Issue #1034 Business

facebook.com/ georgiatoday

Issue no: 1034/122

• MARCH 27 - 29, 2018

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Georgian President Awards Deceased Tatunashvili with Order of Honor NEWS PAGE 2

Deja-Vu: Will Growth in 2018 Look Similar to 2017? The Economy Might Still Surprise Us…

FOCUS

ON GEORGIAN AGRICULTURE

A look at the ongoing agricultural sector developments (or lack thereof)

ISET PAGE 4

Ukraine Confiscates Gazprom Assets BUSINESS PAGE 6

PAGE 5,8

Image source: YSBRANDCOSIJN / ADOBE

US 2018 Budget Increases Assistance for Georgia to $105 Million

Hilik Bar: Tbilisi All Set to Host Int’l Forums

BY THEA MORRISON

BUSINESS PAGE 11

T

he United States of America, in its 2018 Spending Bill, increased assistance to Georgia to $105,325 million, $5 million more compared to the assistance allocated last year.

The corresponding bill was endorsed by the United States Congress and signed by President Donald Trump on March 23.

The newly passed $1.3 trillion bill is the latest attempt by Congress to take a harder stance on Russia.

"None of the funds appropriated by this Act may be made available for assistance to the central Government of the Russian Federation," reads the section, which excoriates Russia for seeking to destabilize Ukraine, annexing Crimea and occupying Georgian territories Abkhazia and South Ossetia.

Continued on page 2

Unraveling the Complexities of Hate Speech

Photo: Georgian embassy to the US

POLITICS PAGE 14 Prepared for Georgia Today Business by

Markets As of 23ͲMarͲ2018

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MSCI EM EE MSCI EM

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NEWS

GEORGIA TODAY

MARCH 27 - 29, 2018

New Hotel Opens in Georgia’s Kakheti Region

Photo: Tatunashvili's father at the funeral. Source: President's Administration

Georgian President Awards Deceased Tatunashvili with Order of Honor

BY THEA MORRISON

G

eorgian President Giorgi Margvelashvili has awarded Georgian citizen Archil Tatunashvili, who died in custody in a detention facility in Georgia’s occupied Tskhinvali region (“South Ossetia”) on February 23, with an Order on Honor.

The puppet regime at first refused to hand Tatunashvili’s body over to Georgia-proper authorities following his death in custody in unclear circumstances. However, late on March 20, the body of Tatunashvili was transferred to the Georgia-proper side of the boundary line and on March 24, he was buried with military honor at Mukhatgverdi mili-

tary cemetery on the outskirts of Tbilisi.

Georgian media says the body has multiple injuries on the hands and head, and claim it is obvious that 35-year-old Tatunashvili had been tortured.

De facto Tskhivali claims Tatunashvili was “suspected of sabotage and murder of civilians” during the Georgia-Russia August war 2008.

They say their "law enforcers" used physical force against Tatunashvili when he attempted to escape, adding that as a result, he fell down stairs and died two hours later in hospital.

After the funeral, the President directly stated that Tatunashvili had been tortured.

“I want to tell those who are carrying out such actions against us: we have gone through such periods many times, for centuries, and we are ready for such a fight. We always win and we will win this time too,” Margvelashvili stated at the cemetery.

Photo: Opening of hotel - Akhalsheni Wine Resort

BY THEA MORRISON

A

new hotel named Akhalsheni Wine Resort was opened in Gurjaani municipality, Georgia’s eastern region of Kakheti, on Sunday.

GEL 7.5 million was invested in the project, which was co-financed by the Ministry of Economy’s Produce in Georgia project, the Bank of Georgia and European Union financial program.

The new hotel belongs to Kakhetian Traditional Winemaking (KTW), which will popularize the 8000-year-old Georgian winemaking traditions for tourists.

Georgia’s Prime Minister, Giorgi Kvirikashvili, took part in the opening ceremony. He noted that the hotel is located in the micro-zone of Alazani Valley and Papari fields with a beautiful view of Caucasus mountains and added that this highstandard hotel “would contribute to attracting tourists to Georgia’s oldest wine-making region.”

He highlighted that over the past year, the number of tourists in Georgia increased by 28% and there is a potential to triple this by 2025.

“This will affect our country’s welfare. Quality of life will be improved and new jobs will be created,” he said.

The Georgian PM then thanked KTW and its head Zurab Chkhaidze for carrying out investments and projects in support of Georgian viniculture and winemaking traditions.

“KTW carries out projects and invests throughout the country and I’d like to thank Zurab Chkhaidze for his patriotism. It is also noteworthy that local tourism is moving to a new dimension. Requests for such hotel complexes significantly increase by the year,” he added.

Kvirikashvili also noticed that even more significant projects will be carried out in Kakheti in the near future.

He claimed that the government and investors plan to set up a music program in Tsinandali, which will be similar to the Verbier Festival, an international music festival that takes place annually in the mountain resort of Verbier, Switzerland.

Stressing that it is high time that Kakheti had a separate airport, Kvirikashvili spoke of his belief that, through the negotiations with the private sector, charter flights will soon become available to the region.

He also talked about the importance of the development of railway traffic in Kakheti.

"The construction of a new railway is a costly feat. In Kakheti, there is an existing railway, and we are considering extensive restoration works.

Development of tourism without railway is unimaginable," he stressed.

The PM once again noted that Georgia has great tourism potential due to its amazing nature and called on citizens to take care of their homeland.

“Georgia is a country of progress and synergy.

Our country has a history of 8000 years of winemaking and the oldest traditions in this regard,” he added.

US 2018 Budget Increases Assistance for Georgia to $105 Million Continued from page 1 In addition to this, the bill prohibits financing for governments recognizing the independence of Russian-occupied Regions of Georgia: Abkhazia and Tskhinvali.

“None of the funds appropriated by this Act may be made available for assistance for the central government of a country that the Secretary of State determines and reports to the Committees on Appropriations has recognized the independence of, or has established diplomatic relations with, the Russian-occupied Georgian territories of Abkhazia and Tskhinvali Region/South Ossetia,” the document reads.

It further notes that none of the funds appropriated by this Act may be made available to support the Russian occupation of the Georgian territories of Abkhazia and Tskhinvali region.

The bill adds that the US Secretary of the Treasury shall instruct the United States executive directors of international financial institutions to vote against any assistance for any of their programs (including any loan, credit, or guarantee) that violates the sovereignty and territorial integrity of Georgia.

The document also says that the funds used to assist the Eastern Partnership countries shall support implementation of these countries’ Associa-

tion Agreements and trade agreements with the European Union, and to reduce their vulnerability to external economic and political pressure from the Russian Federation.

Georgian Prime Minister, Giorgi Kvirikashvili welcomed the increased financing of Georgia and the US support towards Georgia’s territorial integrity.

“It is a clear confirmation of the support of Georgia's sovereignty and territorial integrity by both the US Congress and Administration, and of commitment to deepen the two countries' strategic partnership and further intensify their cooperation.

I would like to thank the US Congress and the Administration of President Donald Trump for yet another demonstration of firm support at a legislative level,” Kvirikashvili’s statement reads.

Georgia’s Foreign Ministry also thanked the US government and President Trump for supporting Georgia.

Georgia’s Foreign Minister, and Vice-Premier, Mikheil Janelidze, says this is confirmation that the US-Georgia strategic relationship is moving forward.

“We would like to thank the US Congress, the Administration and the President for supporting important points for Georgia in the 2018 Budget Bill, first of all related to the strong support of the US of Georgia's territorial integrity and sovereignty,” Janelidze stated.

NEWS

GEORGIA TODAY MARCH 27 - 29, 2018

3

Police Arrest 2 in Connection to Leo Grand Hotel Tragedy

BY THEA MORRISON

G

eorgia’s Ministry of Internal Affairs (MIA) reports that they have detained two individuals in connection to the Batumi Leo Grand Hotel fire, which left 11 people dead in November 2017.

According to the MIA, following a 4-month investigation, it was assessed that Leo Grand was functioning without observing the correct safety norms.

“In particular, the building was not equipped with an automatic fire and alarm system and did not have the right ventilation system, which would have

enabled the evacuation of people from the building during the incident,” the ministry stated.

“The investigation revealed that the technical manager of Leogrand Hotel and the person responsible for technical storage were obliged to ensure fire-safety standards at Leogrand Hotel,” the MIA added.

