Issue no: 1086/148
• SEPTEMBER 25 - 27, 2018
• PUBLISHED TWICE WEEKLY
PRICE: GEL 2.50
In this week’s issue...
FOCUS ON THE SWEET STUFF
London's best loved baker opens a branch in Tbilisi. Welcome Lily Vanilli!
Georgian Parliament to Move from Kutaisi to Tbilisi
PAGE 11
NEWS PAGE 2
World Chess Olympiad Opens in Batumi BUSINESS PAGE 3
Georgia's Growth Projections Strong, but Turkish Lira Crisis May Dampen Buoyant Forecasts ISET PAGE 4
Car-Free Day in Tbilisi
The Rise of the US is a Lesson for China
BY SAMANTHA GUTHRIE
S
eptember 22 is World Car Free Day, where people who usually drive are encouraged to give up their cars for a day. The day was established by the British organization Environmental Transport Association in the mid-1990s, and the official date was set in 2000 as an initiative of the European Commission. This year, Tbilisi Mayor Kakha Kaladze participated in the day’s festivities, including a community bike marathon. At the event, Kaladze spoke to participants, discussing the importance of living a healthy lifestyle and noting that City Hall is working to implement policies that increase and protect Tbilisi’s green space, expand and improve public transportation options, and encourage fewer people to drive private cars. “Many people move around Tbilisi by car. A healthy lifestyle is not very
BUSINESS PAGE 7 Image source: Tbilisi City Hall
popular with us, but today's action is an important step in that direction. So many young people came out today, and we were riding bicycles together...When [City Hall develops] infrastructure projects, we look for places to include bicycle infrastructure. The Kostava-Shartava streets project is a clear example of this. A bike lane is completed, which will be connected to Pekini Avenue, creating one unified route,” said Kaladze. The Mayor also expressed hope that environmentalism and awareness of environmental issues will continue to grow in Tbilisi, and that more people will join Car Free Day next year. He said, “We will do our best to walk more, and have more people on foot and on public transport, and we will have more green spaces in the city. We must slowly draw attention to the ‘killing’ cars that are outdated and damage the city environmentally, along with the health of each of us and our children.” The national organization Alliance for Safe Roads observed the day, along with the United Nations in Georgia – partners in establishing the “Clean Air” campaign, which works to bring awareness to the health effects of breathing polluted air. “The main message is that [we need] fewer cars in the city and more people using public transport and bikes and walking often,” said Eka Laliashvili, Chairman of the Board of the Alliance for Safe Roads. Continued on page 3
Bakhtadze Meets with Amazon Web Service Management in DC BUSINESS PAGE 8 Prepared for Georgia Today Business by
Markets As of 21ͲSepͲ2018
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Bank of Georgia (BGEO LN)
GBP 18.79
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103.23 (YTM 5.39%)
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+1,9%
Georgia Capital (CGEO LN)
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GBP 11.09
+8,7%
+6,7%
GEORG 04/21
BONDS
105.15 (YTM 4.71%)
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GBP 2.15
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GRAIL 07/22
106.10 (YTM 5.93%)
+0,1%
+1,2%
GBP 16.42
+3,0%
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GEBGG 07/23
98.07 (YTM 6.47%)
Ͳ0,2%
Ͳ0,8%
COMMODITIES
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CURRENCIES
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Crude Oil, Brent (US$/bbl)
78,80
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2,6175
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GHG (GHG LN) TBC Bank Group (TBCG LN)
Gold Spot (US$/OZ)
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1 200,04
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3,4238
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7 490,23
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0,0394
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0,4161
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0,0054
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7 986,96
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0,0933
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159,13
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EUR / USD
0,8511
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MSCI EM
1 051,43
+2,2%
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GBP / USD
0,7645
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SP 500
2 929,67
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CHF / USD
0,9587
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MSCI FM
2 616,93
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RUB / USD
66,4552
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GT Index (GEL)
1 582,68
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TRY / USD
6,2907
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1 208,13
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1,6992
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NEWS
GEORGIA TODAY
SEPTEMBER 25 - 27, 2018
Georgia Improves Position in Crime & Safety Index
BY THEA MORRISON
R
esearch portal Numbeo, the world’s largest database of user-contributed data about cities and countries worldwide, reports that Georgia improved its position in the crime and safety ranking in 2018. In the ranking, Georgia took 5th place among 125 countries, reports the Ministry of Internal Affairs (MIA) of Georgia.
The data reads that the crime index of the country is 20.35, and safety index – 79.65 points. In addition, Tbilisi also improved its index and moved from 19th to 16th place this year. The crime index in Tbilisi is 19.81 and the safety index is 80.19 points. “Numbeo provides current and timely information on world living conditions including cost of living, housing indicators, health care, traffic, security, crime and pollution,” the information released by the MIA reads.
Georgian Parliament to Move from Kutaisi to Tbilisi BY THEA MORRISON
F
rom 2019, parliament sessions are to take place in the old parliament building in Tbilisi instead of the western Georgia city of Kutaisi. Tamar Chugoshvili, First Vice-Speaker of Parliament, says it is more convenient if lawmakers are again working in the capital. “We had several arguments in making this decision. One is that it is almost
impossible to work in two buildings, in two cities. This damages the performance of the Parliament. Secondly, this is related to high costs. Thirdly, it is very difficult to strengthen the Parliament and its supervisory function when the government and the legislative body are in different cities,” Chugoshvili explained. The Vice-Speaker added the building of parliament in Kutaisi might be handed over to the Ministry of Internal Affairs. Khatuna Gogorishvili, member of the parliamentary minority European Georgia, criticizes the legislative body’s deci-
sion to relocate Parliament to Tbilisi. She slams the ruling team for making amendments to the regulations and notes that the existence of Parliament in Kutaisi is one of the main sources of income for the local population. "This means that Kutaisi will not be a parliamentary capital, so the Members of Parliament, hundreds of employees of the parliamentary staff will not come to Kutaisi, which means that locals will not have additional jobs and income and it will not help the urban development [there],” the MP stressed.
