Issue no: 1128/169
• FEBRUARY 26 - 28, 2019
• PUBLISHED TWICE WEEKLY
PRICE: GEL 2.50
In this week’s issue... Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2
Politico: Zurabishvili Aims to Bring Country Closer to EU & NATO with Help from Her Past
FOCUS ON FITCH
Georgia upgraded to BB by Fitch Ratings
PAGE 3
Next Step for Tbilisi Night Economy: Food Trucks
Water Losses & Operational Efficiency in the Water Sector ISET PAGE 4
Average Hotel Prices in Georgia & Hotel Price Index
BY SAMANTHA GUTHRIE
L
ast spring, Tbilisi City Hall introduced the Night Economy concept, which aims to reinvigorate Tbilisi’s afterhours cultural and social life through policies that encourage safe and regulated night activities. The concept involves restaurants, bars and nightclubs that are most active from 6 pm to 6 am. Leading the project’s implementation from City Hall is Sergi Gvarjaladze, a former journalist, producer, and TV presenter. Continued on page 5
BUSINESS PAGE 2
BUSINESS PAGE 8
Georgian Wrestler Demands Dismissal of His Attacker- President of Federation Image source: Pazzy Food Truck, Facebook
SPORTS PAGE 11 Prepared for Georgia Today Business by
Markets As of 22ͲFebͲ2019
Price
w/w
m/m
Bank of Georgia (BGEO LN)
GBP 16.97
+1,1%
+10,8%
Georgia Capital (CGEO LN)
STOCKS
GBP 11.24
Ͳ0,5%
+5,1%
GBP 2.10
Ͳ9,7%
GBP 14.70 +11,7%
CURRENCIES
GHG (GHG LN) TBC Bank Group (TBCG LN)
COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)
Price
w/w
GEOROG 04/21
102.15 (YTM 5.68%)
+0,2%
+0,5%
GEORG 04/21
BONDS
105.87 (YTM 3.97%)
Ͳ0,1%
+0,2%
m/m
Ͳ0,9%
GRAIL 07/22
106.70 (YTM 5.54%)
+0,6%
+2,2%
+1,5%
GEBGG 07/23
99.21 (YTM 6.21%)
+0,3%
+1,5%
Price
w/w
m/m
Price
w/w
m/m
67,12
+1,3%
+9,1%
GEL / USD
2,6576
+0,8%
+0,0%
1 329,40
+0,5%
+3,4%
GEL / EUR
3,0201
+1,6%
+0,1%
GEL / GBP
3,4713
INDICES
Price
w/w
m/m
GEL / CHF
2,6607
+1,5%
Ͳ0,1%
FTSE 100
7 178,60
Ͳ0,8%
+4,0%
GEL / RUB
0,0408
+2,8%
+2,3%
FTSE 250
19 269,59
+1,5%
+3,1%
GEL / TRY
0,5009
+0,2%
+0,7%
DAX
11 457,70
+1,4%
+3,3%
GEL / AZN
1,5703
+1,1%
+0,3%
DOW JONES
26 031,81
+0,6%
+6,7%
GEL / AMD
0,0055
+1,9%
7 527,55
+0,7%
+7,2%
GEL / UAH
0,0985
+1,9%
+2,9%
165,69
+2,0%
+1,7%
EUR / USD
0,8822
Ͳ0,4%
+0,2%
NASDAQ MSCI EM EE
+2,1%
+0,9%
Ͳ
1 058,65
+2,7%
+4,8%
GBP / USD
0,7660
Ͳ1,3%
Ͳ0,8%
SP 500
2 792,67
+0,6%
+6,1%
CHF / USD
1,0004
Ͳ0,5%
+0,3%
MSCI FM
2 717,60
+1,3%
+3,9%
RUB / USD
65,3831
Ͳ1,4%
GT Index (GEL)
1 582,68
Ͳ
Ͳ
TRY / USD
5,3180
+0,6%
Ͳ0,4%
GT Index (USD)
1 208,13
Ͳ
Ͳ
AZN / USD
1,7013
Ͳ0,2%
+0,1%
MSCI EM
Ͳ1,7%
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NEWS
GEORGIA TODAY
FEBRUARY 26 - 28, 2019
@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: From April, ‘Made in Georgia’ bicycles are to be presented on the local and international market by the ‘Georgian Bicycle Group.’ Founder Beqa Kiknavelidze was inspired by the increasing demand on cargo and electric bicycles. Customers will be able to purchase bicycles through an online platform, choosing specifications, technical characteristics and color, with prices to vary between 800 and 2,500 GEL. Interest has already been heard from Denmark and Finland. Creation of the enterprise, laboratory and showroom, integrated in one space, is scheduled for the near future. Rko is the name of a new clothing startup with plans to establish itself on the international markets. The idea came from three young women- Tako Megrelishvili and sisters Tamar and Nino Mesakrishvili, who, even without their own sewing studio, were able to present their products at the Playtime Exhibition in Paris. They got positive feedback and, as a result, Rko has successfully completed negotiations with Germany, Italy and England, while consultations are underway with Japan, China, Belgium and Switzerland. ‘Barambo’ is a must-try for those interested in the taste of Georgian chocolate. Iago Chocheli started working in the sweets industry many years ago and launched a chocolate with a specific Georgian taste. Along with an increase in the assortment of products, the success of the business has also been growing, and Barambo is to represent itself on the Chinese market in autumn this year. The company also plans to launch in Egypt, Dubai and Saudi Arabia. Georgian chocolate, sweets and ice-cream are already well-known in Uzbekistan, Iraq, Ukraine, Russia and Singapore. Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge
Image source: Politico
Politico: Zurabishvili Aims to Bring Country Closer to EU & NATO with Help from Her Past BY THEA MORRISON
I
n her interview with POLITICO at the Paris Hotel at the end of a three-day visit to France last week, Georgian President Salome Zurabishvili’s highlighted France’s participation in the European Union Monitoring Mission on Georgia’s border with Russia, and France’s role in raising the issue of Georgia with strategic partners. “Nobody can think that anything is going to be effective with Putin,” Zurabishvili told the renowned media company, adding that she aims to bring Georgia country closer to the EU and NATO with help from her past. “There are many things that France is now doing which would not have been possible in previous years,” she said. “[Macron] was very clear about … France’s
supporting Georgia in any way it can,” she said. The article notes that Zurabishvili met President Emmanuel Macron last Tuesday at the Elysée Palace, on her first bilateral foreign trip as head of state. “The visit was also something of a return home. Although she was elected president of the land of her ancestors in December, Zurabishvili was born in France and spent three decades working in its foreign service.” “Our male colleagues would say Salome is the man they wished they were, a steel fist in a silk glove,” the author of the article cites the words of French diplomat Muriel Domenach. Zurabishvili told POLITICO “she and Macron had agreed that discreetly mentioning Georgia in their talks with Russia was ‘a way to go forward’ — though with no guarantee of success.” She also said she is banking on France
to be her foremost ally not just because of her long affiliation with the country. “The only country that is very determined to go down the road with continuing the European project is France, so we have to cling to France,” she said. The first female President of Georgia indicated she was content for France to raise Georgia's disputes with Moscow behind the scenes. “What we need is more engagement [on Georgia] from our partners in their discussions with Russia … but that will not necessarily happen in the public forum,” she said. The article also reads that Macron declared support for Zurabishvili's vision and announced a “new page” in FrancoGeorgian ties. “France continues to welcome you as one of our own,” Macron told Zurabishvili at their joint press conference in Paris.