The Chief Prosecutor’s Office also released a statement, which reads that easily inflammable material, which had been placed in the technical storage room, helped intensify the blaze that broke out in the room and caused strong smoke in the building at around 8pm on November 24.

The investigation was launched under Article 243 of the Criminal Code of Geor-

gia, entailing a breach of fire and safety norms.

The Government of Georgia declared November 27 as a Day of Mourning for the victims of the November 24 tragedy.

11 people were killed in the fire, including 10 Georgians and 1 citizen of the Republic of Iran. 21 people were injured, including a firefighter, 4 Turkish citizens and 1 Israeli.

The November 24 Leo Grand blaze is one of the most tragic fires in Georgia in recent years. The police and the firefighters rescued more than 100 people during the incident.

The Ministry of Internal Affairs calls on all public and private institutions to observe fire safety norms in order to protect people's lives and health.

Worker Dies in Chiatura’s Shukruti Mine

G

eorgian media reports that Zaza Abramishvili, a 45 year old miner, died in Shukruti mine in Georgia’s western town of Chiatura at around 5am this morning.

The accident was confirmed by the Ministry of Internal Affairs. An investigation is underway under Article 240 of the Criminal Code of Georgia, which pertains to the violation of safety rules.

Deputy Head of Georgian Trade Unions, Tamaz Dolaberidze, told media that the man was doing his work when the ceiling of the mine collapsed and he was caught in the ruins. He noted that in normal circumstances, the ceiling would have been supported by wooden pole but in this case it was not so.

Dolaberidze said the body is still trapped in the ruins.

“As the workers told me, the place is not safe. I have no idea why the mining company makes miners work in such places. I think getting manganese is more important to them than the lives and safety of their workers,” the Deputy Head of Georgian Trade Unions stated.

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

The company confirmed there had been an accident, during which Zaza Abramishvili was stuck in the mine.

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BUSINESS

GEORGIA TODAY

MARCH 27 - 29, 2018

Deja-Vu: Will Growth in 2018 Look Similar to 2017? The Economy Might Still Surprise Us…

Source: National Statistical Bureaus

POSITIVE CONTRIBUTORS TO REAL GDP GROWTH FORECAST

BY DAVIT KESHELAVA AND YASYA BABYCH

I

SET-PI has updated its forecast of Georgia’s real GDP growth rate for the first and second quarters of 2018. Here are the highlights of this month’s release: • Geostat has revised its rapid estimate of real GDP growth for the fourth quarter of 2017. Estimated growth now stands at 5.4%, which is 0.7 percentage points above the previously estimated average growth rate for Q4. As a result, the real GDP growth for 2017 reached 5.0%.

• ISET-PI’s forecast of the real GDP growth for the first quarter of 2018 stands at 4.1% - up from 3.4% in February. The first estimate of the second quarter growth forecast now stands at 5.1%.

• Based on January’s data, we expect annual growth in 2018 to be 4.6% in the worst-case or “no growth” scenario, and 5.6% in the best-case or “average longterm growth” scenario. Our “middle-ofthe road” scenario (based on average growth over the last four quarters) predicts 4.8% real GDP growth. This suggests that in 2018, GDP growth will be largely similar to that of 2017. However, the economy might still surprise us as the year progresses. Keep in mind that early in 2017, the ISET-PI forecast predicted 5.1% real growth only in the bestcase scenario. As it turned out, the bestcase scenario was the one closest to reality.

• Currently, ISET’s middle-of-the-road annual forecast is close to the projections coming from national and international institutions. According to the National Bank of Georgia, real GDP growth in 2018 is projected at 4.5% , while the World Bank, the International Monetary Fund, and the Asian Development Bank predict 4.2%, 4.2% and 4.5% real GDP growth for 2018, respectively.

Expected Q1 2018 growth is now higher.

ISET-PI’s forecast for real GDP growth for the first quarter of 2018 was revised upward by 0.7 percentage points. Two factors can help explain this: first, Geo-

stat’s upward revision of 2017 growth for the fourth quarter, which now stands at 0.7 percentage points higher than the previous estimate. Secondly, diminishing inflationary pressures, improved business confidence, continuing money supply growth and much improved external statistics – all contributed to the buoyant expectations.

January 2018 shows strong growth in the wider region. According to the estimates for January 2018, the majority of countries in the region showed significant improvement compared to the same period in the previous year. The Armenian economy reached impressive 10.2% annual growth. The Russian and Azerbaijani economies advanced by 2.5% and 2% respectively, which further stimulated the Georgian economy though trade, remittances and tourism channels. The Georgian economy itself grew by 4.4% y-o-y in January.

DIMINISHING INFLATIONARY PRESSURES In January 2017, the Georgian government increased the excise tax on a variety of goods. As a result, the general price growth in the country notably exceeded the targeted level. As expected, however, the excise tax effect started to wane at the beginning of this year. For example, in January 2018, the effect of the excise tax on inflation was just 1.5 percentage points. The annual inflation rate amounted to the 4.3% (which is still higher than the new target rate of 3%).

Inflation on food and non-alcohol beverages subsided to 4.9%, and this sector’s contribution to the overall inflation amounted to only 1.3 percentage points.

The measure of core inflation amounted to a relatively moderate 3%, of which about one percentage point was due to the lingering excise tax effect. Based on this evidence, one can conclude that inflation is not a major concern for economic growth in Georgia. The long run inflation in the country is stable and likely to converge at the 3% target level.

EXPORTS EXPAND, EVEN AS TRADE DEFICIT DEEPENS

The other set of variables which had a significant positive effect on the GDP growth forecast was related to trade.

Georgia’s exports continued to expand, increasing by 26% yearly in January 2018, while imports were up by 18.2%. The trade deficit, however, deepened by 13.9% year-on-year and amounted to 371.2 million USD. Among the main contributors to the export increase were traditional products: petroleum and petroleum oil (599%); nitrogenous fertilizers, (135%).

REMITTANCE INFLOWS AND TOURISM MAINTAINED DOUBLEDIGIT GROWTH IN JANUARY Money inflow increased by 31.1% compared to the same month of the previous year. In addition, the number of international visitors increased by 14.8%, while the change in tourist numbers (visitors who spent 24 hours or more in Georgia) was even more impressive – a 23% increase. Both tourism and remittances made a significant positive contribution to our growth forecast.

RECOVERING BUSINESS CONFIDENCE AMONG STRONG

10 Galaktion Street

The Georgian Business Confidence Index (BCI), a barometer of business sentiment in the country, showed a year-on-year improvement in the first quarter of 2018 and reached its highest level in the last three years. Moreover, almost 60% of business executives participating in the survey expected improvement of their businesses over the next three months.

MONETARY BASE The other set of variables which had a significant and positive effect on our forecast was related to currency in circulation. As of March 12, 2018, the majority of the countries in the region were implementing expansionary monetary policy by reducing their monetary policy rate (MPR). Azerbaijan, for instance, reduced MPR from 15% to 13%; Belarus from 11% to 10.5%; Russia from 7.75% to 7.5%; and Kazakhstan from 9.75% to 9.5%.

Despite the fact that Georgia is among the countries that maintained its MPR, a rapid credit expansion (commercial bank loans to the domestic economy increased by 14.9% y-o-y) led to an increase in the domestic money supply through the money multiplier effect. All of the monetary aggregates, including the Broad Money (M3) measure, increased

significantly (27% yearly) in the corresponding month, while the most liquid measure of money supply, Currency in Circulation (CCIR), experienced a 9% y-o-y growth. While credit expansion in itself is a stimulus for growth, it can also become a source of major instability.

Therefore, as we progress through the year, the monetary authorities should keep a watchful eye on the financial sector, and particularly the expansion of private credit.

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.

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge

BUSINESS

GEORGIA TODAY MARCH 27 - 29, 2018

5

The Roots of the Problem OP-ED BY TIME OGDEN

W

hen I first arrived in this country, it was a frequent vexation that because I’m an Englishman, Georgians assumed I came from London; I’ve known Americans similarly annoyed that everyone thought they came from New York. Over time, I came to understand that in Georgia, outside the capital, opportunities are few and far between, and Georgians applied that same logic to other countries: when I explained to one man that I was from the borderlands of England and Wales, he looked at me aghast, as though picturing in his mind’s eye a rainy, grey scene of shepherds and wooden hovels, and said ‘But…what do you do in England if you are not from London?’ The true answer to that is ‘count your lucky stars,’ for Londoners are a breed apart from the rest of us, or so we like to say; in truth, I have met many Londoners who reinforce the stereotype of their kind not knowing a damn thing about the rest of the country, whose lives begin and end in the capital. Ghastly.

