Issue no: 1247
• MAY 22 - 28, 2020 • PUBLISHED WEEKLY
PRICE: GEL 2.50
In this week’s issue... Citizens Who Lost Jobs to Benefit from Additional 3-Month Grace Period on Loans NEWS PAGE 2
Which Renewable Energy Source is Favored by Experts NEWS PAGE 3
FOCUS
ON ISRAEL-GEORGIA CHAMBER OF BUSINESS: RESTORING TOURISM WILL ENCOURAGE INVESTORS
The Israel-Georgia Chamber of Business is to support the renewal of tourism activities
PAGE 3
Director of Friedrich-Ebert-Stiftung’s South Caucasus Regional Policy on EaP Achievements & Prospects EXCLUSIVE INTERVIEW BY VAZHA TAVBERIDZE
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ast week saw the Eastern Partnership initiative renewed (and upgraded) by the European Union beyond 2020, the Georgian Institute for Security Policy and GEORGIA TODAY spoke to Felix Hett, Director of Friedrich-Ebert-Stiftung’s South Caucasus Regional Policy, about the impact the EaP has had and will have on Georgia, as well as its future prospects.
Dr. Muhamed Ismail Seyan, Chairman & Acting CEO of Hawkary Pharmaceutical BUSINESS PAGE 5
Towards Sustainable Low Emissions Transport in Georgia BUSINESS PAGE 7
Israeli-Georgian Cooperation Becomes Stronger During Global Pandemic Crisis BUSINESS PAGE 9
Carrefour Joins Red Cross, Tbilisi City Hall to Support Socially Vulnerable Elderly SOCIETY PAGE 9
“Corona Days” Artworks of Young Georgian Artists: Mako Lomadze CULTURE PAGE 11 Prepared for Georgia Today Business by
Markets
HOW IS THE CORONAVIRUS CHALLENGE GOING TO AFFECT THE EUROPEAN UNITY AS SUCH?
As of 15ͲMayͲ2020
The slogan is overused, but still I think it’s a challenge and an opportunity at the same time. We saw the challenge primarily at the beginning, when with the spread of the pandemic, the response in Europe was closing borders, prohibiting the export of medical equipment from one member state to the other, all these controversial decisions were there at the beginning. What we see now though is a sense of understanding, solidarity and acknowledgement that we are in fact all in the same boat. Continued on page 4
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NEWS
GEORGIA TODAY
MAY 22 - 28, 2020
Citizens Who Lost Jobs to Benefit from Additional 3-Month Grace Period on Loans BY ANA DUMBADZE
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itizens who have lost their jobs or whose incomes have been reduced amid the pandemic will have their bank loans deferred for another three months, Prime Minister Giorgi Gakharia announced on May 21. The head of the government emphasized that it will happen without capitalization of interest, which is extremely important. "As a result of the cooperation between
the Government of Georgia, the National Bank and the banking sector, we made a joint decision at the very first stage of the crisis to offer a three-month grace period on loans to our citizens. At yesterday's meeting, we made a joint, agreed decision to allow those who lost their jobs or whose incomes have been reduced amid the pandemic to benefit from another 3-month grace period on loans," the PM said. In addition, all citizens whose incomes have been reduced during the crisis and have a loan can apply to the bank and have their credit interest deferred for three months, which will be done without capitalization of interest.
MAC Supports Vulnerable Families through the Mshoblis Skivri Page BY NINI DAKHUNDARIDZE
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ounded in 2008, McLain Association for Children, Georgia, provides support, education, and resources for vulnerable persons of all abilities. The NGO does so by building the skills and knowledge of the families and communities that provide these individuals with care. During the 12 years of functioning, MAC Georgia’s reach has grown. With a team of professionals, many of them holding degrees in psychology, MAC has made many lives better. The organization develops and supports a variety of projects, including the establishment of regional parent support centres and the creation of paediatric wheelchair distribution initiative. It also supports ongoing educational endeavours (financially and professionally); and provides expertise on handling disabilities, behavioural management, special needs education, and occupational therapy. The COVID-19 global pandemic has made many change the platform of their services to continue their work and help the newly-found needs of society. MAC Georgia, too, decided to go remote to reach the people seeking their valued service. In partnership with UNICEF and Ministry of health and through the support of UKAID, MAC Georgia established a TV program called Mshoblis Saati (Parents’ Hour), aired by 1TV. MAC then, again, in partnership with UNICEF, and the Ministry of Health, and with the
support of UK Aid, launched Mshoblis Skivri (Parents’ Chest), a Facebook page offering various free online services and resources to parents of children with disabilities. GEORGIA TODAY talked to Maia Bagrationi, the Program Manager, to find out more. “MAC Georgia, along with other organizations, started thinking about what we could do during the global pandemic, what we did best, and how we could help those most vulnerable during these hard times. We were all interested in how we might connect with parents and give them as much information as possible. Within the frames of this initiative, and with the support of UNICEF, 1TV gave us eight
programme hours to air Mshoblis Saati. TV is a good platform to reach many people, since, especially in the villages, many don’t have internet,” Maia tells us. Wanting the best for the community, MAC soon realized that two hours a week was not enough to help those in need, and the idea of the Mshoblis Skivri Facebook page was born. “We realized that two hours of TV a week wouldn’t, by itself, produce fundamental changes, so we turned to Facebook, creating a page that would be similar to this TV program, and so a new initiative was born. We now have Mshoblis Saati on TV and Mshoblis Skivri on the internet!” she says.
EU Council Adopts EUR 150 Mln Loan Package for Georgia BY ANA DUMBADZE
O
n May 20, the Council of the European Union adopted a decision to provide up to 3 billion Euros of macro-financial assistance to ten enlargement and neighborhood partners, including EUR 150 million to Georgia, to help it cope with the economic fallout of the COVID-19 pandemic. Financial assistance will be provided in the form of loans on highly favorable terms and allocated as follows: Albania: €180 million Bosnia-Herzegovina: €250 million Georgia: €150 million
Jordan: €200 million Kosovo*: €100 million Moldova: €100 million Montenegro: €60 million Republic of North Macedonia: €160 million Tunisia: €600 million Ukraine: €1200 million. EU assistance will help these jurisdictions cover their immediate financing needs, which have increased as a result of the COVID-19 outbreak. Together with the support from the International Monetary Fund, the funds will help enhance macroeconomic stability and create space to allow resources to be allocated towards protecting citizens and to mitigating the negative socio-economic consequences of the coronavirus pandemic.
Source: consilium.europa.eu
With the joint Facebook page of the organizations and facilities mentioned above, Mshoblis Skivri has defined the basic needs of children with disabilities and the families that care for them,and adapted their services to these needs. Their biggest focus is academic, emotional and behavioural support for the children. The platform offers Facebook LIVEs hosted by psychologists, experts and fellow parents in connection to the topics discussed on the television program, and more. One service that has proven most popular and effective, Maia tells us, is the tête-à-tête consultation service. “When we make a Facebook post about a specialists who will host one-to-one consultations that week, we barely have it posted and it’s already full! While of course it’s better when the professional knows the child personally, the advice being more accurate and individualistic, it’s the best we can do during the pandemic and we have found that the parents are really looking for such talks,” Maia shares with us. MAC Georgia is also looking for ways to support the emotional well-being of the parents, not only instruct them. To this end, MAC has developed some services that serve as therapy for the parents. This particular and other Mshoblis Skivri services, the program manager tells us, have proven to be in such a high demand, and precious for both the staff and the users, that the organization is likely to keep it going even after the coronavirus crisis ceases to exist. “We think that Mshoblis Skivri will
continue even after the pandemic is over. We plan to continue functioning and touching on different important topics. We’re finding that we always have more topics to cover!” she says. The coronavirus pandemic has become a source of additional problems for children with disabilities and their parents. Other than the stress of the risk of being infected, of losing family income, of getting food and medical and hygienic supplies, these parents have to meet the complex physical, academic, and psychological needs of the children, and do so independently, with the services that usually support them being limited due to the pandemic. Mshoblis Skivri not only softens these troubles, but also works to make even these times positive. They have launched a kind of encouraging competition: the parents have to snap a photo of their best, happiest moment during the pandemic. The winner will be awarded on June 1, not incidentally, the International Day for the Protection of Children.
NEWS
GEORGIA TODAY MAY 22 - 28, 2020
3
Israel-Georgia Chamber of Business: Restoring Tourism Will Encourage Investors BY TEAM GT
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rom May 22, following the lifting of the imposed state of emergency restrictions, the Israel-Georgia Chamber of Business will start functioning with a special plan tailored to the current situation. Itsik Moshe, the President of the Israel-Georgia Chamber of Business, believes that given the current conditions of the coronavirus pandemic, choosing the right priorities is crucial for the successful and rapid renewal of economic activities. The Israel-Georgia Chamber of Business believes that in the case of Georgia, this could be more active care for attracting direct investments and tourism. The Chamber of Business, based on 25 years’ experience in promoting economic cooperation between Georgia and Israel, sees special potential in working with Israeli investors and tour operators. Currently, the organization is negotiating with several business unions, which are now getting acquainted with the business environment and coronavirus-related situation in Georgia. Moshe says that right now, tourism can become, directly or indirectly, a stimulus for the economy, especially for foreign capital, as the reception of international travelers will have a tenfold positive impact on the country's image. The President of the Israel-Georgia Chamber of Business recalls 2002, when at his and the Georgian government’s initiative, and with the support of the
During the Israeli Week, along with other issues, business activities in Israel to Georgia will be summarized in the conditions of the pandemic. In addition, the Israel-Georgia Chamber of Business will also present an action plan for 2021. The Israel-Georgia Chamber of Business, with the support of ‘Israeli House,’ is strengthening ties with European Jewish organizations with close ties to the Council of Europe and the European Union. "The 25-year activities of the IsraelGeorgia Chamber of Business and the recognition and active support of its activities by the Israeli and Georgian governments have given Georgia even more opportunities to use Israel's experience and potential. “The economic conferences organized by the IsraelGeorgia Chamber of Business usually have the support of the heads of the countries, for example, in 2012, Prime Minister Benjamin Netanyahu wrote: "Dear members of the Israel-Georgia Chamber of Business, I am convinced that in the coming years you will continue to strengthen, encourage and expand these activities to support Israel and Georgia and their people." “The Israel-Georgia Chamber of Business also successfully cooperates with the Government of Georgia, providing proposals, expert assessments, and solving a number of problems that naturally always occurs with business. We believe that right now, against the backdrop of difficult challenges, the priorities and methodology we have proposed will be as effective as the numerous initiatives launched and implemented in the difficult 90s and in the following years,” says Itsik Moshe.