BUSINESS
GEORGIA TODAY SEPTEMBER 25 - 27, 2018
3
World Chess Olympiad Opens in Batumi well as within the country,” said Rizhvadze, wishing success to the Olympiad participants. The Chess Olympiad is open to all National Federations affiliated to FIDE, who can nominate one team for the open section and one for the women's section. Each team must consist of four players, one reserve and one captain. The captain may be, but is not limited to being, one of the players or the reserve. Additionally, each delegation can nominate one head of delegation and one delegate for the FIDE congress. In parallel with the teams of different countries, the Organizing Committee of the 2018 Chess Olympiad invited the most motivated, erudite and enthusiastic young people (18-30) to volunteer and work in the framework of the event. The Olympiad venue, Sport Palace, situated in the center of Batumi, was opened this year and the Olympiad is the first event to be held there.
Image source: 1TV
BY THEA MORRISON
G
eorgia’s Black Sea coastal city Batumi is hosting the 43th World Chess Olympiad, organized by the World Chess Federation (FIDE). The opening ceremony took place on September 23 at the Black Sea Arena in Shekvetili and was attended by famous Georgian sportsmen, honorary foreign guests and the President of Georgia, Giorgi Margvelashvili. The opening ceremony saw performances and a gala concert with famous Georgian singers, musicians and dancers. The closing ceremony will be held at the Batumi State Music Center on October 5.
Part of the Olympiad started on September 24 and representatives of 190 countries will fight for championship in Batumi until October 6. Aside from the Olympiad, FIDE and Continental presidential elections, the FIDE 89th Congress and other important chess events will take place in Batumi. Chess players, captains, arbiters, accompanying persons, congress delegates and foreign journalists have already arrived in Batumi for the Olympiad. While delivering a speech at the opening, President Margvelashvili stated it is an honor for Georgia and Batumi to host such an important sporting event. The President noted that Georgia is well-known for its hospitality, and ensured all that the organizing committee of the Olympic Games in Georgia, as well as the Georgian Chess Federation, will offer
a high-level event. “Chess has always been very popular in our country. We are proud of legendary champions Nona Gaprindashvili and Maia Chiburdanidze, who won the World Championship title five times each, and Nana Alexandria who is twice World Champion, having won six Chess Olympiads,” Margvelashvili stated. He expressed hope that, as always, Georgian chess players will succeed in the 43th Olympiad. The Head of the AR Adjara government, Tornike Rizhvadze, informed the guests that Batumi has been named the Sport City of Europe. "Batumi has been named the 2019 European Sport City by the European Capitals and Cities Association. The status is important for our city; one of the best ways to popularize a healthy lifestyle, the position of our city in the international arena, as
Car-Free Day in Tbilisi Continued from page 1 “We hope that in Tbilisi and other Georgian cities, this trend will soon be established. Today's event brought together citizens, the Mayor of the capital, EU and UN ambassadors – it confirmed that we all support moving in this direction.”
Mamuka Mumladze, head of the Municipal Transport Department, Davit Kirkitadze, Mtatsminda District Governor, and Shalva Ogbaidze, a member of the Tbilisi Sakrebulo (City Assembly), also participated in the event. Many countries around the world observe Car-Free Day. The largest event is in Bogota, Colombia, where the day has been insti-
tutionalized through a public referendum, and the municipal government closes the major streets to traffic all day. There are also large events in Portland, Oregon, and Vancouver, British Columbia. In Jakarta, Indonesia, every Sunday is reserved as a car-free day. In Tbilisi, the day was held within the framework
of European Mobility Week. It included a bicycle marathon from Vake Park to Republic Square, organized by the East-West Management Institute with the support of the Civil Society Development and Citizens Involvement Project (ACCESS) and USAID. It was co-organized by local non-governmental organizations New Society and Ecology.
4
BUSINESS
GEORGIA TODAY
SEPTEMBER 25 - 27, 2018
Georgia's Growth Projections Strong, but Turkish Lira Crisis May Dampen Buoyant Forecasts
BY DAVIT KESHELAVA AND YASYA BABYCH
I
SET-PI has updated its forecast of Georgia’s real GDP growth rate for the third and fourth quarters of 2018. Here are the highlights of this month’s release:
HIGHLIGHTS • Recently, Geostat released the preliminary estimate of real GDP growth for the second quarter (April-June) of 2018, which now stands at 6.0%. This is only 0.1 percentage points above the recent ISET-PI forecast. As a result, real GDP growth for the first seven months of 2018 reached 5.5%. • ISET-PI’s forecast of real GDP growth for the third quarter (July-September) of 2018 stands at 7.2% - the same as last month’s prediction. The first estimate for the fourth quarter (October-December) growth forecast stands at 6.5%. • Based on July’s data, we expect annual growth in 2018 will reach 6.3%. This
optimistic forecast is consistent with the evidence coming from the National Bank of Georgia and international development institutions. For example, the National Bank of Georgia revised its expectation for the real GDP growth from 4.8% to 5.5% in 2018. According to the Monetary Policy Report, among the reasons behind the upward revision of the prediction are the improved domestic and external demands due to significant foreign inflows (mainly from export, tourism, and remittances), improved business sentiment, credit growth, and capital spending by the government. • Moreover, the International Monetary Fund (IMF) has also raised its growth forecast from 4.8% to 5.5% in 2018. IMF provided similar findings to the National Bank of Georgia, identifying some other contributors of the real GDP growth: low and stable inflation that allows the Central Bank to carry out expansionary monetary policy, and markedly reduced dollarization of loans and deposits. However, this authoritative institution identified threats coming from deteriorating
economic conditions in the region. The Georgian statistics office, Geostat, has released its preliminary estimate of GDP growth for the second quarter of 2018. Its estimated growth figure is 6.0%, which is only 0.1 percentage point higher than ISET PI’s forecast. As a result, our projected real GDP growth for the third quarter of 2018 remains unchanged at 7.2%. ISET PI’s forecast for fourth quarter growth stands at 6.5%. This optimistic forecast figure can be explained by markedly improved external and internal conditions. The economic situation in the region remains favorable, leading to the high numbers in export (currency crisis in Turkey and ruble depreciation is not reflected in the model yet), tourism and remittances, low and stable inflation, credit expansion, enhanced monetary aggregates, and accelerated growth of national currency deposits.