Yet as I came to know Georgia better, I understood that man’s reaction to my question, and to the way he treated me thereafter, which was something close to pity. For although Tbilisi-Georgians will boast about the beauty of the country’s various regions, they don’t think too highly of their inhabitants, and it does not take long for resident foreigners here to learn that when describing a person as ‘village,’ they are implying ignorance, a lack of education, and no refinement.

Image source: YSBRANDCOSIJN / ADOBE

The lack of opportunities elsewhere in the country has led to a flood of people from the regions moving to this already-overpopulated capital city, but, really, one cannot blame them. I’ll agree with Georgians that their rural regions are naturally beautiful, but there really isn’t much to do beyond the scattered hotel resorts: it’s actually almost frightening when you see people just squatting by the roadsides, staring at any car that goes past simply because that’s apparently the only way to pass the time.

As with most things in life, the only thing that will change this situation is a flood of money, and Georgia is rather

short of the stuff (although if the government cut back the millions it gives to the church, it might have more to go around). Prioritizing budgetary spending is a conundrum for any country, but one can see why Georgia has invested so much in tourism: it is, after all, a lovely place to visit, and on a personal note I’m seeing increasing numbers of Westerners coming for a holiday, especially for the skiing.

But Georgia’s agriculture remains woefully underdeveloped, which is especially staggering for a predominantly rural country, and the vast majority of produce in supermarkets is imported from elsewhere. If more money

were invested in agriculture, perhaps Georgia could grow the majority of the food it eats, which in turn would create opportunities in the countryside and stem the flow of migrants to the capital city. Making farming attractive would be another challenge, however; everyone wants an office job to the point that degrees have become badly devalued.

It is a recurring joke amongst foreigners and Georgians alike that many taxi drivers have Master’s degrees.

Without enough cash of its own, the simple solution for the Georgian government would be to attract foreign investment, which it did for a time until it suffered a fit of nationalist sentiment and

banned the sale of land to foreign citizens.

Madness, you might think; madness and stupidity. And you’d be right, but both of those seem to go hand in hand with the populist movements of the day. It does strike me as odd, too, that nobody thought to allow foreigners to buy land but then tax the hell out of them.

I am neither a businessman nor an economist, but this all seems to me something of a lost opportunity, not least because this week I listened to a speech given by a Franco-Swedish businessman who mentioned his own investments in Georgian agriculture. The gentleman described them as ‘long-term investments’, and I daresay he’s right, but this chap in particular is unique in that he also holds Georgian citizenship (I think from the Saakashvili era, like myself, when good old President Misha was giving out Georgian passports like free hats). This surely makes him one of the very few able to make any investments, having both Georgian nationality and money.

With a strong agricultural economy, fewer people would be fleeing to the cities and Georgia’s imports could be drastically reduced. If the government is adamant that it cannot amend its constitution once again to allow foreigners to buy land, then it should at least establish some sort of native-controlled scheme in which foreign money can help develop Georgian agriculture (things like the Traktor scheme, which I covered last year). Georgians do not have the money to invest themselves, and most would not spend it on agriculture if they did. For Georgia’s sake, let us hope its tourist appeal remains strong for many years to come, else the government may regret it did not prioritize other areas.

6

BUSINESS

GEORGIA TODAY

MARCH 27 - 29, 2018

Ukraine Confiscates Gazprom Assets

BY DIMITRI DOLABERIDZE

U

kraine has confiscated 100 million Grivnas ($3.81 million) in the execution of a fine imposed by the Antimonopoly Committee on the Russian company Gazprom.

The Minister of Justice of Ukraine, Pavel Petrenko, announced the news last week.

“Gazprom has nothing to say,” he said.

“Despite the actual disruption of relations between countries, dependence on Ukrainian transit is still too great.”

“The Ministry of Justice is charging Gazprom on a decision of the Ukrain-

We have already recovered some of the funds everything that Gazprom had on the territory of Ukraine has been described, confiscated and recovered in the state budget

ian court on a fine in favor of the budget at the initiative of the Antimonopoly Committee. We have already recovered some of the funds - everything that Gazprom had on the territory of Ukraine has been described, confiscated and recovered in the state budget. This is more than 100 million Grivnas in the Ukrainian budget,” the Minister said.

Petrenko said he also plans to appeal to other countries to arrest the funds of Gazprom.

“There is an appropriate instruction from Prime Minister Vladimir Groisman, and we now have good prospects and good achievements in implement-

ing these decisions not only in Ukraine, but in other countries with which Ukraine has relevant agreements,” Minister Petrenko said.

In addition, according to the minister, measures are being developed to recover money from the Russian monopolist for the shortage of agreed volumes of gas for transit in accordance with the decision of the Stockholm Arbitration.

Gazprom has nothing to answer in this confiscation as Russia's dependence on transit through Ukraine is too great. By 2019, the Nord Stream-2 gas pipeline is scheduled to be commissioned. According to Kommersant, by

Gazprom has nothing to say... dependence on Ukrainian transit is still too great

that time the ground infrastructure in the EU will not be ready. To be more precise, the Eugal gas pipeline (European Gas Pipeline), an analog of the Opal line ((Ostsee-Pipeline-Anbindungsleitung, a natural gas pipeline in Germany), which should become a continuation of the Nord Stream-2 in Germany, will be built only by the end of 2020.

In 2017, despite the disruption of relations between the countries due to Crimea and Donbass, the Russian company pumped through the territory of Ukraine a record volume of 93 billion cubic meters of gas.

BUSINESS

GEORGIA TODAY MARCH 27 - 29, 2018

7

The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research.

For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at gt@gt.ge.

Electricity Market Watch towards implementation of directive N2009/28/EC. The directive requests contracting parties to set and therefore achieve national goals for the share of renewable energy into the total sources consumed in transport, electricity, heating and cooling by 2020. The law should define states’ policy principles, missions, and general requirements, also promote the schemes supporting renewable energy.

After adoption of the law, the secondary legislation will cover items such as detailed schemes on trading of renewable energy, approaches and procedures on integration of renewable energy into the grid, detailed rules and control mechanisms on implementation of obligatory quota for renewable sources in the transport sector, control and regulation of the construction norms, etc.

The current scope for Niras, also includes preparation of action plan for implementation of the secondary legislation. This activity is financed by the US$ 4mn grant from the Kingdom of Norway, and also includes trainings for students of Georgian Technical University and relevant Government institutions, working explicitly on renewable energy sources.

FOR GEORGIA TODAY BY MARIAM CHAKHVASHVILI

S

ector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our energy sector coverage, we produce a monthly Electricity Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.

INVESTMENTS IN TRANSMISSION PROJECTS Total investment for transmission projects is estimated at EUR 683.9mn over 2018-2028. The Ten Year Network Development Plan (TYNDP) for 2018-2028 approved on 28 December 2017 incorporates revised forecasts of electricity consumption growth, and updated pipelines of power plant and transmission network projects. The TYNDP targets 48.8% of total investment to be spent over 2018-2020, mostly financed by credits from IFIs (KfW, EBRD, WB, ADB, EU-NIF) and GSE’s own resources. Under the previous edition of TYNDP total estimated investment stood at EUR 735.4mn, and the decrease largely reflects already implemented projects in 2017: high voltage transmission lines - Batumi1, Batumi2, Derchi, Sataflia 2, Ajameti 3, etc. and substations - Jandara, Shindisi, etc. Commissioning dates for crossborder transmission projects were revised to 2020 from 2018 for 400kV line Marneuli (Armenia) and 154kV line Batumi-Muratli (Turkey), to 2021 from 2020 for 400kV line Akhaltsikhe-Tortum (Turkey) and to 2023 from 2021 for 500kV line Stepantsminda (Russia).

FORECAST FOR ELECTRICITY CONSUMPTION GROWTH

REVISED UPWARDS IN TYNDP 2018-2028 The annual consumption growth rates in the pessimistic, moderate and optimistic scenarios are revised upwards from 1.0%, 3.5% and 5.0% to 3.0%, 5.0% and 7.0%, respectively. The generation scenarios vary by the assumed rates of commissioning for the power plant projects at different stages of development.