Israeli Ministry of Tourism, the first tourist representation of Georgia opened in Israel. Despite the difficult situation and pessimism in certain sectors back then, it was the encouragement of tourism that played the role of an important mediator between the countries, which was later followed by an unprecedented inflow of private investments from Israel. Currently, its volume exceeds $500 million, and the contribution of tourists from Israel to the Georgian economy is $1 billion. At the same time, the Israel-Georgia Chamber of Business considers it important to develop the investment already received from Israel in Georgia. "Businesses need to be aware of the challenges, but they also need the support of the state. This topic is especially sensitive for foreign investors. If we are able to solve the problem, several Israeli investors are facing this year for objective reasons, it will be the best message for other businesses to invest in Georgia,” says Moshe, adding that this year, in December, the Israel-Georgia Chamber of Business, on the occasion of the 25th anniversary of its activities, will hold an Israeli Week, which will be attended by a delegation from Israel. It will be a large-scale event for the Chamber of Business, which will be joined by partners from Europe and Israel. The Israel-Georgia Chamber of Business is a member of the Georgian National Committee of the International Chamber of Commerce (ICC Georgia) and The World Chambers Federation (WCF). This is an international platform that will contribute to working on investments with Israeli business organizations.
Which Renewable Energy Source is Favored by Experts
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demonstrations. So, yes Norway has also experienced these kinds of things. But very large HPPs in Norway were built quite a few years ago and are still running.
he fight against hydropower plants has become a kind of "fashion trend" for "green" unions in recent years (not only in Georgia), who still oppose the construction of renewable energy sources with outdated, thousand times-rejected methods and myths. The projects of reservoir hydropower plants remain the main target of various environmental associations. Despite a number of scientific confirmations, HPPs still do not get "green" status. But the Greens cannot deny that HPP is a source of renewable energy and converts the mechanical energy of water into electricity. No fuel is involved in the process and the environment is not polluted by any waste. Against the background of the categorical "no" of the Greens, there are a number of advantages to HPPs with water reservoirs. Hydropower experts never tire of arguing that the construction of hydropower plants is necessary not only to get ecologically clean energy, but also for the energy safety of the country - Georgia. We spoke with Carsten Jensen to learn more about the Norwegian experience in hydropower, which is one of the world leaders in the development of this field. He is the Head of the Hydropower Licensing Department of the Norwegian Water Resources and Energy Directorate.
HOW MANY HPPS ARE THERE IN NORWAY AND HOW MUCH ELECTRICITY DO THEY GENERATE PER YEAR? The annual production of hydropower in Norway is about 135 TWh. This, of course, varies a bit due to differences in inflow and precipitation. We have a total of 1600 HPPs in Norway and the total installed capacity is approximately 33000 MW. Norway also has up to 1000 reser-
HOW DID NORWAY OVERCOME THE OBSTACLES? You will of course have controversies, no doubt about that, because all hydropower means some environmental issue. But what I think is important and the way we do it in Norway, all HPP projects, from the start have to secure some payback for the local communities for borrowing or lending their resources for the greater good.
TELL US ABOUT THE HYDROPOTENTIAL AND OPTIMAL UTILIZATION STRATEGY OF GEORGIA
Zhinvali Dam
voirs used for hydropower, which makes about 50% of all the flexible hydropower capacity in Europe. So, the total capacity of reservoirs in Norway is about 70% of all the electricity consumption in the country per year. As for the development of hydro resources, the total hydro potential in Norway is about 215 TWh, and as of today we have adopted approximately 60% of that.
HOW DID NORWEGIAN HYDROPOWER DEVELOP IN THE HISTORICAL CONTEXT? WAS THERE ANY RESISTANCE FROM CERTAIN GROUPS IN SOCIETY TO THE IMPLEMENTATION OF MEGA PROJECTS? In Norway, we have a very long history of hydropower, it goes back more than 100 years. In the early 1900s, we started
exploiting hydropower. But the biggest boom when it came to hydropower was in the years after World War 2, because we had to rebuild the country after the war and of course environmental issues were not forefront then. But during the ’60s and ’70s we we saw that environmental issues had bigger impacts on projects and we had several highly controversial projects with protests and
To ensure energy independence, it is important not to delay the construction of regulatory hydropower plants. It is recommended to build a hydro-accumulation station, which will increase the system's resilience, flexibility, and enable the integration of additional variable power (solar and wind). It is possible to accumulate hydro resources in water storage hydropower plants: we adopt them during the "winter season in energy," the period when the water level in the rivers of Georgia is significantly reduced and small, and seasonal hydropower plants are practically unable to work.
WHAT DO WE HAVE TODAY? According to 2019 data from JSC “Georgian State Electrosystem”, the total installed capacity is equal to 4247 MW, which includes the installed capacity of hydropower plants (3300 MW) and the installed capacity of thermal power plants (925 MW). Continued on page 7
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POLITICS
GEORGIA TODAY
MAY 22 - 28, 2020
Georgia’s Anti-Crisis Economic Plan BY TEAM GT
T
he Georgian government introduced a massive anticrisis plan. Amid a worsened economic situation in the country, the plan will serve as a test for the ruling party before the crucial parliamentary election in October 2020. On April 24, Georgian Prime Minister Giorgi Gakharia introduced an anticrisis plan which covers almost all sectors of the economy the country depends on, and which is subdivided into two large stages. Overall, the government plans to spend 3.5 billion GEL, roughly $1.2 bln. The anti-crisis plan includes both financial assistance to those who have lost their jobs due to the lockdown caused by the coronavirus, as well as measures to navigate business from the shutdown within a six-step plan of gradual removal of imposed restrictions on economic activity. According to the PM, the government will pay more than 1.2 million households’ electricity, water and cleaning bills, and 670 households’ natural gas. In total, the government will spend 150 million GEL (more than $45 mln) for this purpose. At the same time, the government also subsidized prices for 9 main products (bread, butter, etc.), spending 15 million GEL (roughly $4.5 mln). Moreover, 600,000 loans were allowed to be deferred for a consecutive three months.
A crucial sector which constitutes a large part of the Georgian economy is tourism. In 2020, up to 7 million tourists were expected in the country. Therefore, propping up the sector was important: the government annulled 4 months of property and income taxes for tourismrelated business entities (until November 1). This benefits 4,500 entities to the amount of 90 million GEL ($29 mln). Small hotels opened with bank loans will receive state financing of 80% of the loans for the duration of a consecutive 6 months (an overall amount of 10 million GEL (nearly $3.3 mln). This measure will benefit nearly 850 hotels across the country. Another 7000 legal entities are allowed to restructure their bank loans. The state has also insured the increase of the price of construction materials for all infrastructure projects allocating for this purpose to the amount of 200 million GEL (nearly $60 mln). One of the crucial components of the anti-crisis plan is a minimal substitution of employee salaries to nearly 350,000 citizens. For the duration of 6 months, those who lost their jobs as a result of the measures imposed because of the pandemic, will receive 200 GEL (nearly $60) per month. The government will spend 460 million GEL (nearly $150 mln) for this purpose. Additionally, the government will also allocate 75 mln GEL ($24 mln) to subsidize a one-time salary to self-employed people. This specific proposition stirred numerous disagreements in the county as not all selfemployed people would be able to prove
Image source: guardian.ng
they enjoyed steady salaries before the pandemic. As an additional measure, employers will be exempt from the 20% income tax for the duration of 6 months for salaries which amount to 750 GEL (nearly $235). Socially vulnerable people, including large families, will receive 600 GEL (nearly $180) per month for the duration of 6 months. Persons with severe disabilities and children with disabilities will also receive assistance. The amount for this purpose will be 83 million GEL (nearly $27 mln.). Moreover, from 2021, the state pension will increase by at least
20 GEL (nearly $7) per month. At the same time, the government also plans to provide the amount of 600 million GEL ($190 mln) to commercial banks, and an additional 500 million GEL will be generally allocated for business support. Another crucial sector for the stability of the Georgian economy is agriculture, as the country must be able to meet domestic demand for food, particularly as neighboring countries (for example, Russia) have already started to cut down the existing supply chains. 40 million GEL (nearly $13 mln), plus another 50 million GEL ($16 mln) in agro-credit will be provided, ben-
efitting nearly 5000 farmers. The government also unveiled a 6-phase plan to gradual lift restrictions, with the 6th phase (entertainment, sports, recreational, gambling, hotels, educational institutions and all other activities) scheduled to start on July 5. The anti-crisis plan will serve as a major test for the government, as the long-term forecast for the Georgian economy is not particularly satisfying: the country's economic growth will likely be reduced by 4%, meaning budget revenues will be reduced by 1.8 billion GEL ($580 mln).