BUSINESS
GEORGIA TODAY FEBRUARY 26 - 28, 2019
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Fitch Upgrades Georgia to 'BB’, Outlook Stable BY THEA MORRISON
F
itch Ratings Inc., one of the "Big Three credit rating agencies," has upgraded Georgia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB' from 'BB-'. The Outlook is “Stable”. Fitch noted that so far Georgia's economy has been resilient to the negative developments of 2018. The information released by the agency reads that economic growth remained robust, the currency was relatively stable and the National Bank of Georgia (NBG) built reserves despite a severe economic shock in Turkey and a heightened sanctions risk in Russia. “Georgia's resilience reflects a diversification of sources of current account inflows, the floating exchange rate and prudent fiscal and monetary policy settings, underpinned by steadfast adherence to its IMF program,” the agency said, adding that all requirements under the Extended Fund Facility with the IMF were achieved as of end-June 2018 and end-December 2018. Fitch added that external imbalances are gradually easing. Georgia's current account deficit is structurally high, but Fitch estimates that it narrowed to 7.5% of GDP in 2018, despite the testing external environment. The agency noted that in 2017, Russia and Turkey were Georgia's second- and third-largest trading partners, respectively, in addition to being leading sources of tourists, remittance and FDI, although financial sector links are small. “Rising tourism revenues and remittances, notably from the EU, and exports, resulted in an estimated 13.9% increase in current external receipts. The first quarterly current account surplus on record was recorded in Q3, the peak tourism season,” the agency said. Fitch forecasts a further narrowing of the current
account deficit, adding the recently launched funded pension pillar in Georgia will likely encourage savings, and the implementation of macro-prudential measures will lead to a deceleration in consumer lending, reducing pressure on imports. “The deficit is expected to remain over 7% of GDP to 2020, which is large compared with the current 'BB' median of 2%... We forecast inflation to remain in line with the NBG target of 3.0% (and below the current peer median of 3.5%) in 20192020,” it added. The agency says that Georgia’s fiscal policy is consistent with a gradual decline in gross general government debt (GGGD)/GDP, which they forecast at 42.5% of GDP in 2019, lower than the current 'BB' median of 48.1%. “We expect the share of external debt to decrease, as the government increases local issuance to deepen the domestic capital market,” the statement reads. Fitch forecasts that sustained FDI, along with portfolio flows and private sector borrowing will fully finance the current account deficit. “Net foreign direct investment slowed in 2018 to 7.4% of GDP, from 9.5% in 2017, due to the completion of a large infrastructure project. We expect it to recover in 2019-2020 to an average 8% of GDP, boosted by new Free Trade Agreements, large projects in the transportation sector and development of the Anaklia Port,” the agency noted. In addition, Fitch expressed hope that the central bank will continue its policy of reserve accumulation through interventions in the FX market and the launching of FX options in 2019, while remaining committed to a floating exchange rate. Moreover, Fitch forecasts reserves to rise to $3.5 billion at end-2019 from $3.3 billion at end-2018. External finances remain a key rating weakness for Georgia according to Fitch, with net external debt at 61.9% of GDP at the end of 2018, higher than the current 'BB' median. However, the agency added that governance and
EU Ambassador: TBC Developments Impact Georgian Banking Sector
BY THEA MORRISON
E
uropean Union Ambassador to Georgia Carl Hartzell believes that the recent developments surrounding the largest bank in Georgia, TBC, affect the whole banking sector of the country. “It is an important issue. It affects the stability of the banking sector in Georgia. Consequently, we will continue to keep track of the situation," the Ambassador said. On February 14, the National Bank of Georgia (NBG) stated that after examining transactions conducted by TBC Bank 2007-2008, it was revealed that Chairman of the Supervisory Board of TBC Bank Mamuka Khazaradze and his Deputy Japaridze had violated the requirements of the legislation regulating conflict of interests, therefore it suspended the authority of the two men. Khazaradze filed a lawsuit against the regulator, but the supervisory board decided to withdraw it.
It was followed by Khazaradze’s resignation as the board chair. He announced he was leaving TBC, where he had spent 27 years. His deputy also decided to quit. However, Khazaradze and his deputy will keep positions at TBC Bank Group PLC, registered in London, UK, which keeps 100% shares of TBC Bank. In his Facebook post, former Chairman of TBC Supervisory Board explained that the Bank has been under attack for the past few weeks, which resulted in huge losses for the shareholders, amounting to $200 million in one month. He also noted that the reputation of the Bank has been put under question. “I made the decision to leave the bank where I spent 27 years of my life, the bank that I turned from $500 into the largest player in the region. Hopefully, this decision will positively affect the bank’s development in a stable and calm environment,” he stated. The NBG welcomed the decision of TBC to withdraw the lawsuit and pay the GEL 1 million fine imposed by the regulator.
Image source: newsbook.com.mn
business environment indicators are well above the current medians of 'BB' category peers, with Georgia ranking 6th out of 190 in the 2019 World Bank Ease of Doing Business Indicator. Georgian Prime Minister Mamuka Bakhtadze commented on Fitch's decision to upgrade Georgia’s rating. “It is a tremendous success and, moreover, according to the current data, we are the only country in the greater region to advance in the Fitch ratings,” he said at a press conference on February 25. Bakhtadze explained that it is a sign of Georgia's economy being more competitive, enabling the attraction of more investments as well as job creation. “It also means that fewer risks are associated with the economy, leading to decreased interest rates on loans. It is the most significant support towards the correct economic policy being pursued by Georgia,” he noted. The PM explained that advancement in the rating further increases the trust of international institutions and investors towards Georgia. “It is positively reflected in the business environ-
ment of the country and, what is most important, it will have a direct correlation with our main challenge - the elimination of poverty,” he claimed. Bakhtadze said that success was achieved by implementing effective reforms in the country, which helped reduce the current account deficit. “The historic problem of our economy is that Georgia was always heavily dependent on imports. We managed to alter this pressing issue, which means that we are solidly and rightly pursuing a road leading to a further reduction of this deficit. This very fact has been one of the most significant sources of poverty in Georgia… Yet we have now managed to make the economy more sustainable and resistant to external shocks,” he explained. The PM pointed out that the current success in the Fitch rating indicates that the Government of Georgia is carrying out fundamental reforms which make the economy more competitive, and that "this is an explicit fact." “At the same time, personally, for me, it is yet another clear example of us succeeding in our main strategy for the future by transforming Georgia into a regional economic hub,” he added.