The base case scenario is assumed to be L3G3, with consumption growth rate at 7.0% (reaching 27.9TWh in 2029) and full utilization of HPPs under construction, licensing and development stages, resulting in 32.3TWh total domestic generation in 2029. The base case scenario gives approximately 4.4TWh of net exports in 2029.

LEAP MODEL FOR GEORGIA FORECASTS 3.9% ANNUAL AVERAGE GROWTH OF DOMESTIC CONSUMPTION 2015-2030 The Long-range Energy Alternatives Planning (LEAP) model was developed

by Energy Efficiency Center Georgia (EEC), under the USAID’s Governing for Growth (G4G) grant project “Electricity Demand Forecasting Model”, enabling forecasting of monthly electricity demand and peak loads. The model uses a bottom-up approach, evaluating the end-use in household, commercial and public services, industry, transport, agriculture, forestry and fishing, cryptocurrency mining, Abkhazian region and the losses of the system.

In total, five scenarios are discussed in the report. The baseline scenario assumes the consumption trend without implementation of any new policies and takes into account past trends and functional relationships between demand drivers and end-uses, resulting in 18.9TWh annual consumption in 2030; The other scenarios include: 1) energy efficient scenario, decreasing forecasted consumption of 2030 to 16.6TWh, 2) costumerowned generation scenario (18.8TWh in

2030) and 3-4) two variations in GDP growth forecast, showing that 10% variation in GDP growth from base case scenario will lead to 0.7 TWh variation in consumption growth in 2030.

LEGISLATIVE CHANGES EXPECTED IN 2018 Several important legislative changes are expected in 2018. Georgia’s obligation under the Energy Community Treaty, signed in October 2016, includes implementation of seven different EU directives and regulations before the end of this year. The most significant is the directive concerning the common rules for the internal market in electricity (N2009/72/EC). We expect the first draft to be publicly available in late spring, 2018.

Other EU directives due this year are: N2009/28/EC on promotion of the use of energy from renewable sources; N2012/27/EU on energy efficiency, directive N714/2009 on conditions for access to the network for cross-border exchanges in electricity; N2001/80/EC on the limitation of emissions of certain pollutants into the air from large combustion plants; N2010/75/EU on industrial emissions for new plants; N2010/30/EU on the indication by labeling and standard product information of the consumption of energy and other sources by energyrelated products. There are several grant programs from different countries, assisting Georgia in reaching its goals toward the Energy community and implementing these acquis into the Georgian legislation

RENEWABLE ENERGY PRIMARY LAW FOR GEORGIA EXPECTED TO BE ADOPTED IN AUGUST 2018 The draft is being prepared with the assistance of the Norwegian Water Resources and Energy Directorate and Danish consortium NVE-NIRAS. The project aims to fulfill Georgia’s obligation under Energy Community treaty

USAID LAUNCHED US$ 7.5MN 3-YEAR TECHNICAL ASSISTANCE PROJECT USAID Energy Program (UEP) aims supporting Georgia in energy market and cross-border trade development via capacity building for government institutions and other market players. The program also concentrates on non-hydro renewables, willing to establish enabling environment and investment promotion plans; to support the wind farm developers and GSE in integrating new variable renewable energy (VRE) plants into the grid; and to advise the Government of Georgia on energy security policy and complex energy infrastructure operations, based on detailed domestic and regional studies. These measures will help Georgia to fulfill its obligations under the Energy Community Treaty.

ELECTRICITY CONSUMPTION AND GENERATION – JANUARY 2018 Domestic electricity consumption increased 7.6% y/y to 1.2TWh, slightly below the planned level (-2.3%). The

growth was driven by 11.9% increase in consumption by distribution licensees: consumption by Energo-Pro Georgia subscribers, including former Kakheti Energy Distribution subscribers, increased 17.2% y/y, from relatively low level in January 2017 (2.7% y/y); Telasi consumption was up 3.6% y/y, albeit from a high base in January 2017 (+10.5% y/y).

Electricity usage by eligible consumers showed slight increase (+0.9% y/y), while Abkhazian regions consumption was down 1.9% y/y. Electricity export and transit didn’t take place in January, 2018.

Electricity generated by domestic sources increased by 6.1% y/y to 1.0TWh, slightly above (+2.2%) the planned level.

Hydro generation showed significant increase (+19.9%y/y) from a low base (-10.4%y/y) in January, 2017. Enguri/Vardnili generation was slightly down 2.7% y/y, while generation of other regulated and deregulated HPPs increased 43.9% y/y and 34.4% y/y, respectively. Thermal generation declined 14.0% y/y, which was 18.3% below the planned level. Wind generation increased 9.6%y/y to 7.1GWh and contributed 0.6% of total supply.

Electricity import increased 12.9% y/y to 202.1GWh, and accounted for 16.6% of total electricity supplied to the grid in January 2018. Notably, electricity import was 22.5% below the planned level. 92.2% of imported electricity came from Azerbaijan, while the rest came from Russia (4.0%) and Armenia (3.7%).

The guaranteed capacity fee was up 6.4% y/y to USc 0.7/kWh. The increase can be explained by new guaranteed capacity fee rates in force from January, 2018.

Gardabani CCGT and Mtkvari Energy operated at full power for almost the entire month, while the other three thermal power plants were mostly on standby.

ELECTRICITY PRICES IN GEORGIA AND TURKEY The average import price was up 3.2% y/y to USc 5.1/kWh. However, the wholesale market prices in Georgia was slightly decreased to USc 5.0/kWh (-1.1% y/y).

Electricity traded at the wholesale price through the market operator accounted for 19.7% of total electricity supplied to the grid in January 2018, with the rest traded through bilateral contracts. The average monthly market clearing price in Turkey decreased -2.4% y/y to USc 4.9/kWh in January 2018.

8

BUSINESS

GEORGIA TODAY

MARCH 27 - 29, 2018

The Sector at a Glance PRODUCTION Over the last decade, the real GDP of Georgia has been steadily increasing, while the share of agriculture has been decreasing. The share of agricultural output in total GDP decreased from 6.7% on 2016 to 6.2% in 2017. Agricultural output decreased in absolute terms as well by 2.6% in 2017 compared to 2016.

From an annual perspective (February 2018 vs. February 2018), the prices of food and non-alcoholic beverages increased by 3.4%, contributing 1.04 percentage points to the annual inflation rate.

FRUIT AND GRAPES IN THE SPOTLIGHT

EMPLOYMENT The active population (labor force) ranges from 1.9 mln to 2.0 mln persons, and 42%-44% out of the total labor force are self-employed people in rural areas. Given that in rural areas employment opportunities other than in agriculture are quite limited, most of self-employment in rural areas is likely to happen in the agricultural sector.

In February 2018, fruit and grapes became more expensive by 22.3% compared to February 2017. According to trade data, Georgia’s exports in this category slightly decreased by 3%, compared to the same period in the previous year. On the contrary, imports of fruit and grapes sharply increased by 88%, from 3701.58 tons to 6971.43 tons, during the same period. The current year was considered bad in terms of harvest in Georgia. Therefore, the high prices of fruit and grapes might be the result of decreased production, which caused a shortage in supply. In order to meet demand, Georgia increased its imports of fruits and grapes.

INTERNATIONAL PRICES International prices slightly decreased in February 2018. The Food Price Index, measured by the Food and Agriculture Organization (FAO), dropped by 3% in February 2018, compared to the previous year.

The main drivers were sugar and vegetable-oil prices. In February 2018, the FAO Vegetable Price Index lost 11.6% from February 2017, and the FAO Sugar Price Index showed the sharpest decrease at 33%.

TRADE HIGHLIGHTS

The share of FDI in agriculture constituted 0.2% of total FDI in 2017. While the total FDI in 2017 was higher than in 2016, FDI in agriculture has significantly decreased (by 56.6%). The highest FDI in agriculture was observed in the third quarter of 2017, while there was divestment (negative FDI) in the fourth quarter of 2017. Since FDI in agriculture is mostly driven by acquisition of land, recent restrictions on foreign ownership of agricultural land might be one cause of the reduction.

