Caucasian Business Week #33 by Caucasian Business Week

DISTRIBUTED FREE OF CHARGE

BUSINESS WEEK December 09, 2013 #33

caucasian business week www.facebook.com/CBW.ge Partner News Agency

December 09, 2013, Issue 33

GEORGIA

S&P AFFIRMED RATINGS ON GEORGIA AT “BB-”

nfluential international rating agency Standards & Poor’s affirmed long-term sovereign credit ratings on Georgia at “BB-”, outlook Stable. Pg. 3

caucasian1

BE INFORMED, DO BUSINESS

Georgia’s Prime Minister Sets up Economic Council

GEORGIA RANKS 50TH IN FORBE’S RATING OF BEST COUNTRIES FOR BUSINESS

Georgian President: Russian cannot Stop Our EU Integration ion

GEORGIA GETS WORSE RANKING ON CORRUPTION INDEX

eorgia has slightly worsened its ranking on Transparency International’s Corruption Perception Index – from 51st to 55th place. Pg. 3

Pg. 2

THE PATARKATSISHVILI FAMILY ADMITTED THAT SHARES OF KULEVI TERMINAL BELONGED TO VANO CHKHARTISHVILI

ispute between the Patarkatsishvili Family and Vano Chkhartishvili filed to the Court of British Virgin Islands came to an end on 24th of Pg. 8 last month.

AZERBAIJAN AUSTRIA EXPRESSES INTEREST IN AZERBAIJAN’S CONSTRUCTION SECTOR

n Azerbaijani-Austrian Business Forum was held in Baku on December 5, Azerbaijan Export and Investment Promotion Foundation (AZPROMO) reported. Pg. 10

CIS CARREFOUR OPENING’S FIRST STEPS TO BE MADE IN 2014: ECONOMY MINISTER

he Ministry of Economy of the Republic of Armenia hopes that in the first quarter of 2014 there will be good news on the opening of the French hypermarket Carrefour in Yerevan. Pg. 11

CIS UKRAINE GETS $8BN INVESTMENT FROM CHINA

krainian President Yanukovych left Kiev in search of foreign cash for his country’s near bankrupt economy, and now he says he’s secured $8 billion in investment from China. Pg. 12

WORLD NEWS BLOWBACK: FITCH, S&P AND MOODY’S UNDER EU PENALTY THREAT

Georgia, U.S. discussed cooperation in different areas

eorgia ranked 50th out of 145 countries in the “Forbes” magazine’s annual ranking of the Best Countries for Business. This is the best indicator among the countries of the region - Russia occupies 91st place , Azerbaijan - 67th , Armenia - 64th .

Pg. 2

Rating is topped by Ireland, New Zealand, Hong Kong, Denmark, Sweden, Finland, Singapore, Canada, Norway, and the Netherlands . According to “Forbes», Georgia has decided its energy problems through the rehabilitation of hydropower plants and redirection of imports from Russia to Azerbaijan. Pg. 3

CONTRACT WITH TBILISI BYPASS RAILWAY CONSTRUCTOR WILL BE EXTENDED

conomic council of the Prime Minsiter made this decision on the Wednesday session. According to information released by press service of the Prime Minister, agreement us reached with constructor company for contract extension and other terms and conditions.

Pg. 4

Economic council considered that it’s necessary to improve technical-economic indicators of the bypass railway and mineralization of the negative results, for which additional engineering researches should be made. The closest government session will discuss extension of the contract by 3 years. Pg. 3

COMMENCEMENT OF KHUDON HYDRO POWER STATION CONSTRUCTION IN THE PAST WAS FOLLOWED WITH BIG CELEBRATION IN SVANETI

he EU regulator is threatening to fine or deregister three of the top credit agencies. Pg. 13

Pg. 7

CHOOSE GEORGIAN! INVITES GEORGIAN PRODUCTS COMPANIES TO GOODWILL’S Pg. 3 EXHIBITION

Economy Minister: Election Promises were somewhat Exaggerated Finance Minister: In 2014, Georgia’s Domestic Debt will Reach 600 Million Pg. 4

“Liberty Bank” Director General: Big changes are not Expected in Terms of Interest Rates in 2014 Pg. 4

New Year Discount at the Special Issue for the 31st of December Congratulate the Coming New Year to Diplomatic and Business Establishment

Pg. 4

MAIN EVENTS caucasian business week

December 09, 2013 #33

GEORGIA, U.S. DISCUSSED COOPERATION IN DIFFERENT AREAS

GEORGIAN PRESIDENT: RUSSIAN CANNOT STOP OUR EU INTEGRATION

he Georgian president Giorgi Margvelashvili says Russia has no means of influence that could divert Georgia from its course toward integration with Europe and interrupt the signing of the Association Agreement next year. In a TV interview on Tuesday, the president said that it would be incorrect to think thatwhat is happening in Ukraine will also happen in Georgia. “We must be careful and be concentrated in one direction – society must be modernized and we must sign the Association Agreement in near future,” he said. Foreseeing past experience, Georgia counts risks, he continued, and seeing risks shows that Georgia has a firm position and is less exposed to being influenced. The journalist asked if the government expects that Russia may use the fact that it has reopened its market for Georgian goods as a means to pressure Georgia, by threatening to close the trade again. The president said this is a possibility, but he thinks this is not a threat which would out-

weigh Georgia’s European choice and force the country to change its foreign policy. Margvelashvili said bilateral trade with Russia is not of an extent that could cause destabilization in Georgia if the trade is be closed again. In 2006, Russia imposed an embargo on Georgian wine and mineral water which was seen as political pressure, although it was grounded in concerns over impurities. The same type of trade embargo was used against Moldova and Ukraine as well. Bidzina Ivanishvili’s government started talks with Russia in the end of 2012 to lift the embargo and Georgia now exports wine, fruits and some otheragricultural products to Russia. Figures from the Georgian National StatisticsDepartment covering the first nine months of 2013 show that after the resumption of trade with Russia, that country has become Georgia’s fifth largest trading partner. The trade turnover with Russia in this period was USD 501.7, which is 35 percent more than the same period last year. In 2012, Russia was Georgia’s sixth largest trading partner.

TBILISI NAMES CONDITIONS FOR RESTORATION OF DIPLOMATIC TIES WITH MOSCOW

eorgia wishes the restoration of diplomatic relations with Russia, but it can be possible on condition that the Russian forces are withdrawn from the breakaway

regions and recognition of Abkhazia and the Tskhinvali region is cancelled. Georgian Foreign Minister Maia Panjikidze made the remark on December 5 in response to her Russian counterpart Sergei Lavrov’s recent statement. “We hope the issue of restoring diplomatic relations, which were violated by the Georgian side, to return to the agenda,” Lavrov said on December 4. Panjikidze said if these conditions are met, Georgia will restore the diplomatic relations with Russia. President Georgi Margvelashvili said earlier the country is interested to expand trade andeconomic cooperation with Russia. “Georgia should not say no to trade with Russia just out of fear that one day Russia may again close down its market for the Georgian products,” Margvelashvili said in an interview with Rustavi 2television channel. Georgia and Russia have maintained no diplomatic relations since a brief war in 2008. Tbilisi broke off relations with Moscow in August 2008 when Moscow crushed a Georgian assault to reassert control over two rebel regions - South Ossetia and Abkhazia -- and later recognized the regions. Georgia announced the two unrecognized republics as occupied territories in September 2008.

eorgia’s EU integration was a key topic of U.S. Assistant Secretary Victoria Nuland’s meetings in Tbilisi. During a meeting with President Giorgi Margvelashvili on December 6, the sides exchanged a view on the issues of Georgia’s integration into the European and Euro-Atlantic structures. The issues concerning the bilateral and multilateral relations between Georgia and the United States also were among the discussed topics. Margvelashvili said Georgia was facing very serious challenges and the next year would be difficult enough for the government from this point of view. He said the U.S. support during a year from initialing the EU Association Agreement until its signing was very important for Georgia. The sides also touched the Georgia-Russia relations and the situation in Georgia’s occupied territories. Nuland also met with Defense Minister Irakli

Alasania, with whom she discussed the issues of Georgia-U.S. bilateral cooperation in defense field and Georgia-NATO relations. “Ms.Nuland once again highlighted the U.S. position to support Georgia on the way to NATO membership,” Alasania said after the meeting. On the same day, Nuland also met with Prime Minister Irakli Gharibashvili and other senior government officials.

NATO SG READU TO COOPERATE WITH GEORGIA’S NEW GOVERNMENT

eorgia’s ambitious reform agenda has an ambitious goal - integration into the Euro-Atlantic family, where Georgia naturally belongs, said NATO Secretary General Andres Fogh Rasmussen. “I am confident that the new government will bring a new energy and a new momentum to our cooperation,” Rasmussen said at a meeting of foreign ministers of NATO member countries, held on December 4. “And we stand firm by our decisions at the Bucharest Summit and will continue to support the Georgian people in fulfilling their aspiration for NATO membership.” In recent years Georgia has made a great contribution to the security issue and is one of the main contributor countries in the Afghan mission, the Secretary General said. “Georgian soldiers are serving their country and protecting our shared values in Afghanistan, side by side with Allied troops. And Georgia has offered to contribute to the NATO Response Force in order to keep our troops connected for the future,” he said.

Georgian Foreign Minister Maia Panjikidze has confirmed Georgia’s intention to participate in new NATO mission in Afghanistan. “Georgia is ready to send military instructors and doctors to Afghanistan as part of the NATO’s new mission,” she said.

GEORGIA-IRAN CHAMBER OF COMMERCE ESTABLISHED

eorgia-Iran chamber of commerce has been established in Tbilisi. The main priority of the chamber is to promote trade-economic relations between Georgia and Iran, said Vano Mtvralashvili, one of the chamber’s founders and head of the Petroleum ProductsImporters Union told the radio “Commersant” on December 6. He said the Iranian businessmen mainly interested in the energetic and construction sectors, andfood industry. “The founders of the Chamber are five Georgian and four Iranian businessmen. The annual trade turnover between Georgia and Iran is $120-$150 millions and this figure is planned to be increased”, Mtvralashvili said. The Georgian National Statistics Office reports that the number of companies registered in Georgia by Iranian businessmen was

2,215 in 2012-2013. Iran mainly exports to Georgia ferroalloy, wood, cars, sheep and goat meat, while the oil, glass,ceramic tiles and cement are most imported goods imported from Iran to Georgia.