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BUSINESS
GEORGIA TODAY
FEBRUARY 26 - 28, 2019
THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS
www.iset-pi.ge/blog
The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.
Water Losses & Operational Efficiency in the Water Sector BY MATSATSO TEPNADZE AND NORBERTO PIGNATTI
T
he large and chronic water losses characterizing distribution networks constitute one of the major challenges faced by Georgian water utilities. The water supply generates approximately 700 million cubic meters of non-revenue water (NRW) each year, considering just the urban centers. High water loss rates create excessive operational costs for the utilities and result in undesirable operational inefficiency in the water supply sector. This creates obstacles—from a financial
deterioration of the operational efficiency of the water supply utilities in Georgia— as well as to the loss of water—is the low rate of metered connections. Normally, water utilities are not able to control water consumption levels for nonmetered customers. These customers are charged per capita fixed tariffs, not conditional on their monthly water consumption levels. This, in turn, reduces their incentive to save water and to eliminate water losses on their property. As a result, the lower the metering rate, the higher the uncertainty about the company’s water balance and normative water loss levels. Below, we analyze the case of the United Water Supply Company of Georgia (UWSCG), looking at the evolution over
Figure 1.Metered and non-metered HH customers, UWSCG, 2011-2018
point of view—to the achievement of full cost recovery and to the appropriate operation of the water supply infrastructure. Directly, high loss rates in distribution networks result in NRW and higher water bills for the utilities. Indirectly, NRW increases the energy inputs required for
time of the company’s key parameters, such as metering ratios in absolute and percentage terms, the growth rate of new connections, and municipal energy intensity as an input factor. Through graphical illustration, we will also show how household and business connections have evolved over the last seven years.
Figure 2. Growth rate of metering, year on year, UWSCG, 2011-2018
Figure 3. Percentage share of electricity in total O&M (UWSCG, 2018)
water supply operations. This is the case especially in half the mountainous regional municipalities in Georgia where electricity constitutes up to 30% of the company’s operational costs. Another factor contributing to the
Based on the results of the analysis, we discuss how targeted policy measures could benefit both water utilities and society as a whole. UWSCG is a state-owned enterprise which coordinates the development of
the water supply and sanitation network in regional municipal centers and plays a fundamental role in the context of the country’s sustainable development strategy, which emphasizes rural development. As of today, the company has 53 municipal and up to 9 regional service centers in Georgia and serves 306,000 household (HH) customers as well as 19,000 commercial/business customers.
METERED AND NONMETERED CUSTOMERS, UWSCG, 2011-2017 The graphs below illustrate the absolute and percentage changes in metered and non-metered HH customers’ connections in the UWSCG. Over the last 8-year period, the metering rate for HH customers grew at an average 24%, with a sharp acceleration in the first years and a significantly lower growth (about 6% per year) over the last 4 years. Since 2017, the number of metered HH customers rose above that of un-metered customers. Still, in 2018 46% of households under UWSCG were still un-metered. As the meters are necessary to control water consumption and incentivize more efficient use of water, the low metering and the slowing growth rate of metering remain among the reasons for the system’s efficiency problems. In analyzing the efficiency of the company, it is also important to examine the structure of its operational costs. The next figure shows that the UWSCG has different electricity input needs in various municipalities. In other words, the percentage share of electricity costs in total Operation and Maintenance (O&M) costs is radically different across municipalities. Electricity costs as a percent of total O&M costs are above 25% in almost half of the municipalities in which the UWSCG provides water supply services (see figure 3). Clearly, municipalities characterized by high energy intensity contribute significantly to the company's overall operational costs. Two “quick win” policy actions have been suggested by the Asian Development Bank in the context of the Country Operations Business Plan 2018-2020: • improve UWSCG operational efficiency by reducing NRW from the declared 75% to the targeted 45% level; • adopt energy efficient technologies in the water production process, with potential savings up to 35% of the electricity currently consumed. Similar recommendations were put forward by other development partners such as the World Bank, the KFW, and the EIB who invest widely in our country’s water supply sector. The analyses conducted at the Ministry of Regional Development and Infrastructure of Georgia revealed that the proposed policy implementation would reduce the demand for power between 109 and 219 million kWh of electricity annually (see figure 4). Comparing the first two scenarios, it emerges that the company can save more from NRW reduction than from energy efficiency improvement. Combining the two policies would result in savings amounting to 219 million kWh of electricity. In order to have a clear understanding of the social relevance of the policy
Figure 4. Proposed policy impact on electricity consumption, million kWh, Source: MRDI 2019
intervention, we performed a simple exercise. Dividing the total energy saved in each of the scenarios by the average annual electricity consumption per household member, we estimated that the first policy scenario would save an amount of electricity equivalent to that consumed by 50,590 people in a year,
tricity import and export volumes, respectively. With the double policy intervention, the electricity saved rises to 46% and 39% of the country’s annual electricity import and export, respectively. What are the overall implications and conclusions from this case study?
Figure 5. Number of potential beneficiaries and three policy scenarios, MRDI 2018
while the number for the second scenario would be just 32,462. The third—and best-case scenario—is the double policy effect, which would save an amount of electricity sufficient to satisfy the electricity needs of 65,345 people for an entire year. Given the fact that the operational losses of UWSCG are covered by the public budget, this is more than a fictional exercise. It gives an idea of how many resources could be freed yearly by increasing operational efficiency in the water sector.
The first is that, as electricity is quite a costly input factor in water generation, reducing its consumption would potentially save a substantial amount of financial resources that otherwise would have to be subtracted from the state budget to subsidize the company, freeing them for alternative uses. The second is that, as the country’s overall demand for electricity consumption increases, a sensible water policy addressing the whole sector—not only the state-owned UWSCG—could con-
Figure 6. Saved electricity in percent of electricity imports and exports, 2017
These resources—net of the costs associated with the implementation of the suggested policies—could be used, for example, to provide electricity vouchers to vulnerable households. To illustrate the same concept from a different angle, we looked at the electricity saved as a percentage of the country’s electricity imports and electricity exports. Figure 6 below illustrates the policy intervention effects for three different scenarios. In the first scenario, the released electricity is equivalent to 35% and 30% of Georgia’s annual elec-
tribute significantly to reducing the country’s dependence on electricity imports. As we discussed, this could be done by defining specific policy targets to improve the water companies’ operational efficiency (such as reducing NRW and/or by adopting more energy efficient technologies). Targeting efficiency improvement measures and water recovery mechanisms would also be a good way to start putting the water sector on track to meet its energy efficiency targets for 2030.
