The book focuses on Tbilisi of the 1870s-1920s.

Iljine has also co-authored and edited ‘Memories of Baku’ and ‘Selling Russia’s Treasures,’ and produced a 30-minute documentary about Iosif Brodsky.

He has played an important part in creating and implementing museum projects, including Guggenheim Bilboa, Deutsche Guggenheim Berlin, Guggenheim-Hermitage in Las Vegas, and the development of Guggenheim Abu Dhabi.

Image source: independent.co.uk

T

he Regional Dialogue on the implementation of the Paris Agreement in Eastern Europe, Central Asia and the Caucasus kicked off in Tbilisi, on 21 May. The three-day event will be attended by 90 participants from 18 countries of Eastern Europe, Central Asia and the Caucasus who will draw lessons from their current efforts to reduce greenhouse gas (GHG) emissions and achieve a breakthrough in the renewable and efficient energy sectors.

The event will be opened by Donald Cooper, UNFCCC Secretariat Director;

Niels Scott, UNDP Resident Representative in Georgia; and Nino Tandilashvili, Deputy Minister of Environment Protection and Agriculture of Georgia.

The Regional Dialogue on Nationally Determined Contributions (NDCs) is co-organized by the UN Development Program (UNDP) and the UN Framework Convention on Climate Change (UNFCCC) Secretariat, and hosted by the Government of Georgia.

The event is supported by the European Union and the Governments of Germany, Japan, and Norway, in collaboration with the NDC Partnership.

4

BUSINESS

GEORGIA TODAY

MAY 22 - 24, 2018

2018 Growth Forecasts Inch Upward - Positive External Trends, Higher Gov’t Expenditure on Capital

BY DAVIT KESHELAVA AND YASYA BABYCH

I

SET-PI has updated its forecast of Georgia’s real GDP growth rate for the second quarter of 2018.

Here are the highlights of this month’s release: • Geostat has released its GDP growth estimate for the first quarter of 2018. The Q1 growth stands at 5.2 percent, which is 1.1 percentage points above the recent forecast.

• ISET-PI’s forecast of the real GDP growth for the second quarter of 2018 stands at 5.9 percent - up from 5.1 percent in April.

• Based on March’s data, we expect annual growth in 2018 to be 5.4 percent in the worst-case or “no growth” scenario, and 6.4 percent in the best-case or “average long-term growth” scenario.

Our “middle-of-the road” scenario (based on average growth over the last four quarters) predicts 5.7 percent real GDP growth in 2018.

• The National Bank of Georgia has

According to the rapid estimates of real GDP growth for the first three months of 2018, the majority of countries in the region showed significant improvement in terms of economic activities compared to the same period of the previous year.

The Armenian economy advanced by 9.5 percent year over year, while Azerbaijan experienced 2.3 percent annual growth.

Moreover, the growth rate of the real GDP for Kazakhstan and Belarus reached 5.5 percent and 5.1 percent respectively. The Russian economy grew by 2.0 percent in January-February of 2018 compared to the same period of 2017.

In March 2018, external merchandise trade increased by 34.3 percent year over year. Exports of the merchandise goods increased by 33.1 percent year over year, while import advanced by 34.7 percent.

Consequently, trade deficit deepened by 35.6 percent compared to the same period of the previous year. In addition, remittances and tourism maintained doubledigit growth in the third month of 2018.

Money inflow increased by 17.0 percent compared to the same period of the previous year. The number of international visitors also increased by 13.2 percent,

tributes to the short-term growth figures by stimulating private consumption.

However, the growth rate of domestic credit significantly exceeds the growth of the Georgian economy as a whole, and borrowed money is often spent on purchasing imported products and services. This might have negative implications for the long-run economic growth of the country. Thus, domestic credit expansion needs to be closely monitored by the National Bank.

FINANCIAL SECTOR ENVIRONMENT IN GEORGIA REMAINS SOUNDS. In March, banks retained their highly profitability profile, with a return on equity (ROE) and return on assets (ROA) at 20.6 percent (0.4 percentage point lower than previous month) and 2.8 percent (0.1 percentage point lower than previous month), respectively. In addition, non-performing loans (NPL) decreased by 0.1 percentage point m-o-m to 1.6 percent of the total loan portfolio in March 2018, and 46.4 percent of NPLs were denominated in domestic currency.

THE CONSOLIDATED GOVERNMENT BUDGET WAS IN SURPLUS IN MARCH, EVEN DESPITE A SIGNIFICANT INCREASE IN THE INFRASTRUCTURERELATED SPENDING.

revised the real GDP growth forecast upward to 4.8 percent in 2018 from 4.5 percent in February. The upward revision was explained by positive trends in the external sector and increased government capital spending, which is expected to improve consumption and investment spending, and further contribute to growth.

According to the recent Geostat’s release, the official estimate of growth for the first quarter of 2018, which is based on VAT taxpayers’ turnover data, now stands at 5.2 percent. The newly estimated Q1 figure is higher than initially anticipated by the ISET-PI forecast.

Consequently, ISET-PI second quarter forecast has also been revised upward to 5.9 percent. The upward revision of the forecast is most likely due to the improved external environment, credit expansion and fiscal stimulus in Georgia.

THE BEGINNING OF 2018 SHOWED STRONG GROWTH TRENDS IN GEORGIA’S NEIGHBORING REGION, WHICH FURTHER STIMULATED THE GEORGIAN ECONOMY THOUGH TRADE, REMITTANCES AND TOURISM CHANNELS

while the change in tourist numbers (visitors who spent 24 hours or more in Georgia) was even higher – a 33.0 percent increase. Both tourism and remittances increase disposable income of citizens and have significant positive contribution to estimated GDP growth.

Tax collections decreased by 10.6 percent in March year over year, while current spending went down by 5.1 percent in yearly terms. The decrease in compensation to employers and other payments categories was balanced by higher spending on purchases of goods and services and interest payments. However, due to higher infrastructural spending – net acquisition of non-financial assets spiked by 61.6 percent. General budget ended up in surplus of 130.7 million lari, 46.7 percent smaller than in the March of 2017. Increased government spending (including net acquisition of non-finan-

Source: National Statistical Bureaus Note: In case of Russia, the growth of the real GDP for January-February

cial assets) further contributed to economic growth.

INFLATION RATE CONTINUES TO FLUCTUATE AROUND THE TARGETED LEVEL AS THE EXCHANGE RATE STRENGTHENS AND THE ONE-TIME PRICE LEVEL INCREASES ARE PHASED OUT. In March 2018 lari strengthened against the US dollar by 0.9 percent, while nominal effective exchange rate gained 1.4 percent m-o-m. The pressures on prices from higher excise taxes in January 2017 (which caused a one-time shift in price

levels) are already exhausted. Annual inflation in March 2018 constituted 2.8 percent, which was in line with the 3 percent NBG target.

The Monetary Policy Committee of NBG met on March 14, 2018 and decided to maintain the moderately tight monetary policy rate (7.25 percent). This decision was explained by the fact that despite the recent appreciation of the nominal effective exchange rate, the latter still pushes the inflation upwards. At this moment the future path of inflation mainly depends on the developments in the external sector.