EXTERNAL FACTORS A great majority of the countries in the wider region continue their strong growth path in June and July of 2018. According to the rapid estimates of real GDP growth, Kazakhstan, Belarus, and Russia advanced
on average by 4.6%, 4.5%, and 2.2%, respectively, in June-July 2018, compared to the same month of the previous year. The Armenian economy continues to surprise economists with high growth figures - currently 10.4% in annual terms. Only the Azerbaijani economy is still far behind its peer countries, with an average annual growth rate of 0.8% in JuneJuly. Improved economic conditions in the wider neighborhood stimulated the Georgian economy through trade, remittances, and tourism channels. However, the Turkish currency crisis and the significant depreciation of the Russian ruble, both of which are potential external threats to the Georgian economy, are not taken into consideration in our model yet. As was mentioned earlier, favorable economic conditions in Georgia’s partner countries contributed to real GDP growth through trade, remittance, and tourism. Notably, exports grew by 31% year-over-year in July of 2018, driven by significantly larger exports/re-exports of motor cars, cigarettes and cigars to Azerbaijan, increased exports/re-exports of copper ores and concentrates to China, and accelerated export of fruits, grapes and natural wines to Russia. However, the exports of ferroalloys declined by 31.5%, and exports to Turkey were reduced significantly. Furthermore, metal prices (metals are the main exporting commodity for Georgia) increased by 6% annually, but went down by 8% in monthly terms. During the same period, imports increased by 21.8%, driven by petroleum
and petroleum gases, motor cars, copper ores and concentrates (the last two are used mostly for re-export). Moreover, world prices of crude oil increased by 53.2% yearly, which negatively contributed to the growth forecast. As a result, the trade deficit deepened by 17.2%, compared to the same month in 2017, and reached 503.4 million USD. Both remittances and tourism showed significant yearly increases in July of 2018. Money transfers rose by 19.3% in the seventh month of 2018, driven by remittances from Israel (28%), Italy (35.4%), Greece (40.5%), France (72.2%), Azerbaijan (52.4%), and Turkey (8.7%). Remittances from the Russian Federation experienced a slight yearly decline and had a 0.1 percentage point negative contribution to the total growth of remittances. Nevertheless, Russia remains the top country of origin for money inflow, accounting for 29.8% of total remittances. The share of money inflow from the European Union amounted to 33.5% of the total. The number of international visitors increased by 10.7% in July, compared to the same month of the previous year, while the number of tourists increased
by 15% annually and reached 66.8% of total international visitors. According to the model, both tourism and remittances had a significant positive contribution to the GDP growth forecast.
etary policy several times during the whole of 2017 to avoid high inflation caused by the one-time increase of the excise tax, higher crude oil and food prices in the world market, and inflationary expectations of the economic agents). A low and stable inflation (the inflation rate was 2.8% in July - very close to the targeted 3%) gives policymakers the opportunity to actively use monetary policy instruments to boost growth figures. However, the use of monetary policy tools to stimulate the domestic economy might still be quite limited in the second half of the year due to the depreciation pressure on the Georgian lari (and pressure on the price levels) caused by the currency crisis in Turkey and the marked depreciation of the Russian ruble. The credit expansion contributed to an increase in the amount of currency in circulation. All of the monetary aggregates, including the largest - Broad Money (M3) - experienced significant yearly growth (M3 aggregate rose by 15%). The largest increase was observed for Monetary Aggregate M2, which went up by 19% relative to the same month in the previous year. Our model’s outcomes confirm the standard textbook result that a marked increase of monetary aggregates positively contributes to real GDP growth in the short run. Last, one of the most important factors contributing to the real GDP forecast is the accumulation of national currency deposits in the commercial banks. The total deposits in commercial banks amounted to 21.8 billion lari by the end of July – 21.6% higher than in the same period of the previous year. In particular, the stock of national currency deposits grew substantially, by 42%, while the stock of foreign currency deposits increased by only 11%. As a result, deposit dollarization fell by 2.99 percentage points yearly and 0.1 percentage points monthly, and amounted to 61.1%. Rapid accumulation of deposits, as well as reduced deposit dollarization, had an appreciable positive contribution to our GDP growth projection.
INTERNAL FACTORS The other factor that contributed positively to the real GDP growth forecast was the expansion of credit to the national economy. Loans to the domestic economy increased by 18.9% in July compared to the same month of the previous year . The credit portfolio grew mainly due to the increase in loans issued in national currency, as well as the expansion of loans issued in foreign currency. The largest annual growth was observed in Transport and Communications (59.4%), Hotels and Restaurants (34.1%) and Transactions in Real Estates, Researches (26.8%). Rapidly growing credit positively contributes to the shortterm growth figures by stimulating private consumption. In addition to the rapid credit expansion, the National Bank of Georgia reduced the Monetary Policy Rate (MPR) by 0.25 percentage point in July, which stimulated further borrowing and contributed to higher growth. This was the first raise since September of 2016, when the National Bank of Georgia conducted an expansionary monetary policy by reducing the policy rate (NBG restricted mon-
Our forecasting model is based on the Leading Economic Indicator (LEI) methodology developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian economy, which assumes that all economic variables, including the GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published. For each quarter, ISET-PI produces five consecutive monthly forecasts (or “vintages”), which increase in precision as time goes on. Our first forecast (1st vintage) is available about five months before the end of the quarter in question. The last forecast (5th vintage) is published in the first month of the next quarter.
6
BUSINESS
GEORGIA TODAY
SEPTEMBER 25 - 27, 2018
Spotcoin CSO on the Potential of Blockchain & the Upcoming Hackathon EXCLUSIVE INTERVIEW BY SHAWN WAYNE
B
lockchain is the hottest topic in technology these days, with the prospect of streamlining many facets of everyday life. The NEO Black Sea Community is bringing together top developers in the region for a three-day hackathon to tackle issues affecting the Georgian people by improving government services using Smart Contracts. The NEO Black Sea Community Hackathon kicks off on September 28 at 19:00. Teams will continue programming on the 29th from 09:00 - 23:00. Final touches will be put in place on the 30th at 14:00, with final presentations at 16:00, and an award ceremony at 18:00. The event is being held at the Geolab in GAU, 8 Merab Alexidze Str., Tbilisi. Teams can register on the Hackathon’s website at https:// neoblacksea.community/#register Spotcoin is a startup fintech company using blockchain technology with the aim of making blockchain and digital currency accessible to everyone. GEORGIA TODAY sat down with the sponsor and organizer of the event, Spotcoin Chief Strategy Officer Sean Mulcahey, in order to shed some light on the blockchain concepts and upcoming hackathon.