DOMESTIC PRICES Overall, the price levels in the country have increased both on a monthly and annual basis; the Consumer Price Index (CPI) in February 2018 was 0.2% higher compared to January 2018, and 2.7% higher compared to February 2017.

In the category of food and nonalcoholic beverages, prices increased by 0.4%, contributing 0.13 percentage points to the overall CPI change.

The main drivers were price changes in the following sub-groups:

During February 2018, Georgia’s agricultural exports (including food) amounted to 49 mln USD, which is around 27% of total Georgian export value. While comparing this indicator to February 2017, it is 6% higher.

As to imports, in February 2018 Georgia’s agro import stood at 85 mln USD, which constitutes 16% of total Georgian imports. Year over year (compared to February 2017), imports increased by 23%.

TheHerfindahl-Hirschman Index (HHI), which ranges from zero to one, shows a country’s export/import diversification. A lower index value refers to high export/import diversification, while a higher value means more concentration (less diversification).

Georgia’s agricultural exports by products are more diversified than its exports by countries. For the given period, the highest HHI for agricultural exports by products was observed in October 2017 (0.08), while the lowest (0.05) was observed in April 2017. HHI for agricultural exports by countries was the highest (0.15) in June, 2017 and the lowest (0.08) in September 2017.

IMPORT DIVERSIFICATION The highest HHI for agricultural imports by products was observed in August 2017 (0.03), while the lowest (0.02) was in February 2017. The highest HHI for agricultural imports by countries was observed in February 2018 (0.13), while the lowest (0.1) was in January 2017.

POLICY WATCH The Agricultural Project Management Agency (APMA) is considering establishing a separate agency responsible for the management of the agricultural insurance system in Georgia.

The introduction of a public-private partnership may have high potential for the long-run development of the agricultural insurance market in Geor-

gia. However, this is conditional on the willingness of all parties involved to commit to this long-run process and invest the required resources (financial and intellectual). While a dedicated institution might do a better job in terms of the capacity building necessary for the successful implementation of agricultural insurance, there is the so-called “greenfield risk” because, typically, a new institution has to build trust among stakeholders.

For more information follow the link: http://apma. ge/projects/read/agroinsurance/4:parent The APMA launched the new project “Young Entrepreneur,” funded by DANIDA, to support young people from rural areas in Georgia.

The project will have three stages: technical assistance during application process, co-funding from APMA, and technical assistance after co-funding.

The program targets women aged 18-40 and men aged 18-35. Given that the unemployment rate among these age categories is the highest in Georgia, the initiative is expected to have a positive impact on employment figures. However, as in case of other subsidized programs, it is vital to ensure the sustainability of the initiative and have clear phase-out strategy, as well as a strong monitoring component.

For more information follow the link: http:// danida.apma.ge

BUSINESS

GEORGIA TODAY MARCH 27 - 29, 2018

9

Direct Banking: Innovative Banking for Private Individuals

P

roCredit Bank offers private individuals Direct Banking, a completely different banking experience that provides the full package of banking services through electronic media.

Simple services, a flat fee, permanent access to banking services with Internet Banking and access to multi-functional 24/7 self-service zones are the main advantages that customers can enjoy with Direct Banking.

The idea of creating Direct Banking emerged as a result of analyzing customers' needs.

In light of the fast pace of life today, customers have less time to visit bank branches and stand in queues for banking services during the Bank’s working hours. In addition, it is important to customers that banking services be sophisticated, continuously available, simple and cheap. With these requirements in mind, ProCredit developed a simple, fast and fully integrated set of services called Direct Banking.

The price for using Direct Banking is much lower than the total price that would be charged for the individual products. By paying one monthly fee, customers can perform almost all bank transactions at no additional charge. In addition to standard banking transactions, exclusive conditions apply to credit

and debit services within Direct Banking. The Bank is always ready to consider a short- or long-term financing plan with customers and offer them the best lending conditions. To help them plan a stable future, the Bank offers its customers various types of deposit accounts, attractive interest rates and favorable terms.

Thanks to the diversity of remote channels and the investments the Bank has made in them, clients can now carry out nearly 99% of banking operations independently, whenever and wherever they like. In addition, the Contact Center has expanded its range of services, and Contact Center Operators are permanently ready to give support. The Bank’s official website has been updated, with its modern, simple design making it more convenient for customers to use. Customers have continuous access to the banking services they need using Internet Banking.

According to innovative Direct Banking, the Bank is not merely a physical place but a space that can operate more efficiently in an online environment with the help of modern technologies.

Become a Globally Certified & Recognized Int’l Leading Professional

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eady to boost your salary and experience and become a globally certified and recognized ILP (International Leading Professional) at a professional training center that serves international certifications through its highly qualified international trainers?

Then you need the one and only CMA program in Georgia!

The Certified Management Accountant (CMA) is an International Certification awarded and globally accredited professional qualification from the Institute of Management Accountants (IMA), USA. The CMA is a financial management certification that serves all industries, international corporations, and the public and private sector through its diversified portfolio of topics and materials. It is for accountants, finance per-

sonnel, auditors, managers, CEOs, CFOs, etc.

For more info about the CMA, please visit: www.imanet.org

WHY ILP? 1. International certified instructors with extensive teaching and professional experience.

2. Support in all applications to have a smooth journey from entering the program to final certification.

3. International accredited training material that guides you towards success.

4. Tailored course fees & packages.

Competitive prices for corporations and groups.

5. Study plans and exam tips provided throughout the program.

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10

BUSINESS

GEORGIA TODAY

MARCH 27 - 29, 2018

National Pension System: Reconciliation of Freedom & Tradition with UN Expertise

BY BENJAMIN MUSIC

I

t is not uncommon in Georgia to see a 50-year-old employee being called up by her mother asking when she is on her way home.

After the call, the mother’s expectations for her daughter to understand the importance of a family support system are high, in hopes she’ll be quick on her feet to make it to dinner, or even to help prepare it. Family traditions occasionally strike foreigners with awe, as this unique arrangement, not a singularity in this world, is yet manifested in a cautiously unique way unseen in other parts of the globe. It almost seems as if the bond of individual family members generates the foundations of a functioning family arrangement incorporating friends and extended family members into this protected and cared-for circle.

Population decline, paired with an ageing society, has significant implications for the enjoyment of human rights by older persons

As with so many cultural quirks, the opinions on such traditions diverge, finding refuge in either side of the debate.

However, one fact is undeniable: the importance of family support to enable the elderly to receive decency and a modest lifestyle.

The UN Human Rights expert Rosa Kornfeld-Matte clearly understands the contentiousness of the issue, being an advocate and former policymaker for the rights of older persons herself. Since her appointment as the first Independent Expert for Human Rights for Elderly People by the UN Human Rights Council (UNHRC) in 2014, she has travelled the world tasked with evaluating national pensions schemes and putting recommendations for their improvement on policymakers’ tables.

Last month, the Georgian government welcomed her to Tbilisi. “I want to thank the Georgians for their warm welcome and reform-driven approach. I also want to thank all the people I had the chance to meet, such as ministers, representatives of NGOs and other public and private organizations,” Kornfeld-Matte stated before diving into the complexity of Georgian pension reforms. At a press conference held in French and translated into Georgian last week, the expert showcased her expertise by elaborating on the current situation in Georgia.

Georgia is the most aged country in the South Caucasus region, and, according to the last census, every fifth person is aged 60 or over. This ratio will further increase to over 30% by 2050. This simple demographic math calls for shortand long-term solutions to make the pension scheme fit for the decades to come.

“Population decline, paired with an ageing society, has significant implications for the enjoyment of human rights by older persons,” Kornfeld-Matte noted, adding the point that care of older per-

sons in general remains an area that needs to be improved. “There is no comprehensive strategy on long-term care and despite the introduction of the statefunded Universal Health Program, older persons remain particularly vulnerable to significant out-of-pocket payments, especially for medication.”

Problems have not only been identified with the set-up of pensions schemes, but with human rights for elderly people in a family context, peppering the debate of traditions and personal freedom. The independent expert highlighted the reports of various forms of violence against and abuse of older persons. These reports often mention fellow family members as the main perpetrators, questioning the family environment as a shield against outside threats to elderly people.

The inclusiveness of our oldest members of society can enhance their wellbeing and happiness but defining inclusiveness teeters on a knife’s edge. The divided camps are adamant that it is zero-sum game, either they enjoy the freedom and financial independence, or families are tasked with such matters ensuring the closeness and family bond.