BUSINESS
GEORGIA TODAY FEBRUARY 26 - 28, 2019
Job Openings for High-Qualified Georgians in Germany
Image source: prospects.ac.uk
BY MARIAM MERABISHVILI
H
igh-qualified professionals from Georgia will be able to go to Germany and find a job, says Jan Bittner, Head of the Economics and Law Department of the German Embassy in Georgia, noting that the German government has already submitted the relevant draft law to its parliament. Bittner told IPN media outlet that people of certain professions- specialists who have obtained higher education- can be employed on the German job market and their number is not to be restricted by law. For example, IT specialists, cooks and other professionals who have high qualifications are to be welcomed to seek such job openings. It is important to note that anyone hoping to find
a job in Germany will have to justify his education and qualifications. Only IT professionals will be able to find a job without a formal diploma. “This law has yet to be signed off on, so I can’t talk about specific procedures. But in the case of cooks, I can say that not everyone is entitled to a job, but rather it’s for those who are a national dish specialists, and they need to be in Germany. They should also have a specific labor agreement and a work visa from the Embassy because the visa free regime is only for tourists,” Bittner emphasized. Besides Germany, high-qualified Georgian citizens were also recently given the chance to work legally in France. According to the German Embassy spokesman, in addition to the legislative amendments related to finding work, the German parliament has received some regulations for the fight against criminals, of utmost important for the countries’ continued peaceful relations.
Next Step for Tbilisi Night Economy: Food Trucks Continued from page 1 The new “Mayor of the Night” has already proposed several initiatives within Tbilisi Night Economy, including the possibility of issuing permits for street performers and developing a special night bus route (number 22). The aim of Night Economy is to improve relationships between several sectors of the economy and the city, to capitalize on tourism opportunities and to welcome those interested in nightlife to the capital. “The main goal of our project is to create new jobs and support the development of small and medium businesses, especially in the tourism and restaurant sectors. We want to position Tbilisi as a 24/7 city and organize cultural and sports events for a wider group of people,” Gvarjaladze told GEORGIA TODAY last April. Now, a new project is being introduced under the Night Economy umbrella – food trucks. Tbilisi Deputy mayor Sophio Khuntsaria announced the plan late last week, saying that specific locations would be allocated for food trucks to operate in Tbilisi. She noted that small businesses have already expressed their support for and interest in the project. Khuntsaria explained that a survey will be conducted in each of the city’s ten districts to examine the potential demand for different aspects of Night Economy and to determine what direction the concept’s development should take in different parts of the city. “Development of the night economy is not just for tourism or for people who are oriented on entertainment – the local population should [also]
benefit from working at night,” said Khuntsaria. In his April interview, Gvarjaladze emphasized that the Night Economy concept would be inclusive of the whole city, not just the central districts, and would in fact help revitalize suburban areas. “Gldani, Varketili, and some other big ‘sleeping’ areas of the city lack cultural life. We aim to change that and to bring new life into these districts. People should have the chance to participate in an active life throughout the city. Another priority is to reuse old, abandoned Soviet-style buildings. Often, they were used for industrial purposes in the past and have since lost their purpose,” said Gvarjaladze. Food trucks could help fill a market of late-night eating that is mainly dominated now by shawarma stands of varying quality, and often have questionable health and safety standards. They also may encourage more creativity in the Georgian food scene, providing a space for people to play with traditional cuisine and themes and introduce more variety – which would benefit tourists alongside local consumers and entrepreneurs. The current food truck scene in Georgia is primarily limited to trucks or stands that appear for special events, such as on the pedestrian section of Aghmashenebeli St. or on Rustaveli during holidays when the street is closed to traffic. In many cities around the world, food trucks are an integral part of the culinary environment, offering a quick and easy lunch to hungry workers and serving as a perfect way to soak up alcohol after a night out. If the new project is successful, Tbilisi’s residents and visitors can look forward to the flourishing of a new cultural element that could benefit a large section of society.
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BUSINESS
GEORGIA TODAY
FEBRUARY 26 - 28, 2019
Given Enough Rope, Regulators Will Hang Us All BY ERIC LIVNY
P
rologue: Green Space Café is a tiny business on the outskirts of Tbilisi, next to the Ford Service Center in Dighomi. It is far less prominent than TBC Bank, and, therefore, few in Georgian media, the diplomatic community or business associations took notice of the fact that this small café came under vicious attack by a couple of Georgian regulators, V. Labadze and E. Gogoladze. Labadze and Gogoladze are no mob hitmen – such as Vincent Vega and Jules Winnfield from Tarantino’s Pulp Fiction. They are righteous inspectors employed by the Georgian Revenue Service. Having descended on Green Space Café on Tuesday, September 4, 2018, the duo was armed with no live ammo, but administrative violation protocols (blanki in Georgian). And, instead of reciting Ezekiel 25:17, they referenced the fine print of Georgia’s brand new Law on Tobacco Control. Article 5(2)l of the new law, which became effective merely three days earlier, on September 1, 2018, prohibited “to sell and/or display tobacco products… in shop windows, in glass cases, on counters, and on shelves or displayed otherwise in a manner that it is visible from outside the shop.” Yet, here they were, a few rows of cigarette packages neatly arranged on the shelves behind the Green Space Café salesperson’s back – visible from outside the shop! Labadze and Gogoladze utterly lacked a sense of Hollywood drama. Their ‘vengeance and furious anger’ took the prosaic form of a ₾2,000 fine. Boring, but very painful for Levan Abzianidze and Nino Kvelesiani, the enterprising couple behind Green Space Café. Levan and Nino were not the only victims of Revenue Service ‘vigilante’ in early September 2018. According to data provided by a single tobacco distributor, JTI, a total of 34 contracted outlets – small and large – were fined for violating EU-style outdoor visibility rules. An additional three fines were imposed on retailers for failing to fully comply with advertising restrictions.
ANTON AND HIS TOYOTA PRIUS (OR A MISTAKE THAT
And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy my brothers.
BROKE THE CAMEL'S BACK) Anton’s career as a professional stylist was interrupted in 2001 by a nasty car accident. Only 22 at the time, Anton was back on his feet after a year of rehabilitation, yet he could no longer work as a stylist. Having taught himself microelectronics, Anton was able to make a living by repairing phones and laptops. A few years later he landed a BP warehouse manager job in Bakuriani and Marneuli, and even made a temporary attempt to go back to his beloved profession in Donetsk. Taxi driving, the last resort for so many Georgian men of his generation, has been Anton’s main occupation since 2015. In September 2018, Anton sold his old Mercedes and decided to buy a relatively new and much more efficient Toyota Prius. In fact, he did not buy his Prius (its price tag, $6,000, was well beyond his means) but leased it at ₾800/month, for 18 months. Burdened with debts (a mortgage and car lease) and elderly parents, Anton and his newlywed wife Maria (they married on January 19, 2019) can barely make ends meet.
Early on February 20, Anton woke up not to the sound of music but an SMS signal on his phone. A ‘smart’ camera caught him driving his Prius without a technical inspection certificate, resulting in a fine of ₾200 – roughly 20% of Anton’s monthly income. Having not read the fine print of Georgia’s new law on Periodic Technical Inspections, Anton was planning to have his Toyota inspected by September 2019, according to the schedule for privately owned vehicles. His mistake was to think that he owns his car. In fact, it was registered in the name of “Geo Leasing Company LLC” and, as such, had to be inspected by January 1, 2019. That turned out to be a costly mistake.