The Newspaper is Distributed at Tbilisi to Athens Flights of Aegean Airlines

BUSINESS WEEK

caucasian The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili DISTRIBUTED FREE OF CHARGE Editor-in-chief: Evgeni Mikeladze Mobile phone: 591 013936; 577965577 Commercial Department: Irakli Lekvinadze Email: caucasianbusiness@gmail.com

The weekly is distributed to top companies, banks, embassies, state sector, Tbilisi and Batumi hotels, Tbilisi, Batumi and Kutaisi Airports. The newspaper will also penetrate Azerbaijan in the near future

MAIN December 09, 2013 #33

caucasian business week

GEORGIA RANKS 50TH IN FORBE’S RATING OF BEST COUNTRIES FOR BUSINESS

A From Pg. 1

griculture is the main economic activity in Georgia, production of alcoholic and nonalcoholic beverages, metals, chemicals and small industrial production. The country imports gas completely, but it has a serious hydropower potential, which allows it to fully meet its demand for electricity. In the past, the country had energy problems but they were resolved by HPP rehabilitation and diversion of imports from Russia to Azerbaijan . Baku- Ceyhan oil pipeline, Baku - Erzurum gas pipeline and railway line Baku- Tbilisi-Kars are part of a strategy to capitalize on Georgia’s strategic location between Europe and Asia and de-

velop its role as a transit point for gas, oil, and other goods, “- writes “ Forbes “ . According to the magazine , in 2006-2007 Georgia’s GDP growth reached 10%, which was associated with a greater flow of foreign investments, but growth fell after the war with Russia in 2008. “In 2010-2012, economic growth increased from 4% to 6%, but the investments which served as the locomotive of the economy have not returned to previous levels. The country also has high unemployment - over 15%. Georgia is hoping to preserve the course of economic liberalization, low level of corruption and the maintenance of minimum level of state regulations, to attract investment in largeenergy, tourism, agriculture and textiles, “- writes” Forbes “.

CONTRACT WITH TBILISI BYPASS RAILWAY CONSTRUCTOR WILL BE EXTENDED

From Pg. 1

t’s noteworthy that Georgian Railway researched possible results of the existing project through consultancy company MC Mobility. It was determined that operational and maintenance data worsens, capacity (transit capability) reduces. Besides,

implementation of the project in this form causes necessity to carry out entailing high-cost projects, which is not considered by budget project. Contractor (23rd bureau of China) could not meet construction deadlines, due to which by the end of the works completion (June 8, 2013) the contractor was 18 months behind.

S&P AFFIRMED RATINGS ON GEORGIA AT “BB-”

nfluential international rating agency Standards & Poor’s affirmed long-term sovereign credit ratings on Georgia at “BB-”, outlook Stable. The agency did not change short-tern rating at “B”. The rating reflects Standard & Poor’s view that the government will enhance stabilization of the budget of Georgia and foreign balance data in the mid-term perspective. “We positively evaluated economic growth perspectives of the country, despite slower growth in 2013, also maintained political tensions and

uncertain political curse”, - says the press release of the agency. Experts of the agency consider that uncertain political situation can be negatively reflected on the rating, which also influences economic growth of the country. Rating growth may be defined by prolongation of government’s smooth change, also increase of policy effectiveness and predictability and maintenance of high economic indicators. It’s noteworthy that on November 21 Fitch Ratings, which is in top-3 list of the rating agencies, also affirmed the same rating to Georgia.

UKRAINE AGREES TO JOIN CUSTOMS UNION

kraine agrees to join Customs Union On the meeting between presidents of Russia and Ukraine in Sochi yesterday, agreement has been reached on Ukraine joining the customs

union , The Economist Editor-in-chief Edward Lucas says in Twitter. “Hearing Yanukovich in Sochi today signed strategic agreement with Russia includes $5BN+ up front, gas price $200 + agreement to join customs union”, Lucas tweeted.

GEORGIA GETS WORSE RANKING ON CORRUPTION INDEX CHOOSE GEORGIAN! INVITES GEORGIAN PRODUCTS COMPANIES TO GOODWILL’S EXHIBITION

n the New Year period Goodwill, the network of hypermarkets, will hold the exhibition and sales of Georgian products. The exhibition is organized by Choose Georgian! company. This is the third exhibition and it will be held in the Dighomi branch of Goodwill on December 20 to December 21. Georgian products will be sold at special prices in the New Year period. Choose Georgian! invites small and medium sized companies that have agrarian and handicraft products to the sales and exhibition for participation. The event aims to popularize Georgian products and support small sized regional enterprises. The event is held twice a year – several weeks prior to the Esater and the New Year. Last year about 40 manufacturers of tea, honey, natural juices, mineral waters, lemonades, wine and various alcoholic drinks, cheese, sweets, jams and tinned products took part in the

exhibition. No participation fee is required for the exhibition and sales. Participant companies should just have cash registers. The event is supported by Georgian Agriculture Ministry. Goodwill hypermarket is a leader on Georgia’s retail market and operates in Tbilisi with 5 assets. The network also includes hypermarkets in Batumi and Gori. Goodwill prioritizes support and development of Georgian product companies. Founded by the Sales Management Company, Choose Georgian! makes focus on finding Georgian natural products companies in regions to help them in planning sales, management and marketing. Those wishing to take part in the exhibition should contact Nini Mosiashvili at mobile phone – 591 410 976.

eorgia has slightly worsened its ranking on Transparency International’s Corruption Perception Index – from 51st to 55th place. In 2012, Georgia ranked 51st among 176 countries, but in 2013 it is in 55th place among 177 countries. The organization ranks countries according to degree of corruption, awarding points from zero – the most corrupted – to 100 points – the least corrupted. TI listed 177 countries and granted 49 points to Georgia, which had 52 points in 2012. However, Georgia ranks higher than several European countries. The Czech Republic and Croatia are both in 57th place, while Slovakia is in 61st place. Italy and Romania share 69th place, while Bulgaria is on 77th place, Greece – 80th. In the region, Turkey has the highest score and is in 53rd place. Armenia is in 94th place, while Russia and Azerbaijan share 127th place. The top countries with the lowest score are Denmark, New Zealand and Finland, while Afghanistan,

North Korea and Somalia are in the last places. According to TI’s new report, the new Georgian government has advanced anti-corruption reforms in some areas, including through expanding the scope of public officials’ asset declarations and by publishing directly awarded government contracts, including all small purchases. “The government has also, although carefully, pursued reforms to pro-actively release more public data online and has improved the responsiveness to Freedom of Information requests,” the report says. TI recommends strengthening the Prosecutor’s Office, the State Audit Office, the Competition Agency, and independent regulatory bodies. The watchdog group also calls for creating an independent anti-corruption agency tasked with prevention, investigation, and public education, strengthen anti-corruption mechanisms and policies of local government bodies, as these entities may be given more autonomy and resources through planned reforms.

DATE OF TBILISI BYPASS RAILWAY PROJECT RENEWAL IS UNKNOWN

t’s still unknown when construction of Tbilisi bypass railway will be resumed. Head of supervision board of Georgian Railway states that the company should work out revised projects in 3 years term. As Koka Guntsadze stated on the Friday press conference, 350 million was assigned for project implementation, although additional $50 million may be needed for other infrastructural expenditures. “The project, budget of which is $350 million, is started without any preliminary research, technical-economic justification. “Georgian Railway” decided to pause for 3 years period. Changes should be made in the main agreement with our contractor company, to change terms and during this 3 years we’ll be able to find optimal engineering decision,” - Koka Guntsadze stated. He said that as 2013 million has already spent, resolution will be found “this bill not to be blown away.”

Reminding that economic council of the Prime Minsiter made a decision to extend contract on Tbilisi bypass railway for 3 years on the Wednesday session.

INTERVIEW caucasian business week

ECONOMY MINISTER : ELECTION PROMISES WERE SOMEWHAT EXAGGERATED An interview with Georgian Economy Minister GIORGI KVIRIKASHVILI

- How would you assess your activities over the past year? - Overall, the results are good, considering the fact that the economy has undergone fundamental changes - monopolized economy is turning into competitive. Previously, each sector of the economy was associated with specific persons or a group of persons, a specific business group, and now the new players have entered into such areas as trade in fuel, pharmaceutical business , etc. In this case, the main thing is that business is free and no one exerts pressure on it. Slowdown, of course, is a negative phenomenon; we expected growth of 6 %, and received 2, 5 %. But most importantly, we have laid the foundations for the development of market economy, which necessarily will lead to economic growth. One year is too little a normal economic system to work. Monopolistic economy at some point can be very effective, but sooner or later we must move to a more modern model. We have already begun the transition to it, and this is a good result .- Are you saying that there are no oligopolies on the fuel and pharmaceutical markets? But the players are the same as before ... - The situation is very different. New players have appeared in the fuel sector and soon we will see new networks of filling stations. - Can separate filling stations change the situation? For example, in regard to prices of fuel? Your campaign promise was to reduce the price... - Promises were sometimes exaggerated, but fuel prices still fell slightly. It is connected with the fact that after the change of government, new importers who import fuel but do not own filling stations appeared on the market and therefore, they are not well known to the general public .

And this fact is reflected in the market pricing policy. In addition, we are in the process of creating Antimonopoly Service, which will work in 2014. We‘ve completed work at the administrative level –opened a hot line and entrepreneurs who face violations of their rights in the market can call there. And most importantly - our government does not contribute to various business groups. - The government’s program presented to the Parliament doesn’t contain specific figures. There are only general trends, in particular, the initiative to establish an accumulative pension system. How will such a system operate in a country with high unemployment? - This is not a priority, and the program doesn’t envisage this. However, despite this, it’s necessary to prepare the legal framework and institutions for the transition to this pension system. It is very effective in Eastern Europe, and when they started its implementation the situation in their economy was not much better than we have now. If we do not start today, in 15 years we will have big problems with pensions. The primary objective is to create an attractive economic environment that will be more clear and predictable . Next year we will adopt a law limiting the introduction of new government regulations, and it will make the process more difficult. We also intend to stimulate business development - all international organizations say that only a small part of economic growth reaches the population. Therefore, beginners in business should have access to finance - in this regard , we intend to spend 140 million GEL over 3 years on funding small and medium business, consulting assistance, export promotion , etc. We’ll set up an Agency for Small and Medium Businesses Support , which will discuss business ideas. Apart from that, we intend to encourage the construction of 2-3 star hotels in the country and a favorable tax regime will be created for this purpose. - Do you expect any economic pressure from Russia after the initialing the Association Agreement with the EU? - Given the experience of other states, theoretically such a risk exists. I really hope that it will not happen, but nevertheless, we warn the businessmen that they should not rely solely on the Russian market. Based on the current state of Russian-Georgian relations, I hope that nothing like this will happen, but we are ruling nothing out.