The reality sheds a different light, as hybrid solutions are the most common features of strong national pension schemes. Said freedom is often nothing more than the option of choice. Financial independence allows the freedom to choose on what to spend time, ranging from caretaking of grandchildren to a weekend vacation in Batumi.

During the press conference, KornfeldMatte’s attitude reflected this intersectional understanding, emphasizing on a strengthening of the national foundations to allow for personal freedom leading to self-fulfillment and self-realization.

National working papers on the pension scheme couldn’t escape her experienced eye, and she pinpointed the recent adop-

tion of the National Action Plan for the implementation of the State Policy Concept on Population Ageing in Georgia as a long awaited step towards transforming the main policy directions into concrete actions for older persons.

Her findings and recommendations address the importance of speed when it comes to the implementation of proposed legislations. A plan de travail is necessary to spur reforms and revamp the pension system sustainably and effectively. The role of the media is mentioned as a key aspect to sensibilize the wider public. This can help to challenge misconceptions of pension schemes and spawn an informed and serious debate.

Furthermore, the younger generation can greatly profit, as it raises their awareness of their rights in future too. Her main proposal is a revamped tax-supported national pensions scheme, which is financed by a proportional tax of 4% (2% is paid by the employer, 2 % is paid by the employee) based on income, alongside a 2% contribution by the state.

The implementation and supervision of the scheme can be conducted by a national panel, supported by international experts familiar in the field.

Kornfeld-Matte’s preliminary comments (the final report will be published by the UNHCR in September) are more elaborate than a simple pension reform proposal. She explained at length how access to public transport and medical services catalyzes efforts to reach the ultimate goal of barrier-free access for elderly people, be it in rural or urban areas. The government can benefit greatly by providing prevention check-ups to hinder the outbreak of illnesses, whose treatment tears a bigger hole in the budget than regular check-ups do. Georgia’s climate tends to generate strong influenza viruses and a general vaccination scheme can forestall national outbreaks.

Reforms are multi-fold, ranging from

education over health to public awareness. Kornfeld-Matte helped to reignite an essential debate about the treatment of the weakest members of our society.

Her final remarks on the culture of older people to remain in a common family household can be seen as a positive stimulant for opportunities of self-realization in a sheltered ambiance. It simply requires the right mix of spices to make such a reinvention of the traditional family recipe successful. The UN can give recommendations, but only cultural flexibility and understanding, which stem from Georgians themselves, can spawn this perfect mix.

There is no comprehensive strategy on longterm care and despite the statefunded Universal Health Program, older persons remain vulnerable to out-of-pocket payments, especially for medication

BUSINESS

GEORGIA TODAY MARCH 27 - 29, 2018

11

Water: The Right of Us All, the Challenge of Us All OP-ED BY MICHEL TEMER, PRESIDENT OF THE FEDERATIVE REPUBLIC OF BRAZIL

A

ccess to drinking water and basic sanitation is a right and one of the sustainable development goals of the United Nations. It is a condition for human life. However, up to two billion people on the planet do not have access to a safe source of water at home, and up to 2.3 billion people suffer from lack of sanitation. Approximately 260 million people, more than the entire population of Brazil, must walk more than thirty minutes to gather water. Guaranteeing access to water is one of the main challenges of our time.

Brazil has 12% of the planet’s fresh water, but, despite this fact, we are not immune to water-related problems.

Major cities in Brazil have been enduring water shortages. An unacceptable sanitation deficit persists, and the suffering caused by drought to the people of Brazil’s northeast region is a wellknown fact.

The search for answers to such urgent issues led us to host the 8th World Water Forum in Brasília last week. The forum gathered more than 40,000 participants from over 160 countries. We welcomed heads of state and government, state governors, mayors, members of congress, judges, representatives of international organizations and academia, the private sector, and civil society.

The choice of Brazil to host one of the most important global events on water resources is no surprise. We have long been committed to this matter on the international stage. We hosted the

Hundreds of people attending the Alternative World Water Forum protested against water privatization in Brasilia, Brazil on March 22, 2018 / Thomson Reuters Foundation/Karla Mendes

Rio 92 and the Rio+20 conferences, in which the close link between water sustainability and development were recognized. More recently, we were among the first countries to ratify the Paris Agreement, which deals with one of the main threats to the right of access to water: climate change.

This traditional protagonism on the world stage is anchored in solid measures on the domestic side. Brazil knows that water and sanitation are synonymous with environmental preservation, and we have made water security a pillar of our environmental policies.

To preserve our waterways, we implemented the River Planting program,

Francisco River is all about. The longawaited project, now in its final stages, will benefit a population 12 million in Brazil’s northeast. With the portion that supplies water to the states of Pernambuco and Paraiba completed, the final phase involves enabling water to reach the state of Ceará. By completing this enormous public works project, we did not neglect our sustainability goals. We have now launched a new project (Novo Chico), aimed at revitalizing the São Francisco River.

Our attention, once again, is focused on sanitation and the great deal that must still be done. We are putting the final touches on a bill of law aimed at modernizing our regulatory framework in sanitation and encouraging new investment in the area. What inspires us is the need to make this basic service universal.

This is the Brazil that hosts the World Water Forum: a country in search of common solutions to global problems; a country that will continue to do its part in preserving our most precious resource.

which uses digital tools to protect our springs and permanent preservation areas.

We have also made significant progress towards protecting our forests.

We have increased our forest conservation areas. We reversed the deforestation curve in the Amazon that we found to be on the rise, and we are about to create two vast marine biodiversity conservation areas. By protecting our ecosystems, we protect our water sources. Having water is essential, but it is not enough. The water must get to those who need it.

Getting water to those who need it is what the transposition of the São

Hilik Bar: Tbilisi All Set to Host Int’l Forums

BY NIA PATARAIA

T

he Deputy speaker of the Israel Knesset and the head of the Israel-Georgia Parliamentary Friendship Group shared Hilik Bar’s opinion about Tbilisi as the best place for conducting forums related to peace and others of the world’s most popular topics. Hilik Bar plays a major role as a lobbyist for Georgia in the Foreign Policy of Israel. As the deputy speaker stated, Tbilisi could become a heart of numerous meetings of a variety of format. In terms of development, he said, “here are all the necessary conditions.”

The Knesset Deputy Speaker noted that the very same high-class meetings related to global issues which are held in Europe and elsewhere around the globe could be conducted in Tbilisi.

“This will help to underline importance of Georgia throughout international policy.”

With the support of the Israeli Embassy in Georgia and the Georgian Embassy in Israel, Hilik Bar plans to organize events related to Israel in Georgia. Forums on a variety of international matters will be held with the participation of “Israeli House” thanks to its experience and expertise.

Hilik Bar, who has just returned from the US, suggested the representatives of international Jewish organizations Tbilisi to become the center of all meetings for as opposed to other capital cities of Europe.

The Israeli delegation currently working in Tbilisi is holding meetings with Knesset members and experts in an informal

environment with British analysts on various issues. The Israeli representative delegation is headed by Hilik Bar.

The founder and chairman of the “Israeli House," Itsik Moshe, notes that "Israeli House,"withKnessetmembers,hasreached

a point where at the end of the year, all events which are planned together with European organizations, will move to Tbilisi.

12

BUSINESS

GEORGIA TODAY

MARCH 27 - 29, 2018

The Environmental Cost of One Man & His 4.6bn Friends’ Dendrophilia

BY MÁTÉ FÖLDI

A

nd then there were fewer.

And fewer. And fewer. And fewer. We’re told that money can’t buy happiness but it does get you a hell of a lot of other things: sex, drugs, cars, houses, shoes, clothes, planes, and trees. Big trees.

The best trees. In Georgia, money even makes trees sail the Black Sea. It all started with a century old tulip tree, the liriodendron tulipfera, on its maiden voyage 14 miles up the coast to Shekvetili, where an upcoming privately-owned arboretum was waiting to welcome it “home”. Then came the others: a forest’s worst of gigantic trees, uprooted from Georgia’s western subtropical coastline and forcibly relocated north to provide decoration for a private garden.

More tulip trees, lime trees, magnolias, eucalyptuses, cypresses, have been taken from across western to Georgia over the last two years to Ivanishvili’s garden.