PRELUDE TO “LABOR SAFETY” Georgian workers, so we are told, will soon be better protected from occupational hazards. As reported, by OCMedia, the Georgian parliament recently “adopted a new law on occupational safety granting inspectors new powers to inspect all workplaces in the country without a court order or prior warning.”
The new organic law will also strengthen the Labor Safety Agency, giving it greater autonomy and increasing its budget. From September 1, 2019, the Agency will have the authority to examine working conditions of any entity in all sectors of the economy, and issue fines up to ₾100,000 ($40,000). To me, this sounds like a lot of rope!
EPILOGUE: GEORGIA’S EUROPEAN FUTURE I am not a smoker, and am very happy that Georgia is introducing measures to raise the price of cigarettes, restrict access to tobacco products, and ban their advertising. Likewise, I am very happy to see Georgia gradually introducing technical vehicle inspections as a means of improving road safety and (potentially) reducing traffic congestion. And, I definitely have nothing against stronger labor safety standards in Georgia’s horrifically unsafe workplaces. I do, however, have a serious issue with the unnecessary brutality and stupidity in the implementation of all the above EU-style regulations.
• There is nothing particularly European about the Revenue Service inspectors slapping fines on small Georgian businesses that fail to comply with a new advertising or display regulation two days after its coming into effect. Fines should be the last resort, not a knee jerk reaction to a first violation. Businesses should be taught how to comply with a complex regulation. They should be warned. They should be given a bit of time to adjust. • There is nothing particularly European about drivers being fined for failing to understand the complex timetables for technical vehicle inspections. The same ‘smart’ cameras that are currently programmed to issue ₾200 fines can be reprogrammed to issue warnings and reminders. An SMS sent to a driver’s phone could politely notify her of any new requirements, giving her some time to set a bit of money aside and comply. There is every reason to suspect that, unless better trained and properly instructed, Georgian labor inspectors will wreak havoc on Georgia’s small and medium businesses. Most Georgian employers do not have the capacity to comply – fully and immediately – with the fine print of the new labor safety standards. Workers’ safety is important, but businesses will have to be given some time to learn the new standards and adjust their processes and equipment. Labor inspectors should be instructed to help in the process of a costly and time-consuming adjustment. Not to pull their guns and administrative violation protocols, but help. Understandably, Georgia is working very hard to harmonize its legislation and fulfil its obligations under the Association Agreement with the European Union. Regretfully, however, in the rush to tick off the boxes on this agreement, mindless bureaucrats tend to forget that government institutions are there to serve the people. Their purpose is not to inflict fines and sanctions, but to improve the people’s lives. Fines and sanctions are a legitimate means to achieving the common good. But they should be the last resort, not an automatic routine.
ABOUT THE AUTHOR:
Eric Livny is Founder and President at Tbilinomics Policy Advisors, and Chair of Economic Policy Committee at the International Chamber of Commerce (ICC Georgia).
Tbilisi Academy of Arts to Establish Business Incubator BY AMY JONES
T
he Tbilisi Academy of Arts will implement a business incubator for students starting in October. The project was unveiled on February
Image source: betravel.ge
21. The incubator, UpStart, will help students to develop projects and learn new
skills. It will also teach students how to market their projects and artwork on the international art scene. Trainers from the UK will help with training. Mikheil Giorgadze, the Deputy Minister of Education, Science, Culture and Sport, told students that he hopes the incubator will improve their job opportunities and help them in their fields. Creative Georgia, an agency working to develop Georgian creative industries, is also supporting the project.
BUSINESS
GEORGIA TODAY FEBRUARY 26 - 28, 2019
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Enterprise Georgia Evaluated Positively BY SAMANTHA GUTHRIE
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udit and business advisory firm BDO Georgia released a report last week analyzing and evaluating the state program Enterprise Georgia. Enterprise Georgia is administered by the Ministry of Economy and Sustainable Development of Georgia. The program is a collection of initiatives that support investment, business development, and exports. It is the first Georgian government program “mandated to facilitate export and private sector development through a variety of financial and technical support mechanisms,” explains its website.
Between 2013 and 2018, the 85 surveyed beneficiaries’ export sales were recorded at $116.7 mln
Enterprise Georgia uses a variety of approaches and mechanisms to support Georgian entrepreneurs. The support program “helps SMEs expand and enhance operations, become more market oriented, and turn new ideas into profitable businesses by offering them financial and technical assistance tools.” As of January 2019, Enterprise Georgia has supported 441 businesses with a total investment value of more than 1 billion GEL ($375 mln), through which 16,600 new jobs have been created – according to internal figures released by the program. The BDO report looks at the efficiency of the financial accessibility and technical assistance components of the program. BDO followed 85 beneficiaries of Enterprise Georgia. These beneficiaries were at least two years out from their participation in the program, and included 30 startups and 55 more established companies who sought to reequip or expand their businesses through Enterprise Georgia. Overall, BDO evaluated Enterprise Georgia quite positively, praising the program’s success improving beneficiaries’ production scales, quality, product diversification, and competitiveness against imports. Some of the report’s most interesting findings are that, from 2014-2018, the beneficiaries surveyed created more than 164 million GEL ($61.5 mln) in GDP, of which 54% was contributed by growing enterprises and 46% by startups. Of this sum, 79% came from Tbilisi-based companies – although
Image source: Enterprise Georgia
only 60% were located in Tbilisi. This data shows that the startups included in the research are proportionately more revenue-generating than the established companies, and that companies based in Tbilisi are more revenue-generating than those in the regions. The beneficiaries surveyed generated a total revenue of 390 million GEL ($146.3 mln). Among the surveyed beneficiaries, a total of 3,033 new jobs were added due to their participation in Enterprise Georgia, adding a total salary increase of 25.6 million GEL ($9.9 mln). The ratio
of loans and capital payments in relation to gross investments made by the surveyed beneficiaries from 2014-2018 is approximately 38% – more than 247 million GEL ($92.7 mln). Surveyed beneficiaries paid more than 42.5 million GEL ($16 mln) in state taxes between 2014-2017. One of Enterprise Georgia’s stated goals is to support Georgian companies to increase their exports. Between 2013 and 2018, the 85 surveyed beneficiaries’ export sales were recorded at 311 million GEL ($116.7 mln).
The report released last week is only the first phase of the research and consulting contract between BDO Georgia and the Ministry of Economy and Sustainable Development. Phase two will see BDO providing recommendations to the ministry on how to increase the program’s efficiency and how the program can increase beneficiary companies’ performance. BDO was hired to conduct the research following a tender announced by the Ministry of Economy and Sustainable Development. The contract amount was 298,481 GEL ($112,000).