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.

RAPID CREDIT EXPANSION IS LIKELY TO BOOST ECONOMIC ACTIVITIES IN THE SHORTRUN, BUT UNCHECKED CREDIT GROWTH MIGHT HAVE NEGATIVE LONGRUN CONSEQUENCES. The domestic credit to the private sector extended by commercial banks grew by 21.1 percent in March of 2018. The domestic currency loans increased by 39.4 percent year over year (accounted for 15.6 percentage point of the growth in the total domestic credit to the private sector), while foreign currency loans experienced a relatively moderate 9.1 percent growth (accounted for only 5.5 percentage point of the growth in total credit). As a result, loan dollarization was reduced to 55.0 percent, compared to the 61.0 percent in the same period of the previous year.

Rapid credit expansion positively con-

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BUSINESS

GEORGIA TODAY MAY 22 - 24, 2018

5

Efforts to Claim Energy Autarky

Image source: Energy Live News

BY BENJAMIN MUSIC

L

ooking at the various articles of the Ministry of Energy, the efforts of the Georgian government to increase the output of renewable energy are enormous. Most projects go in one direction: hydropower plants, or energy won from the power of water. The unique topographical features of Georgia, with it snow-covered mountain tops and hundreds of rivers forming gorges and valleys, hydropower plants are the government’s top investment choice when it comes to generating new energy.

In fact, over the past decade, numerous foreign development agencies have taken it upon themselves to finance projects to increase the overall energy output of hydropower plants in Georgia. The Austrian Development Agency worked closely with firms and organizations from Austria

to support the growing industry in Georgia. Austria has very similar topographic features to Georgia and has been using hydropower plants for decades effectively for its energy consumption.

Just last week, the Georgian government reiterated their support of advancing hydropower plants. “Renewable energy sources and their employment is a priority direction for Georgia’s power sector development. The employment of domestic resources is Georgia’s priority, and this is a precondition for energy independence,” Deputy Economy Minister Romeo Mikautadze noted at the International Conference on Renewable Energy Development in Georgia.

He went on to thank major investors and supporters, the UNDP, SIDA (Swedish International Development Agency), Energy Efficient Center Georgia and ECO British company for supporting the recent action plans. Since the Association Agreement between the European Union and Georgia entered into force, Georgia

assumed various obligations connected to the EU norms of energy policy. A multitude of such norms were transformed into national legislative-regulatory databases as well as an action plan to tackle the situation more effectively. The recent conference was part of advancing the action plan and is closely supported by officials of the European Union.

As of 2017, 76 hydropower plants operate in Georgia, producing a total energy output of 3159 MW, thus making it by far the main contributor to the energy won through alternative energy sources. In total, Georgia produced around 4099 MW last year through renewable energies, of which 21 MW came from one wind power plant and 926 MW from six thermal power plants.

Liana Jervalidze, who published a report on Georgia’s energy situation back in 2008 when the reforms started, noted the dependence on other countries. “Georgia consumes approximately 8 billion kilowatts/hr of electricity, 1.8 billion cubic meters of natural gas, and 750,000 tons of oil products annually. Georgia imports 71% of these resources from neighboring countries with only electricity as an exception. A significant portion of electricity (71%) comes from large, medium, and small hydroelectric stations. The remaining 29% is produced using imported natural gas,” Jervalidze wrote in 2008.

However, as part of the 2007 reform process to understand Georgia’s potential energy output through renewable energies, the report stated calculations by USAID. “The rough calculations prepared by the Georgian Energy Academy in autumn 2007 upon the request of the United States Agency for International Development, put the energy potential from wind, the sun, geothermal, and biomasses at 15-17 billion kilowatts/hr annu-

ally. Specifically, the annual wind energy potential is 3-4 billion kilowatts/hr, solar energy – 3-5 billion kilowatts/hr, biomass energy – 2 billion, hydroelectric energy from small hydroelectric power stations – 5 billion. Geothermal energy has the lowest potential at 2 billion kilowatts/hr,” Jervalidze explained.

Ten years later, Georgia has strongly improved and keeps on supporting the energy transformation. Taking wind, water and thermal energy together, over 139 projects have been identified by the Ministry of Energy for future investments. 17 of these projects are already under construction and add 524 MW to the overall energy production.

Looking at the current energy consumption of Georgia, the country has improved its situation massively compared to 10 years ago. Yet, Demur Chomakhidze, from the Agricultural University of Georgia, paints a grimmer picture from the government and highlights the shortcomings in a report from 2016.

“The electrification rate is considerably lower compared to similar parameters in developed countries. Electricity generation and consumption constitute 2900 kWh per person, while the index of gen-

eration and consumption in Great Britain constitutes 5600 kWh, in Germany – 7100 kWh, in Japan – 7900 kWh. The situation is similar in all segments of energy sectors. It should be especially noted that despite the serious deficit, energy intensity and electricity intensity of Gross Domestic Product (GDP) in Georgia is higher than in other countries. In 2011, energy intensity in Georgia was equal to 0,40kgoe, in USA – 0.17 kgoe, in the world – 0.25 kgoe (average), while electricity intensity in Georgia was – 0,97 kWh, in the USA – 0,31 kWh, in the world – 0,39 kWh (average),” Chomakhidze wrote.

He continues by pointing out the potentials of hydropower plants. In the end, it seems to be only a question of time as to when the transformation will happen, but the dangers of oil imports and energy dependency are as high as before Georgia started to develop its hydroelectricity sector. One question remains: if Georgia can increase production in line with consumption increases. Blackout and energy rationing are past occurrences of the years following independence, but a developing country is a big burden to the power grid. Only when both go hand-in-hand will success be visible on both fronts.

6

BUSINESS

GEORGIA TODAY

MAY 22 - 24, 2018

Numbeo: Ukraine among Top Cheapest Countries to Live in Worldwide

BY DIMITRI DOLABERIDZE

R

ecently, Ukraine was named among the top of the cheapest countries in the world according to Numbeo’s study of The Cost of Living Around the World 2018. Ukrainian cities were positioned among those of India and Egypt for cheap living costs.

Numbeo is a crowd-sourced global database of reported consumer prices, perceived crime rates, quality of health care, and other statistics. It is the world's largest database on cost of living information in various countries (with ratings created based on user information, so they can display the average situation by country with some error). The published rating took into account various factors, for example, the cost of rent and purchase of housing, payment for utilities, travel by public transport, buying food and food in inexpensive restaurants.

According to the results of the study, in Ukraine the average price for renting a one-room apartment near the city center is much higher than the average salary. So, for comparison, on average,

Ukrainians receive $262.3, but the rent of flats is $317 dollars (note: the Numbeo index takes the average data for large cities in Ukraine: Kiev, Odessa, Kharkov).

Despite the fact that renting in Ukraine is quite expensive, it is much easier to do this than in Europe, or in the US. For example, if in some countries you need a good credit history, recommendations, a stable income, etc., when in Ukraine, these things are not particularly troublesome and you can rent without even using an agency, just simply choose from an advertisement and agree with the landlord, much as is done in Georgia.