A LOT OF DIFFERENT BLOCKCHAIN APPLICATIONS ARE APPEARING, AND ONE OF THE MAIN FOCUSES OF THE EVENT IS SMART CONTRACTS. TELL US MORE
One of the most valuable things blockchain technology provides is the ability to write and program contracts in such a way that when certain conditions are met, it will automatically execute. It’s pretty much open to whatever you want to put in the contract, and it creates a way for you to be able to exchange value without the need for trust between people. This is only one of the three components of the NEO blockchain, with the others being Digital Assets and Digital Identity. The blockchain itself handles this via crypto logging and, without getting into the technicalities, it’s basically a very secure database which is controlled by cryptographic keys.
WHAT DOES THE FUTURE APPLICATION OF THIS SYSTEM ENTAIL? WILL IT EXPAND? I believe these Smart Contracts as a part of the “Smart Economy” will affect all parts of global economy and governments; in fact, this upcoming event has companies from all over the world attending and focusing on engaging with the government. It can be described as a collaboration event with the exploration of blockchain, and how it can be used to make government services better.
DO YOU THINK THE GEORGIAN GOVERNMENT IS A BIT MORE OPEN TO THESE BLOCKCHAIN IDEAS THAN OTHERS? Absolutely. I know the Prime Minister is very interested in implementing blockchain technology, especially for purposes such as improving education and applying it to the Revenue Service. Georgia is earning a reputation for being more forward-
looking in the scope of blockchain technologyinordertoimprovemultipleservices for economic prosperity.
ARE THERE ANY SPECIFIC INVESTMENT OPPORTUNITIES IN SOMETHING LIKE THIS? Yes. Last year, there was this big hype over the initial coin offerings giving opportunities to invest, but there are still significant risks and it’s still quite a new
thing, so people should be cautious about which projects they invest in.
BACK TO THE EVENT THIS WEEKEND: WHAT EXACTLY IS GOING TO HAPPEN THERE? This event is not specifically Spotcoinhosted but rather by the NEO Black Sea Community, and we’ll be proposing to developers how systems like Smart Contracts can be used to improve government systems. This is the basic theme: introducing the value of blockchain to the government and explaining how to implement it.
WHERE IS THE FUTURE GOING WITH THIS? WITH INNOVATIONS LIKE SMART CONTRACTS COMING UP, IS THIS A PERMANENT WORLDCHANGING EVENT? In my view, this is bigger than the internet itself in terms of its impact on the global economy and governance. It allows a freer exchange of value and a creation of infrastructure that was not possible before. Regarding the cryptocurrency hype, people were just looking for investment opportunities but the real value lies in the actual implementation of blockchain technology as a whole. The internet provided the world with a plat-
form for centralized business, but blockchain creates the opportunity to still derive that value, just in a decentralized way. This is just the beginning. We believe the potential Georgia has for this is huge. Blockchain technology is a bit difficult to understand for the average person; however, we help that discovery process with the government and in the end, we see real companies solving real problems related to tourism, emergency response and overall economic problems. Spotcoin as a company sees Georgia’s success in this as our success.
ANYTHING YOU WANT TO SAY TO PEOPLE WHO WANT TO GET INTO BLOCKCHAIN TECHNOLOGY? Well, first of all we are always open to exploring partnership opportunities with other companies. Self-teaching is the best place to start for anyone looking to get into it. There’s a lot of content out there, and you won’t exactly find someone with years and years’ experience in this because of the fact it’s so new. The other thing is to attend events that encapsulate blockchain technology and build contacts in the industry. It’s seen as complicated, but it doesn’t have to be: with everything going on, you can selflearn and build contacts easily.
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BUSINESS
GEORGIA TODAY SEPTEMBER 25 - 27, 2018
Agriculture Minister Visits Wine Cellars in Kakheti Region
Photo source: Wines of Georgia
BY THEA MORRISON
L
evan Davitashvili, Minister of Environment Protection and Agriculture of Georgia, together with local government representatives, visited Kakheti wine producers who are buying the grape harvest from local farmers. According to the Minister, where in 2012 there were about 50 different wine enterprises or cellars in Georgia, today that number stands at 500. “As a result of the correct state policy pursued in the viticulture and wine industry, the wine industry has been significantly strengthened in Georgia - exports of wine are up, resulting in increasing wine and wine production,” he added. The Minister visited the Tornike Chubinidze Wine Cellar in Shilda village, in the Kvareli municipality of the Kakheti region. Young winemaker Tornike Chubinidze moved from Tbilisi to Shilda in 2016. The same year, with the support of the preferential agro-credit program of the State, he built a wine cellar. In 2017, Chubinidze sent about 40,000 bottles of wine to export. 'Chubini Cellar' exports its own wine to four countries: Japan, China, France and the United States. The Minister stated during his visit to the cellar that Chubinidze had, through his own motivation and state support, become a success story in a
very short time. “Now he produces wine, exports it and plans to increase production and develop the wine tourism of our country,” Davitashvili added. According to Chubinidze himself, he sent his first batch of wine to the US several days ago, having found customers there with the help of the National Wine Agency after one of its many degustation events. “This summer, our cellar hosted tourists interested in Georgian wine culture from about 15 countries. In the cellar we have 28 Qvevri of different volumes. We buy grapes from viniculturists, but in the future, I will definitely extend my vineyard and increase production,” Chubinidze told the Minister. Davitashvili also visited the newly opened wine enterprise Askaneli, located in the village of Sanavardosho near Kvareli, which this year bought 3500 tons of grapes from local farmers. The company carries out export of a wide variety of wine to 13 countries: Azerbaijan, Turkey, Armenia, Israel, France, Germany, Great Britain, Russia, Ukraine, China, Latvia, Poland and the United States. “Due to the healthy conjuncture existing in the wine industry, the grape harvest process is underway without any problems in Georgia. Most of the grapes have already been picked. So far, 130 tons of grapes have been processed and the income of the local farmers has reached GEL 190 million,” the Minister noted.