Money may not grow on trees but it certainly buys them, a peculiar quirk that allows Georgia’s richest man to wreak untold environmental damage with impunity across this part of the country, destroying centuries of natural beauty. As Giorgi Lomsadze writes for

About 3,800 trees have been cut down because they stood in the way, and about 150 have been transplanted

EURASIANET: “Scores of men and heavy machinery have been deployed in the western regions of Adjara and Guria to dig out trees from private properties, roadside shelterbelts and hilltop groves.

An entire infrastructure is being built, with roads carved through the woods and new piers protruding into the sea, to facilitate the multimodal shipping process. On occasions, overhead power lines for trains have had to be removed and traffic stopped to let the trees, their massive soil balls potted in girdles of picketed wood and mounted on heavy haulers, pass though to reach the sea.”

Nata Peradze of the green activism group Guerrilla Gardening sheds light on the scale of the damage: “It’s not just about the trees that were transplanted.

Others are knocked down to make way to transport them.” Indeed, it all makes for pretty depressing reading, with “minefield-like fields of ruin” now visible on either side of the main highway along the Black Sea coast to the Turkey, writes Lomsadze. Bidzina’s appetite is seemingly insatiable, he continues, “This month the mass transplantation has moved further south, approaching Batumi, Georgia's seaside capital.

Recently released drone footage showed an entire hill ravished of its once lush vegetation. Rising above the shore near the village of Buknari, the hill is being dug out and bulldozed through. Concrete slabs are being laid to create a makeshift road for the haulers to go in and out.”

AllthedestructioninBuknariwaswrought for two liriodendron trees, two magnolias and a eucalyptus, with all other trees “chopped down to clear the way,” Rezo Kharazi, the local representative of the opposition National Movement Party and author of said drone footage, told the EURASIANET journalist. Kharazi has been raging against the dying light in an attempt to stop this madness, engaging himself in a David vs. Goliath battle as he documents the toll of this sick obsession, filming and creating before-and-after satellite map comparisons of the carnage.

The numbers are depressing: “By our estimates, about 3,800 trees have been cut down because they stood in the way, and about 150 have been transplanted,” he said.

In a country where you can realistically

Image: The Georgian Tulip Tree Illustration by Greg Groesch/The Washington Times

survive on $2500 dollars a year, 4.6bn friends and an estimated 30% control of the economy gets you, well, quite far.

Indeed, it doesn’t take an Einstein to figure out how this is all ‘legal :’ “Generous compensation, dispensed through Ivanishvili’s Cartu Group, have secured cooperation from local, mostly povertystricken communities for some time. But public anger has been growing…. Ivan-

ishili and Cartu Group say the transplantation project is causing no environmental damage, and the Georgian Ministry of Environment nods in agreement. Local authorities crank out permits, even police are recruited to help with transportation.

Police briefly arrested members of Peradze’s Guerrilla Gardening group when they tried to prevent the removal of that original liriodendron. The exodus of

trees continues effectively unopposed,” Lomsadze writes for EURASIANET. Peradze herself doesn’t see much light at the end the end of tunnel either, with Ivanishvili simply too rich to be stopped, “Environmentalists and geologists on the government’s payroll, and also the useless Green Party, have all been suborned and they all carry water for Ivanishvili,” she said.

The Place Where East Meets West The stunning perfumery composition was mixed by Dominique Ropion, whose skill allows each drop on a lady’s skin to radiate extraordinary ease and sensitivity.

25 years ago, the moon seen from a Parisian hotel room window floating above the Eiffel Tower became the inspi-

BY NIA PATARAIA

I

f you are tired of the daily humdrum and crave fresh air and crystal clear spring water, then a L'Eau d'Issey aroma is definitely for you!

Find genius designer Issey Miyake's new fragrances in every shop of ICI PARIS. Water is the main source of cleanliness, and so it is behind the immense energy and infinity of L'Eau d'Issey.

The beauty of nature at dawn; fresh dewdrops reflecting the magical moment.

ration of Japanese designer Issey Miyake’s bottle of perfume, a bottle of which is sold somewhere in the world every five minutes.

Issey Miyake's men's line is especially popular in Georgia. The designer has been making perfume for men since 1994.

In 2018, again, the perfumers have been

inspired by nature and water while forming their new aroma, a powerful men's scent created by the world-renowned Aurelien Guichard.

Issey Miyake is the first Japanese designer to have gone through Parisian high fashion training through Guy Laroche and Givenchy's patronage.

POLITICS

GEORGIA TODAY MARCH 27 - 29, 2018

Human Rights Violations in Occupied Territories Condemned by 40+ Countries

BY BENJAMIN MUSIC

A

United Nations Human Rights Council (UNHRC) resolution was adopted supporting Georgia’s efforts to condemn and solve human rights violations in the occupied territory of Abkhazia and Tskhinvali. The delegations of the United Kingdom, the United States, Switzerland and Australia, together with 36 other countries, voted in favor of the resolutions.

The resolution was supported by many countries not part of the UNHRC, but still looking for a way to express their condemnation of human rights abuses. The resolution reaffirms the territorial integrity of Georgia according to the internationally recognized borders of the wider international community, alongside reiterating past resolutions, which supported Georgia’s sovereignty.

The resolution touches on issues such as the worrisome introduction of school curriculums stopping Georgian language classes, which is the mother tongue of many families. The UNHRC further declared their opposition to second-class treatment of part of the population based on ethnic differences. These treatments affect non-Russian affiliated ethnic groups.

The Council regards the opening of polling stations for the previously held Russian presidential election as inacceptable. While international law is not only disregarded, the occupying authorities have committed grave human rights violations with their insufficient treatment of IDPs in Abkhazia and Tskhinvali.

The two key points pushed forward by the resolution are providing assistance to the UNHRC office in Tbilisi and demanding immediate access to the occupied regions to UNHRC representatives

The resolution seeks immediate access for the OHCHR and international and regional human rights mechanisms to Abkhazia and South Ossetia

The Government of Georgia is cooperating closely with the OHCHR to improve the human rights situation in their country in Georgia. In the meantime, a third point called for a continuous observation of the situation as well as a report evaluating and highlighting human rights violations in the region.

Australia has complimented Georgia for its efforts to find a solution at the negotiation table, highlighting Australia’s continued support for these efforts as well as strengthening the cooperation for human rights. “The resolution seeks immediate access for the Office of the United Nations High Commissioner for Human Rights (OHCHR) and international and regional human rights mechanisms to Abkhazia and South Ossetia. It is appropriate for Georgia to put forward such a resolution, since these regions are integral parts of Georgia," the Australian delegation said.

“Switzerland exercises a mandate of protective power in the region between Russia and Georgia and is involved in various dialogues as a facilitator.

Switzerland will spare no effort to improve the security and humanitarian situation in the region promoting the respect of human rights in cooperation with the parties to the conflict”, the Swiss delegation reiterated, stressing human rights and Georgia’s sovereignty as a key point.

“This resolution is about access, it is about cooperation…The council should always support cooperation with UN human rights mechanisms,” the UK delegation commented, pointing to the unique situation, in which only an independent monitoring team can ensure partiality.

“Along with reporting on the human rights situation, the Government of Georgia is cooperating closely with the OHCHR to improve the human rights situation in their country. At the same time, de-facto authorities in the Russian occupied territories of Georgia continue to deny any access to OHCHR while there are reports of widespread abuses of rights in these territories,” the US delegation emphasized.

Georgia has been a member of the Council since 2016.

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POLITICS

GEORGIA TODAY

MARCH 27 - 29, 2018

Unraveling the Complexities of Hate Speech INTERVIEW BY VAZHA TAVBERIDZE

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ccording to the latest report by the Council of Europe’s anti-discrimination body, the European Commission against Racism and Intolerance (ECRI), “hate speech against ethnic and religious minorities, as well as against LGBT persons, continues to be a widespread problem in Georgia” despite certain progress achieved by the country on anti-discrimination policies and legislation.

Recently, The Ministry of Internal Affairs of Georgia announced the launch of a Human Rights Department which will also be tasked with monitoring investigation of hate crimes. For the same purpose, the Council of Europe (CoE) recently launched a new project ‘The fight against discrimination, hate crimes and hate speech in Georgia”.