Director of Friedrich-Ebert-Stiftung’s South Caucasus Regional Policy on EaP Achievements & Prospects Continued from page 1 The German-French proposal on a joint EU recovery fund is the last example for this.
WE SAW RUSSIA MAKING OVERTURES WITH EUROPE AND THE US, SENDING HUMANITARIAN AID TO ITALY IN A BADLY-VEILED PR MOVE. DO YOU THINK THAT MIGHT CHANGE THE PERCEPTION OF RUSSIA IN EUROPE, AND INCREASE ITS INFLUENCE AND STANDING IN THE NEAR ABROAD? I followed the events in Italy concerning the Russian aid sent to Italy in March, and in my view, this venture did not really pay off. It even backfired in some way, culminating in the Russian embassy in Rome criticizing an Italian journalist for their reporting on the issue. Meanwhile, it has become clear that unfortunately Russia is far from immune to the Covid-19 threat, quite on the contrary. And the question is still open as to how effective Moscow will be in handling the crisis.
TELL US YOUR EVALUATION OF THE EASTERN PARTNERSHIP IMPACT UP TO 2020 FOR THE REGION, AND GEORGIA IN PARTICULAR. “There are two ways to look at its impact: You can look at the Eastern Partnership as a whole and then you could look at the individual track record of EU cooperation with certain countries in the EaP framework. And at the individual level, I think what has been achieved is quite impressive, for example in the context of EU & Georgia relations. Would this success have been possible without the Eastern Partnership being in place? Quite probably not. Of course, there is always more you could strive and hope for, but in the end, what the EaP has achieved and is still achieving is an understanding and constant reminder that the EaP societies are indeed part of the European
family. That, for me, is the most important thing about the Eastern Partnership.” Last week, the Council of the European Union approved conclusions on the Eastern Partnership policy beyond 2020, reaffirming its strategic importance. And the respective press-release reads that the EaP should be “a more strategic, ambitious, flexible and inclusive framework for cooperation”. Call me skeptic, but words like ambitious and flexible don’t really go hand in hand when it comes to this part of the world. We asked Mr Hett just how ambitious the new EaP can be while retaining its flexibility, and vice versa. “I think a lot of things might seem paradoxical about the European Union,” he told us. “It has an incredibly complex political structure and, frankly, if you expect the external policy of the EU to be as straightforward as the foreign policy of a small city-state, you might end up disappointed. It’s an unavoidable ambiguity that affects the Eastern Partnership policy as well. I think the idea of flexibility comes out of the history of Eastern partnership and to a certain extent reflects the institutional learning of the EU, because the Eastern Partnership and its history have been full of positive as well as negative surprises.”
WHAT ARE THE BIGGEST CHALLENGES AHEAD FOR THE EASTERN PARTNERSHIP TO BE AS AMBITIOUS AND FLEXIBLE AS THE EU COMMANDS IT TO BE? “For me, it's very simple. I think the biggest challenge is to achieve the declared goal. Now, if you look at the documents, it says we want to deliver tangible benefits to the daily lives of people across the region. That is the biggest challenge, which is complicated by the apparent emergence of China as an alternative role model for development. To be a bit more specific, the EU usually describes the expansion of mutual trade as one of the successes of the Eastern Partnership. I think in the long run, it is not enough to increase trade volumes: if the EU
wants to deliver tangible benefits, for example to the people of Georgia, the huge trade deficit that Georgia experiences in mutual trade has to gradually disappear. Georgia needs to export more, because that would create jobs here. With its negative trade balance, Georgians create employment in the EU.” One of the cornerstones of Eastern partnership is the need for genuine reforms, but when we compare the membership path reforms and those of EaP variety, there are two different approaches. In the membership's case, there is the conditionality criteria and in the Eastern partnership, we hear that the reforms should be carried out for their own good and there should not be anything expected in return. Mr Hett works and lives in Georgia and has a profound understanding and knowledge of the Eastern Partnership countries in general. We asked him if he thinks it is enough of an incentive for this country and other Eastern Partnership countries not to stray from the path of reforms. “I think the problem of lack of conditionality is precisely about the membership perspective, which is currently not on the table,” he says. “From my understanding of what a democracy is and how societies should function, it is the right approach because the reforms in themselves should not be carried out to please any external power; they should be carried out for the good of the people, and because the people demand them. With my understanding of democratic processes, I think to put the stress on the responsibilities of societies seems to be the right approach.”
APART FROM MEMBERSHIP, WHAT LEVERAGE DOES THE EU HAVE TO ENSURE GENUINE REFORM IN THESE COUNTRIES? “I think the most important leverage is to be part of the process, to increase the exchange, to have constant communication, not to allow societies or countries to live in their own bubble, to always have the outside reflection, and to make sure that feedback on how certain steps
are viewed from the outside reaches decision-makers and societies alike.” We note there is a political loophole that also gives an increased risk of fake aid reforms, where the government basically builds a “Potemkin village” to appease external powers. The reforms seemingly are passed, but they stay on paper. We ask him, what ways are there to combat that, aside from optimistically hoping from Brussels that Georgian society will be knowledgeable enough to see through the ruse? “I think democracy is a long-term game and in the end, ultimately, there is no escaping the fact that it has to be pushed through by society," he tells us. "I do not think democracy is granted from above by enlightened leaders: it has to be fought for and won by the societies themselves. The role of the EU is to support societies in this process. They cannot replace the societies: I do not believe that democracy can be imposed from the outside. The attempt to win democracy through conditionality precisely leads to this kind of facade that you described.” There are a number of high profile authors who proposed some sort of alternative to this, in the form of shared sovereignty, which means that the EU should engage in at least partial direct supervision to counter these non-genuine reforms and autocratic tendencies in some of the Eastern Partnership countries. We asked Mr Hett for his take on it. “I see that as a call for some kind of self-imposed, enlightened colonialism. I am very skeptical about this approach for the reason I just mentioned, because it runs counter to my ideas of democracy. And it might also lead to a sort of blame game and finger-pointing, where suddenly the government is no longer responsible for the social and economic situation in their countries but the blame will lie somewhere else.
IN 2017, AT THE EAP SUMMIT, THE “20 DELIVERABLES BY 2020” INITIATIVE WAS PRESENTED. HOW MANY
OF THOSE HAVE BEEN DELIVERED SO FAR? I think the 20 Deliverables are a bit problematic. They include, for example, general goals such as “strengthening the rule of law”. That is of course a very important goal, but it is a qualitative one that is hard to measure. So, for each and every goal you could have a long discussion if the Eastern Partnership has delivered or not. It is different with the EaP European School, which is goal No. 19. It is there, you can tick the box, but that is one of very few deliverables where the answer is so straightforward.
TELL US ABOUT THE RUSSIAN FACTOR AND THE INFLUENCE IT HAS ON THE EASTERN PARTNERSHIP AND ITS FUTURE PROSPECTS. I have a feeling that in the Eastern Partnership context, the Russian factor is sometimes overemphasized. I do not think that the EU designs every EaP policy applying a “what will Moscow think?”-filter. And I’m not convinced that Russia is actually following the policy so closely. I would like to point to the case of Armenia, which shows that democratic progress is possible without alienating Russia. On the other hand, I see a certain risk with this announcement of the new commission being more geopolitical, because I think that this is a word that triggers attention in Moscow. So far, the official EU line in my understanding was always that the EaP is a non-geopolitical project, and suddenly there is this announcement by the Commission to enter the realm of geopolitics. I am not sure what this means, and how it will play out for the Eastern Partnership.
BUSINESS
GEORGIA TODAY MAY 22 - 28, 2020
5
Dr. Muhamed Ismail Seyan, Chairman & Acting CEO of Hawkary Pharmaceutical
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r. Muhammad Ismail Sayan is the founder and has been shareholder of 50% of the Batumi View project since 2016. He joined Batumi View after he saw what a good environment Georgia has in real estate investment, law, and in terms of management by the government. Batumi View offers apartments and with an international hotel brand for a luxury lifestyle, with incredible views and a great variety of facilities, including shopping areas, restaurants and cafes, entertainment areas for children and a swimming pool and fitness center. It guarantees a tranquil environment and comes with 24/7 security, front desk service and a private car parking area.
The total land of the Batumi View project consists of 15,000 m2, divided into three residential blocks and one hotel. Apartments start at 30 m2. By launching the Batumi View project, the aim is to create the highest performance levels for any property under the company’s management, by utilizing the most sophisticated and appropriate practices. This will deliver significant new returns on investment for owners while keeping customers happy in the best traditions of the hospitality industry. Dr. Muhamed established Hawkary Group in 1992 in Kurdistan region, Iraq, to be one of the biggest groups working in the commercial sector there. Hawkary Group's major specialization and experience in these 28 years was in the phar-
maceutical sector. He has continued to expand the network of Hawkary Group while providing high-value-added services that assist employees and clients of Hawkary to expand business operations. Hawkary is one of the top five fast-growing Local Pharmaceutical Distribution Companies in Iraq and occupies a significant share in the Iraqi market. It engages in the distribution and marketing of pharmaceutical products and has supported this growth by proactively adding the right products to its portfolio based on the growing Pharmaceutical market needs. Dr. Muhamed is also Executive Chairman of "TEAMMART" TEAMMART is a huge market chain consists of over 120 branches distributed
in Iraqi Kurdistan. Continuous improvements and strategic planning are some of the strengths of Dr. Muhamed, seeing TEAMMART concepts gradually increase its size and operations since 2008. In today’s fast-moving and changing
markets, companies no longer just want a vendor who responds to requests at a minimal cost: they need an innovative partner that can quickly turn ideas and projects into value-generators with minimal cash burn, and that’s what we do.