The Rise of the US is a Lesson for China
Image source: REUTERS/Tony Gentile
BY EMIL AVDALIANI
T
he rise of new powers usually follows a massive global or economic shock engulfing a certain region or the world as a whole. China's ascendance in the last several decades in the economic and military realms brings to mind various theories that a definitive change in the balance of power is or will be taking place in the near future. In fact, China has often been compared to preWorld War I Germany. The latter had an ambition to attain a dominant position in eastern Europe, including large portions of the Russian Empire. The Germans were expanding their economic reach to the Middle East and, most importantly, it was not long before they came to pose a serious challenge to Great Britain's naval dominance. China, like Germany a century ago, also aspires to build a larger military navy and increase its eco-
nomic potential abroad. However, rather than comparing China to Germany, which was defeated in both world wars, it would be in some sense expedient to compare the modern China to its current geopolitical competitor, the United States of late 19th-early 20th century. There are many similarities between the two. China nowadays in some ways is facing a new world and new opportunities which had been closed to her for centuries. Surrounded by an arc of almost impregnable geographic barriers, China’s heartland produced enough to sustain a self-sufficient economy. The 19th century amounted to a national catastrophe as European powers assailed China for economic gains, while in the early 20th century, Japan’s hegemony undermined any Chinese attempts to revive the state. Thus, China has never been a global power and does not clearly see what kind of world order it wants to build. Everything about modern Chinese foreign policy moves shows the country is still developing its "world order ideas". Continued on page 8
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BUSINESS
GEORGIA TODAY
SEPTEMBER 25 - 27, 2018
Bakhtadze Meets with Amazon Web Service Management in DC BY SAMANTHA GUTHRIE
G
eorgian Prime Minister Mamuka Bakhtadze has been on a working visit to the United States. It began on September 17 with a meeting with US National Security Advisor John Bolton at the White House in Washington, DC. Throughout the trip, he has held several high-level meetings with US government officials, met with Georgian students studying at US universities, and will give a speech at the 73rd session of the UN General Assembly on September 27. On September 19, Bakhtadze met with Amazon Web Service (AWS) Management in the US capital. According to the Prime Minister’s office, John Brennan, Head of Expansion and Capture at Amazon, briefed the Head of the Government of Georgia on the company’s priorities and activities planned for service improvement. The key issues discussed during the meeting were the growing role of Georgia in the digital technologies sector, regional projects, and potential avenues for cooperation between Georgia and Amazon.
Bakhtadze emphasized Georgia’s significant potential to develop digital technologies, particularly in the regional context. He also raised the issue of how Georgia could effectively cooperate with Amazon and integrate Amazon services into the local economic framework, and the Digital Silk Road. The Digital Silk Road is a Chinese-led initiative with the goal of “constructing cross-border optical cables and communications trunk line networks, planning transcontinental submarine optical cable projects, and improving spatial and satellite information passageways to expand information exchanges and cooperation,” as explained by the Council on Foreign Relations. One component of the project is a plan to add 35 satellites to its national satellite navigation system, extending coverage to the countries of the Belt and Road Initiative by 2020, aiming to compete directly with GPS – a US project. The Prime Minister’s Office told the Amazon representatives that Georgia is keenly aware of the development of the digital economy, and government authorities welcome close cooperation and knowledge transfer from leading international companies in the process of successful implementation of the
planned measures. Rumors of an Amazon distribution facility in Georgia have swirled since December 2016, when Giorgi Tsikolia, then-temporary envoy of Georgia to the USA, and Levan Beridze, an advisor at the Georgian Embassy, paid a working visit to Seattle, Washington state, for bilateral meetings with representatives from Amazon and Microsoft to discuss potential cooperation with Georgia. Tsikolia’s team submitted a proposal to Amazon to establish a distribution hub in Georgia. Amazon “has [distribution centers] in many countries, cities and regions of the world. Those centers follow two business models: 1) delivery of Amazon’s own products to consumers and 2) Ama-
The Rise of the US is a Lesson for China Continued from page 7
Like the US in the early 20th century, China nowadays feels that it has to assume a more powerful internationalist stance as her economic appetite makes it inexpedient to rely on the benevolence of other powers. At the same time, again like the US before, China is also reluctant as it fears that a more “global China” could ignite suspicions around the world of nascent Chinese dominance. China today portrays her actions as a policy which benefits not only her, but the entire world. At the same time, China sees that there is a certain necessity to
increase her military potential both at sea and on land. The US too, 100 years ago, cast her policies as peaceful and non-interventionist in other countries’ internal affairs. However, it was the young United States which had a “manifest destiny” to expand its influence into North America and the waters around the continent. Like modern China, the US a hundred years ago did not openly aspire, nor really plan, to acquire global dominance. The then-US statesmen only gradually started to see that the country needed to take a more active geopolitical role by influencing political developments in Europe
and Asia-Pacific. Modern China also resembles the younger US as they both have a view that the world can benefit from them economically and through the way they plan to (re-) create the world order. How the US was catapulted from a domination over North America in the early 20th century to global pre-eminence after 1945 serves as a good explanatory case on the rise and fall of great powers. China could learn a lot from the American rise, a story of the gradual build-up of military and economic power coupled with attractive cultural features. The rise of new powers does not hap-
zon acting as a mediator. We discussed both directions and introduced Georgia’s advantages in this respect, because there is no such center in our region…Amazon plans to enter both our region and Central Asia. Naturally, we emphasized the advantages of Georgia and prospects to make our country a hub for Amazon business. They positively appraised our proposals and we agreed to provide more detailed information at a second meeting,” Tsikolia said at the time. That second meeting came in January 2017. The two sides discussed the idea that Amazon could open a logistics center in Georgia with Amazon operating as a mediator to supply products from major companies to certain markets. Tsikolia pointed out that such a center could help
Georgian manufacturers penetrate export markets. “I believe our communication will continue,” said Tsikolia, noting three key advantages of Georgia’s position: a growing, western-facing democracy, a geographic location at the crossroads of east and west on the New Silk Road, and continued progressive reforms to create a business-friendly environment. Just a day before the second meeting of Tsikolia’s team with Amazon, the sprawling indoor-outdoor shopping center Lilo Mall, located on the eastern edge of Tbilisi, announced a 250,000 GEL project to digitize the mall’s products. Lilo’s administration boasted that they would create a Georgian version of eBay or Amazon. The project was scheduled to be launched by the end of 2017, but it is not yet online. CEO Levan Gagua announced last week that the project is finally in the testing phase, and he expects it to be functional by the end of 2018. Gagua told Commersant, “We will launch online sales before the end of the year. We have some problems as tenants do not yet have a particular desire to work via Internet, but I am sure that everything will change as soon as they see the benefits of the new format.”