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BUSINESS
GEORGIA TODAY
FEBRUARY 26 - 28, 2019
Average Hotel Prices in Georgia & Hotel Price Index The average cost of a room in a 5-star hotel in Georgia in January 2019 was 481 GEL per night. In Tbilisi, the average price was 600 GEL, followed by Adjara – 480 GEL, Samtskhe-Javakheti - 385 GEL, and Kakheti - 285 GEL. In January 2019, the average cost of a room in a guesthouse2 in Georgia was 69 GEL per night. The highest daily rates for guesthouses, were found in Guria – 109 GEL.
HOTEL PRICE INDEX Graph 1: In the graph, average prices for standard double rooms in 3 and 4-star hotels and guesthouses are given by region. 5-star hotel prices are provided above
I
n January 2019, in Georgia, the hotel price index decreased by 3.9% compared to December 2018. Among ten regions of Georgia and Tbilisi, in January 2019, compared to December 2018, the hotel prices increased only in Racha (1.3%). In Tbilisi, hotel prices decreased by 4.2%. In January 2019, compared to January 2018, in Georgia the hotel price index increased by 2.6%. The daily rates for standard double hotel rooms increased the most in Adjara (19.2%) and Samtskhe-Javakheti (6.2%). It has to be noted, that the majority of the trips of international visitors, in 2018, were made in Tbilisi and Batumi. In January 2019, compared to January 2018, in Tbilisi the hotel price index decreased by 4.6%, the prices of 3-star, 4-star and
5-star hotels decreased by 4.8%, while the prices of guesthouses decreased by 3.8%. For Batumi, in January 2019, compared to January 2018, the hotel prices increased by 23%, the prices of 3-star, 4-star and 5-star hotels increased by 34%, while the prices of guesthouses increased by 0.3%.
In January 2019, in Georgia the hotel price index3 decreased by 3.9% compared to December 2018. The daily rates for standard double hotel rooms increased the most in Samegrelo-Zemo Svaneti (-5.4%) and Shida Kartli (-4.7%). Among ten regions of Georgia and Tbilisi, in January 2019, compared to December 2018, the hotel price increases was not recorded in any of the regions. The 3-star, 4-star and 5-star hotel price index decreased by 3.3% in January 2019, compared to December 2018. In these
types of hotels, the highest price decreases were recorded in Tbilisi and MtskhetaMtianeti. In January 2019, compared to December 2018, the 3*, 4* and 5* hotel prices increases was not recorded in any of the regions. For guesthouses, the price index decreased by 4.5% in January 2019, compared to December 2018. In this type of accommodation, the biggest percentage price decreases for standard double rooms were recorded in Samegrelo-Zemo Svaneti and Mtskheta-Mtianeti. The price increase of guesthouses was recorded only in Racha. In the same period, in January 2018, compared to December 2017, in Georgia the hotel price index decreased by 6.4%, while in Tbilisi hotel prices decreased by 9.9%. During this period, the daily rates for standard double hotel rooms decreased the most in Tbilisi and Mtskheta-Mtianeti. Increases of hotel prices were recorded only in three regions. In January 2019, compared to January 2018, in Georgia the hotel price index
increased by 2.6%. The daily rates for standard double hotel rooms increased the most in Adjara (19.2%) and SamtskheJavakheti (6.2%). Among the regions of Georgia, in January 2019, compared to January 2018, hotel prices decreased in six regions. In Tbilisi, in January 2019, compared to January 2018, the overall price level of hotels decreased by 4.6%. In Georgia, the 3-star, 4-star and 5-star hotel price index increased by 6.5% in January 2019, compared to January 2018. In these types of hotels, the highest price increases were recorded in Adjara and Samtskhe-Javakheti. During this period, in Tbilisi, the prices of these types of hotels decreased by 4.8%. In January 2019, compared to January 2018, for guesthouses, the price index decreased by 2%. In this type of accommodation, the biggest percentage price decreases for standard double rooms were recorded in Kvemo Kartli and Shida Kartli. During this period, in Tbilisi the prices of guesthouses decreased by 3.8%.
AVERAGE HOTEL PRICES In Georgia, the average cost of a room1 in a 3-star hotel was 124 GEL per night in January 2019. The most expensive 3-star hotels in January in Georgia were in Mtskheta-Mtianeti – 200 GEL. The average cost of a room in a 4-star hotel in Georgia in January 2019 was 225 GEL per night. The most expensive 4-star hotels in December was found in Mstkheta-Mtianeti– 324 GEL.
Table 1: Percentage change of prices in January 2019 over December 2018 and over January 2018
Georgia Promotes Mediation & Arbitration through UNDP & EU Programs BY GABRIELLE COLCHEN
T
he European Union (EU) and the United Nations Development Program (UNDP) are working on Alternative Dispute Resolution in Georgia. The Minister of Justice, Thea Tsulukiani, the UNDP head in Georgia, Louise Vuiton, and the Deputy Head of Cooperation Section at the Delegation of the European Union to Georgia, Catalin Gherman, among others, discussed these initiatives at the Radisson Blu Iveria Hotel in Tbilisi last week. The Minister of Justice first highlighted that mediation is inherently part of the Georgian culture and heritage, and that it has been efficiently resolving disputes for centuries now. Indeed, Sophie Tkhemaladze, Chairperson of the Georgian Association of Arbitrators, described that in Georgian mountains, people have always
asked mediators to help resolve conflicts. Tsulukiani explained that the development of mediation creates fair and faster justice, which establishes a safer business environment. This enables Georgia to be a more and more attractive country for foreign and local investments. If people, as well as companies, can have access to mediators and arbitrators, they avoid going to court for disputes, saving time and energy. “Where Georgians still highlight the slowness and expense of their judicial court system, they also recognize that the Georgian judiciary system is generally getting better,” Tsulukiani said, adding that she was working on these issues and that mediation was very promising in this direction. Catalin Gherman noted that more alternative dispute resolutions would reduce the number of cases faced by the Georgian judiciary system, meaning less pressure and more efficiency. “It’s a win-win situation for people and
companies as well as for the judiciary. People and investors need to have trust and to feel that they are in a safe and predictable business environment in Georgia”, she said. Irakli Lekvinadze, Business Ombudsman of Georgia, explained that there is a high number of commercial disputes and that mediation units are already doing a good job intervening. He said that more and more people were coming to him because they could see the efficiency of such alternative resolutions. “To develop mediation and arbitration in Georgia, we need to train people to become mediators,” David Asatiani, Executive Director of the Georgian Bar Association, explained. “I’ve been working with a lot of lawyers who are interested in being trained as mediators. Psychologists and professors are also disposed to it”. Georgia’s objective is to become the mediation center of the region. Already,
people from Uzbekistan have been coming to Georgia to learn more about mediation and arbitration. Georgia needs
to keep inviting experts and working in cooperation with the EU and UNDP to strengthen this promising initiative.