“LIBERTY BANK” DIRECTOR GENERAL: BIG CHANGES ARE NOT EXPECTED IN TERMS OF INTEREST RATES IN 2014 ”Interest rates have sufficiently reduced this year, but they may be further reduced “

iberty Bank” doesn’t exclude a reduction in interest rates next year. When asked by commersant.ge what trends they expect in terms of interest rates on deposits and loans,

Giorgi Arveladze, CEO of one of the leading banks in Georgia, explains that big changes are not expected in terms of interest rates in 2014, but rates may be further reduced. “This year a rate has been sufficiently reduced, “ - says Arveladze. In his words, next year “Liberty Bank” will offer customers several new products and they will gradually become known. Note: The President of the National Bank of Georgia Giorgi Kadagidze says that a decline in interest rates has been observing for 4 years. “There is a decline in interest rates over 4 years and this is one of our tasks. The decrease in interest rates is a process that reflects the realities of the economy. This is a healthy process, “- explains Kadagidze.

December 09, 2013 #33

GEORGIA’S PRIME MINISTER SETS UP ECONOMIC COUNCIL

rime Minister Irakli Gharibashvili has set up an Economic Council. According to the PM’s press service, the first session of the Economic Council was held today. ‘The Council consists of 12 members, including economic ministers, the Head of the Partnership Fund, the Director General of the Georgian Railway, the Head of the Co-investment Fund, the Business Ombudsman, etc.’,- the PM’s press service says. The Council also asked the President of the National Bank [NBG] to involve in the working of the Council. Ongoing economic issues were discussed at today’s session.

FINANCE MINISTER: IN 2014, GEORGIA’S DOMESTIC DEBT WILL REACH 600 MILLION

n increase in credit resources by 200 million GEL will be really useful for Georgian economy “ In 2014 , Georgia’s domestic debt will reach 600 million - Finance Minister Nodar Khaduri said at a press conference . He says that it was originally envisaged to take 400 million GEL but the 2014 budget provides for the issuance of treasury bonds worth 600 million GEL. Finance Minister clarifies that 400 million from the abovementioned amount will be spent on the needs of the state budget and 200 million will be placed on the deposits of commercial banks to enable them to issue long-term investment loans. Nodar Khaduri notes that Ministry of Finance as well as the Ministry of Economic Development and the National Bank have quite interesting calculations and an increase in credit resources by 200 millionwill be really useful for the Georgian economy.

2014 BUDGET DOES NOT CONSIDER COMPENSATIONS FOR THE BUSINESSMEN WITH CONFISCATED PROPERTY

inister of Finance Nodar Khaduri stated about it on the Tuesday press conference. He explained that it’s caused because no political decision on the issue has been made. Working to study this issue continues. He also said that it’s easy to make statements, but specific actions should back them. Khaduri stated that study of these issues need scrupulous approach. “We do not even know what’s the issue about or

where is this confiscated property”, - Khaduri stated. Minister of Finance stated that the commission continues working and all issues will be scrupulously studies. “We should agree on some issues. All the decisions we make will be financially and economically justified. There is no divergence of opinions on this issue. Our main promise about restoration of justice is till valid. I will also tell you that 2014 budget does not consider compensations, because political decision has not been made yet”, - Khaduri stated.

GOVERNMENT TO BEGIN WORKING ON AGRO-INSURANCE PROJECT NEXT YEAR

ommersant” radio reports that the Ministry of Agriculture will begin working on agro-insurance project next year. According to the Ministry, the enactment of agro-insurance is directly related to the land inventory and work in this direction has already begun. They say, an inter-agency committee composed of representatives of agriculture, justice and economy has been working on the land inventory project.After public and privately owned lands are distinguished, the state will work on agro-insurance project. Note: The Minister of Agriculture Shalva Pipia still in his capacity as deputy minister told ‘’Commersant” that the Ministry consulted with foreign and Georgian insurance companies regarding de-

velopment of agro-insurance scheme, but then he did not specify the time of the project implementation due to theproduct complexity.

BUSINESS & ECONOMY December 09, 2013 #33

caucasian business week

CASPIAN FORUM NAMES BAKUTBILISI-KARSI RAILWAY AS 2013’S BEST PROJECT

ew railway line of Baku-TbilisiKars was nominated as the best Project of The year on the Caspian forum. Awarding ceremony was held on December 5, on the 3rd Caspian Forum - Defining the Caspian. “Marabda-Kartsakhi Railway reports that main direction of the forum this year is regional energy and transport corridors. Representatives of 35 countries attended the forum. During the dis-

cussion of the new railway line of Baku-TbilisiKars they talked about its strategic importance in terms of connection Europe and Asia. Representatives of 3 years received award - deputy Minsiter of Economy and Sustainable Development of Georgia Natia MIkeladze, Minister of Transport of Azerbaijan Zia Mamedov and Minsiter of Transport of Turkey Binal Ildirim. As Minister of Transport of Azerbaijan Zia Mamedov stated on the forum, first pilot train about opening of railway line will pass at the end 2014.

ANNUAL INFLATION WAS ACCELERATED IN NOVEMBER

n November annual inflation accelerated, monthly - reduced. Geostat informs that in November 2013 inflation level equaled 0,5% in comparison with previous month, annual inflation is 0,6%, average inflation - 0,8%. It’s noteworthy that in October, prices have increased by 1,5% compared to September, by 0,2% in comparison with October of previous year. In November in the formation of inflation data main influence had price change on food and nonalcohol beverages/ Prices in this group increased by 1,5%, which was reflected on the November’s monthly inflation overall data by 0,44 percent points. Price increase on the following sub-groups can be mentioned: vegetables (10,2%), milk, cheese and egg (3,5%). Besides, prices reduced on the subgroup of fruit and grapes (-5,7%); In the given period 0,5% price increase was mentioned also on the healthcare. Respectively, share of the group in November’s monthly inflation equaled to 0,0%%. Price increased on the pharmaceutical products as well (1,5%). As for annual inflation, price changes on the following groups also influenced its formation: prices in alcohol drinks, tobacco group increased by 8,6%; considerable price increase was mentioned

on tobacco products (13,8%0. Accommodation, water, electricity, air: in this period prices increased by 3,4%; prices increased on the accommodation maintenance and repair (7,3%), on the real accommodation payment (3,9%); On the goods (service) in transport group prices reduced by 3,2%; in this group price reduced on vehicle purchase (-10,8%) and exploitation of persona vehicles (-3,4%).

LOAN PORTFOLIO, ASSETS AND INTEREST RETURNS OF MICROFINANCE IN OCTOBER 2013 , GDP GREW ORGANIZATIONS DROP BY 3, 9 % n the Q3 overall actives of the micro-fi- Net profit is 44,4 million GEL (Q2 - 32,3; Q1 -

nance organizations reduced by 9,8% (Q2 - 11% growth, 1 Q - 7,4% growth) and equaled to 729,1 million GEL by October 1, 2013 (Q2 - 808,5 million). According to NBG statistic, loan portfolio has reduced by 9,2%, to 554,7 million GEL (Q2 - 9,3% growth, to 611,2 million GEL; Q1 - 7,8% growth, to 559 million GEL). Overall obligations of the organizations are 543,4 million GEL (Q2 - 604,1 million GEL). Total portfolio is 185,7 million GEL (Q2 - 134,6 million GEL, Q1 - 192 million GEL).

13,9 million GEL). Organizations have attracted resource of 395 million GEL (Q2 - 451,5 million GEL). Among them 217,5 million GEL is a loan from financial institutes, 69,2 million - loan from banks, 93 million GEL from individuals, 14,8 million GEL from legal entities. NBG prepared accumulated data table according to financial data of 65 microfinance organizations. In total 67 ones are registered, this year Finca has moved from the list to the banking sector.

PARTNERSHIP FUND PUBLISHED ONGOING AND COMPLETED PROJECTS

artnership Fund completed list of completed and ongoing projects. Information was published on the Facebook page of the Partnership Fund. The fund reports that Hotel Royal Batoni is already completed in Kvareli, also pig-breeding complex Kalanda, also Hotel Gino Velne in Rabati. In 2014 hotel complex construction will be opened in Bakuriani, which will be managed by RIXOS. 152-room hotel is being

built along with Kazakh investors. Construction of 230 MW thermal power station in Gardabani will be completed in 2015. The fund implements this project along with Turkish Chalik Energy. Construction of the hotel carried out with Silk Road Group in Tsinandali will also be completed in 2015. Radisson will manage it. Fund’s projects include hydropower plant Nenskra, which will be built in Svaneti, on the river Nenskra.

INTERNATIONAL RESERVES REDUCED IN NOVEMBER

ccording to preliminary data of Statistics Office of Georgia , in October 2013 , GDP grew by 3, 9 %, in the 3rd quarter of 2013 1, 3 % , based on the data for 10 months of 2013 – by 1, 9 %. Since January 2012 “GeoStat “ conducts a monthly estimate of GDP growth , which is done on the basis of departmental statistics (including the turnover of VAT payers , fiscal and monetary

data). This methodology is fully compliant with international standards, used to obtain short-term and operational information. In those areas where there is no monthly data (agriculture), estimates are made based on the information for the previous period , respectively , the actual data for quarters may differ from the preliminary Also, VAT data for the past month is not excluded to be adjusted, which consequently leads to a change in the final figures.

ABASTUMANI HOTEL PROJECT SUSPENDED, WHILE LASHA PAPASHVILI’S HOTEL CONSTRUCTION UNDERWAY

ao” company has not yet started the hotel construction in Abastumani. Commersant.ge was told at Adigeni Municipality that the company had to start the construction this year, but the project has not yet started. “Commersant “ unsuccessfully tried to get in touch with the company and as soon as we receive an answer, we’ll offer it to readers. Note: The construction of a 200 - room hotel, which should be completed in 2016, is underway in Abastumani, the works are carried out by “Redix” company owned by businessman Lasha

Papashvili. Accordign to the head of the Adigeni municipality Goderzi Skhirtladze, the company had to complete the construction by the end of 2013 , although they asked for the postponement of deadlines for 2 years and the municipality satisfied the request only for a one-year term . Consequently, the construction should be completed by the end of 2014. Note: The hotel in Abastuamni will be located on 22 thousand square meters. Europe’s leading architectural companies ,,Henning Larsen” developed the project for “Redix” company.