pen quickly: it takes decades of meticulous work. That could explain why China's comparison with Germany of the early 20th century is a flawed one. Kaisers' Germany was powerful, but its human and economic potential could not match that of the allied powers. China, on the contrary, possesses a large population as well as enough economic potential to try to challenge the existing balance of power. Though similarities exist, this does not lead to a clear-cut conclusion that, like the US' rise to global pre-eminence, China will do the same. The US began to dominate the oceans and parts of Eurasia only after its major geopolitical contenders in Europe fought two deadly wars and destroyed the Euro-
pean world order. The US also acted from a safe geographic position: oceans essentially precluded the then powers from reaching North America. China's geographic position, on the other hand, is a continental one, surrounded from the east by the US-led Asian countries nestled on a chain of islands. That said, historical comparisons show that the rise of new powers is always followed by conflicts, and often one conflict alone does not suffice to alter the balance of power. Carthage lost its power after two long wars with Rome, and Europe lost its grandeur after two world conflicts. Perhaps the same will go for China’s rise too, as it has yet to be seen that a dominant state willingly gives up its position.
BUSINESS
GEORGIA TODAY SEPTEMBER 25 - 27, 2018
The New Word in Mobile Photography: HUAWEI P20 Pro Offers Innovative Approaches to Georgian Customers
ADVERTORIAL
M
obile Photography is a new direction in photography that is growing in popularity. The rising demand encourages producers of technologically sophisticated smartphones to pamper consumers by upgrading and bringing out the perfect models, which includes enhanced processors, increased installed memory, sophisticated cameras, better screen resolution, and greater resources. Besides the cost of devices, such improved features are the main driving force for the competition in the world market. With each new smartphone, consumers want better photographic technology. Recognizing this, the HUAWEI P20 Pro is the first smartphone in the world to boast three cameras. With this innovation, the company has introduced consumers to a new generation of mobile camera technology. HUAWEI has already proved many times its worth as a decent and advanced brand of innovations. The world agrees that the HUAWEI P20 Pro is the best choice for taking the highest quality photographs. It is the only smartphone to possess three main cameras: a 40MP, 20MP and 8MP camera. HUAWEI helps users to take professional and highquality photos even in bad lighting. The HUAWEI P20 Pro was released earlier this year and comes with Leica's triple camera, which earned 109 points from DxOMark- the highest result ever recorded. Although many new smartphones come out each year, the HUAWEI P20 Pro remains the first and is recognized globally as the best camera smartphone on the market.
HOW DOES THE TRIPLE CAMERA WORK? Each camera and lens possess its own functions and features. The 40MP RGB camera with a 1 / 1.7" sensor, 27mm vision area and f / 1.8 diaphragm is aimed at perceiving colors. The 20MP monochrome camera with 1 / 2.78" sensor, f / 1.6 diaphragm and
27 mm vision, takes black-and-white images and helps the device to adjust to the number of lights and brightness for catching more details. The industry's leading 8MP telephoto camera (VARIOSUMMILUX-H 1: 1.6-2.4/27-80ASPH) has a 1 / 4.4" sensor, f / 2.4 diaphragm and an 80 mm optical focal length with 3x optical zoom.
THE ADVANTAGES OF THE HUAWEI 40MP CAMERA The HUAWEI P20 Pro has a 1 / 1.7-inch sensor with 40MP resolution, although the camera does not directly take a 40MP image. Instead, it uses "Pixel Binding" technology to achieve a 4-pixel merged 10-megapixel image. To add light, a monochrome cam is used, which not only increases sharpness but also delivers more detail in the image. All these features of the HUAWEI P20 Pro increase the dynamic range and ISO sensitivity that ultimately results in a high resolution photo.
A GREAT SENSOR THAT SETS THE STANDARD FOR ISO SENSITIVITY The HUAWEI P20 Pro has 3x optical zoom, 5x hybrid zoom and 10x digital zoom. Using 5x hybrid zoom, the HUAWEI P20 Pro can capture amazing colors and details on a photo. The HUAWEI P20 Pro allows users to see and capture the world in a new, more innovative manner and introduces a new standard in smartphone photography. This is the latest technology behind the HUAWEI P20 Pro's three-dimensional camera and is very popular among Georgian consumers. HUAWEI products and services are available in more than 170 countries and are used by a third of the world's population. There are 16 research and development centers operating worldwide in the USA, Germany, Sweden, Russia, India and China. HUAWEI Consumer BG is one of HUAWEI's three business units, mainly focusing on smartphones, personal computers, tablets and smart services. HUAWEI Global Network is based on 20 years’ experience in the telecommunications business and serves to provide innovative technologies to customers around the world.
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BUSINESS
GEORGIA TODAY
SEPTEMBER 25 - 27, 2018
Sustainable Management of Machakhela National Park Benefits Local Communities BY THE GT TEAM
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enewable energy, environmental tourism and biofarming were the focus of a media tour to the Machakheli Gorge on 20-21 September, organized by the United Nations Development Program (UNDP) in cooperation with the Agency of Protected Areas. Journalists from lead Georgian print and broadcasting media visited the National Park and nearby villages, learning about the complex assistance provided by the UNDP and the Global Environmental Fund (GEF). The media tour participants met Munkhtuya Altangerel, Deputy Head of the UNDP in Georgia, and Toma Dekanoidze, Deputy Head of the Agency of Protected Areas. They also interviewed representatives of the Machakhela
Image source: Vladimir Valishvili/UNDP
National Park administration and residents of the Machakheli Gorge villages – Chkhutuneti, Ajara Aghmarti, Tskhem-
lara and Chikuneti. A four-year initiative in the Machakheli Gorge promoted sustainable manage-
ment of the Adjara Protected Areas and local economic growth of the villages located in the support zone of the Machakhela National Park. The UNDP and GEF initiative also laid the ground for potential cooperation between the Adjara Protected Areas and Jamili Biosphere Reserve in Turkey that together form a chain of unique natural reserves established to protect the Colchis forests. With a total budget of $1.3 million, this initiative was implemented in 2014 – 2018 in partnership with Georgia’s National Agency of Protected Areas, local authorities, businesses and communities. Some concrete results of the four-year work include a demarcation of the Machakhela National Park boundaries, rehabilitation of its administrative premises and visitor center, arrangement of hiking tracks and preparation of print, audio and video kits for tourists. In addition, the UNDP and GEF carried out comprehensive research to support the
future development of the National Park – a feasibility study, forest inventory and an assessment of potential revenue sources. UNDP and GEF assistance also benefitted the villages located in a support zone of the National Park. Local households engaged in a renewable energy program that will benefit up to 100 families in 2019. Small farmers received technical assistance and consultations in wine-making, beekeeping and other agricultural businesses. A livestock insurance programme and the instalment of electric fences helps the farmers to reduce the livestock loss caused by predators. Several families have been trained in touristic management and received startup support to open family guesthouses. The initiative in the Machakhela National Park is part of the UNDP’s wider assistance to Georgia which aims to expand the country’s access to green solutions and make environmental issues an integral part of development.