Cranking up Georgia’s Economy OP-ED BY NUGZAR B. RUHADZE
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ne of the most qualified automotive tips is to move an unused vehicle around every once in a while, rather than have it sitting immobile. The same is true with people. And it can also work when applied to the economy. The thought is very simple but extremely practicable. They say the global economy is at a temporary halt, including ours, but nobody in the world can say with certainty how long the global moneymaking machine is going to be idle. More so when we talk about the Georgian economy! Sporadic rumors would have it that economic matters might improve on what they were before the virus outbreak. There is one funny streak to the current economic situation though: those who are responsible for the product output of the country might use the corona moment as a scapegoat to put all possible economic failures on the death-hauling shoulders of the imperceptible microorganism. Why not? Corona wouldn’t mind the blame because the malicious germ is very busy building its own perfidious plans to destroy our sources of our survival. They say the rate of unemployment could be lowered in Georgia thanks to the economic plan to create thousands of new jobs by moving certain industrial
enterprises from China to this country, but it is not easy to prognosticate how soon it might take place, if at all. In the meanwhile, those businesses that were paralyzed for well-known medical reasons are now poised to reopen, but again, nobody can predict the level of their successful operation. We should consider why. Take, for instance, the restaurant business, which was very well developed in Georgia. All kinds of eateries were visible, popular and profit-smart here and their absence has made our lives terribly dull and lifeless. But even if all of them reopen today, the restaurants, cafes, diners, coffee-rooms, bars or ice-cream joints will have to manifest a certain amount of patience until the public starts enjoying them full-time again, because the traditional clientele of those small business spots have gotten unused to them and need time to reacquire the old habit of eating out or spending their leisure time in a public space. Moreover, in order for us to create a certain unison between businesses and customers, we will have to not only crank up the businesses, but the customers too, because the laze has overwhelmed most of us due to the imposed home-stay, and I’m afraid the secure domestic environment has made us feel better indoors than in the open air, although many would say that they are now tired of spending this much time at home. Anyways, the longer a business, be it a big factory or a small store, stays shut, the
Image source: news.sky.com
more moss and rust it gets covered with, and the more problematic it becomes to give it new life. These fresh life opportunities and presumptions might all be true, but not very helpful if the virus wants to stay around to deprive us of our revived spirits. Frankly, I am getting allergic to online information because a) it is irritatingly controversial, b) I have no idea which
piece of the available info about the virus is true and which is false, and c) the avalanche of unchecked information is likely to trigger a nervous breakdown. So, maybe it is indeed much better to get back to our old-time routines and let them work as the real-time circumstances allow. What leaves no doubt is that action is better than stagnation in any possible
case. Fearing the monster is normal, of course, but dying of that fear will not save the day. Am I being foolishly optimistic? Never! I am just trying to be reasonably pragmatic. Stopping life and not knowing when to restart it is the worst thing our imagination is compelled to accommodate, so let’s do something that keeps us ticking!
6
BUSINESS
GEORGIA TODAY
MAY 22 - 28, 2020
Fiscal Effects of COVID-19 in Georgia
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he Covid-19 pandemic is having a severe impact on economic activity worldwide. What was already a global health crisis is now evolving into a global economic crisis with dire and sweeping consequences. The nature of this particular shock is markedly different from past downturns, affecting supply, demand, and consumer confidence. The well-worn mantra ‘extraordinary times require extraordinary action’1 is pertinent today - the pandemic has heightened the need for swift and targeted government responses, and in this regard fiscal policy plays a key role. Support for those affected by the pandemic is being provided on an extraordinary scale around the globe revenue and spending measures is estimated to amount to US$3.3 trillion globally so far2. Governments are deploying a wide range of ‘timely, temporary, and targeted’ measures including paid sick and family leave, transfers, unemployment benefits, wage subsidies, tax deferrals, and liquidity support for firms. Given their relatively strong tax-benefit systems, advanced economies are able to rely on a wide range of fiscal instruments. However, developing economies have less room in their budgets to respond to the pandemic. Indeed, the additional spending and tax cuts and deferrals necessitated by the pandemic result immediately in sizeable budget deficits and worsened public debt dynamics. The pandemic has sharply weakened Georgia’s economic growth prospects for 2020. Severe containment measures are already significantly lowering tax revenues while state expenditures increase. Extreme uncertainty is also hampering capital inflows and delaying investments, as well as weakening domestic demand. According to estimates in PMC Research Center’s recent assessment in which three scenarios (optimistic, less pessimistic, and very pessimistic) were considered, Georgia’s real economy is expected to shrink by 4.3% in the optimistic scenario, and by 8% and 12.9% in the less pessimistic and very pessimistic scenarios, respectively.
IMPACT ON TAX REVENUES AND EXPENDITURES Due to the stagnation in economic activity, the budget revenues from taxes will inevitably fall. Based on the three scenarios for economic growth in 2020, PMC Research Center has estimated the magnitude of the decline by analysing the impact on each type of tax separately3. As a result, PMC RC estimates a 1756 million GEL decrease in tax revenues in optimistic scenario, a 2208 million GEL decrease for the less pessimistic scenario and a 2843 million GEL drop in the very pessimistic scenario. In order to mitigate the health and socio-economic impacts of the shock, the Government of Georgia (GoG) has announced the Anti-Crisis Economic Plan worth 3.5 billion GEL on 24th April4. The fiscal relief package includes subsidies, transfers, tax deferrals, and liquidity support for firms. Our scenarios for expenditure were designed based on the aforementioned economic growth scenarios forecasted by PMC Research Center. The stimulus package proposed by the GoG, to supplement the three-
US$1.5 billion has also been announced, of which a total of US$200 million has thus far been confirmed by various donor organizations. Despite this announcement of donor financing being made approximately a month ago, the full breakdown of the sources of this funding is not yet known. As of writing, approved budget support amounts 481 mln USD, while announced budget is 470 mln USD, totalling 951.5 mln USD.
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month containment period, corresponds to the optimistic scenario in PMC RC’s previous research5, while the other two scenarios (less pessimistic and more pessimistic) come into play if the situations worsens and some of the package items are extended6. A detailed list of the items in the package that directly affect the budget, based on different scenarios, can be seen in table 1:
According to PMC Research Center’s calculations, additional expenditures arising from the anti-crisis package amount to 1738 million GEL, while the less pessimistic scenario this figure rises to 1818 million GEL, and in the event of the very pessimistic scenario proving true it reaches 2.220 million GEL. Revenue measures, such as income tax exemption and VAT refund were subtracted from the income tax revenue and VAT revenue of the planned budget for 2020, and neither were included in this calculation. Additionally, we expect the GoG to partially offset this temporary spending by reprioritizing current expenses (300 mln GEL). On the basis of all of these anticipated developments, which are summarized in table 2, we estimate a new budget deficit7. If the optimistic scenario unfolds, the budget deficit is expected to be 4905 million GEL, while in the event of the less pessimistic scenario it is expected to be 5437 million GEL, while under the very pessimistic scenario the budget deficit is forecasted to be 6474 million GEL. To put these numbers into perspec-
tive, the budget deficit as a % of GDP will increase from 3.1% to 9.8% in the optimistic scenario, while in the less pessimistic and very pessimistic scenarios it will amount to 11.2% and 14.1%, respectively. The increased budget deficit will increase government debt as a % of GDP to 53% in the optimistic scenario, which is a 10 percentage points increase from the initially planned 42.7%. If the less pessimistic or very pessimistic scenarios play out, the government debt to GDP ratio will go up to 56.1% or 61.4%, respectively. Increased debt translates to higher taxes in the future, putting the burden of the COVID-19 crisis on future generations.