The project is financed from the voluntary contribution of DKK 15,000,000 (approximately €2 million) made by the Government of Denmark. GEORGIA TODAY spoke with Stephano Valenti, External Relations Officer at the European Commission against Racism and Intolerance, about the short and long-term goals of this project.

WHAT ARE THE MECHANISMS FOR FIGHTING HATE SPEECH? One is legislation. There is antidiscrimination legislation, and that is a very good step forward, but in general terms, it’s not only a matter of just hav-

ing it but also implementing it. An example of this is if the police fail to classify a crime as a hate crime.

We are there to help them with training, but the main battle should focus on raising awareness of what hate speech is; understanding that hate speech is not tackled only by limiting freedom of speech and understanding why it’s dangerous. Such knowledge is needed for all stakeholders, not only the government, but also in civil society. Media campaigns, and the work of the Ministry of Education, can help in this regard.

HOW DO YOU ENVISION FIGHTING HATE SPEECH AGAINST THE LGBT MINORITY? Some NGOs, even the Public Defender’s Office, have been working to tackle the issue of parliamentarians using hate speech, by creating a code of ethics which provides a number of sanctions, like suspension, for hate speech use. This is to be discussed at plenary level. Then comes the involvement of sports and religious leaders.

THE CHURCH IS FIRMLY AGAINST THE LGBT ISSUE, FROM THE PERSPECTIVE OF FAITH. YET YOU SAY THEY SHOULD FIGHT HATE SPEECH. HOW DO YOU SEE THIS WORKING IN PRACTICE? We don’t come with an instruction manual for this as all sensitivities must be taken into account. This is our first mission, to be followed by careful assessment to establish a baseline. We have four years and will implement initiatives step-by-step. Study,

Photo: euobserver.com/Kyra Preston

then the constitution of the steering committee, and then the launching of the project.

ARE YOU GOING TO MEET RELIGIOUS LEADERS? No, not this time. I don’t think it’s for us to meet them, though I believe not involving them would hamper the effectiveness of the campaign. But this has to be studied. It needs a more inclusive approach.

THE DANISH GOVERNMENT IS FUNDING THE PROJECT WITH A SIZEABLE SUM. HOW BIG IS THE SCOPE OF THE PROJECT AND HOW BIG DO YOU SEE THE IMPACT BEING? WHAT WOULD BE A REALISTIC EXPECTATION? The role of the CoE is to coordinate. Media outlets are used to engage audiences and monitoring evaluations will be conducted. At the end of the year, there will be an overall evaluation of the results achieved. Realistically, we can have a process moving towards achieving the desired legislative changes.

You need to lobby parliamentarians, government, and numerous stakeholders. Sometimes, the intervention of international organizations can give impetus to the government to make changes. So, this is one of the expectations. The other, for example, is to give good examples to other countries.

IN GEORGIA, THERE HAS BEEN ONLINE SENSITIVITY FROM CONSERVATIVE

FORCES TO ONLINE CRITICISM OF THE CHURCH. RECENTLY, WE SAW THE UK PRIME MINISTER PROPOSING A BILL MAKING OFFENDING SOMEBODY ONLINE PUNISHABLE. WHAT’S YOUR TAKE ON THIS? The CoE publish general policy recommendations with guidelines on how the law should be written in such cases: precisely in order to avoid misuse of the law. Hate speech can be used against freedom of expression and there should be very precise definitions, monitoring systems and also a special judiciary which is aware of this and can intervene, if necessary. The problem is that you cannot take everything to the judiciary because it will explode into extremes. Hate speech is not always easily definable. If I say something on a microphone as a CoE representative, that doesn’t have the same impact as if I am saying the same thing off record. If you say something online, the multiplication of the message is completely different from when something is said to just one person. You have to see hate speech as the consequence of your speech, the likelihood that your hate will create discrimination and violence. It depends on the hater and on the victim: if the hater is very powerful and the victim very weak, it is most likely classifiable as hate speech. Our aim is to provide support to the government in better understanding this complex issue and working to create the right kind of legislation.

Occupation Victims' Park to Be Opened in Tbilisi’s Ponichala

BY THEA MORRISON

T

bilisi Mayor’s office will soon open a new park in Tbilisi’s Ponichala district, Krtsanisi, dedicated to the victims of occupation.

Mayor Kakha Kaladze, his deputies and the district governor looked around the territory where the park arrangement works are underway.

Krtsanisi district administration started construction of the park last year. An 8000 square meter

recreational zone has already been arranged and the lighting network and the irrigation system installed.

Around 15 species of trees, including bush plants, have been planted, and a fountain has been built.

"I have a proposal for this park to be named after the victims of occupation. We will announce a contest to name of the park and a competition for the memorial of the victims. We have a lot of heroes who lost their lives fighting occupation in the war, but it is a greater catastrophe still when people die due to occupation during time of peace,” the Tbilisi Mayor stated.

POLITICS

GEORGIA TODAY MARCH 27 - 29, 2018

15

Despite Victory, Putin Now Faces his Main Dilemma: Succession OP-ED BY EMIL AVDALIANI

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n March 18, Russia elected Vladimir Putin for a fourth presidential term making his rule the longest since Joseph Stalin’s. But this next is set to be a far different term for Putin and the Russians. Moreover, beyond the foreign and domestic challenges Putin will face arguably the most important question: who will succeed him in 2024?

In previous editions of GT, I have written that Russia’s long-term foreign policy challenge will be breaking a more-or-less united Western front. Here, I would like to focus on a number of other geopolitical theaters Russian diplomacy will be actively involved in.

Putin will face three major foreign policy questions in his new term: finalizing a settlement in Syria; reaching a consensus with Japan over the Kuril Islands, and resolving the Ukraine conflict.

In Syria, Russia will be finding it more difficult to keep its powerful position constantly challenged by various regional actors. At the same time, as Bashar al-Assad’s government strengthens, Putin will increasingly be looking at an exit strategy (without withdrawing its military contingent).

The Japanese PM Shinzo Abe is expected to visit Russia later this spring for yet another summit with Putin. Abe continues to strive for a final settlement

to the Kuril Islands matter, and for a formal peace treaty with Russia.

And perhaps the most important theater for Putin will be Ukraine, where he could make some concessions such as de-escalation of fighting in east Ukraine and perhaps even facilitate a long-term ceasefire. However, strategically, his government will be working intensively to keep Kyiv out of NATO and the EU. Beyond the foreign policy front, Putin will have a Russia changing from within. The most noticeable development recently is that the center of gravity in the Russian opposition to Putin for the coming years will lie with communists and nationalists, not liberals and democrats.

This correlates well with the existing trend across the county that there is a pull towards a stricter rule where all seeming regional autonomies are restricted. Tatarstan, one of the richest regions, already experienced this when the Kremlin decided not to continue the power-sharing deal with Kazan.

State security apparatuses set to gain a bigger influence – a trend well visible over the past couple of years.

Problems are also seen among the Russian youth.

Although many (and perhaps the majority) of youngsters do not contest the Putin rule, and Putin is unlikely to face a significant opposition in this milieu, many, however, believe that Putin’s rule should not continue. For them, he has been the only leader they remember. The Kremlin is now

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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

concerned over protest-sentiments among schoolchildren and students.

The sidelining of liberals and the general trend towards tighter control has been a hallmark of Russian history. Numerous Russian emperors and various rulers (including former president Dimitri Medvedev) promised to introduce liberal-based rule, which eventually turned out to be impossible.

But there is also one important nuance to Putin’s new term – constitutionally, it will be his last.

Moreover, by 2024 (end of term), Putin will be of quite an advanced age, leading many to expect a new ruler in six years’ time. Indeed, Putin himself, in his victory speech this election, hintedto his age and the reality that he will not be around forever.

It is thus likely that in the coming years, Putin will work to set the foundation for a future transition

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through constant reshuffles and gradually promoting his potential successor, though undoubtedly, Putin will likely continue to play a major role from behind the scenes.

It is also likely that the Russian president will change the constitution. He has refuted any possibility of his doing so, but this will depend on both the domestic and foreign situation. In fact, this pull towards perpetuation of the presidential rule has been visible all across the former Soviet space, and Putin may well follow the lead.

Putin’s new fourth term will be foundational in many ways as Russia’s foreign policy and internal development unfolds. This merits meticulous analysis of Russia on behalf of her neighbors (primarily Georgia) which experiences difficult relations with Moscow.

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