8 Reasons Athletes Drink Beer...And Why It’s a Good Thing ADVERTORIAL
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here's an undeniable connection between getting a great sweat on and knocking back beer. Research shows that not only are athletes more likely to imbibe, but the harder we work, the more we drink. Carbs and calories aside, there are actually a lot of reasons for athletes to down a post-sweat pint or two. From reducing muscle soreness, replacing lost fluids, and maybe even preventing kidney stones, here are eight reasons you deserve, nay, need another beer.
BEER DOESN'T DEHYDRATE YOU In moderation, of course. Science hasn't quite given us the data we need to consider beer a recovery drink, but it won't add to your post-sweat hydration woes. A 2015 study in the Journal of the International Society of Sports Nutrition found that when 16 male athletes consumed either mineral water alone or beer plus mineral water after a sweaty workout, there were no remarkable differences between their levels of hydration. And a 2015 study in the International Journal of Sport Nutrition and Exercise Metabolism found that light beer with added sodium actually helped with fluid
retention post-workout.
easier. It also increased how often members of the group smiled. Our social networks are important, especially when it comes to working out. A few fit friends can save you from hitting snooze on a cold morning or from giving up on those tough intervals.
ALCOHOL CAN REDUCE PERCEIVED MUSCLE SORENESS Beer really does make everything better, even that ache in your hamstrings. A 2014 study in the International Journal of Kinesiology and Sport Science found that athletes reported feeling less sore when they drank beer versus a placebo after a hard session.
YOUR HEART APPRECIATES A DRINK The key here is moderation. Drinking in excess is linked to a higher risk of heart disease, but according to the American Heart Association, a single drink a day could raise HDL (good) cholesterol levels and could reduce blood-clot formation, a risk factor for heart attack and stroke. The AHA recommends one to two drinks daily for men and one a day for women.
IT CAN PREVENT KIDNEY STONES Over time, frequent dehydration can lead to kidney stones. But beer could help keep your kidneys in the clear. A 2013 study published in the Clinical Journal of the American Society of Nephrology found that most sugary drinks, like sodas and juices, upped a person's kidney stone risk. But regular beer intake decreased a person's risk by 41%, while wine decreased it by only 31–33%.
BEER BUILDS STRONG BONES A 2007 study published in Nutritional Health and Aging found that dietary silicon was crucial for bone and skeletal tissue strength. Guess what one of the best sources of silicon is? Beer. The amount of silicon occurring in a pint varies significantly from beer to beer, though IPAs are a good bet for their pale malts and abundant hops: the rich-
IT'S GOOD FOR YOUR GUT est sources of silicon. However, a paper published in the journal Food and Science in Agriculture concluded that drinking about three bottles of any beer would satisfy your daily requirement.
IT'S ANTI-INFLAMMATORY Score another one for hop heads: Besides making beer taste amazing, a 2009 study in Molecular Nutrition and Food Research found that hops could reduce acute
inflammation in study subjects. And a 2006 study in Planta Medica found that hops could work similarly to traditional over-the-counter COX-2 inhibitors, a type of non-steroidal anti-inflammatory drug.
IT BOOSTS TEAM BONDING A study published in Psychological Science found that moderate doses of alcohol made bonding with a social group
Beer gets a bad rap for what it does to your belly. And sure, if you drink a lot of it you're going to pack on a few pounds. But it can also be good for your digestive system. Moderate alcohol consumption seems to combat the bacteria often responsible for stomach ulcers, Helicobacter pylori, as reported in a study from The American Journal of Gastroenterology. Furthermore, beer is a good source of arabinoxylan-oligosaccharides, the prebiotic foodstuffs that your good gut bacteria feast on.
National Folklore Center Opens in Ozurgeti BY MARIAM MERABISHVILI
A
regional branch of the National Center of Folklore has been opened in Ozurgeti, covering the western region and all three municipalities of Guria. Director of the Georgian Folklore State Center Giorgi Donadze, and Minister of Culture and Sports Mikheil Batiashvili, opened the rehabilitated center in Ozurgeti before an audience of government and business sector representatives, folklorists and media. Minister Batiashvili said he considers the rehabilitated, modern folklore center a unique means of development of the sector. “Opening this unique folklore center in Ozurgeti is the best opportunity for folklore development in western Georgia. It comes with a concert hall, exposition rooms, and recording studios with all the essential equipment. It will be the perfect venue for international folklore festivals in the region,” he said. According to Donadze, the Folklore State Center in Ozurgeti will serve the whole
of western Georgia. It was opened to promote the development of cultural and educational activities, and the preservation and popularization of Georgian folklore. “We opened this western regional representation of the Georgian Folklore Center to serve all fields of folklore and we will be working to intensify the direction of folklore in western Georgia,” he said. During the opening ceremony, Georgia’s best folklore bands, including Shemoqmedi, Shvidkatsa, Basiani, local trio Shalva Chemo and choirs from the town itself, Mestia and Oni performed live for the audience. “Georgian Folklore is unique worldwide for its polyphonic sound and traditional chanting,” said Donadze. “Guria is even more special in this regard, as its chanting is very specific in tonality. Guria is also the heart of western Georgia and a favorable geographical location for the Folklore Center. Ozurgeti will become western Georgia’s main communicative center. We hope that exhibitions and concerts will be moved from Tbilisi to Ozurgeti and thus the center will help revive the western region of Georgia. In addition, the main concerts of the Black Sea Folklore International Festival will
be held in this Center from 2019. I would also like to arrange scientific conferences here, inviting foreign specialists to share their knowledge and experience.” Another mission of the center is to encourage new generations to become interested in folklore, and to share the accumulated knowledge with them. The center will be able to bring all the traditions into practice and boost interest
from local youth as well as providing an interesting stop for tourists. The Municipal Development Fund of the Ministry of Regional and Infrastructural Development of Georgia was in charge of the rehabilitation works on the administrative building of the Ozurgeti Folklore State Center of Georgia, with financial assistance from the Ministry of Education, Science, Culture and Sports
of Georgia of GEL 1.5 million. “The building was in a dire state and needed rehabilitation,” noted Executive Director of the Municipal Development Fund, Juansher Burchuladze. “We implemented a full renovation of both the interior and exterior walls, roofing, facade, infrastructure and yard.” The whole building is now adapted for people with disabilities.