Logically, the most expensive rental housing is found in the capital of Ukraine - in Kiev, where the average monthly cost per flat is around 8 thousand UAH ($305). Cheaper options are also available.

In Lviv, the average rental price is slightly more than 6 thousand UAH ($229), in Kharkov and Dnieper prices similar - somewhere 5.5 - 6 thousand UAH. In Odessa, the specificity of rent is slightly different, here is more expensive housing, which is close to the sea, and not to the center of the city itself - 6,5 thousand UAH ($248).

According to Numbeo, in Kharkiv,

Ukraine, the cost of living plus rent index was 16.87 and the local purchasing power index was 27.19. In Lviv, it was 17.01 and 26.88, respectively, and in

Kiev the cost of living plus rent index was 20.24 and the local purchasing power index was 37.48. The top end of the scale features Bermuda (128.76;

112.26) and various Swiss and Norwegian cities.

See the full ranking here: www.numbeo.com/cost-of-living/rankings.jsp

A Strong Woman Changing Georgian Compliance Philosophy

BY BENJAMIN MUSIC

T

he term “compliance” might be a very common word to English ears. In principle, it is quite straightforward. It regulates the right conduct of employees and employers to avoid conflicts of interest and a merit-based working environment. Salesmen often have heavy internal fights with the compliance department as going the extra mile might harm the good standing of the company. The right balance between pushing forward to market the product well and acting responsibly is the key to a fine-tuned compliance strategy.

In Georgia, where positions are often given to the son-in-law, or shady financing schemes are put in place by a friend of the CEO, compliance has become an essential tool of big corporations, especially if operating in the public sphere.

Yet, first, the knowledge needs to be accumulated to apply compliance rules and the corresponding structure to the company. One person in particular is at the forefront of compliance: Tinatin Nadareishvili.

Having studied in Europe, she completed an MA in Public Administration as well as an LLM in Public International Law and Human Rights – the perfect legal foundation to strive to a career in compliance. Initially, she worked in different fields, but when a job opening allowed her to work for Geocell in Georgia, she took the opportunity and applied. “One thing led to the other and I started to work in the compliance department to implement essential rules in Georgia.

Geocell at the time belonged to the Swedish Telia Company, and Telia had a strict set of rules in place to guarantee compliance across the segments,” she told us.

In fact, Telia has a set of 17 compliance rules which meet the highest standards of European legal networks. Following these 17 rules is imperative to avoid legal issues and ensures a flawless record when it comes to hiring new people or

Image source: corporatecomplianceinsights.com

making integral decisions to the company’s strategy.

A quick outline of these rules may make one wonder why they are important, but in fact, these 17 points function as a foundation for conducting all operations in an ethically correct way.

1) Don’t accept shine gifts; 2) Don’t favor family; 3) Don’t sponsor the wrong thing; 4) Don’t do bribes; 5) Don’t meet public officials alone; 6) Don’t share sensitive information; 7) Don’t compete unfairly; 8) Don’t do insider trading; 9) Don’t launder money; 10) Don’t post without thinking; 11) Don’t buy irresponsibly; 12) Don’t be a bully; 13) Don’t endanger yourself or others; 14) Don’t travel when you don’t need to; 15) Don’t violate customer’s privacy; 16) Don’t disrespect freedom of expression; 17) Don’t waste resources.

Some points, such as “Don’t do bribes” are probably quite obvious, but also others, such as “Don’t travel when you don’t need to” contribute to a healthy working environment and help a company to run a better image campaign. Besides cost reduction measures, a company is part of society in the same way an individual is. In fact, corporations across the world are responsible for the highest levels of CO2 emissions, which heavily contributes to climate change and environmental destruction. Modern technology also allows us to collaborate and communicate in an instant across thousands of miles. So why should we then travel for work, if we don’t need to?

“Explaining the different points takes time and the goal should be to make the employees aware of the compliance rules.

When they see what is wrong, they learn

to refrain from engaging in undesired behavior,” Nadareishvili says, outlining the most imperative part of a successful compliance strategy.

Her work at Geocell is done and currently she is between jobs, contemplating new solutions to modern compliance issues. When speaking to Nadareishvili, one can clearly see the passion of compliance she radiates. She is admired and respected by colleagues for the rigorous implementation of internal compliance rules in a fair and equal manner. While many managers prefer to use a loud voice and disciplinary consequences as their main tool to force on people a certain conduct, she is different, as she understands the cultural predisposition in Georgia. “I am not my colleague’s enemy, although I’m often seen in such a light.

In the end, we’re all working together and

pulling the same string to bring the company forward. Observing compliance rules has so many advantages; it not only makes sure that the smartest people operate in the company, but that customers can trust us fully when entering into a business transaction,” she tells us.

Nadareishvili continues by stating that the Georgian law has made huge leaps forward when it comes to compliance and anti-corruption legislation. Politicians are held more accountable and compliance rules are in the process of implementation not only in private companies, but also in public institutions.

“From the minister down to the lowest ranked public clerk, everyone needs to observe compliance rules, and people are starting to do so. A new legal framework in Georgia also supports such initiatives,” she explains.

When asked what the biggest challenges in Georgia are when it comes to compliance, her positive attitude speaks for her, as she believes that people will observe the rules when they understand what they are not allowed to do. She notes that there is usually a compliance framework in place which starts by telling everyone what not to do. This is followed by different activities to make sure people don’t forget the rules and have fun memories about them in their minds. “It is basically a step-by-step process,” she says.

“In case people don’t observe the rules, we talk to them and make them aware of their mistakes. Nothing bad happens initially, as people need time to get the right conduct internalized. For deliberate misconduct, disciplinary measures are introduced, which go as far as to fire the individual in question – a situation every company or institution hopes to avoid,” she notes.

Tinatin Nadareishvili is a truly powerful woman, having revamped what is means to do compliance in Georgia. Her passion and expertise for the field makes her contemplate opening up an organization to spur the culture of compliance in various fields in Georgia. We wish her all the best in doing so!

GEORGIA TODAY MAY 22 - 24, 2018

BUSINESS

7

Georgia: Finally Free from Tobacco Smoke

F

rom May 1, 2018, tobacco smoke (including electronic cigarette and pipe) is prohibited in the buildings of various institutions, including bars and res-

taurants.

WHERE IS IT FORBIDDEN? • Buildings or facilities of any purpose; • Public transport (except taxi and yachts); • Café-bars and restaurants; • Educational, childcare and educational institutions; • Other educational institutions, libraries, youth camps, children's entertainment centers and surrounding territories, as well as at social events involving persons under 18.

Smoking is also prohibited in the buildings and facilities of medical and pharmaceutical institutions and their territories; in petrol, gas and gas distribution stations, and in buildings and facilities and their surrounding in which flammable material is stored.