DONOR ASSISTANCE TO BUDGET In order to balance the budget, the Government has to turn to donor lending. On April 14, the Prime Minister of Georgia, Giorgi Gakharia, announced the receipt of donor financing of US$1.5 billion, which is planned to be disbursed in the course of 2020. Approved and announced lending by donors so far are
listed in Table 3. Out of this US$1.5 billion, it is also known that 250 million will be disbursed by the IMF to the National Bank of Georgia14, thus not contributing to the state budget. Meanwhile, assistance to the private sector of
1. Planned budget spending should be reprioritized to provide space for COVID19-related expenditure. The financing of emergency health and social needs is becoming more challenging, particularly considering the already high level of Georgia’ debt and the inevitable increase to its budget deficit due to the pandemic. The Government should assess the resource requirements for health responses and support packages, and should identify and cut low-priority spending (current and capital) to create space and keep balance for emergency spending measures and post-crisis response. Meanwhile, the generation of additional revenue from privatization should also be considered. 2. Fiscal measures should be targeted to assist the hardest-hit households and firms. The government should ignore lobbying pressure from different sectors and businesses seeking benefit from fiscal policy package. While advanced economies can afford a broad-based stimulus, developing countries have less room in their budgets to follow suit. Accordingly, financial constraints should be taken into account when determining the extent and scope of the support instruments, while clear criteria should be designed for sectoral support. Priority should be given to sectors/sub-sectors that have been almost completely shut down during the pandemic, and will potentially suffer a steep decline in demand for some time (e.g. tourism and its sub-sectors). 3. Effective public financial management is key to safeguarding against fiscal risks and enhancing the Government’s capacity to respond to the crisis. The Government should intensify the monitoring of revenues and expenditures as well as the national debt and liquidity position. Moreover, fiscal policy responses need to be adequately costed and monitored.
https://www.ecb.europa.eu/home/search/coronavirus/html/index.en.html IMF Fiscal Monitor, April 2020 3 The analysis is based on IMF paper „Challenges in Forecasting Tax Revenue“, as well as taking into consideration special characteristics of Georgian tax structure 4 http://georgiatoday.ge/news/20805/PM%3A-GEL-3.5-billion-will-be-Spent-on-Crisis-Management 5 as a scenario with -4% growth rate is a working scenario for Georgian government, as of writing 6 More specifically, some components of supportive measure will be sustained proportionally to the period of containment. These components include: subsidy for electricity, natural gas, and utility , subsidy on basic food products, healthcare costs and credit guarantee scheme for businesses. 7 The budget deficit was calculated from the state budget, using the assumption that change in non-financial assets will be the same figure as initially planned 8 https://www.imf.org/en/News/Articles/2020/05/01/pr20202-georgia-imf-execbrd-complete-6threv-eff-approves-request-support-address-covid19 9 https://eeas.europa.eu/delegations/georgia/77393/eu-announces-%E2%82%AC183-millionsupport-georgia-covid-19_en 10 https://eeas.europa.eu/delegations/georgia/78001/letter-eu-ambassador-carl-hartzell-primeminister-giorgi-gakharia_en 11 https://agenda.ge/en/news/2020/1336 12 https://ge.usembassy.gov/message-from-ambassador-kelly-degnan-new-u-s-support-for-georgiasresponse-to-covid-19-may-8/ 13 https://agenda.ge/en/news/2020/1174 14 https://www.imf.org/en/News/Articles/2020/05/01/pr20202-georgia-imf-execbrdcomplete-6threv-eff-approves-request-support-address-covid19?cid=em-COM-123-41535 1 2
BUSINESS
GEORGIA TODAY MAY 22 - 28, 2020
7
Towards Sustainable Low Emissions Transport in Georgia
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ransport remains the main contributor to air pollution in Georgia: 70% of NOx and 40% of volatile organic compounds come from this sector. This is caused by the fact that the car fleet is old and poorly maintained, with more than 45.5% of vehicles being 20 years or older. Furthermore, every year the number of imported vehicles increases in the country, taking into account that no emission standards have been introduced for imported cars. As a result, introducing vehicle emission standards for imported vehicles in compliance with EU requirements became a priority for the government. On May 2020, the United Nations Environment Program (UNEP), together with its partner organization CENN, officially launched phase II of its “Sustainable Low Emissions Transport” project in Georgia. UNEP intends to continue supporting the development and implementation of vehicle emission standards in Georgia via the adoption and implementation of Euro-equivalent vehicle emission standards to promote a global transition to no-and low-emissions mobility for improved air quality and climate change mitigation. Phase II of the “Sustainable Low Emissions Transport” project aims to provide technical support to analyze current and proposed vehicle standards. This includes undertaking a cost-benefit analysis in order to assess the potential economic impacts of introducing import restric-
ronmental Protection and Agriculture of Georgia. “To this end, the project will speed up the process of mainstreaming innovative approaches to introducing low-emission transport policies and standards in Georgia, in consultation with lead international and national project partners.” The Terms of Reference for developing the CBA have been prepared under the previously-supported project for the Introduction of EU Emissions Standards for Light Duty and Heavy-Duty Vehicles in Georgia, based on country-specific requirements and circumstances, and with the support of the Climate Technology Center and Network (CTCN). The project “Sustainable Low Emissions Transport” (phase II) also contributes to UNEP’s Climate Change Subprogram 2020-2021, including Expected Accomplishment: (b) “Countries increasingly adopt and/or implement low greenhouse gas emission development strategies and invest in clean technologies”.
tions based on EU vehicle emission standards in Georgia. Based on the outcomes of the previously-supported project for the Introduction of EU Emissions Standards for Light Duty and Heavy-Duty Vehicles in Georgia, this project continues to provide support to the Govern-
ment of Georgia in harmonizing Georgian legislation with EU requirements and to protect human health and the environment from the harmful emissions created by the transport sector. “This project intends to conduct a Cost Benefit Analysis (CBA) study on intro-
ducing low-emission transport policies and standards in Georgia, in consultation with lead project partners, including the Ministry of Environmental Protection and Agriculture of Georgia (MEPA),” says Noe Megrelishvili, Head of the Ambient Air Division, Ministry of Envi-
Which Renewable Energy Source is Favored by Experts Continued from page 3 It is expected that the additional capacity of the new hydropower plants will be added to the installed capacity in 2020-2030, which will increase the total installed capacity from the existing 4247 MW up to 5014 MW by 2022, up to 5984 MW by 2024 and up to 7945 MW by 2030. By the end of 2019, the following types of HPPs were operating in Georgia: 7 regulatory (with reservoir), 4 daily regulation, 27 seasonal, i.e. depending on water inflow, 53 small HPP. In total, we have 91 hydrogeneration facilities, which is about 5% of the same Norwegian hydropower plants. This is against the background of the fact that, as mentioned above, Georgia has adopted only 20% of its water resources.
THE OPINION OF GEORGIAN EXPERTS Giorgi Chikovani, Director of the Energy Development Fund of Georgia: "Our energy is based on hydropower and water inflow in rivers. Unfortunately, we do not have the great potential of water storage hydropower plants and we are very limited in terms of water accumulation. There are several projects only in Georgia, which are of great importance in terms of our energy independence, such as Khudoni, Nenskra and partly Namakhvani. All other HPP projects depend on water inflow. Regulatory hydropower plants are very important for the development of the system as well as for integrating alternative energy, as solar and wind power plants are unstable and we need electricity too." "If we did not have Enguri HPP today,
we would be tied to neighboring countries and we would not have any energy independence in terms of electricity. HPPs with the storage capacity of Enguri can no longer be implemented in Georgia, as Eguri HPPs is very large: there is no potential for that. However, the construction of hydropower plants such as Nenskra, Khudoni, Namakhvani is necessary and they cannot result in any disasters or bad results." Nugzar Beridze, Director of the Electricity Department of the Georgian National Energy Regulatory Commission, assesses the growing trend of electricity imports in the country. According to the expert, in the first quarter of 2020, the share of import was 12-15%. The main importing countries are Russia and Azerbaijan. Of course, the share of Russia comes mainly on Abkhazia, while Azerbaijan leads in the rest of Georgia in terms of import.
SHUAKHEVI HPP WAS PUT INTO OPERATION. HOW IMPORTANT IS THE CONSTRUCTION OF NENSKRA HPP IN TERMS OF IMPORT SUBSTITUTION? THE PANDEMIC WILL END AND CONSUMPTION WILL INCREASE AGAIN. Without the use of energy, we will not be able to develop enterprises and the economy. We need to develop sources of generation because consumption is increasing and local sources can no longer meet it, so we need to import electricity. As you know, powerful and water reservoir hydropower plants, if hydroelectric power stations are developed, are very important for the more
Enguri Dam
efficient introduction of other variable generation sources. Import has significantly grown because our generation can no longer cover consumption. Consequently, only powerful power plants can develop the industry and economy of the country.
FOREIGN COUNTRIES IN THIS DIRECTION? FOR EXAMPLE, IN NORWAY THERE ARE 1660 HPPS, OF WHICH MORE THAN 1000 ARE RESERVOIR HPPS. SHOULD GEORGIA SHARE THIS EXPERIENCE?
WHAT IS THE EXPERIENCE OF
In this regard, sharing the experience of Norway will certainly be useful for
Georgia. They have fully taken advantage of their hydro resources, while we use only 20%. We always acknowledge their experience and they, as consultants, are actively involved in this process. Therefore, sharing the experience of Norway as one of the most powerful energy countries in Europe will definitely help us.
8
BUSINESS
GEORGIA TODAY
MAY 22 - 28, 2020
Government Adopts New Electricity Market Model Concept between the price provided by the agreement and day-ahead market price shall be paid to the public wholesale service organization by the producer in case of positive difference; in case of negative difference the public wholesale service organization shall pay the difference to the producer. The electricity for the consumption on the occupied territory of Georgia shall be purchased on the day-ahead or intraday market. The Market Concept further envisages electricity supply by universal service providers. They will supply electricity on a regulated basis to households and small enterprises that have not selected a specific supplier. The supplier of last resort will supply electricity with a pre-established tariff, set by the regulator to those consumers who have lost the supply due to planned or unplanned suspension in the supplier’s activities or due to material breach of supplier’s obligations.
STAGES OF MARKET OPENING The Market Concept determines the deadlines for the opening of the specific markets.