BUSINESS
GEORGIA TODAY FEBRUARY 26 - 28, 2019
Emerald Group
BY KETEVAN KVARATSKHELIYA
I
n an era of developments and modernization, where there is a multiplicity of innovative companies carrying out important infrastructure projects, Emerald Group, a relatively new Investment Development Company launched in Georgia, plans to strongly establish itself on the Georgian market and even beyond its borders. Emerald Group, a company which builds residential apartments, hotels and other multifunctional complexes, was established on June 26, 2018, and has the ambitious strategy to introduce unorthodox living standards and first develop in the capital city of Georgia, Tbilisi, then assimilate into the market of the entire country, followed by the markets of
other Eastern European countries. Emerald Group is the only Georgian company comprising of only luxury projects, targeted to high-budget clientele. It aims to carry out premiumclass projects where the residents will feel secure and be able to enjoy a stay in an aesthetic and comfortable environ. Fulfilling the needs of clients is of paramount importance for the professional team of Emerald Group, which puts much effort into exploring them, and takes the responsibility to meet the requirements of the most pretentious customers in the very best way. It also promises to enable them to feel part of something exclusive and totally distinguished. Emerald Group represents exclusive projects with original design and architecture. All the apartments of the present and upcoming constructions are designed to meet the highest standards and offer 5-star hotel services.
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BUSINESS
GEORGIA TODAY
FEBRUARY 26 - 28, 2019
China’s Belt & Road Initiative in Flux BY EMIL AVDALIANI
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hina’s economic and political ascendancy is a topic for almost every Eurasian state – and Georgia is no exception. However, before proceeding to China’s geopolitical role in and around Georgia, keep in mind those major routes which make up the famous Belt and Road Initiative (BRI): China to Europe through a new Eurasian land bridge; the China-Mongolia-Russia Corridor; and Central and West Asian countries. The 21st century maritime Silk Road mainly relies on Chinese coastal ports and consists of the China-Indochina Peninsula corridor linking China with the South Pacific Ocean through the South China Sea; the China-Pakistan trade corridor; and the BangladeshChina-India-Myanmar trade route. Georgia does not feature in the list, nor does the South Caucasus. This, however, does not preclude China from forging closer relations with the South Caucasus countries. This signals one of the crucial arguments around the BRI: Chinese perspectives are in constant flux, and just because a country or region is absent from the list does not actually mean Beijing is not economically interested. China has developed close trade contacts with all the South Caucasus countries and has invested extensively in the region. However, Georgian-Chinese co-operation stands out due to the size of investments and growth in bilateral trade. After the collapse of the Soviet Union, China’s state-owned investment activities in the region drove Chinese immigration to Georgia. In the early 2000s, the majority
of Chinese migrants ran corner shop businesses and restaurants or worked as market vendors. Since 2010, a large portion makes a living as construction workers. China is now Georgia’s third-largest trade partner after Turkey and Azerbaijan, whereas Russia is the fourth. Trade between the two countries has increased significantly over the past ten years, from about 10 million US dollars in 2002 to
823 million dollars in 2014-15. In 2017, China and Georgia signed a free trade agreement during the visit of a Georgian delegation to China in May. The Georgian government hopes that the country’s position on the Black Sea (with several ports such as Batumi, Poti and Anaklia) will allow it to function as a logistics hub for the entire region, and particularly for China’s One Belt, One Road initiative.
Aside from its Black Sea ports, Georgia boasts the East-West Highway – the country’s main land transport road that essentially connects Azerbaijan with the Black Sea coast – and existing railway projects such as the Baku-TbilisiKars link (BTK). Indeed, from Beijing’s perspective, the three most valuable projects underway in the South Caucasus relate to Georgia. These include the opening of the BTK railroad, which will
make the delivery of containers, freight and passengers from Asia to Europe 45% faster, the construction of a new deep-water seaport in Anaklia on the Black Sea, capable of handling 100 million tons of cargo per year and of receiving large Panamax-type vessels, and the East-West Highway expansion in cooperation with the World Bank, the Asian Development Bank, and other organizations. China began considering the South Caucasus route following the announcement of the BRI in 2013. In 2015, China tested the connection efficacy between the Chinese-controlled Xinjiang province to Georgia’s Poti port via Kazakhstan and Azerbaijan. A couple of years ago, railway cargo loaded in China arrived in Georgia within a month. However, handling administrative obstacles took almost a third of the transit time. China also carried out several other tests to explore the viability of a trade and transit route through the South Caucasus. Despite its advantages as a transit country, however, Georgia still faces numerous questions. Although Beijing considers Georgia’s location to be important and the region to be strategically relevant, there is still much to be done. As said, the Chinese BRI is a constantly evolving project responding to rising challenges and opportunities. In fact, like ancient and medieval trade routes which spanned from Asia to Europe, the BRI is also subject to abrupt changes and modifications. Thus, it depends much on Georgia’s internal processes and how the country develops an internal artery of railways, roads and other infrastructure so that China pays more attention to Tbilisi when considering its BRI project in this part of the world.
Asian Shares Rise After Trump Delays Tariff Hike BY AMY JONES
A
sian shares have jumped after US President Donald Trump announced he will meet with Xi Ping to conclude an agreement ending the trade standoff between China and the US. “I am pleased to report that the US has made substantial progress in our trade talks with China,” tweeted Trump on Sunday evening. He mentioned that progress had been made on “structural issues, including intellectual property protection, technology transfer, agriculture, services, currency and many other issues.” Trump was planning to increase tariffs on Chinese imports into the US from 10% to 25% on March 1 if the two countries did not reach an agreement by Friday. The increase would affect $200 billion worth of Chinese goods. The delay is likely to calm volatile financial markets and reassure business owners who depend on China.
Since the news, Asian shares have reached their highest point in the past five months. Chinese markets saw significant gains, with the stock market soaring by 5%. The Shanghai composite jumped by 5.6% to 2,961.28, taking this year’s gains to over 20%. Meanwhile, the Shenzhen component increased by 5.5% to 9,134.58 whilst the Shenzhen composite rose by 5.4% to 1,557.27. Elsewhere in the region, the Nikkei in Tokyo rose by 0.5% and the Kospi in Soeul climbed 0.45%. The Australian dollar also benefited. China’s official Xinhau news agency echoed Trump’s comments, stating that both sides “came a step closer by realizing the important consensus reached” by Xi Jiping and Trump when both parties agreed to a trade war truce. China and the US agreed to halt trade tariffs for 90 days to allow for talks in December following months of hostile tariffs imposed between the two countries. China had accused the US of starting “the largest trade war in economic history.” The announcement to delay the tariffs
comes after days of negotiations between American and Chinese officials in Washington. “The high frequency engagement between Beijing and Washington at a
senior level implies that both sides are looking for some form of settlement,” Tai Hui, Chief Market Strategist Asia Pacific at JP Morgan Asset Management
told The Guardian. Trump’s decision to delay tariffs suggests a breakthrough in talks between Washington and Beijing. Trump’s administration has been in discussions with Beijing for months in an attempt to persuade China to make structural changes to its economy. Trump has been critical of China for undercutting American workers. By imposing tariffs, he wanted to make US-made products cheaper than imported ones, encouraging consumers to buy American. However, both sides are still to sign an official agreement and few details have been revealed regarding the measures of such an agreement. Some analysts believe that Trump’s advisors may have secured greater concessions than previous administrations, whilst others question whether the US can really transform its economic relationship with China. Nonetheless, Trump’s optimism is clear: “if all works well, we’re going to have some very big news over the next week or two,” said the President. Trump and Xi Jiping plan to meet in Florida in the near future.