SILK ROAD GROUP TO CONSTRUCT ENTERTAINMENT COMPLEX ON ROSE REVOLUTION BUSINESS SECTOR INVESTMENTS IN SQUARE ilk Road Group’’ starts the construction of a restaurant - entertainment FIXED ASSETS ARE 49 MILLION GEL complex in the Rose Square. The company informs “Commersant ‘’ HIGHER Y-O-Y that according to the project, a com-

y December 1, 2013 international reserve actives equal to $3,03 billion (1/11/13 - $3,1 billion). According to statistic of the National Bank of Georgia, annual growth of actives is 6,6% (01/11/13 -9,2%). In the same

eorgian enterprises invested 49 million more in the fixed actives in comparison with last year. Geostat informs that in the 3rd quarter 2013 overall investments made by enterprises in the fixed actives equaled to 324,9 million GEL, while this amount equaled to 275,9 million GEL in July-September 2012. 72,5% of the total investments have ben made by large business, 24,2% - by medium-size business. Only 3,3% of the investments comes on the small

period last year it equaled to 2,2%. By October 1 Foreign currency reserves equal to $2,809,6 billion (01/11/13 - $2,887 billion). Actives, in addition to foreign currency reserves, also include information about Special Drawing Rights (SDR) and data about reserve position in the IMF.

business. It’s noteworthy that in July-September 2013 annual turnover of the enterprises has increased by 8,4% in comparison with the second quarter, but reduced by 1,8% in comparison with the third quarter 2012. Geostat informs that in the 3rd quarter of the current year overall turnover of the enterprises equaled to 10,7 billion GEL, overall issue of the products - 5,5 billion GEL (respectively 10,9 billion and 5,9 billion in the third quarter 2012).

plex will be a three-story with a warehouse floor. The ethnographic restaurant with the demo kitchen corners will be placed on the first level, public facilities will be located on the other side of the passage. They also say that on the fourth level a bar with an extensive terrace will be located. At present, a square has been planted in the northern part of the Rose Square, a water mirror was arranged , a cafe - pavilion was built as well as a lobby with vertical communications connecting the lower levels of the square.

The project, which cost is 5 million USD, is being implemented by “Silk Road Group” partner “Iberia Center ‘’ company. The project will be completed in the spring of 2015.

BUSINESS caucasian business week

December 09, 2013 #33

GEORGIA RANKED 116TH AMONG THE WORLD’S MOST BIG-HEARTED NATIONS

UNESCO GRANTS SPECIAL STATUS TO ANCIENT GEORGIAN WINE MAKING METHOD

eorgia was ranked 116th in the World for Charity Ranking “The 2013 World Giving Index”. British iinternational nonprofit organizationCharity Aid Foundation (CAF) has released Charity World Rankings which shows that Georgia is ranked 116th in «The 2013 World Giving Index» -ranking and is behind its neighbors Azerbaijan (69th place) and Armenia (113th place) . Turkey was given 128thplace in the rating, while Russia – 123rd . The United States is the world’s most generous nation, according to a global index of giving, as a higher proportion of Americans helped a stranger

he ancient Georgian traditional winemaking method in large clay containers (kvevri) has been approved for inclusion into UNESCO’s List of Intangible Cultural Heritage. “Inclusion of kvevri in the list will promote the popularization of Georgian wine on the international market,” said the Ministry of Culture for Cultural and Monument Protection of Georgia. The Cultural Heritage Agency of Georgia stated earlier that Georgian method of making wine in kvevri has no analogues in the world, Georgian media reported. “It is a natural and environmentally friendly method recognized as one of the best and unique wine-making technology”.

than any other country in the world. Three countries tied for second place this year: Canada, Myanmar, and New Zealand. It should be noted that in the world ranking Georgia shares its position with Vietnam. Ukraine is on the 102nd place and Kazakhstan is ranked 66th. Belarus occupies 93rd place in the world ranking. The 2013 World Giving Index – published annually by international nonprofit organization Charities Aid Foundation – looks at three measures: monetary giving, volunteering and helping of strangers in a typical month. The survey, published on Tuesday, was carried out in 2012 across 135 countries.

“KAZBEGI” AND “ CASTEL” SALES GREW BY 7-8 %

he largest producers of beer and lemonade evaluatethe companies’ performance in 2013 in a conversation with “Commersant”. “ Kazbegi” founder considers this year more successful than the previous. Gogi Topadze says that the company’s sales increased by 7-8 % and exports grew by 12% . The businessman explains the company’s particular success by the opening of the Russian market in 2013. According to Topadze, the company was active in terms of diversifying the types of beer and lemonade. Gogi Topadze excepts a growth in

sales after December 15. “Castel” new management used 2013 year for studying the company’s potential. The company’s owner Temur Chkonia states “Commersant “ that despite changes, “Castel” beer was successful that was reflected in a 7% - growth in sales. ”Castel” beer is preparing for market leadership next year. The businessman notes that lemonade “Zandukeli “ produced by “Castel” is undergoing rebranding. Management plans to add new flavors and a working process will take about 2 months.

MINISTER OF ENERGY OPENED BAKHVI-HESI-3

ice Premier and Minister of Energy Kakha Kaladze, head of director board of the Silk Road Group George Ramishvili and founder of Kusto Group Erkin Tatishev opened a new hydropower station Bakhvi-hesi-3 in the Village Mtispiri, Ozurgeti municipality.

Bakhvi-Hesi-3 is a pilot project of the international holdings - Kusto Groups and Silk Road Group, implemented by LTD Bakhvi Hydro Power. Construction of Bakhvi-Hesi-3 started in December 2011. Project implementation became available by investments jointly attracted by Kusto Group and Silk Road Group, amount of which equaled to $13,5 million. Bank of Georgia funded construction of the power station. Installed capacity of the power station is 9,8 MW, annual output - 38 million KW/hour. Output during winter months will be fully supplied in the domestic market; other will be exported to Turkey. Local population is employed in the Bakhvi-Hesi-3. 25 persons provide management and operation of the power station.

IN 10 MONTHS 2013, 4 556 MILLION TOURISTS CAME TO GEORGIA

ccording to the National Tourism Agency, in 10 months of 2013, in total 4 million 556 thousand 110 tourists came to Georgia . The Agency informs that if in November last year, 3 million 684 thousand 154 visitors arrived in Georgia, this year the figure in-

creased by 871 956 and exceeds last year’s data by 24%. Statistics show that a flow of tourists coming from neighboring countries has increased as well. The number of tourists from Azerbaijan increased by 15 , from Armenia – by 41, from Russia,- by 50 , and from Ukraine - by 67 %.

MICROFINANCE ORGANIZATIONS MOSTLY CREDIT AGRICULTURE

griculture/forestry has the greatest share in microfinance lending. By October 1, 2013 it’s 26% of the total portfolio (Q2 - 28,2%). The amount has reduced to 142 million GEL in comparison with previous quarter (Q3 - 172,4 million GEL). Share of trade and service sphere lending is 23,3$

(Q2 - 26,4%) and portfolio is 129 million GEL. Compared to second quarter (191,2 million GEL) 20% decline is mentioned. 0,7% - 4 million GEL (Q2 - 6 million GEL) comes on tourism and port, 0,4% - 2,2 million GEL (Q2 - 2 million GEL) - on construction, 0,3% - 1,8 million GEL on funding of processing industry, which is 3 times less than previous quarter (Q2 - 5,4 million GEL). Lending of transport sphere has reduced by 87% and equals to 1,042 GEL (Q2 0 8,145 million GEL). Among the debtors males prevail, 342 271 400 GEL is issued for 163 000 GEL and females have got 129 093 loans for 209 438 422 persons. According to NBG statistic, total portfolio of microfinance organizations has reduced by 9,2%, to 554,7 million GEL in the 3rd quarter.

Georgia acceded to the UNESCO Convention on “Protection of Intangible Cultural Heritage” in 2007. Georgian folklore has been included in the samples of intangible world cultural heritage.

“TAV GEORGIA” CONFIRMS NEGOTIATIONS WITH “AEROFLOT “

bilisi airport operator “TAV Georgia” confirms negotiations with “Aeroflot “ regarding its access to the Georgian market. Negotiations between “ Aeroflot “ and Tbilisi international airport have started, “ сommersant.ge was told at the airport management company. “Tav “ does not speak about other details at this stage. Recall that as reported, “Aeroflot “ will launch flights in Moscow – Tbilisi direction. The flights are expected to begin in March and will be performed every day at night Currently “Siberia “ and “Georgian Airways” operate services in the abovementioned destination. “Aeroflot “, as well as other Russian companies, stopped flying to Georgia in 2008. Note: During the 2013-2014 winter season, “Aeroflot “ plans to perform flights in 53 countries, including the CIS - states , and says that if air links between the two countries are resumed, the company will fulfill flights to Georgia as well. According to Head of Business Tourism Department at “Megaplus tour” Ekaterina Nikitina, the return of “Aeroflot “ to the Georgian market will increase the volume of passengers. In her words, at this point high tariffs and group

transportation represent the problem. Nikitina hopes that the return of “Aeroflot “ in the market will solve these problems. The expert adds that Georgia is a trend direction and is ideal for both mass tourism and business audience. “For example, Batumi and Tbilisi respond to the high demands declared in Russia for servicing business audience,” - says Ekaterina Nikitina. Head of the Baltic and Georgia Department at “Wand International Tour” Irina Medvedeva believes that if “Aeroflot” enters the market with acceptable prices, it will positively affect tourism flows. When it comes to the current tariffs in Georgia, in her judgment, they make Georgia an uncompetitive country in the tourism industry.

“TRANSPARENCY INTERNATIONAL” PUBLISHES REPORT ON BUSINESS ACTIVITIES OF OFFICIALS AND POLITICIANS

he conclusions of the study conducted by “Transparency International” shows that it is necessary to create legislation regulating the relationship between business and government, “- a representative of the organization Eka Gigauri states. According to the study, many businessmenturned-politicians, and vice versa, many politicians laterbecome businessmen, besides, many government officials have explicit or implicit ties with the business. Big businessmen David Bezhuashvili , Gocha Enukidze, Kakha Okriashvil entered into Parliament on the list of the National Movement left the former ruling party after it lost the elections , and this generates a great question about the purpose of their entering into politics. In addition, officials in Georgia have been associated with companies which have benefited from ties to the Government in recent years - it’s about benefits such as preference in tenders for public procurement , tax and customs privileges , obtaining licenses, more loyal attitude on the part of state, “ the report reads. The report cites specific names, in particular, the former Defence Minister David Kezerashvili, who hadcompletely controlled the advertising market in the country

until 2012. TV Company “Imedi”, which director was former Economy Minister Giorgi Arveladze, twice took advantage of tax amnesty. FormerDeputy Minister of Economy Zviad Cheishvili left his post and began to work in large Chinese companywhich during his work in the ministry received several large orders from the state. The study authors also give evidence of informal links of business companies with Tbilisi City Hallofficials, MPs and representatives of other government agencies. “Transparency International” urges the investigative authorities to examine these issues in order to clarify the presence of corrupt interests in these facts.