WHERE IS SMOKING ALLOWED? In the house of the person who uses it for residential purposes; in taxis and on yachts; in casinos; in detention facilities; in penitentiary establishments; in specialized laboratory equipment studying tobacco smoke; in Cigar Bars; in case of a special order from the head of the establishments, for inpatient psychiatric and palliative care; in the transit zone of the airport; in designated

tobacco friendly spaces.

Along with the ban on smoking, from May 1, all kinds of tobacco advertising and sponsorship are banned.

• Trade objects which feature external advertising or domestic accessories which involve tobacco advertisements, will be fined GEL 3000 by the new legislation.

• If smoking is to be seen on TV, a special warning video will be shown beforehand and at the end of the program.

ABOUT THE FINES • For smoking in a building and / or in its surroundings, the fine is 500 GEL, and the administration of the institution will be fined double that if the act is repeated; • In the entrance of a multi-storey building, the roof or pedestrian lift, the fine for smoking is 50 GEL; • Public transport drivers will be fined 500 GEL for smoking in the vehicle, to be doubled if the act is repeated; • Smoking on rail transport, in the sealed part of the vessel and on a plane, will incur a fine of 50 GEL, and in case of recurrence, this will be doubled.

It is illegal to sell cigarettes within a 50-meter radius of schools or to display cigarettes in the proximity of children's food products and toys. The fine for doing so is 150 GEL, doubled again in case of reoccurrence.

Thank you for not smoking. Thank you for preserving a healthy work and living environment for all!

8

BUSINESS

GEORGIA TODAY

MAY 22 - 24, 2018

Leading Design Company BergerABAM to Design Anaklia Deep Sea Port

T

he company which is to develop a detailed design for Anaklia Deep Sea Port has been revealed. BergerABAM, one of the leading design and construction management companies in the world, has won the international tender.

AnakliaDevelopmentConsortium(ADC) named BergerABAM after announcing an international tender on drafting a detailed design. The top 20 global companies participated in the tender. One of the best offers was presented by Louis Berger Group member, BergerAbam.

The Government of Georgia has already approved the company chosen by ADC. BergerABAM is one of the leading companies in the field of civil and structural engineering, construction management, underwater inspection and environmental services, known for its work in the development of Panama, Dubai, Mexico, Washington, Marine and Port Infrastructure and Design.

The detailed design of the Anaklia Deep Sea Port includes the full projection of the first phase of the port, according to which the planned marine and land construction works will be carried out by 2020. This design implies: designing a 1.6 km breakwater; 625-meter long berth and multifunctional terminal construction, up to 16 meters of marine water

depth, auxiliary buildings and other necessary infrastructure designed using the latest technologies and international standards.

ADC developed a preliminary design for the Port in early 2017, which was approved by the Government of Georgia in November. World-famous design

companies were involved in the preparation of the preliminary design.

Work on the Port’s detailed design has already begun. Within the framework

of the tender, representatives of BergerAbam visited Anaklia Deep Sea Port, where they were hosted by Anaklia Port and Operator Company SSA Marine.

Anaklia Projects Presented at Astana Global Economic Forum

E

xecutive Director of ‘Anaklia City,’ Ms. Keti Bochorishvili, presented the Anaklia project in Astana in the framework of the Astana Economic Forum 2018.

The AEF (Astana Economic Forum), which is held annually in Kazakhstan, this year was attended by over 8,000 international delegates, including world business leaders, leading scientists, economists and politicians, as well as representatives of multinational and regional companies.

As invited speaker for the panel “The New Central Asian Trade Agenda – Strengthening the Role of the Private Sector,” the CEO of Anaklia City shared the vision of using the Special Economic Zones as platforms to enhance the connectivity and to spur economic activity along the transportation corridors (CAREC and Belt & Road) in our region.

Ms. Bochorishvili shared with the audience the details of the Anaklia Deep Sea Port and Anaklia Special Economic Zone as upcoming state-of-the-art infrastructure to boost the competitiveness of Georgia as a primary transportation gateway for the Caucasus and Central Asian countries for trade with the Western world. In addition, she emphasized the importance of inter-governmental and private sector cooperation to improve the capacity of the Middle Corridor in the frames of EU-China trade.

Alongside the Director of ‘Anaklia City’, other AEF speakers this year included the former French President François Hollande, Steve Wozniak, co-founder of Apple, and the UN’s 8th General Secretary Ban Ki-moon.

The AEF is a crucial platform for business projects, Anaklia City and Port, for boosting the country’s potential of economic opportunities and for making new partners.

The Global Challenges Summit 2018 at Astana's forum saw such topics discussed as economics and stability, digitalization and urbanization, global security and cultural changes.

The Astana Economic Forum was founded in 2008. Over the last 10 years, the forum has hosted 50,000 delegates from 150 countries, including 30 well-known politicians and 20 Nobel laureates.

10

BUSINESS

GEORGIA TODAY

MAY 22 - 24, 2018

Renegade Tea Estate: On a Mission to Revive Georgian Tea EXCLUSIVE INTERVIEW BY SAMANTHA GUTHRIE

gian tea plantations would add a new segment to the tourism sector and possible competitors in this segment are much harder to access from Europe.

I

WHAT KIND OF RECEPTION HAVE YOU HAD IN IMERETI? HAS THE COMMUNITY BEEN WELCOMING? HAS THERE BEEN ANY RESISTANCE?

n 2016, the Georgian Ministry of Agriculture initiated the ‘Georgian Tea’ program to restore abandoned tea plantations. As part of the program, participants receive financial support in bringing plantations up to international standards for export.

According to global industry website STiR, at the height of Georgian tea production in 1985, 152,000 metric tons of tea were produced by mechanical harvesting methods from 60,000 hectares growing tea plants. If Georgia had been an independent country, it would have been the world’s fourth-largest exporter of the crop.

Comparisons have been made with the Georgian wine industry – under Soviet management the focus was on quantity over quality. As wine growing in the country today is increasingly emphasizing natural, organic, and local production, the tea industry aims to follow suit.

Tea harvesting by hand is a labor-intensive process, but pickers in Georgia can earn up to USD 11 per day – higher than the average national income and a significant opportunity for people in rural villages who would otherwise be without formal or consistent employment.

According to Renegade Tea Estate, the Georgian tea industry once employed approximately 150,000 people, but almost completely collapsed in the first five years after Georgia’s independence from the Soviet Union in 1991.

Renegade Tea Estate was established in early 2017 by four Estonians and a Lithuanian moving from the corporate world to agriculture. Their mission is “to bring more authenticity, personality and high quality organic tea to the global tea industry which today is focused on mass production and anonymity.”

While Adjara and Guria (especially the popular brand of Georgian tea ‘Gurieli’) are well known for tea production, Renegade has focused on the midwestern Imereti region and is headquartered in Kutaisi.

Kristiina Mehik says, "We have made initial investments and preparations the first steps of rehabilitation have been completed in a plantation near Opurchkheti- the plot has been cleared of weeds, bushes and small trees, and new shoots have started to grow from the trimmed tea bushes. At the moment, we are cleaning a second estate in Man-

It has been hard to find qualified employees at times, who also speak foreign languages. Also, since people have sometimes not had stable work for many years, it means that their lifestyle and expectations have adjusted. This now needs to be changed again, but it’s not happening overnight.