BUSINESS
GEORGIA TODAY SEPTEMBER 25 - 27, 2018
11
Lily Vanilli Sprinkling Some Sugar on Georgia EXCLUSIVE INTERVIEW BY KATIE RUTH DAVIES
L
ast Friday, guests were invited to Stamba Hotel to celebrate the opening of the Tbilisi branch of the famous and much-loved Lily Vanilli café. Surrounded by the sweet fruity and chocolaty creations of founder Lily Jones and her team, and a sumptuous flower display by Emma Weaver from Palais Flowers, GEORGIA TODAY got the chance to meet London's Best-Loved Baker and find out how she does it.
LILY, HOW DID YOU GET INTO YOUR CRAFT? WHAT INSPIRED YOU AND HOW DID YOU COME TO REACH THE LEVEL YOU ARE AT TODAY? I’m a self-taught baker, so I learned through years of experimenting, reading and practice and have owned my bakery in London since 2008. It was an unconventional education, but I think if you’re really passionate about something, this can be a really good thing, as you develop a style that’s unique and your own. I’m still always learning and taking inspiration from everywhere - that’s one of the things I’ve loved about discovering Tbilisi and working here - adapting to local tastes and ingredients and ways of doing things, it's inspiring for me and helps me grow as a baker.
YOU'VE BEEN NAMED LONDON'S BEST-LOVED BAKER, THOUGH YOU ONCE SAID YOU HAD NO PLAN TO HAVE A BUSINESS IN BAKING. HOW DOES THE TITLE MAKE YOU FEEL AND WHAT RESPONSIBILITIES HAS IT PUT ON YOUR SHOULDERS? I was one of the very first of the new wave of bakers who broke the mold and
Image source: Canongate
took a modern approach to food and baking. The bakery grew very organically and by word of mouth, so it has always felt very natural. I only feel happy about it and excited to still be able to do what I love. I’m also grateful that I’ve got to a point where I’m able to give time to projects like this one in Tbilisi.
HOW DID YOU COME TO ESTABLISH A BRANCH IN TBILISIWHY HERE AND WHY NOW? I was invited to visit by the British Georgian Chamber of Commerce
(BGCC) and met and became friends with my current business partners. We shared a vision for a modern bakery in Tbilisi. Right now, it feels like a very exciting time to be in Tbilisi, all my friends who work in food all around the world are starting to visit, and everyone loves the wine, the city and the food.
HAVE YOU BEEN TO GEORGIA BEFORE? WHAT ARE YOUR IMPRESSIONS? I first came to Georgia in April 2017, having been invited by the BGCC, and visited Tbilisi and Kazbegi. I knew about Georgian wine and had heard that the food was really good, but nothing prepared me for how much I would fall in love with it. The restaurants, the buildings and the beautiful countryside are all magnificent, but above all the grace, generosity and attitude of the people I have met made a huge impression. There’s an incredible spirit in Georgia.
HAVE YOU TRIED ANY GEORGIAN SWEETS? Yes! I love Georgian apple pie, Medoc and sour cherry pie and we have versions of them on our menu at the bakery. I’ve had some good churchkhelas too!
YOU MENTIONED "ADAPTING TO TASTES." IN WHAT WAY HAVE YOU HAD TO ADAPT FOR THE GEORGIAN TASTE? Lots of custard! And adapting our recipes to use local ingredients, sulguni, tarragon, lobiani. We also developed a
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GEORGIA TODAY
EDITORIAL DEPARTMENT:
Editor-In-Chief: Katie Ruth Davies
Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Maka Lomadze, Joseph Larsen, Vazha Tavberidze, Nugzar B. Ruhadze, Nino Gugunishvili, Thea Morrison Photographer: Irakli Dolidze
menu of the most delicious imaginable dairy free treats for fast days when they come around.
WHAT ELSE HAVE YOU BEEN WORKING ON RECENTLY OTHER THAN THE TBILISI CAFE? I’ve been working on an afternoon tea concept in China, and I released a book this year #BakeForSyria, part of an initiative that raises money for children displaced by the war in Syria by making and sharing food. We’ve raised over £600,000 since 2017. I'm also working on a cake product range for the UK.
WHICH IS YOUR FAVORITE CAKE? I love my vanilla sponge the best - we make it in Tbilisi with custard and local berries and it's delicious. I once made a cake that was exhibited as a sculpture at the V&A Museum in London, then cut up and eaten, that was probably the most exciting, with Elton John’s cakes and the recent wedding cake I made for fashion label Shrimps coming close second. Visit Lily Vanilli’s Tbilisi cafe at 20 Irakli Abashidze Street.
OTHER THAN THE WORK YOU'VE PUBLISHED, DO YOU ACTIVELY SEEK TO EDUCATE OTHERS IN THE CRAFT OF BAKING AND CONFECTIONERY? It has been one of the things I thought about a lot when working on this project, I love teaching and working with new people - discovering their strengths and learning from them too in the process. I would love to look at ways to teach on a larger scale perhaps in the future, perhaps even in Tbilisi.
DO YOU TRAIN YOUNG PEOPLE/UP-AND-COMING BAKERS IN YOUR LONDON BAKERY? Just those that work for me - lots of people over the years, many of whom go on directly to open their own bakeries. I occasionally run classes too, although I prefer to train with people for longer periods.
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