HYDRO POWER PLANTS December 09, 2013 #33

caucasian business week

COMMENCEMENT OF KHUDON HYDRO POWER STATION CONSTRUCTION IN THE PAST WAS FOLLOWED WITH BIG CELEBRATION IN SVANETI What was the reason for suspending construction in 80s and who expects benefits from blocking this project today?

esigning and construction of Khudon Hydropower Station started in 80s of the last century. Nobody was against this construction at that time but now it became a subject of tough dispute. The public opinion is divided into two parts. One part of population thinks that the power station will inflict serious damage to the environment. Majority of experts deems that construction of Khudon Hydropower Station will bring economic independence and many other benefits to the country. Construction of Khudon Hydropower Plant started in 1979. Grand Plan on utilization of the whole length of Enguri River was a part of the Soviet Georgia’s Industrial Dream. Main objective of additional hydropower stations was supplying south regions of Russia with electricity. The project was developed in 1979-82 at TbilisiHydroProject and approved in Moscow, since construction of hydropower plants with a capacity over 300 MW was to be resolved at the central level. As Anzor Chitanava, a power specialist remembers, at that time when a foundation was laid for a Hydropower Plant, no one was against it neither in the region nor in Georgia at large. Moreover, the Project was agreed as a document not only with the government but also with the local population. “The situation in the country from 1979 to 1988 was quiet, construction was in progress, but in 1985 when so-called “Perestroyka” started, the

issue of revisiting such large-scale projects appeared on the agenda” – said Chitanava. At the end of 80s, when the Soviet Union was already at the verge of break-up, the similar strategic projects got suspended not only in Georgia. This type of power plants were planned to be constructed in 11 Soviet Republics. For this purpose, the funds were allocated and preliminary works completed, but “Perestroyka” stopped everything. The same happened in Tajikistan, a country extremely rich with hydro resources. Construction of Raguni Hydropower Plant the biggest station, the parameters of which exceeded Khudon’s parameters several times, was suspended during the same period. The Kremlin stopped funding for all of these objects. Later on, these republics after acquiring independence completed the aforementioned projects on their own. Only Khudon HPP was not completed out of 11 hydro dams, planned in the Soviet Union in 80s. „I would reiterate once again that when the plant was being designed the locals were not against it at all. Moreover, the opinions got exchanged and the population was satisfied. Nowadays the young people who are there are told that the construction is fatal, that it will not bring any benefit and etc. i.e. overall, there are unsound conversations going on against Khudon Hydropower Plant. I do not exclude that all of these is being done for the other purposes, e.g. the third party is trying not to stop the construction but to transfer it from one

hand into another and in the end to change the investor when half of the work is almost done” – said Chitanava. According to him, it is necessary that the investor talks to each person who is within the construction zone and explains why the HPP is to be constructed, what would they get how resettlement will take place and how much compensation they will get, how the infrastructure is to be organized, what will be benefits for population and etc. Central and local governments have to actively participate in this process along with investors. Based on the available information, investment cost for construction of Khudon HPP including financial expenditure incurred in the course of construction, constitutes USD 1.2 billion. This amount will be split for 6 years equaling USD 200 million of investment per year, which is supposed to increase GDP growth indicator additionally by 1.1%. HPP is being conducted by Indian Company Trans Electrica Georgia. In addition, in the course of six-year period (20142020) of construction, the country will receive GEL 157 800 000 in the form of property and income taxes, equaling GEL 26 300 000 per year. Starting from 2020 when the HPP is put into commission the state will save approximately USD 320 million in 10 years, namely: According to the agreement concluded between the Government of Georgia and an investor, in the first 10 years of Khudon exploitation in win-

ter period, during four months, the country will receive 133.9 million kw/h on local market at fixed price of 5.84 cents (9 tetri), by which it is going to save USD 5,570,000 annually on electricity import. In addition, the project provides for additional generation of annually produced electricity on Enguri HPP and Vardnili HPP through Khudon HPP construction effect. The tariff for this power is determined as 0,011 tetri and it will allow Georgia to save USD 26,700,000 annually. The project also envisages to increase revenues through transporting power, in particular, the local companies will collect additional USD 192 million during the first 10 years from transporting electricity. The state budget, after Khudon HPP becomes operational, will receive annually GEL 56,780,000 in the form of property, income and profit taxes. Turkey is considered as a potential market for Khudon HPP, where 90% of total power generated by the station will be exported. “In case of export the company will pay 1.2 cents for transporting energy, this implies additional millions of dollars for Georgian budget” – said Ilia Eloshvili, Deputy Minister of Energy. He is confident that no one would oppose to attract additional investments in the amount of 1 billion for construction of new transmission lines connecting with Turkey. Maia Kupatadze

BUSINESS caucasian business week

December 09, 2013 #33

THE PATARKATSISHVILI FAMILY ADMITTED THAT SHARES OF KULEVI TERMINAL BELONGED TO VANO CHKHARTISHVILI

ispute between the Patarkatsishvili Family and Vano Chkhartishvili filed to the Court of British Virgin Islands came to an end on 24th of last month. It pertained to shares of Kulevi Terminal on which the Family filed suits to the Georgian and British Virgin Islands Courts in 2011 – 2012. On June 10, this year, the Patarkatsishvili Family withdrew the suit from the Georgian court and they did the same in the British Virgin Island Court. However, the Patarkatsishvili Family had to express clear position on the disputable issue in the Court of British Virgin Islands. Namely, the Patarkatsishvili Family admitted and the court resolved that: 1. Mr. Vano Chkhartishvili was the sole holder of 49 shares of the company, owning Kulevi Terminal, regarded disputable by the Patarkatsishvili Family up until now; 2. The Family did not have interest with respect to these shares and respectively would not proceed with dispute on this matter. Therefore, the Patarkatsishvili Family lost the 3-year dispute in the court initiated regarding assets, which were the most valuable on the list of claims raised by them against Vano Chkhartishvili. We hereby would like to remind the public of facts that show real reasons of starting the dispute and goals of subjects involved therein. Badri Patarkatsishvili and Vano Chkhartishvili were business partners, on which the spouse of Mr. Patarkatsishvili was informed shortly after his death. At that time, inventory taking of joint activities was impossible due to disputes regarding Patarkatsishvili’s heritage. When this issue got settled, Vano Chkhartishvili was already a target for the Saakashvili’s Government. His family members were taken as hostages, including his little grandchild and the government was trying to extort money from him through such methods. Being chased, he was forced to seek shelter in Great Britain. The English government awarded him, as a regime victim, with a status of political refugee. There were threats as well as profitable offers but Vano Chkratishvili never compromised himself with a violent regime, unlike the Patarkatsishvili Family, which made a deal with the Saakashvili’s Government under the classified agreement of July 6, 2011. Fighting against Chkhartishvili became a part of this deal, since the combination “Widow vs. Chkhartishvili” was a good instrument for Saakashvili’s propaganda PR machine to destroy businessman’s reputation. Right after this, on the fourth year following Mr. Patarkatsishvili’s death, complaints originated and relations with the family, which used to be normal until then, got strained. Vano Chkhartishvili immediately offered the Patarkatsishvili Family to se-

lect one of the big 5 audit companies, in order to study business details as well as reasonability of originated claims, but in vain. Saakashvili’s regime and subjects behind the widow’s back, having deal with the regime, did not seek fair settlement of the issue. So the disputes started and suits were filed in various courts. One of the suits, filed to the British Virgin Islands Court, was lost by the family in June, 2012. Then they applied to Saakashvili’s pocket prosecution “to restore justice”, to the Prosecution which declared Badri Patarkatsishvili as an enemy and initiated criminal case against Vano Chkhartisvili and his family members for supporting Georgian Dream. Moreover, this process was accompanied by periodical “informational wars” conducted for the purpose of discrediting Vano Chkhartishvili. Unfortunately, such relapses took place after October 1, 2012 as well. An organized group of minions having close relations to the Family and sticking to the new government imposed an unprecedented pressure over Chkhartishvili. They were abusing all available information and governmental levers. This time, the subjects and actors of the block acting against Chkhartishvili changed but the aim remained the same, to extort money through blackmail. Leaders and executors of the campaign will receive deserved legal response from us. It is obvious that such alliances and listening to advices of persons with suspicious goals and reputation do not bring benefits either to the Family or to Mrs. Ina Gudavadze. Hopelessness of their promises and black PR campaigns was proved by the British Court one more time. This was due to these pseudo advisors that the Patarkatsishvili Family had groundless disputes not only with Vano Chkhartishvili, who never had disputes with his partners during 25 years of his business activities, but also with all friends and business partners of Badri Patarkatsishvili (Vasil Anisimov, Tariel Vasadze, passed away Boris Berezovsky and etc.). The group of Mrs. Ina Gudavadze’s advisors is against calculation of assets and reaching agreement with Mr. Chkhartishvili. Because of their interference, our initiatives regarding negotiations are met with libels, information campaigns and blackmail. We offer internationally recognized audit and investigative companies, while they are sending “known human rights defender” Melor Vachnadze and his group for case resolution. We do not intend to act like the other party and go beyond the civil and legal boundaries of the dispute. Once again, we appeal to Mrs. Ina Gudavadze to dissolve misunderstandings at the table of negotiations. In the event of ignoring our proposal, we shall apply to the court to complete this pointless dispute via a court conciliation. Vano Chkhartishvili’s Press Service

BANKING & STATISTICS December 09, 2013 #33

caucasian business week

ZURAB GVASALIA: THE COUNTRY’S ECONOMIC SITUATION WILL IMPROVE AS A RESULT OF THE PLACEMENT OF 200 MILLION ON COMMERCIAL BANKS DEPOSITS An interview with the President of the Association of Banks of Georgia ZURAB GVASALIA

- In 2014, the Government intends to take domestic debt amounting to 600 million GEL, of which 400 million will go into the budget, and 200 million will be placed on deposits in Georgian banks - it is assumed that these 200 million GEL will be used for the issuance of investment loans. How can it be helpful to the economy? - It will bring substantial benefit to the country, as it will give the possibility of financing longterm projects. It shouldn’t be understood as if the banks had a lack of credit recourses. In this case, the State opens deposits in private banks at low interest rates. This will impact on all fronts – both interest rates and long-term lending activity. In general, one of the problems of the banking sector is the lack of long-term loans. Taking domestic debt is normal and there is no tragedy in it ; banks will have an additional resource of 200 million GEL.

Also, we should not think that loans will be issued under the simplified system. Everything will be the same as in ordinary cases since banks are responsible for deposits placed with them, and they will have to return to the debt to the state with interest. - Approximately what could the interest rate on loans be? - Now this is hard to say, but as loans will be long-term, accordingly, the percentage will be relatively low. Very soon all the details will be known, and there will be nothing new. Everything needs time – first the State will issue government commitment , then will get 600 million GEL, and 200 million of this amount will put on deposits in banks. - As for the demand in the market , what is the situation at the moment and is there a chance that in 2014 demand for long-term investment loans will increase? Especially in a situation when a Co-investment Fund has been established in the country. - Everything shouldn’t be confused. Banking system and the fund are not competitors, they have completely different tasks and they do not interfere with each other. - How was 2013 for the banking sector? - In 2013, banks’ profits have increased by 98% in comparison with 2012 and as per the data for three quarters, the figure amounted to 275 million GEL . By the end of the year this figure will grow. Final data will be available in January. One of the priorities of banks is security of customers, and despite the fact that there are still claims against the banks, according to statistics , their number is constantly decreasing. In this direction, the work will continue, and the National Bank conducts a strict monitoring. Overall, 2013 was a successful year for banks.