Image source: aypeg.ge
M
G Law Office, through the contribution of partners Archil Giorgadze and Nicola Mariani, joined by senior associates Ana Kochiashvili, Tamar Jikia, associate Mariam Kalandadze, Junior Associate Ana Jikia and Paralegal Lasha Machavariani is partnering with Georgia Today on a regular section of the paper which will provide updated information regarding significant legal changes and developments in Georgia. In particular, we will highlight significant issues which may impact businesses operating in Georgia. *** Last year, the Parliament of Georgia enacted a new Law on Energy and Water Supply (the Law on Energy) that entered into force on 27 December 2019 and established a general legal framework for further implementation of the EU Directives and Regulations. The Law on Energy provides the legal basis for power related secondary legislation, the main pieces of which are the Electricity Market Model Concept and the Electricity Market Rules. The Electricity Market Rules have not yet been adopted. On 16 April 2020, the Government of Georgia (the GoG) adopted the Electricity Market Model Concept (the Market Concept) by its Decree #246. The Market Concept introduces general principles for organizing and functioning of the wholesale trade market of electricity. The Market Concept aims: (a) to establish attractive environment for investors and to provide free options for consumers by way of developing competitive and transparent electricity markets; (b) to form organized electricity markets, inter alia, day-ahead and intraday markets, as well as balancing and ancillary services market and the market for bilateral agreements; (c) to provide clear distinction between the duties and responsibilities of the entities functioning in the energy sector; (d) to form competitive and liquid market price. Furthermore, the Market Concept sets out the mechanism for fulfilling the obligations envisaged by the contracts that were concluded before the Law on Energy entered into force and special requirements of supplying occupied territories of Georgia with electricity.
MARKET CONCEPT PRINCIPLES The general principles on which the
Market Concept is based, are: a) Competitive, transparent and free trade on the electricity markets; b) Avoidance of the conflict of interests and discrimination; c) Sale of electricity on the wholesale market by means of competitive market, particularly, by bilateral agreements and/ or on organized electricity markets including day-ahead, intraday and balancing markets; d) Trade of electricity only on the organized markets by public service provider energy enterprises and providers using the facilitation mechanism/ scheme envisaged by the Law on Facilitation of Production and Use of Renewable Energy; e) Determining hourly schedules of generation and consumption, means of generation/consumption of electricity and their loading capacity by the responsible persons (self- dispatching); f) Hourly trade on organized markets and, accordingly, liability of the market participants for the hourly imbalance; g) Purchase of electricity only on the day-ahead and intraday markets in order to reimburse the losses; h) Allocation of cross-border capacities in accordance with the transparent and fair rules.
MARKET SEGMENTS AND THEIR OPERATION The Market Concept regulates the market structure and rules of operation and the rules to organize the public service. Wholesale Market Structure and Operation The electricity wholesale market is divided into 4 segments: (a) day-ahead market; (b) intraday market; (c) market for bilateral agreements; and (d) balancing and ancillary services market. Subjects of the wholesale market are: electricity market operator; transmission system operator; distribution system operator; electricity producers; suppliers; large consumers and wholesale public service providers. The operator of day-ahead and intraday markets shall ensure the operation of the respective markets, administer the registry of the markets’ participants, and establish transparent, accessible and reliable system of financial settlements. The operator of balancing electricity and ancillary services shall ensure oper-
ation of the respective markets, determine respective market products, estimate imbalance prices, and determine the value of financial guarantees for securing the payment for products and imbalance fees. The transmission system operator will (i) determine the forecasted volume of balancing and ancillary service products; (ii) manage the energy system on selfdispatching principle and undertake other balancing measures, including activating certain producers on the basis of the balancing market outcomes; (iii) organize a cross-border balancing mechanism, including emergency support; and (iv) register the persons responsible for balancing, including balancing service providers and assigning codes to them; (v) manage and develop electricity metering system for retail market operations, ensure accessibility of the hourly metering data. Final consumer can freely choose the supplier on the wholesale electricity market and purchase electricity.
PUBLIC SERVICE MANAGEMENT Public wholesale service organizations, universal service suppliers, suppliers of last resort and public service producers, including a source of guaranteed capacity, are obliged to provide public services. The obligation to provide public services is temporary arrangement which shall be reviewed at least once every two years. The wholesale public service is established to support electricity generation from renewable energy sources and their integration into the market, to support the universal service providers by ensuring a stabilized purchase price and to secure the supply of electricity to occupied territories (Autonomic Republic of Abkhazia). For above purposes, the wholesale public service provider shall: a) purchase electricity under guaranteed power purchase agreements and sell it on organized market; b) ensure financial settlement with the producers participating in the renewable support schemes and other support schemes; c) ensure financial settlement with the public service generators for differences in price between the market price and the price established by the Georgian National Electricity Regulatory Commission (the Commission);
d) purchase electricity on the organized market to secure supply to the occupied territories and be responsible for relevant imbalance; e) ensure financial settlement with universal service providers for differences in price between the market price and the price established by the Commission. The electricity purchased by the guaranteed purchase agreement can be sold on the organized market by the public wholesale service organization or by the producer itself. In order to compensate the price difference or to implement other facilitative arrangements the producer and the public wholesale service organization can execute the agreement that shall be agreed with the GoG. Otherwise, the difference shall be paid by the public wholesale service organization. Producers that are beneficiaries of the facilitation scheme of the renewable energy shall ensure sale of the electricity themselves. Costs envisaged by the facilitation scheme shall be paid by the public wholesale service organization. Producers providing public services shall trade on the organized market. The obligation of the electricity producers to provide public services is reflected in the conclusion of the agreement on price difference with the public wholesale service organization. The difference Period Until July 1, 2021 Until July 1, 2022 Until July 1, 2026
*** Georgia has been steadily reforming its energy markets to ensure non-discriminatory access thereto by any third party. The GoG strives to encourage new investments and to facilitate investment flows towards a well-functioning electricity market. The process is underway and more changes are expected to be introduced into Georgian legislation to successfully implement the reform. *** Note: this article does not constitute legal advice. You are responsible for consulting with your own professional legal advisors concerning specific circumstances for your business. MG Law is the first full-service law firm in Georgia to be founded by international partners. The firm advises a diverse group of Georgian and foreign companies, financial institutions, investment funds, governments and public enterprises. Among many other areas, the firm primarily focus on the following sectors: Banking & Finance, Capital Markets, Arbitration & Litigation, Labor & Employment, Infrastructure and Project Finance, Energy Law, Real Estate, Tax and Customs, Investment Law, Corporate Law, and Cryptocurrency & Blockchain. For more information, please visit www.mglaw. ge or contact Archil Giorgadze at archil. giorgadze@mglaw.ge and Nicola Mariani at Nicola.mariani@mglaw.ge
Opening of the Market Last consumer of 35-110 V that consumes no less than 0.4 M. kW.h energy per month. The last consumers of 35-110 V and last consumers of 6-10 kW-V that consume no less than 1 M. kW.h energy in per month. All other consumers except of residential sector and small enterprises.
Hydro-electric power plants that were constructed before 1 August, 2008 will be released from the obligation to provide public services as provided in this table: Period After 01.01.2021 After 01.05.2022 After 01.05.2024 After 01.05.2026 After 01.01.2021
Energy generators that will be released from the obligation to provide public service Hydro-electric power plants constructed before 1 August, 2008 project capacity of which does not exceed 50 MW. Hydro-electric power plants constructed before 1 August, 2008 project capacity of which does not exceed 65 MW. Hydro-electric power plants constructed before 1 August, 2008 project capacity of which does not exceed 75 MW. Hydro-electric power plants constructed before 1 August, 2008 project capacity of which does not exceed 90 MW. Hydro-electric power plants constructed before 1 August, 2008 project capacity of which does not exceed 120 MW.
BUSINESS
GEORGIA TODAY MAY 22 - 28, 2020
9
Israeli-Georgian Cooperation Becomes Stronger During Global Pandemic Crisis
I
sraeli-Georgian cooperation has become stronger and more productive during the global pandemic crisis. The Israeli Embassy in Georgia is proud to collaborate with Tech Touch and offer leading Israeli innovation experts to an Online Tech Conference (held on 29-31 May). Two prominent Israeli experts will be among the many world-class speakers sharing their experience, knowledge and practical 'tips'
with local participants. The three-day event will gather business owners, developers, and marketers to discuss the current issues and find potential solutions to save the business and overcome the crisis. IT companies, developers, tech students, project and product managers, white hackers, engineers, AI-scientists and AI-based startup founders will get together to learn the latest online trends, new AI-based discoveries and applications, cybersecurity challenges, fintech, leadership in the IT sphere, product development, autonomous cars tech and ethics in the epoch of the Industry 4.0. With the support of Israeli Embassy and in partnership with the Georgian Innovation & Technology Agency, on May 19, one of the leading Israeli Innovation Institute Developers. Institute provided a free Front-End course in HTML, CSS & JavaScript. Developers. The Institute is a selective & intensive coding bootcamp, dedicated to educating the next generation of tech talent in Israel. They offer cutting-edge mentored courses in Web Development, working with the industry’s best professionals to create the most that promise to take the student from beginner to job-ready developer. Olmait: the success story of the Israeli-
Georgian High-tech cooperation, especially in fighting COVID-19. Olmait (https://www.olmait.com/) is a Tbilisi-based Israeli data-focused development firm, which was founded by the Israeli entrepreneur Mr. Nizan Weisman. Olmait employs teams of Georgian computer scientists, coders, and developers and is at the cutting-edge of the evolving local eco-system. Olmait is proud to announce that it has been commissioned to take a key part in a US-led project to develop a groundbreaking COVID19 testing device. The project is led by the US-based SKC - Sensor-Kinesis Corp (https://sensorkinesis.com), which is a global leader in linking the biological world to the digital domain. The SKC mission is to link medical diagnostics and its related technology platforms to the digital domain, to connect human biological information and data via the cloud to billions of interconnected users, and take advantage of big data analysis to improve medical diagnosis and care. For that purpose, SKC has developed the unique Opticus platform Technology. The Israeli-Georgian Omait firm is engaged to complete the Optikus-cloud API (application programming interface) for secure JSON data transmission by utilizing existing medical protocols.