Our overall impression has been good, though, and we’ve had quite a lot of support from both the government side and from many local people who have showed us how they make tea and helped us in understanding the Georgian culture.

WHY SHOULD PEOPLE BUY TEA FROM YOU WHEN IMPORTED TEA IS OFTEN CHEAPER THAN GEORGIAN? CAN A NON-CONNOISSEUR TASTE THE DIFFERENCE BETWEEN A MEDIOCRE AND A GREAT SIMPLE BLACK OR GREEN TEA?

Image source: Miina Saak of Renegade Tea Estate

dikori and have started to renovate a building to set up a tea factory in Gumati.”

GEORGIA TODAY met Miina Saak of the Renegade Tea Estate to find out about her experience establishing their business in Georgia and reviving tea plantations that have been sleeping for more than 30 years.

TELL US ABOUT THE TEAM We have 5 people in our team: four people from Estonia (Miina Saak, Kristiina Mehik, Hannes Saarpuu and Priit Lavits) and one Lithuanian (Tomas Kaziliunas).

We are former co-workers, and the basis of our cooperation lies in similar values and in our vision for life - to do something that matters to us and others, something meaningful. Many coincidences lead us to this point where we are now rehabilitating tea plantations in Georgia.

WHY DID YOU DECIDE TO COME TO GEORGIA? AND WHY TEA? DID YOU HAVE EXPERIENCE IN AGRICULTURE? As former office rats, we don’t actually have much experience in agriculture, but we all come from small towns and have had some contact with life in the

countryside and have always kind of yearned to be closer to nature. When we learned about the collapse of the Georgian tea industry, it intrigued us so much that we decided to dig deeper into it. Then we found out that the Georgian State has a project called ‘Georgian Tea’ to support the rehabilitation of abandoned tea plantations and we got in touch with the APMA [Agricultural Projects Management Agency], who is coordinating this project. We got a lot of support from them and from other Georgian state institutions. The Georgian Embassy in Estonia also helped us a lot. So, one thing led to another and now we are here. We found some partners from Nepal and India who will help us during this summer to make the best tea we can from the Georgian tea fields.

WHAT HAVE THE BIGGEST CHALLENGES BEEN? The biggest challenge so far has been to find a suitable building for the factory.

Almost every industrial building near our tea fields had been either demolished or ruined. Building something from scratch was also not an option due to time constraints. Then we found an old unused warehouse in the middle of

another abandoned tea plantation. Its location was near perfect and experts confirmed that the main construction is still strong. It requires a lot of resources to set it up as a modern tea factory over the next few years, but we ended up concluding that it is probably our best option going forward. So, we bought it and started to renovate it. Though when we found the building, we realized there was another abandoned tea plantation next to it, we don’t plan to take it on just yet. At the same time it seemed inappropriate to have a bushy tea field next to a working factory, and we hope that there are others who would also like to support getting Georgian tea back on the map and help us to set up a modern factory and clear another tea plantation this year.

Also, learning Georgian has been quite challenging as the alphabet is totally different from the Latin ones that we use in our languages- and the versions of letter “K” are quite difficult for us to pronounce- but we are making some small progress in this field as well.

WHAT KEEPS YOU GOING ON THE HARD DAYS? We were really moved by the sad fate of Georgian tea after the collapse of the Soviet Union and we feel that it deserves a better future. The support from the locals is a major boost for us and keeps us going. Also, the fact that we really do believe that the global tea scene needs more authenticity and personality and we want to offer this. We want to offer high-quality organic Georgian tea and to have real, honest relationships with our customers - no middlemen, no mass production.

WHAT IS YOUR LONGTERM VISION AND WHAT ARE THE STEPS YOU’RE TAKING TO GET THERE? Our future plan is to build up three small Tea Estates (tea farm + visitor center + small hotels at plantations) in the Imereti region. We see great potential in producing high quality organic tea. Demand for such tea is higher than supply and it’s growing fast. We believe that this is the only direction for Georgian tea that is competitive in the world market, as the Georgian cost level is too high for massproduction teas to compete with Africa and South-East Asia.

Also, well maintained tea plantations would be good tourism attractions. Geor-

We see great potential for Georgia as one of the leaders in organic tea production, especially if tea production and tourism is combined. Both sectors have excellent potential and, in our opinion, they can be successfully combined. There will definitely be cheaper alternatives to our tea in the future as well, but we believe that more and more people are interested in knowing who and where produced their food and beverages and see the bonuses of purchasing their tea straight from us, not through many resellers as most of the tea business is doing right now. *** The tea enthusiasts plan to get an initial test batch of tea ready this year and aim to sell their tea to Europe and North America. The entrepreneurs also wish to help to bring a little life back to the villages that once bloomed thanks to the tea industry. If all plans are realized, then in four years’ time, the Renegade Tea Estate plans to offer work to around 300 people during the season.

Mehik says: “This year, we are mainly dealing with the rehabilitation process and keeping the fields clear. Over the next couple of years, the main part of the workforce should get into picking tealeaves.”

The word renegade in the brand’s name means rebels, people who think differently. “In our eyes the name renegade describes best our journey: we are rebels who have chosen an extraordinary path and do not let the norms of ordinary life interfere,” Mehik says.

Renegade Tea is currently crowdfunding the renovation of an abandoned building for their processing factory, and the revitalization of a third plantation nearby the factory. You can learn more about supporting their mission here.

You can keep an eye on the daily life of the renegades and read more about how they live in Georgia on www.renegadetea.com/ blog They are also on Facebook and Instagram.

BUSINESS

GEORGIA TODAY MAY 22 - 24, 2018

Georgia Today Presented at European Newspaper Congress 2018

BY KATIE RUTH DAVIES

O

n May 15, Georgia Today's Founder and General Manager, George Sharashidze, was in Vienna, Austria, to present at the European Newspaper Congress 2018. His topic was: 'Georgia- How the development of a democracy affects media progression,' which also included a focus on the Georgia Today newspaper and its 18-year history.

"This is my second year crossing the European border at Vienna Airport without a Shengen visa in my passport," Sharashidze noted. "Something which became possible after Georgia was granted a visa free regime with European Union member countries. I hope that soon we will celebrate full membership of the EU for which we, Georgians, need to work hard to achieve European standards of democracy and a free market economy, including within the media industry."

Of founding the newspaper, he said: "Helping Georgia to spread the word internationally, beyond the region, ultimately reaching a global audience, was one of the main reasons my colleagues and I decided to establish a European standard newspaper in the English language, with the ambitious mission to be the main source of the most comprehensive, objective, and unbiased information in English about contemporary Georgia," he said, adding that "we realized the importance of having a professional newspaper in English, as Georgia slowly became more recognizable on the global map and began to attract an increasing number of foreign visitors."

He thanked the staff, contributers and dedicated readers that push the newspaper to be ever better.