THE BANKER NOMINATED BANK OF GEORGIA AS THE BEST BANK OF THE COUNTRY

he Banker announced getting of The Banker’s award. The issue recognized Bank of Georgia as the best in the country and awarded status of “The best bank 2013 in Georgia”.

The banker’s annual awarding ceremony has been held since 2000. Bank of the Year Award is for the leading commercial and investment banks worldwide. Bank of Georgia was recognized as The Best bank of the Year in 2012 as well.

BRANCHES OF LIBERTY WILL BE PLACED IN THE REVENUE SERVICE OBJECTS

iberty and service of the Ministry of Finance sighed rental agreement. Minister of Finance Nodar Khaduri also attended signing ceremony by Head of Revenue Service Lasha Nakhutsrishvili and director general of Liberty bank George Arveladze. The bank gained 3-years part-

nership right in the auction. Branches of Liberty will operate in the service centers of Revenue Service, in the Registration Economic Zones and customs checkpoints from January 1, 2014. Active cooperation of the ministry with the banking sector will provide service improvement to the payers.

PRIVATE BANK INCREASED CAPITAL BY 17,9%

rivate Bank (Georgia) announced out 17,9% (611 000 GEL) increase of the capital, to 109,2 million GEL. “Capital increase of the bank is not only approval of reliability and active development of the modern banking sector in Georgia, but also indicates further opportunities to credit county’s economic development, to develop modern credit programs”, - Head of Di-

rector board of JSC Private Bank Yuri Kandaurov stated. According to the decision of JSC Private Bank stakeholders, capital of the bank was increased by emission of 166 110 nominal stocks, redeemed by principal stockholders expect Bogdan Lesyuk, who respectively does not own 2,7%. Among minor stockholders still remain Alexander Chochia (1,1%) and Zurab Masurashvili (0,3%).

10 AZERBAIJAN CENTRAL BANK’S CURRENCY RESERVES APPROACH TO $14 BN FIRST TIME

AZERBAIJAN caucasian business week

CARS IMPORTED TO AZERBAIJAN TO BE CHECKED FOR EURO-3 STANDARD IN 2014

he Central Bank of Azerbaijan (CBA) has brought its currency reserves above $13.7 bn for the first time. The CBA reports that as of 1st December 2013 its currency reserves totaled $13.7 bn (absolute record) versus $13.58 bn by 1 November and $11.69 bn by early 2013. Growth of currency reserves reached 1.17% ($158.4 million) for the last month and 17.5% ($2.047 bn) for Jan-Nov 2013. According to Bank’s plans, by the end of this year they should total $14.5 bn. Last year the CBA began with foreign exchange reserves of $10.48 bn and for 2012 it accumulated them by 11.58% ($1.2 bn). Over 2011 foreign exchange reserves of the Bank grew by 63.6%, or $4.07 bn - an absolute record for the CBA. CBA’s currency reserves reached $6.407 bn by 1 January 2011, $5.175 bn by 1 January 2010 and $6.137 bn by 1 January 2009.

PROFITABILITY OF AGRICULTURE IN AZERBAIJAN IS 4-FOLD ABOVE BANKING SECTOR YIELD

he Tariff (Price) Council, forced to “justify” its decision from 2 December to raise fuel tariffs, dispels a number of persistent myths, especially the myth of the “poverty” of agricultural producers in the country. Tariff Council’s secretary Ilkin Mejidov says that profitability of individual agricultural producers (individuals) amounted to 54.8% in 2012 while other farmers - 19.2%. “The share of diesel fuel in the value of agricultural production reached only 3.5%, while 1.2% of its total cost was subsidized from the state budget. After an increase of fuel tariffs the share of diesel fuel in the price of agricultural products will be 4.7% and will be subsidized for 1.8% of the total cost from the budget. As a result, there is no reason for an increase in current prices for agricultural products as they will certainly have the serious negative impact on the profitability of the agricultural sector,” Mejidov said. Recently Azerbaijan Central Bank’s chairman Elman Rustamov stated that the profitability of the domestic banking system is only 15%. As a result, it turns out that the primary agricultural production in the country is 3.65-fold more profitable than banking operations and overall profitability of agriculture is higher than the profitability of financial transactions by 4.2%. The yield of 54.8% testifies of 2-3 fold overpricing of agricultural products in Azerbaijan.

AZAL STARTS DAILY FLIGHTS TO TEHRAN

zerbaijan Airlines (AZAL) will launch daily flights to Tehran from December 28. According to the flight schedule posted on the company’s website, currently AZAL carries out flight from Baku to Tehran six times a week, except Saturdays. The company reported that the company’s aircraft will carry out flights from Baku to Tehran and back on Saturdays. Aircraft will depart from Baku at 11:15 local time and arrive in the capital at 13:55 on the same day. AZAL, the biggest Azerbaijani airline and national flag carrier, offers passenger flights to countries in Europe, the CIS, Middle East and Asia. After purchasing new Boeing aircraft for long-haul flights in 2014, the airline plans to open regular flights to destinations in North America and Southeast Asia. The company is a regional and CIS leader for the number of new aircraft. Its fleet currently consists of modern aircraft meeting all safety requirements, including Boeing 757-200, Airbus А319, ATR 42, ATR 72, Airbus А320 and Boeing 767300. It cooperates with about 60 airlines to provide its passengers with the opportunity to travel freely around the world. AZAL was certified by IATA Operational Safety Audit, a program that is an internationally recognized evaluation system designed to assess the operational management and control systems of an airline.

December 09, 2013 #33

ars imported to Azerbaijan starting next year will be checked for engines matching Euro 3 standard, Azerbaijani State oil Company SOCAR Vice-President for Refining David Mammadov said. Mammadov said Azerbaijan plans to apply Euro 3 standard from January 2014. Henceforward, only cars with engines matching this standard will be imported into the country.

SOCAR has been taking steps to improve the quality of its fuel since 2004 under the program, which consists of several stages. Currently, gasoline produced in the country meets Euro 2 standards. The volume of gasoline produced in the country meets only domestic demand. The demand for gasoline has increased by 10.2 percent since the beginning of the year and situation may become tenser next year if the growth tendency continues. For this reason, SOCAR suspended the export of gasoline from the second half of 2012 to meet the domestic demand, Mammadov said. Production of Euro-3 gasoline under the SOCAR program is scheduled to start in 2015. Each transition to the next Euro standard requires approximately $1 billion. Currently, the Euro-3 standard applies to vehicles and their spare parts in Azerbaijan, as well as to the fuel produced in the country. The diesel fuel produced by SOCAR already meets the Euro-3 standard. Further improvement of the quality to Euro-4 and Euro-5 gasoline standards will become possible after commissioning

of a new oil and gas processing petrochemical complex by SOCAR, which is planned to be constructed in the Garadagh district of Baku, and commissioned by late 2020. SOCAR plans to put the new complex into operation and to start production there in 2023-2025. “The Euro-5 standard fuel will be produced at the new complex and until then the Euro-3 standard fuel will be produced,” Mammadov said. Production of fuel higher than Euro-3 standard requires the use of expensive technology and therefore, currently it is economically unviable, he added. Creation of a new complex worth $17 billion including interest on bank loans envisages the construction of a petrochemical enterprise with capacity of 1.7 million tons of finished products, oil refinery with a capacity of 10 million tons per year on primary oil refining, as well as a gas processing plant with a capacity of 10 billion cubic meters a year. The depth of oil processing at the plant will be about 95 percent, and the yield of light oil products will amount to 85 percent.

AUSTRIA EXPRESSES INTEREST IN AZERBAIJAN’S CONSTRUCTION SECTOR

n Azerbaijani-Austrian Business Forum was held in Baku on December 5, Azerbaijan Export and Investment Promotion Foundation (AZPROMO) reported. Organized by AZPROMO with the support of Azerbaijan’s Economy and Industry Ministry, the event was held at Baku Business Center as part of the Austrian delegation’s visit to Azerbaijan. Besides official representatives, the event brought together about 130 businessmen operating in food, chemical, and electricity industries, as well as logistics, construction and engineering. Speaking at the event, AZPROMO President Rufat Mammadov informed the guests about Azerbaijani-Austrian economic relations, and the social-economic policy conducted in Azerbaijan and its results. Saying Azerbaijan has created a favorable business climate in the country, he also spoke about the open door policy in Azerbaijan, inviting Austrian businessmen to close cooperation.

Head of AZPROMO said trade turnover between Austria and Azerbaijan shows a 94 percent increase compared to last year. “This figure amounted to about $264 million at the end of 2012,” Mammadov said. “We are pleased to note that cooperation between our countries is developing year by year.” He added that there are currently 46 companies in Azerbaijan that operate with Austrian capital. “We welcome our Austrian colleagues to invest in our national economy. Azerbaijan is trying to attract Austrian capital to major projects implemented in the country, such as the Sumgait Chemical Industrial Park and others,” Mammadov said. Vice President of the Austrian Federal Economic Chamber Richard Schenz said Austrian companies are interested in exporting technologies to Azerbaijan. “The delegation led by me includes representatives of 19 Austrian companies,” he said. “I believe the Austrian entrepreneurs can contribute to

Azerbaijan’s development.” “Austria is interested in investing in the construction sector -particularly in the construction, engineering technology, and production of construction materials. Austrian experts have considerable experience and qualifications in the field of tourism, including winter tourism and construction of facilities,” Schenz added. Earlier, Azerbaijan’s Energy Ministry hosted a meeting with the Austrian delegation led by Deputy Federal Minister of Transport, Innovation and Technology Andreas Reinhard. Trade turnover between Azerbaijan and Austria was about $333.46 million in the first eleven months of 2013, Azerbaijan’s State Customs Committee reported. Azerbaijan’s imports from Austria amounted $79.58 million, while exports to Austria amounted to $253.88 million during this period. Earlier, Baku Business Center hosted AzerbaijaniDutch and Azerbaijani-Italian business forums.