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SPORTS
GEORGIA TODAY FEBRUARY 26 - 28, 2019
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Georgian Wrestler Demands Dismissal of His Attacker- President of Federation BY THEA MORRISON
Z
urab Datunashvili, Captain of the Greco-Roman style wrestling team of Georgia and twice European champion, has demanded the dismissal of his attacker, Gega Gegeshidze, who is the President of the Georgian Wrestling Federation. The incident between the two men allegedly happened on January 11 at the Sports Palace in Tbilisi, when Gegeshidze physically assaulted the young sportsman. Datunashvili addressed the police and an investigation was launched under Articles 126 and 239 of the Criminal Code of Georgia, after which the President of the Federation was arrested on charges of physically abusing Datunashvili. Gegeshidze had consistently denied the charges, saying “someone was backing Datunashvili to discredit me” but during the trial, he admitted attacking Datunashvili and even apologized for his behavior. He was released in exchange for a GEL 5000 bail from the courtroom after the trial, and has kept his position at the Federation.
Image source: Marshall Press
The Wrestling Federation discussed the case on Saturday. However, as Datunashvili says, Gegeshidze’s dismissal was not mentioned during the meeting. The sportsman says he cannot continue
Georgian Kickboxer Davit Kiria Becomes World Champion
Photo: Davit Kiria Facebook Page
BY THEA MORRISON
G
eorgian kickboxer Davit Kiria who competed in the World Championship in China (KUNLUN World C h a m p i o n s h i p) , h a s become a champion. Kiria gained the belt of world champion for the third time in his career (-70 kg weight category). In the final, Kiria faced Marouan Toutouh from Morocco.
After five tense rounds, Kiria won (2929, 28-29, 30-29, 30-27, 30-29). Kiria competes in the Lightweight division. An Ashiharakarate stylist, he is known for mixing crisp boxing with unorthodox kicking techniques. He won the 2009 Kyokushinkai Karate Kamakura European Championship and also built up experience on the Dutch kickboxing scene before joining the Glory promotion in 2011 where he has faced some of the top fighters in his weight class and won the Glory Lightweight Championship in Zagreb (Glory 14), on March 8, 2014.
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working with Gegeshidze and the only way for him to succeed in his career is to leave the country. He took to Facebook to express his opinion regarding the case. Datunashvili
is sure that Gegeshidze’s apology is aimed only at maintaining his post. “Otherwise, he would not have denied attacking me, or would have apologized from the beginning. His actions are
cynical,” the post reads. Datunashvili says if he leaves the country, he might be disqualified. “If I leave Georgia, they can give me a two-year disqualification, meaning I cannot take part in competitions with the name of any country. However, even if it happens, I am ready to do it to protect my position,” he said. Datunashvili was also supported by the non-governmental organizations, who gathered at the Wrestling Federation on January 23, requesting the resignation of the President. Leri Khabelov, Chairman of the Olympic Committee, says that Gegeshidze again apologized to Datunashvili at the presidium meeting. “We have not discussed Gegeshidze’s resignation, as this issue is under consideration in the city court,” Khabelov said, adding that Datunashvili is a Georgian athlete on a scholarship and that it would be bad to have him “competing on behalf of another country.” “We want him to get an Olympic Games license. The presidium had the same opinion but Datunashvili rejected the offer and said that he wanted to continue his career on behalf of another country. We will consider this issue, but I will not support the idea of Datunashvili competing against us,” he said.
Snow Rugby to Boost Georgian Winter Tourism BY KETEVAN KVARATSKHELIYA
T
here’s not much winter left with spring fast approaching, but there are still a number of events scheduled in Georgia’s various mountain resorts to celebrate the last of the chilly season. One caught our eye in particular: the snow rugby tournament which Bakuriani will host on March 3. GEORGIA TODAY contacted one of the event organizers, Zura Duglaze, to find out more. Before speaking about the event, Dugladze briefly informed us about the sport itself. “There are different disciplines in rugby, comprising of teams of 15, 7 and 5 participants. Along with ‘ordinary’ rugby, there are also beach and snow subcategories. Beach rugby is more developed and widespread around the world. There is even a Beach Rugby European Championship,” he said, adding that “Snow rugby is neither so big nor popular yet, but Georgia has a wonderful advantage in its suitable mountainous terrain, ideal for holding snow rugby tournaments once or twice per year.” Snow rugby has actually been going in Georgia for eight years already. 2019 marks its second year being held in Bakuriani, organized with the support of the National Federation of Georgia ‘Sport for All.’ The event is dedicated to amateurs who, along with skiing, enjoy more active and energetic vacations in the snow. “The one-day event will commence at noon and continue for approximately four hours,” Dugladze told us. “Eight teams will be put into two larger groups. After a semi-final and final, we will hold
Journalists: Tony Hanmer, Zaza Jgarkava, Maka Bibilashvili, Dimitri Dolaberidze, Vazha Tavberidze, Nugzar B. Ruhadze, Samantha Guthrie, Amy Jones, Thea Morrison, Ana Dumbadze, Ketevan Kvaratskheliya Photographer: Irakli Dolidze
Snow Rugby Tournament, Gudauri, 2017
an awards ceremony to reveal this year’s winners.” He notes the main aim of organizing the snow rugby tournament is the promotion and popularization of Georgia and its mountain resorts, particularly Bakuriani, which will contribute to the development of the tourism industry in the region, as well as throughout the country. Dugladze also shared the organization’s future plans with us. “We are currently negotiating with the local government, and aspire to expand the scale of the tournament. We would like to invite the representatives of Turkey, Azerbaijan, Kazakhstan and Dubai to participate and make snow rugby a regional contest,” he said. GEORGIA TODAY also contacted the President of the National Federation of
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Georgia ‘Sport for All’, Maia Azarashvili, about the upcoming event. “We have already been supporting the organization of the snow rugby tournament for two years. We do not want to limit ourselves to only certain types of sports, though, and aim to increase the diversity of the ‘palette’ of popular sports,” she told us. “High interest and the inclusion of amateurs and youngsters is of paramount importance for us. By holding such tournaments, we also aspire to develop sport tourism in Georgia. The 2018 Snow Rugby Tournament received very positive feedback. The interest in the event is on the rise among participants, as well among the attending audience. This is good news for us, as it is one of the first steps in establishing snow rugby as one of the most popular types of sport in our country.”
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