SKC’s architecture, based on Omait technology, will allow patients to perform tests remotely (possibly at a temporary testing facility) and share results instantaneously with their primary care provider for diagnosis and treatment prescription. The revolutionary testing kit can be used not only for COVID19, but also cardiac life-threatening conditions, as well as various other physiological diseases. The cheap, user-friendly new device would yield results in a matter of minutes and would enable to masstest millions of people around the world. Mr. Weisman, who has been a prominent consultant for governmental agencies and international companies oper-
ating in Georgia since 2011, and since 2017 an active investor un the local Technology Sector, has cited this project as proof for the enormous progress made in recent years by the local eco-system. As Chairman of Olmait, he is dedicated to expanding Olmait’s potential even further and turning it into a key innovative player in the Georgian, regional and international markets. The Israeli Ambassador to Georgia, Ran Gidor, added: “We congratulate Olmait and Mr. Weisman on their impressive achievement, which demonstrates how Israeli-Georgian cooperation can benefit not only the 2 countries – but the international community at large.”
SOCIETY
Carrefour Joins Red Cross, Tbilisi City Hall to Support Socially Vulnerable Elderly
K
eeping older people safe is especially important during the coronavirus pandemic, as they are the most vulnerable group in this new, invisible enemy. All areas of society must
unite to ensure their safety and wellbeing during these difficult times, and business sector representatives in Georgia are sparing no efforts to contribute to achieving this important goal. Carrefour, as a company with high
social responsibility, has joined the Red Cross and Tbilisi City Hall campaign to support socially vulnerable elderly. Within the campaign, not only Carrefour Georgia , but all its customers, have a chance to contribute to helping elderly in need. As part of the social campaign, you can buy products at Carrefour Georgia stores , which will be packed by Red Cross volunteers and distributed to socially vulnerable elderly people with the involvement of regional administration employees. Together with the Red Cross Society in Georgia and nutritionists, a minimum package has been developed, which envisages about ten days' supply and includes two areas: food, medicine and hygiene items. These include: sugar, rice, tea, pasta, buckwheat, oat flakes, wheat flour, oil, salt, beans, biscuits and primary consumption items. The package will be delivered to single elderly people with the help of trained volunteers and regional administration employees. The campaign is organized on the recommendation of the Interagency Coordination Council. Tbilisi Mayor Kakha Kaladze, together with Deputy Mayor Ilia Eloshvili, personally visited Carrefour Hypermarket in Tbilisi Mall to check the process of its implementation. “We are continuing our project which is successfully helping the elderly. A special platform has been created for this purpose. Carrefour Georgia has expressed interest to join us. A special corner has been set up in each location to collect products. Citizens who want to do so, can buy the products on the list which will then be delivered to those who most need our support today. Many thanks to Carrefour Georgia for giving us this opportunity, and most importantly, to the ordinary citizens who truly care about helping those who are at risk today,” said Kaladze. Christophe Orcet, Country Manager of Carrefour, noted: “We are delighted to have an opportunity to be a part of the very important campaign initiated by Tbilisi City Hall to help those who need it most. During this difficult period,
elderly people are in the most risk group and from today on, with support of our partner organization the Red Cross Society in Georgia, not only Carrefour but our customers visiting the stores, have the chance to make a contribution to the safety and well-being of more than 10,000 socially vulnerable elderly living in Georgia.” What’s more, Carrefour and Mastercard are teaming up to launch a new social campaign that on the one hand will help reduce the risk of spreading the virus by promoting contactless payments and, on the other hand, will help single elderly people. “Today, paying in cash is associated with certain risks, and for this reason, we want our customers to take care of their own safety while caring for others and use contactless payment methods,” note the representatives of Carrefour. By paying with Mastercard, both companies help people to get involved and
contribute to such important and significant projects as "Helping the Elderly." In any branch of Carrefour, from May 18 to June 22, if you pay by Mastercard (whether it is by contactless card payment; using a mobile phone or other device), part of the money will directly go to help single elderly people. It is planned to help 500 single elderly people as part of the campaign. They will receive baskets, specially created for them, full of food and various household items. It should be noted that for these purposes, in order to prevent COVID-19, Mastercard has increased the limit of contactless payments worldwide, including in Georgia, which now stands at 100 GEL instead of the previous 45 GEL. “Use cashless payment. Look after yourself, while caring for others!” is the main motto of the new social campaign.
10
SOCIETY
GEORGIA TODAY
MAY 22 - 28, 2020
The World Prays for Human Fraternity BY H.E. ESSA ALNOAIMI - THE AMBASSADOR OF THE UNITED ARAB EMIRATES IN GEORGIA
T
he global initiative “Pray for Humanity” launched by the Higher Committee of Human Fraternity, to be set on Thursday, 14 May, 2020 as a day of prayer, was welcomed by the leaderships of different countries of the world and international organizations in order to ask the Almighty to end the novel Coronavirus “Covid-19” pandemic that claimed the lives of hundreds of thousands of people and about four billion people of various races and beliefs are still under threat currently. His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the United Arab Emirates Armed Forces stated: “Our prayers in addition to the worship of millions around the world to God never stop, however whether they unite at the call of the Human Fraternity Committee, we find the moment of solidarity where the differences are fading amidst the challenge from where no one is excluded, regardless one’s efforts. Thus, we are in need to reconcile God and His mercy so as to achieve the end to the pandemic. His Holiness Pope Francis, Pope of the Vatican, said: “We ask for an overcome from this Pandemic and we are all united
as brothers who pray to God according to our culture, tradition and beliefs, who fast and ask forgiveness from God for our sins. This pandemic has come up suddenly and lately we started to wake up a little to see that there are other pandemics of hunger and war too, but the most important thing is that we pray, thanks to the courage of the Higher Committee of Human Fraternity.” It is well known that this committee is dedicated to achieving the objectives of the Human Fraternity Document which was unveiled during the Global Conference on Human Fraternity, attended by more than 700 leaders of various religions of the world. In the capital Abu Dhabi on 4th February 2019, Pope Francis, the Pope of Vatican and Ahmad Al Tayeb, the Grand Imam of Al-Azhar signed the Fraternity Document in the presence of H.H. Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the United Arab Emirates Armed Forces and H.H. Sheikh Mohammed bin Rashid Al Maktoum - Vice President of the United Arab Emirates and Prime Minister. During the phone call between H.H. Salome Zourabichvili and His Holiness Pope Francis before the world day of prayer, His Holiness pledged to pray for an end to the coronavirus pandemic, noting that this global crisis has made it clearer how important brotherhood is between nations and said that he would pray for Georgia naming it as a country
Signing the Document of Human Fraternity, Feb. 2019, Abu Dhabi
of great spirituality and precious to him. In a statement made on this memorable occasion, Ahmad Al-Tayeb, the Grand Imam of Al-Azhar mentioned that this prayer is a sincere call to turn to God through worship and prayers in which we beseech God and seek refuge in Him. He also urged the entire humanity to work on rediscovering the values of jus-
tice, peace, coexistence and equality among all humans through the hardships and crises. As well, a number of religious and political leaders of the world joined this global initiative by expressing their support through tweets, articles and videos posted on social media accounts. Among them is UN Secretary-General Antonio
Guterres, who, in support of the initiative, stated on his account of Twitter: “In difficult times, we must stand together for peace, humanity and solidarity”. Thus, it is truly a humanitarian pause in which Faith and optimism interfere and amid the threat of pandemics and disasters, our human instinct leads us to return to God and get His mercy upon us.
Older People’s Rights & Dignity must be Protected amid COVID-19 Pandemic BY ALANNA ARMITAGE, THE DIRECTOR OF THE REGIONAL OFFICE FOR EASTERN EUROPE AND CENTRAL ASIA OF UNFPA, THE UNITED NATIONS POPULATION FUND
A
cross Europe, from Spain to Serbia, care homes for older people have become hotspots of COVID-19 infections. According to the World Health Organization, residents of long-term care facilities account for up to half of coronavirus deaths in Europe. Among all the heartbreaking statistics that tell the story of how the virus is devastating lives around the world, this figure sticks out to me. It shines light on an unimaginable tragedy unfolding right before our eyes – but drawing surprisingly little public attention. Older people living in care facilities make up only a tiny fraction of the total population – barely 1% for example in Germany, the country with Europe’s largest number of nursing home beds per capita. This gives a sense of how grotesquely overrepresented care home residents are among the deaths caused by the virus. Older people in general are badly affected by the pandemic. They are at increased risk of severe illness from COVID-19 and some 95% of deaths are among people aged 60 and older. This is one reason why Europe, the region with the world’s largest proportion of older people, is seeing the pandemic ravaging with such force within its borders. And older people aren’t just facing a health crisis: physical distancing (erroneously called social distancing) measures to contain the virus also have a disproportionate impact on their lives and livelihoods, as many are cut off from the services, support and caregivers they rely on. Often neglected and out of sight, older people living in care homes are among
the most vulnerable of all. We hear haunting stories of people dying alone, without having their loved ones around them and with sometimes only minimal care provided by overwhelmed und underfinanced facilities. The tragedies happening in nursing homes right now are just one, albeit extreme, expression of how we are failing older people more broadly. The pandemic has put this failure into stark relief, but it didn’t begin with COVID-19. As countries in Europe are ageing rapidly – one in four people already is 60 years or older – societies have been struggling to create conditions for the growing number of older people to be able to thrive, remaining in good health and active in their communities and public life. Instead, many older people experience neglect, poverty, social exclusion and isolation – exacerbated now because of the pandemic. Perhaps even worse is the way public discourse tells them, more or less subtly and through myriads of cultural clues, that because of their age they are a burden, less valuable, even expendable. It is my hope that this crisis, and the horrifying effects it has on many older people, will come to be a turning point for how we see and treat older people in society. At UNFPA, the United Nations Population Fund, we work hard with our partners in government and civil society not only to support older people during the pandemic. But also to ensure more broadly that their dignity and rights are protected and that they remain integrated and engaged in their communities. Many countries are now looking at how the crisis can be turned into opportunity. There are four key steps governments can take to make this happen: Prioritize the protection of older people in responses to COVID-19. This can include sending unequivocal public messages of support for the equal rights and dignity of older people and taking bold measures to demonstrate that public commitments go beyond lip service.