FIRST PILOT TRAIN TO RUN VIA BAKU-TBILISI-KARS LATE 2014

he first pilot train will run via the Baku-Tbilisi-Kars railway at the end of 2014, Azerbaijani Transport Minister Ziya Mammadov said at the third Caspian Forum in Istanbul on December 5. “Realization of the project, which is the logical result of the cooperation Azerbaijan, Georgia and Turkey, continues dynamically. After the commencement of the Marmaray project, the Baku-Tbilisi-Kars will provide direct transport between Europe and Asia,” Mammadov said. The third Caspian Forum brought together the

senior officials, representatives of companies and leading experts from 30-35 countries. The forum will focus on projects in the sphere of energy, transport, finance in the Caspian Sea region and study opportunities for future cooperation. Mammadov said the construction of the new international sea trade port is underway in Alat town of Azerbaijan. “A large logistic center will be built in the territory of the sea trade port. Upon completion of the first phase, transportation capability of the facility will be 10 million tons of cargo and 50,000 large volume containers per year. At subsequent stages,

the capacity can increase to 25 million tons of dry cargo and one million tons of containers.” The Baku-Tbilisi-Kars railway is a regional rail link project to directly connect Azerbaijan, Georgia and Turkey. Azerbaijan allocated a loan worth $775 million for the construction of the Georgian section of the railway. This project is being financed by the State Oil Fund of Azerbaijan after the Azerbaijani presidential decree on the ‘Implementation of measures within the Baku-Tbilisi-Kars project’, dated February 21, 2007. The project will be of international importance, delivering goods from Asia to Europe.

SOCAR UKRAINE STARTS SALE OF WINTER DIESEL CODEVELOPED WITH BASF

OCAR Ukraine, which defends the interests of Azerbaijan’s state energy company SOCAR in Ukraine, has launched the sale of winter diesel Nano. German concern BASF AG reported that the sale of diesel Nano, adapted specially to low temperatures has been launched at all the Ukraine-based SOCAR petrol stations after the freezing temperature recorded. Winter diesel Nano was developed by SOCAR in collaboration with BASF. “As a basis for Nano-diesel it was used diesel from refineries in Belarus. It consists of dispersing agents of paraffins, depressor and detergents. All these components prevent deposition of paraffins, lower temperature of gelling and turbidity,

as well as clean the fuel system of the car from carbon and sulfur deposits,” the concern said. Diesel Nano of grade F for temperate climate is characterized by low amounts of paraffins, which allows the motor vehicle to operate smoothly at ambient temperature up to -22°C. It also allows quick start of engine at low temperatures. SOCAR Ukraine owns over 60 refueling stations. Thirty six gas stations operate under the SOCAR brand in the Kyiv, Odessa, Lviv, Nikolaevsk and Rovensk regions of Ukraine. SOCAR annually invests billions of dollars in transport infrastructure and is involved in key projects designed to increase Europe’s energy security. The company has representative offices in Georgia, Turkey, Romania, Austria, Switzerland, Ka-

zakhstan, Britain, Iran, Germany and Ukraine and trading companies in Switzerland, Singapore, Vietnam, Nigeria, and other countries.

ARMENIA December 09, 2013 #33

caucasian business week

ARMENIA REDUCES TEA IMPORT FROM SRI LANKA

he volumes of the tea import to the Republic of Armenia during the months of JanuarySeptember 2013 have reduced by 21,5% in comparison with the same period of the previous year and made 222,6 tons. The total customs value of the imported tea exceeded $1,5 million. Armenpress reports that according to the data provided by the State Revenue C ommittee of the

Government of the Republic of Armenia, the major part of the tea imported to our country during the months of January-September 2013 was from Sri Lanka (139,3 tons), which is less by about 31% than the indicator of the same period of the previous year. Tea was imported to Armenia also from the United Arab Emirates (44,9 tons), Georgia (15 tons), Russia (14,3 tons), India, C hina and other countries.

TOURISTS NEED $1200 FOR 10-DAY STAY IN ARMENIA

tourist coming to Armenia needs about $1200 for 10-day stay. According to the data provided by the National Statistical Service of Armenia, the transport expenses of

the incoming tourist make about $429,71. The hotel and motel expenses per a tourist make about $339,52. Armenpress reports that the food expenses for the 10-day stay cost the tourist about $143,63 and the excursions and tours - $33,61. About $43,83 is needed for the internal transport means, $80,73 – for the souvenirs and $143,01 for other expenses. During the months of January-September 2013 677,906 tourists visited our country and in comparison with the same period of the previous year the indicator has increased by 12,4%. If during the months of January-September in 2012 53 hotels functioned, in the same period of the year of 2013 their number reached 74.

CARREFOUR OPENING’S FIRST STEPS TO BE MADE IN 2014: ECONOMY MINISTER

he Ministry of Economy of the Republic of Armenia hopes that in the first quarter of 2014 there will be good news on the opening of the French hypermarket Carrefour in Yerevan. “For me the good news is the opening of Carrefour”, - told the Minister of Economy Vahram Avanesyan to the journalists, Armenpress reports.

According to him, currently the negotiations are in the process and probably in the first quarter of the coming year the first steps of the hypermarket’s opening will be made. At the same time Avanesyan did not note if there will be one or two Carrefour hypermarkets in Yerevan. Carrefour is the second biggest retail network in the world after Wal-Mart. The considerable package of shares of Carrefour group belongs to the well-known French businessman Bernard Arnault. The Company has about 15,000 hypermarkets, supermarkets and small shops in 32 countries of the world. In 2012 Carrefour opened its first hypermarket in the region, in Tbilisi. In 2009 Carrefour opened two supermarkets in Russia (Krasnodar and Moscow), although the next year it left the Russian market. In 2012 Carrefour announced about its withdrawal from the Greek market as well.

ARMENIAN GOVERNMENT GRANTS TAX AND CUSTOMS BENEFITS TO IRANIAN COMPANY

he Armenian government has granted today tax and customs benefits to Iranian company Sanir building a 400 - kilovolt electricity transmission line from Iran to Armenia. Finance minister David Sargsyan said the benefits will be provided on the basis of payment documents, customs declarations and bills of lading. According to the decision of the government, services as well as goods supplied by Sanir to Arme-

nian High Voltage Electric Company will be exempted from VAT and customs duty. The Iranian company will be exempt also from income tax. The construction of a new transmission line from Iran to Armenia estimated at 100-105 million euros is financed by Iranian Development and Export Bank. There are now two high-voltage lines between Iran and Armenia, which are used to swap electricity in winter and summer months.

GYUMRI TECHNO-PARK WILL OPEN TILL END OF YEAR

he activities of the reconstruction of techno-park building of Gyumri will be over till the end of the year. “Armenpress” reports that the Minister of Economy of the Republic of Armenia Vahram Avanesyan stated it at the course of the meeting between the National Assembly and the Government. “The

building will be fully complete in December 2013, we have accelerated our work activities in this period in order to have an opportunity to obtain arrangements with certain organizations before the opening ceremony of the building and provide them with the areas,” the Minister said adding that they have already made agreements with five organizations one American, French, Armenian and 2 Russian ones which will move to the building and launch their activities till May of next year.

HOUSING PRICES NOT AFFECTED BY CONSTRUCTION REDUCTION

he volumes of the construction in the Republic of Armenia have reduced by about 7% but the prices for the apartments have remained nearly the same. Armenpress reports that the specialists connect the phenomenon mainly with the increase in price for construction materials and state that the prices have reached a minimum threshold and often the apartments are sold at cost price. During the first ten months of 2013 the construction volumes have reduced by 6,9% in comparison with the same period of the previous year. The volumes of the construction carried out by the state budget have reduced by 13,5% and the construction implemented by the community

funds – by 56%. The prices for the apartments have not changed much. In comparison with the months of January-October 2012 the prices have increased by about 8-10,000 drams for one square meter.

EDB AND WB TO IMPLEMENT IRRIGATION MODERNIZATION AND INSTITUTIONAL CAPACITY BUILDING PROJECT IN ARMENIA

he Eurasian Development Bank (EDB) serving as the Trustee for the Anti-Crisis Fund of the Eurasian Economic Community (ACF) and the World Bank signed December 4 a cooperation agreement to support the preparation and implementation of the “Irrigation Modernization and Institutional Capacity Building Project” in Armenia for the amount of US$40 million to be provided by the ACF. The agreement was signed by Laura Tuck, Europe and Central Asia (ECA) Vice-President of the World Bank, and Igor Finogenov, Chairman of the EDB Board. Pursuant to the agreement, the EDB has committed to apply the operational policies of the World Bank in the preparation and implementation of the project. These policies include environmental and social safeguards, and procurement and financial management guidelines for WB-financed projects. In addition, the agreement stipulates that WB experts will monitor compliance with the above WB provisions and guidelines in the course of the project implementation. The agreement also outlines in detail the possibilities for the EDB to tap into the ECA Capacity Development Trust Fund approved in April 2013. The Trust Fund is administered by the World Bank and was established by the Government of the Russian Federation to support preparation of projects in low-income and lower-middle income countries in the Europe and Central Asia region. One of these projects is the “Irrigation Modernization and Institutional Capacity Building Project” in Armenia, which has received a grant in the amount of US$495,000. This is the first ACF-supported project to be prepared with a grant from the above mentioned Trust Fund. The agreement was triggered by the desire of the

World Bank and the EDB to further support the introduction of state-of-the-art standards and the effective implementation of Armenia’s long-term national strategy for the reconstruction and rehabilitation of the country’s irrigation and drainage systems. Initial projects under the national program implemented with WB financial support have yielded good outcomes and have been highly praised by the country’s leadership. The new ACF project is a part of Stage Three of the program and essentially enables the continuation and expansion of the program. “The partnership between the World Bank and the EDB aims to bring knowledge and financing to support the adaptation of international best practices to the needs of countries in the Eurasia region,” said Laura Tuck, ECA Vice-President of the World Bank. “Both partners – the World Bank and the Eurasian Development Bank – have much potential to contribute to this objective,” said Igor Finogenov, Chairman of the EDB Board. “We expect that the cooperation will help to use resources intended for the support of economic development and modernization of countriesmembers of the two institutions more effectively.” The World Bank Group is one of the world’s largest sources of knowledge and funding for its 188 member-countries. Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.

SOKOLOV: RUSSIA ARMENIA TRADE TURNOVER EXPECTED TO GROW 9-15% EVERY YEAR UNTIL 2020

ussian Transport Minister Maksim Sokolov, speaking today at the Third Armenia-Russia Interregional Forum in Armenia’s Gyumri, said the trade turnover between Russia and Armenia is expected to grow 9-15% every year until 2020, and absolute volumes may grow 2.5-3 times. He stressed that the two countries built up trade turnover 22% to $1.2 billion in 2012. “We manage to maintain this positive trend also this year – trade turnover between Russia and Armenia grew more than 11%in the first half of 2013, compared with the same period a year before, to over $600 million,” the minister said. Besides, he said, Russia’s accumulated invest-

ments in Armenia has already exceeded AMD $3 billion, and some 1,300 Russian companies operate in Armenia. “By the way, we expect the opening of very large Russian companies in Armenia with a great amount of investments,” he said. Sokolov also said that trade cooperation will be developed first of all by improvement of free trade regime and taking into account norms and rules of the World Trade Organization. In early September, Armenian President Serzh Sargsyan and his Russian counterpart, Vladimir Putin, made a joint statement, according to which Armenia has decided to join the Customs Union and to take part in formation of the Eurasian Union in the future.