"Our mission now, when we celebrate our 18th anniversary, has not changed since the very first issue – to be an unbiased, objective and comprehensive source of information about Georgia in the English language for the rest of the world," he noted.

Sharashidze went on to remember the process of redesigning Georgia Today, after an unmissable opportunity presented itself in 2015.

"Thanks to the European Newspaper Congress and JTI, who sponsored our participation at the congress here in Vienna, I had the pleasure and privilege to meet design professional Kevin Loftus, Chief Designer and Head of IT of Mayo News, Ireland, a and winner of the prize for the Best Local Newspaper in Europe at the 16th annual European Newspaper Congress in 2015. He eagerly agreed to help Georgia Today in its rebranding process," Sharashidze said.

"It was a time for the whole team to celebrate," he went on. "Seeing a rebranding and redesigning of the newspaper and an upgrading of the website, including the introduction of daily news and a newsletter delivered straight to the inbox of our readers twice weekly, with the hottest newspaper stories in e-format."

He then continued by telling fellow Congress guests about Georgia Today Group's tourism project: the Where.ge magazine and website.

"Our team of experienced foreign and Georgian journalists offers its own best sights, hotels and guest houses, restaurants and cafes, bars, and shops in our sections of Where to Go, Stay, Eat, Drink and Buy, again designed by our friend Kevin Lof-

tus," he said. "WHERE magazine inspires foreign guests to learn more about Georgia and enjoy their stay in such a way that they’ll want to come back for more. Travelers also have online access to www. where.ge – a recently launched travel website unique in content, design and more importantly, service: tourists can receive 24/7 assistance from Where. ge travel specialists: book hotels, arrange trips across Georgia and receive qualified recommendations based on double-checked travel information."

Where.ge magazine was awarded The Best Marketing Campaign of a Tourism Destination Award at the prestigious Welcome to Georgia tourism awards ceremony last year and has been nominated for the Tourism Campaign of the Year at the Emerging Europe Awards to be held at the EBRD Headquarters in London on 22 June.

"Georgia Today, in its 18 years of existence, has proved that in a developing country such as Georgia, with all its challenges and political turbulences, a newspaper can become popular and independent, relying only on revenue from advertising and sales.

This is very important, especially in countries of emerging democracy, where newspapers are still not regarded as businesses but as cogs in a machine of propaganda," Sharashidze noted.

"We understand that more work needs be done in our country for continued improvement, with the goal of having across-the-board European standards of journalism. That is why Georgia Today is here every year, thanks to JTI." Other topics at the Congress included focuses on present and future trends of print and digital media, individual case studies of various European newspapers, such as Morgenbladet and Zeit, and a look into the Facebook effect, fake news and virtual journalism.

There were many speakers, among them Rainer Esser, CEO of Die Zeit, Andreas Kornhofer of the Red Bull Media House, Oleg Trutnev of Kommersant Russia and Dmytro Krapyvenko of Ukrayinsky Tyzhden (Ukrainian Weekly).

The European Newspaper Congress aims to foster the exchange of information about the concept and design of newspapers and news media throughout Europe. It is organized annually by Medienfachverlag Oberauer in cooperation with the newspaper designer Norbert Küpper.

Georgia Today's Founder and General Manager, George Sharashidze

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BUSINESS

GEORGIA TODAY

MAY 22 - 24, 2018

TBC Bank Conference: Violating Rights of Honor, Dignity & Business Reputation - Legal Aspects & Problems

BY NIA PATARAIA

T

BC Bank, alongside the Georgian Legal Firms Association, organized a conference on ‘Violating rights of honor, dignity and business reputation - Legal aspects and problems.’

The event was led by Zviad Kordzadze, Chairman of the Georgian Legal Firms Association, Ketevan Kvartskhava, Deputy Chairman of the Georgian Legal Firms Association, and Head of the TBC Bank Legal Department, Ekaterine Egutia. The event was held in discussion mode and was attended by legal companies and media representatives.

At the conference, the participants discussed issues related to the inviolability of honor and dignity, freedom of speech, and violation of reputation rights of a company. Freedom of speech according to US legislation, and the scope of freedom of speech in journalistic ethics, were also touched upon.

The recent judicial practice of violating honor, dignity and business reputation was reviewed, with Executive Director of the Georgian Charter of Journalistic Ethics, Nata Dzvelishvili, and Judge Ketevan Meskhishvili of the Tbilisi Court of Appeals, presenting a report.

“This conference covered numerous vital issues important for the future in this field,” Meskhishvili said. “In Georgia, we have acceded to judicial decisions in the field of regulation subject to this issue. Lawyers discussed these decisions at the conference. I’m glad that the courts are actively using the decisions of European judges in this

direction: on the one side protected by human dignity and on the other having no limitation within freedom of speech.”

"Today's meeting provided an analysis of the legal situation in Georgia, two serious issues such as freedom of speech, on the one hand a constitutional right and on the other hand a violation of a person's honor, dignity and business reputation,” Kordzadze noted. “We tried to intertwine these rights and their interaction. Freedom of speech is at a very high level in the Constitution and is protected by law. But when such good things are distorted by violation of one’s honor, dignity and business reputation, it can be named as restric-

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tion of freedom of speech. This makes slander, insult and humiliation, strictly unacceptable.”

The conference also aimed to raise awareness, hence the participation of media representatives and attorneys.

“We talked about precedents in Georgia and referred to those in the US. The difference can be seen in the damage costs which, in this country, are minimal,” TBC’s Egutia noted. “TBC Bank had a four-year dispute with Asaval Dasavali and the court ordered the newspaper to withdraw the slander publicly and also demanded financial compensation. This was not a deterrent, but it is still a good precedent when the court finds that

the spread of lies is not an act of acceptance in the context of freedom of speech.”

"Where the flow of information in the country is increasing, misinformation is obviously a significant problem,” said Dzvelishvili. “However, we are looking into finding a solution. This conference came about exactly because lawyers have different opinions from media outlets. We believe that the main thing we should support is the development of ethical journalism, because high-end media can reduce publications that are directed towards the dissemination of incorrect information. The principle of hate speech and their ethical principles is unacceptable," she concluded.

BUSINESS

GEORGIA TODAY MAY 22 - 24, 2018

Russia Will Try to Widen EU - US Differences

BY EMIL AVDALIANI

G

erman Chancellor Angela Merkel visited the Russian President Vladimir Putin in the Black Sea resort of Sochi on May 18. The meeting came after a series of political rifts appeared between the Europeans and the United States over the Iran deal and the Russia-EU gas project dubbed North Stream 2. For Russia, it is an opportunity to widen the differences among the Western allies over crucial issues concerning the Russian state, such as Ukraine. Nevertheless, despite a difficult period in US-Europe relations, the transatlantic partnership will remain fundamental in wider geopolitical imperatives such as supporting Ukraine and a wider EU push across the former Soviet space.