Ensuring continuity of services, supporting caregivers, using digital technologies to reach people in isolation – a lot can be done to mitigate the effects of the crisis. Hear the voices of older people. As we are responding to this crisis, and developing policies for the future, we must listen to what older people have to say. Engaging with community representatives is vital for avoiding bias and being able to come up with solutions that respond to actual needs. Counter ageism in public discourse and practice. There must be no tolerance for the rampant age discrimination and negative stereotyping that has surfaced even more during this crisis. Promoting a counter-narrative centered on inter-
generational solidarity and the agency and valuable contributions of older people will be key for shifting social norms and attitudes. Revisit legal and policy frameworks and budgets through an age lens. Now is the time to start looking beyond the crisis and review what needs to change in sectors like health, education, employment and social welfare so that countries are in a better position to cope with the effects of rapid demographic change while ensuring the rights and choices of an ageing population. Let’s be clear: the death of so many older people during this crisis was not inevitable. It is the direct result of our failure – as societies, institutions and cultures – to assign equal importance
and value to the lives and well-being of the older generation. We must learn from past mistakes and get serious about creating a society for all ages in which older people are recognized, and supported, as the important pillars of society that they are: as teachers and mentors, carers and volunteers, story-tellers and creators, conveyors of culture, and fighters for rights that we sometimes take for granted. In an ageing Europe, we simply cannot afford to exclude a quarter of the population with all their skills, talents and other contributions. Ensuring that older people are treated with the same rights and dignity as everyone else is not only a moral imperative, it’s a win-win for all, old and young alike.
SOCIETY
GEORGIA TODAY MAY 22 - 28, 2020
11
See How Far We’ve Come BLOG BY TONY HANMER
I
f the video documentary on which I reported last week was slickly convincing at first glance, with professional-level production values, this week’s focus of my attention is nothing like it. And I find myself writing a new article only two days after I sent off the last one, because the iron is hot. I have Google news to send me a daily email summarizing any news about my favorite pop singer. (Hints: she’s Scotland’s best voice ever, has been active in music since the late 1970s, and has also been a very influential philanthropist in issues of women’s rights and poverty for some decades as well. Much to adore as well as to admire). Today’s email alert included a link to a news website which I had not heard of. The brief article there had a date of now, but described as current news a charity concert in which the above singer took part… December 2019, old news. It was also filled with the kind of mistakes which led me to believe it was written by an AI. Either that, or it was a bad machine translation from another language into English. I dug further into the site. Every part of it revealed similar errors, a common style of language throughout. “About”, “The Team”, the several categories of news being reported on: all were in this junky English which left me scratching my head. Who is the intended audience
for this rubbish? It could never fool anyone with about a grade 5 level of the language and up. I’m not sure how nonnative speakers or readers would take to it, though. What is the purpose of even setting up and filling or maintaining such an obviously fake news site? Other such sites seem to aim to fool the reader by appearing genuine, using reasonable quality language which doesn’t put the reader off. This one? Nothing that sophisticated. Anything I read there made me feel
cheap, dirty, sullied; not because it was about disgusting things, but simply because it was so poorly written. I googled the name of the site, which I will not dignify by revealing here. There is only one page describing it, listing an age of just over 6 months, a value of $8.95, and a daily income of $0.15. Perhaps it’s too new for the sites which blow the whistle on fake news to have discovered yet? Or simply too obviously wrong for anyone to bother pointing it out as such? Is it something entirely set up and writ-
ten, straying here into science fiction territory, by AI? WHY? Computer programs are being developed which can now write, draw, paint, and compose music in various styles. To varying degrees of success, true; but this site I would characterize as being such a failure that I cannot conceive of it as an attempt to fool, as I have written, anyone with a rudimentary grasp of native English. Is it simply meant to sow more confusion, or to distract people from what is actually important and worthy of attention?
(It’s certainly having some effect on me: Look how much I’ve written about it already!) Is this one of the future genres of internet news, with, say, the wittiest or bestwritten work at one end (The Economist’s picture captions, or articles in The Atlantic), more common but still quite readable human-produced stuff in the middle, the best of AI output after that, and this at the far other end? Its existence bothers me and makes me despair; but then I am someone who devours great English writing like great food, and despises or chokes on the worst of it. To the insult I feel has been added injury. Simple execrable taste is no legal cause for forcing something like this to be shut down. It should either sink or swim by its own merits or lack thereof, so perhaps I can hope reasonably to see its extinction. (Is it intended to make money from click-through ads? At 15 cents a day, no one will be getting rich fast from this.) However, given the down-sliding state of things in the world that I perceive at the moment, perhaps such optimism is also unfounded. I suppose that only time can tell. Tony Hanmer has lived in Georgia since 1999, in Svaneti since 2007, and been a weekly writer and photographer for GT since early 2011. He runs the “Svaneti Renaissance” Facebook group, now with nearly 2000 members, at www.facebook.com/ groups/SvanetiRenaissance/ He and his wife also run their own guest house in Etseri: www.facebook.com/hanmer.house.svaneti
CULTURE
“Corona Days” Artworks of Young Georgian Artists: Mako Lomadze Mako got her fine art Bachelor’s from Tbilisi State Academy of Art in 2013. In 2017, she did her Masters in the same university, her major also Fine Art. Mako is now based in Tbilisi where she works hard, challenging her imagination and conducting her emotions. She participates in Georgian and International art exhibitions.
INTERVIEW BY NINI DAKHUNDARIDZE
G
EORGIA TODAY is continuing its collaboration with BI Auction, presenting artists taking part in the online exhibition ‘Artworks @Corona Days.’ In this issue, we introduce you to Mako Lomadze, a young Tbilisi-based contemporary artist who likes to capture everyday emotions in her paintings. A BA and MA graduate from Tbilisi State Academy of Arts, Mako believes that being an artist means being a conductor of one’s own emotions. “Clearly, during the pandemic, people were overwhelmed by fear and insecurity,” Mako tells us when we ask her how the pandemic has affected her creative process. “In general, I did not think specifically about the theme of the pandemic, because my works are mainly based on everyday feelings, so, naturally, the current events affected my work as well. I believe that an artist is a kind of conductor of emotions and even if artwork is not specifically dedicated to this or that
event, it still affects creativity,” she explains. Her first work during the isolation due to the COVID-19 pandemic featured flamingos in a cactus garden. While at first glance it looks like a breezy summer painting, the number of cactuses on the canvas leaves you thinking that the flamingos, pink, beautiful and ready to flee, might be imprisoned. “A flamingo is a symbol of youth, freedom and strength,” the artist explains. We also find out from her that pink is the color of isolation. “This is the first work I did during the pandemic, the work itself
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expresses isolation,” Mako says. Another painting that Mako entered in BI Auction’s online exhibition has the title “Hikikomori”. Intrigued by the curious name, we asked for more information. “Hikikomori is a subculture in Japan,” Mako tells us. “These people refuse to go out by choice. They live for years in their rooms.” Hearing about this culture certainly hits differently when you are isolated yourself. Many have had to face difficulties being productive. When asked how she has found it to stay active in her work dur-
Journalists: Ana Dumbadze, Vazha Tavberidze, Nini Dakhundaridze, Tony Hanmer, Emil Avdaliani, Nugzar B. Ruhadze, Beka Alexishvili, Elene Dzebizashvili, Photographer: Aleksei Serov
ing this trying time of forced self-isolation, unlike the Hikikomori culture, Mako replied by showing another of her pandemic-themed pieces. “I named this Wild Heart. The desert for me represents isolation, peace of mind and the heart,” Mako said and I am convinced if this interview were not remote, I’d be seeing her smiling cheekily. “In spite of everything, I hope all will be fine and humanity will learn a new lesson: the same danger can fall on everyone,” Mako said, sharing her postpandemic world thoughts with GEORGIA TODAY.
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About BI Auction ‘for ART’: BI Auction is the first Art Auction Company of Georgia, established in 2016. The company’s aim is to promote Georgian art and artists and enlarge the market. In four years, BI Auction ‘for ART’ has organized seven auctions and presented more than 400 paintings from 120 Georgian painters. In every auction, the collection is selected from among a thousand paintings from the well-known legendary artists of Georgia and also from promising young artists. For more information, please contact biauction1@gmail.com
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