The US opposes the North Stream 2 project for several reasons. The pipeline will further solidify the Russian energy presence in Europe which, geopolitically, is tantamount to Russian influence in the EU. Moreover, the project which will run through the Baltic Sea will bypass Ukraine, which is likely to lose a significant amount of transit income. Previously, following the fall-out between Russia and Ukraine over the Crimea issue, Kiev was creating difficulties for Moscow in allowing the transit of Russian gas to Europe. North Stream 2 will remove this obstacle for Moscow.

These reasons aside, the US is also interested in diminishing the Russian energy presence in Europe due to its own plans to increase exports of LNG

Image source: mercopress.com

to Europe. Washington even threatened to impose sanctions to stall the progress on North Stream 2, angering Berlin, and there are signs that Europe and the US could further clash over other trade issues.

European attitudes towards Washington are also strained after the recent US

withdrawal from the 2015 Iran nuclear deal. France and Germany were joined

by Russia in urging the need to preserve the deal.

For Putin, these developments between Europe’s leading states and the US present a certain possibility of rapprochement with Germany. The relations

between the two states have been strained since the Ukraine crisis in 2014, and Russia has been attempting over time to challenge the united western front.

From the Russian perspective, the most important issue is Ukraine, and the German stance is crucial in that sense. Merkel and Putin might indeed find common

ground for deeper cooperation, but how far reaching it could be is uncertain.

The same Ukraine issue serves as a fundamental problem and any wavering in stance from the German side will likely meet opposition from other European states as well as its US partners.

Moreover, Berlin has always been quite clear about the Russian role in the Ukraine conflict and that anti-Russian sanctions are unlikely to be lifted unless Moscow’s position changes.

In the long run, Russia-EU relations are likely to remain deeply troubled as Moscow continues to see the EU’s steady expansion into Eastern Europe as undermining it own geopolitical interests.

The US, Germany and the rest of the EU might clash on economic aspects of their partnership, but they nevertheless share similar geopolitical imperatives of countering Russian influence in eastern Europe and the South Caucasus.

In this light, the Merkel-Putin summit should rather be seen as a step towards meeting the immediate goals set by both governments – to get the North Stream 2 going – rather than a definite sign of a serious rapprochement between the two states on larger geopolitical issues.

Thus, although the Russians could potentially hope for widening the existing differences between Europe and the US, Russian leaders see that Europe’s relations with Washington would not be fundamentally damaged. In fact, Merkel herself, following the meeting with Putin, said: “We have a strong transatlantic friendship, which during its history has had to withstand many questions of different opinions, and I think that might be the case now as well."

Tourist Patrol Crews to Serve in Tbilisi

BY SHAWN WAYNE

T

he Georgian Minister of Internal Affairs, Giorgi Gakharia, stated in Parliament on May 18 that infantry patrol police officers will appear in Tbilisi tourist zones from today to ensure safety and order and to provide support to tourists when asked and needed.

Minister Giorgi Gakharia stated that initially, only 20 officers will patrol Tbilisi with this new task; however, he stated that the number will increase.

“Gradually, over several weeks, the number of units will go up to 60, which

Worker Injured in Georgia's Chiatura Mine

BY THEA MORRISON

O

ne man, 32, was seriously injured in Chiatura mine, western Georgia, early on May 20.

The injured miner is Alexander Dekanoidze and, according to the released information, a heavy rock fell on him while he was working in the mine.

He was taken to Kutaisi Central Hospital. Doctors say the patient's condition is grave but stable.

"The patient has a skull-fracture, a fracture of the spine and a swelling of

the brain,” one of the doctors stated before the patient was operated on.

Georgian Manganese, a major producer of high-grade and regular-grade silicomanganese in Georgia, which carries out mining operations in seven mines and eight quarries, including Chiatura, has released a statement regarding the incident.

The company says it was an accident, adding the mine ceiling collapsed, leaving a worker injured.

Georgia’s Ministry of Internal Affairs has launched an investigation under Article 240 of the Criminal Code of Georgia, which pertains to the violation of safety rules.

Another worker died in Chiatura mine in March.

Photo source: Georgian Manganese

will completely cover all tourist zones of the capital,” Gakharia said, adding that the reason for the introduction of such a patrol was the increased tourist traffic in Georgia, which benefits the state economy and at the same time increases safety threats.

“The number of tourists in Georgia is growing daily. On the one hand, it is a great benefit for the economy, but on the other it is a serious challenge for the law enforcement system, as such traffic of tourists is related to certain risks,” he said.

The police crews have begun their patrols today.

The patrol units underwent special training at the Academy of the Ministry of Internal Affairs, and while selecting

13

candidates, special attention was paid to their personal habits and communication skills.

In addition, all of them have knowledge of one or more foreign languages, which is one of the essential prerequisites for ensuring police services and the development of these services. Infantry patrols will also actively cooperate with the private security units of entertainment and other facilities in their areas of patrol to minimize reaction time to offenses, and to take preventive measures.

One of the main tasks of the patrol inspectors is to identify crimes committed against tourists, provide them with information about the laws in Georgia, and direct them to special service centers.

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BUSINESS

GEORGIA TODAY

MAY 22 - 24, 2018

TCT: Putting the Caucasus on the Map of Mountain Sport Destinations

BY SHAWN WAYNE

W

ith the sun shining brightly, Jeremy and Karen Gaskill could not have picked a more beautiful day to open their home to people and host a ‘bagel brunch fundraiser.’

“We’re very happy to host for TCT; they’re a good group of people and we really believe in what they’re doing,” said Jeremy Gaskill.

TCT, or The Transcaucasian Trail NGO of Georgia, was established in 2017 to develop the Transcaucasian Trail in Georgia. The Transcaucasian Trail will eventually become a 3,000 km+ trail network connecting the Protected Areas of the Caucasus. The goal of this cross-border initiative is to improve access to the region’s diverse cultural and natural heritage and encourage its preservation, benefiting local communities and trail users through the development of sustainable tourism.

Jeremy and Karen came to Georgia with the Peace Corps 2004 – 2006, after which they left. However, they could not stay away and came back in 2014. They will be taking on the trail challenge this summer, for which they prepared themselves and their young daughters by tak-

Image source: JOHN WENDLE / nationalgeographic.com

ing a 22-kilometer hike in Borjomi.

“A lot of hiking in Georgia is more

intense and not quite as safe as it could be, so part of the ultimate goal for the

TCT is to get the trail to a standard where it’s a more feasible hiking trail for people

with children or for people who do not have a huge amount of experience, but not all of it, so that there will still be a couple of challenging areas for more experienced hikers,” a TCT representative explained.

This trail will ultimately be used more by the Georgians themselves, be it to travel between villages, maintaining it or even working on it as guides for tourists.

“Right now, international tourism is a big focus for Georgia, due to the economic boost, however the goal is to build a network for Georgians to use in their travels,” the TCT representative said.

Some people seek out new experiences on a daily basis, be it an adrenalinepacked adventure one or a relaxing journey where a story can be told, and TCT is making the Caucusus available for such people. We can expect a great deal from TCT as well as future events in the autumn, with external funding coming from Austria as well.

“I get a fair amount of requests, doing different types of mountain sports, where people say they want to come to the Caucusus. Because when people look nowadays for travel, they look for an epic experience or something with a story, and so I think the TCT is literally placing the Caucusus on the map for these people,” one mountain climber told GEORGIA TODAY.

Railway Line to Provide Economic Boost

T

he Baku-Tbilisi-Kars (BTK) railway route will provide an economic boost for the development of the region, the Bulgarian Transport Ministry has noted.

"Our country’s aim is to provide suitable land and sea routes to serve the Euro-Asian traffic from the new railway corridor. Our analysts show that construction of a railway line along the BakuTbilisi-Kars route as part of the Silk Road, will offer an alternative to the route through Russia and will provide an economic boost for the development of the region," said the ministry.

The new link is expected to reduce the travel time between China and Europe, making it around 15 days, which is more than twice as fast compared to the sea route and half of the cost of air transport, according to the Bulgarian Transport Ministry. "The Bulgarian side participated actively in the discussions on the new project of the multimodal transport corridor 'Persian Gulf-Black Sea.' The cooperation of the parties on the 'Persian Gulf-Black Sea' corridor would contribute to the development of transport links between Asia and Europe and to the establishment of effective trade routes between the European Union countries,

including Bulgaria, to Iran. Our country has a strategic geographic location and has the potential to become a transport hub for Europe. With the realization of all priority transport directions and projects, Bulgaria will become Asia's most direct route to Europe," said the ministry.

The official opening ceremony of the BTK railway was held in Baku in October 30, 2017. The BTK railway was constructed on the basis of a Georgian-AzerbaijaniTurkish intergovernmental agreement.

The railway’s peak capacity will be 17 million tons of cargo per year. At an initial stage, this figure will be one million passengers and 6.5 million tons of cargo.

Where.ge Nominated for Emerging Europe Tourism Campaign of the Year Award

BY KATIE RUTH DAVIES

W

here.ge magazine and website, new tourism products of the Georgia Today Group, have been nominated for the Tourism Campaign of the Year Award at the Emerging Europe Awards to be held at the EBRD Headquarters in London on 22 June.

"Our team of experienced foreign and Georgian journalists offers its own best sights, hotels and guest houses, restaurants and cafes, bars, and shops in our sections of Where to Go, Stay, Eat, Drink and Buy, designed by Kevin Loftus, Chief Designer and Head of IT of Mayo News, Ireland," said George Sharashidze, founder and GM, speaking at the 2018 European Newspaper Congress in Vienna. "WHERE magazine inspires foreign guests to learn more about Georgia and enjoy their stay in such a way that they’ll want to come back for more. Travelers also have online access to www.where.ge – a recently launched travel website unique in content, design and more importantly, service: tourists

can receive 24/7 assistance from Where. ge travel specialists: book hotels, arrange trips across Georgia and receive qualified recommendations based on doublechecked travel information."

320 different companies representing the tourism and hospitality market from all over Georgia, including hotels, travel agencies, festivals and events, restaurants, cafes, wineries, and travel photographers held the status of Nominee of the Welcome to Georgia! National Tourism Awards 2017.

We spoke to George Sharshidze after he received THE BEST MARKETING CAMPAIGN OF TOURISM DESTINATION AWARD on behalf of the Where. ge team. “This is extremely valuable recognition for us, to have respected jury members, leaders and opinion-makers of Georgia’s hospitality industry, chose Where.ge as the best of the best. The prize goes to the whole team of Where. ge and GEORGIA TODAY, our journalists headed by Editor-in-Chief Katie Davies, marketing team, designers, photographers, distributors and every single contributor. And of course, we appreciate the support of our partners’; companies and organizations which have found the cooperation mutually beneficial. The

Welcome to Georgia National Tourism Award is becoming more and more popular and prestigious within the hospitality industry, motivating all stakeholders across the sector, which as the Minister of Economy said at the ceremony, has a larger share in the Georgian economy than the aggregated export from Georgia. We will keep doing our best to

achieve our goal of providing visitors from around the world with the most accurate information about Where to Go, Stay, Eat, Drink and Buy in Georgia.

Emerging Europe is a London-based think tank committed to boosting the social and economic development of 23 countries in Eastern Europe and raising awareness about the region.

The 2018 awards see nominations in the following categories: National Investment Promotion Agency of the Year; City FDI Promotion Strategy of the Year; Social Impact Start-Up of the Year; Equality Friendly Initiative of the Year; Young Empowerment Initiative of the Year and Tourism Campaign of the Year.

BUSINESS

GEORGIA TODAY MAY 22 - 24, 2018

15

‘As Good as Iberico:’ Partnership Fund & SpanishGeorgian Company Present Georgian Mountain Pig Meat

BY THEA MORRISON

W

ithin the project ‘Saving the Georgian Mountain Pig,’ Georgia’s state-owned Partnership Fund and the Georgian-Spanish company ‘Native Georgian,’ along with the State Agricultural Research Center, have held a presentation and degustation of products made from the highest-quality, unique breed of Georgian pig.

The event took place at the Culinary Academy of the Agrarian University on Friday.

Founder of Spanish company Deraza Iberico, Rejino Diaz Del Riosa, and the establisher of the Native Georgian Company, Luis Sans Casado, took part in the event along with Deputy Agriculture Minister Yuri Nozadze, Deputy Executive Director of the Partnership Fund Natia Turnava and the director of the Agricultural Research Center, Levan Ujmajuridze.

The project ‘Saving the Georgian Mountain Pig’ includes promotion of breeding

an Iberico-like variety of pigs in Georgia, and the production of Georgian jamon and other kinds of meat products, as well as the commercialization of these products on the world market.

As a result of studies in Spain, it was confirmed that the Georgian mountain pig has the same characteristics as the Spanish Iberico breed; the meat and other meat products made from the Georgian mountain pig, like that from the Iberico breed, are considered high quality products.

Within the first phase of the project, up to 500 pigs were bred in sterile conditions by picking out 25 unique varieties of Georgian mountain pig.

Several products were specially selected for the presentation and tasting of dishes made from the first Georgian pork products at the Agrarian University Culinary Academy. Famous chefs cooked 15 dishes and all of them received high appraisal from specialists, other chefs and the guests.

The ‘Saving the Georgian Mountain Pig’ project will last 5-7 years and consists of five stages. At present, the first stage of the project is underway, which envisages construction of pig farms, introduction

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of European technologies and standards, finding unique Georgian breeds of pig and transporting them to a specialized farm equipped with ultra-modern technologies.

The investment volume of the first stage is $750,000, from which the Fund's contribution is $350,000.

Within the second phase of the project,

Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Maka Lomadze, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison Photographer: Irakli Dolidze

breeding of up to 1200 mother pigs and construction of farms is planned in nine regions of Georgia.

The third and fourth phases envisage social aspects like employment of the population in the mountainous regions, increasing their income and improving their economic conditions.

The fourth phase also implies equipping

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farms with modern technologies, establishing a European standard meat processing enterprise and production of meat products made from the Georgian mountain pig.

The fifth stage envisages creation of a jamon and Racha Ham producing enterprise and the export of these products to world markets.

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