CIS caucasian business week

TURKMENISTAN, EU MULL ENERGY CO-OP

UKRAINE GETS $8BN INVESTMENT FROM CHINA

urkmenistan and the European Union (EU) has discussed cooperation in the energy sphere,Trend news agency reported on December 4 with reference to the local Turk-

men media. On December 3, the EU delegation headed by Director General for Energy Hans Rhein held a meeting in Ashgabat to mull cooperation in the energy sphere. The sides in the meeting noted that the EU attaches great importance to development of energy cooperation with Turkmenistan. In this regard, the Turkmen side provided a comprehensive report on the pace of implementation of the energy strategy aimed at active international cooperation, diversification of gas export routes and creation of conditions for secure and reliable transit of energy resources to the largest markets of the Eurasian continent. The EU representatives expressed their interest in further cooperation and implementation of a number of joint projects in Turkmenistan. Describing the Turkmen market as very promising, the EU representatives stressed that this assessment includes not only the rich hydrocarbon resources confirmed by independent experts, but also all necessary conditions for doing business in the country, including favorable investment climate, political stability and favorable geographical position. Also, particular emphasis was made on the ongoing measures relating to the modernization of the energy sector enterprises, creation of better conditions for energy markets, as well as enhancement of security of energy supplies. Turkmenistan, which is rich with hydrocarbon reserves, is one of the key players of the energy market in the resource-rich Caspian region. The Central Asian state has the world’s fourth largest natural gas reserves after Russia, Iran and Qatar. It produces about 70-80 billion cubic meters of gas a year.

KAZAKHSTAN SEEKS TO CHAIR 2014 ENERGY CHARTER CONFERENCE

azakhstan bids for the chairmanship of the Energy Charter Conference in 2014. A source at KazEnergy Association told Trend news agency that Kazakhstan has already made a bid for the chairmanship in the 2014 Energy Charter Conference. “In our opinion, Kazakhstan’s chairmanship will make a certain contribution to the modernisation of the Energy Charter which protects the interests of energy producers,” the source said. The Conference will make a decision on a chairing country at its 24th session in Cyprus on December 5-6. KazEnergy has been participating in the negotiations on the main documents of the Energy Charter since May 2011. “The main goal of Kazakhstan’s participation in the negotiations on the Energy Charter Treaty is to discuss and participate in working out the documents to establish suitable mechanisms and rules of international cooperation in the energy sphere including trade and transit of energy resources, investment issues, dispute settlement and energy efficiency,” the source said. The Energy Charter Treaty of 1991 which is sometimes referred to as the European Energy Charter is a political declaration designed to promote energy cooperation between East and West. The Treaty was signed in December 1994 and came into force in April 1998. It was worked out on the basis of the Energy Charter Treaty of 1991.

December 09, 2013 #33

krainian President Yanukovych left Kiev in search of foreign cash for his country’s near bankrupt economy, and now he says he’s secured $8 billion in investment from China. The money has made a timely arrival in cashstrapped Ukraine’s hands, as the economy teeters on default and faces debts over $15 billion. Yanukovych is on a three-day planned working trip to China. “The documents signed today expand our economic cooperation. We have not yet calculated how much this will make up in terms of money, but we made some calculations earlier and saw that the matter is about some $8 billion in investments coming to the Ukrainian economy,” Yanukovych said after signing a number of bilateral documents in Beijing on Thursday, quoted by Interfax. More investment documents are in their final stages of preparation, and are expected to be signed soon, he said. China has already given Ukraine $10 billion in loans, Reuters reported, citing Volodymyr Fesenko of Ukraine’s Penta think-tank. While Yanukovych signed papers in Beijing, a Ukrainian delegation met with Russian government officials in Moscow, including Prime Minister Medvedev to discuss trade issues such as customs clearance, Ukrainian chocolate, meat and dairy products, railways.

Protests broke out in Kiev over Yanukovych’s last minute rejection of an EU trade deal in favor of restoring economic talks with Russia, Ukraine’s top trading partner and energy supplier. Ukraine hasn’t made a decisive step East or West, and for now seems to be shopping around for the best economic deal to bring calm to markets, bond prices, and opposition movements, before committing to either the EU or Russia. DEEP IN DEBT The government faces $15.3 billion in maturing loans that will further deplete the Central Bank’s currency reserves. As of October 31, Ukraine’s international reserves dropped to $20.6 billion, according to Bloomberg data. The Central Bank intervening to repay debts will threaten the financial stability and the value of the hryvnia, Ukraine’s currency. Public debt is just a piece of the debt abyss. Stateowned companies are also at high-risk of bankruptcy. Naftogaz, the state-run oil and gas company, has a 15 percent chance of default in the next 12 months, according to Okan Akin, a strategist at asset management group AllianceBernstein, Reuters reports. The local currency, the hryvnia, is depreciating so fast investors worry a money lock down similar to Cyprus could take place. Authorities would use capital controls to protect the currency, limiting move-

ment across borders. Although Russia has repeatedly warned Kiev it will end trade benefits if it signs an association deal with the EU, Ukraine remains caught between Russia and the EU. Ukraine will send delegations to both the EU and Moscow “to restore economic trade relations,” Prime Minister Azarov said Tuesday. Ukraine still owes state-owned Gazprom $2 billion in unpaid bills, and there is no plan to settle the debt, Gazprom head Aleksey Miller said Wednesday. His comment contradicts Tuesday’s statement by the head of Naftogaz that Gazprom has extended payment until the spring. Gazprom, Russia’s largest natural gas company, ships half of its European gas through Ukraine. After the collapse of the Soviet Union, Ukraine became a natural hub for transporting Russian gas to European and Turkish markets, but Gazprom is building a maze of new pipelines to circumvent their western neighbor in transit logistics. NEXT STOP: RUSSIA The next destination for President Viktor Yanukovych will be the country’s closest ally, Russia, where the countries hope to normalize “the roadmap of cooperation, which will imply normal trade and economic regime,” Prime Minister Nikolay Azarov said. Russia is Ukraine’s main source of energy, loans and trade, with Russia importing nearly 25 percent of Ukraine’s export goods. Ukraine still owes state-owned Gazprom $2 billion in unpaid bills, and there is no plan to settle the debt, Gazprom head Aleksey Miller said Wednesday. His comment contradicts Tuesday’s statement by Naftogaz head that said Gazprom has extended payment time until spring. Gazprom, Russia’s largest natural gas company, ships half of its European gas through Ukraine. After the collapse of the Soviet Union, Ukraine became a natural hub for transporting Russian gas to European and Turkish markets, but Gazprom, Russia’s state-owned gas giant, is building a maze of new pipelines to circumvent their western neighbor in transit logistics. Rt.com

$1 TRILLION WTO DEAL ‘VERY CLOSE’ – RUSSIA’S ECONOMIC MINISTER

oscow is ready to resume talks in Bali on Tuesday and hopefully sign a landmark Asia-Pacific region free trade zone deal, which would cheapen import goods worldwide and boost global trade by $1 trillion, Aleksey Uluykaev told in interview to RT. Russia’s Minister for Economic Development will represent Russia in Bali. Ulyukayev believes the leaders are “very close to a final positive solution,” on details of the Trade Facilitation Agreement (TFA) he told RT before departing Moscow for the summit. “There are technical and political issues. I still think that we have a possibility [to sign a WTO trade deal] and WTO General Secretary Roberto Azevedo is very much focused on getting a result,” said Ulyukayev. The 159 WTO members will meet for the ninth ministerial conference on the resort island of Bali on Tuesday to finalize a trade deal that has been in the works for more than two decades, since the organization’s inception in 1995. WTO members account for 97 percent of global trade, so the deal would impact countries both rich and poor, and make cross border shipments and customs more seamless. Ulyukaev urged ministers to work hard and produce results, and stressed the WTO agreement in Bali mirrors Russia’s long term goals, both economic and cultural. Russia, the world’s sixth largest economy, became the 156th member of the WTO in August 2012, the last of the G20 nations to join. “This is the kind of investment and cultural policy which is very important for us,” Ulyukayev told RT. The trade deal will include measures that will reduce the time to expedite shipments of air cargo and perishables. Negotiations failed last month in Geneva, Switzerland, as diplomats at the summit were unable to strike an agreement on lower tariffs. Consensus has been eroded as countries favor smaller scale talks, for example the TTIP deal between the US and EU, the Trans-Pacific Partnership, and the soon to be Eurasian Economic Union. “It’s not easy, and of course when you have close to 200 economies discussing different issues in some sensitive areas like agriculture, which is the most

sensitive for many countries, unfortunately up to now they haven’t been able to achieve an appropriate result, which means ministers must work harder to get results. We still have some room going further,” Ulyukayev said. FOOD AND ‘PEACE CLAUSE’ WTO talks have faltered many times, and the terms of the agreement have been compromised to appeal more widely to members. Talks were put on pause due to a sharp schism between developing and developed countries over farm subsidies and tariff reductions at the Doha round, which began in 2001. Forty-six of the WTO’s developing countries are strongly campaigning to protect poor farmers from WTO- prohibited subsidies, Economic Times reported. Developing agriculture-based economies are lobbying for a “peace clause”, which would set an agricultural subsidy limit of 10 percent of total production over four years, and to some degree protect farmers from foreign imports. RUSSIA’S GROWING PAINS WTO membership and regulations can come at a high price, making domestic goods less competitive, as they are undercut by higher-quality imports. “There are some industries which are very dependent on the trade conditions, metallurgy, fertilizers; right now it’s not the best time for those industries, there are a lot of limitations, objective limitations,”Ulyukayev said. Russia’s fertilizer business took a tumble in the cartel dispute between Uralkali and Belaruskali, which

caused potash prices to fall over 30 percent. The metals sector has experienced major cutbacks due to sharp falls in metal prices and weak market conditions. RUSSIA’S GROWING PAINS Russian metals, agriculture, and automobile industries have struggled as a result of the country’sascension to the WTO, as new trade tariffs will cost the federal budget an estimated $14 billion in losses during the first two years of membership. Assimilation into the WTO market will force Russia to transition from dependence on raw material exports to more value added goods, like technology and autos, to reap more profit per unit. Auto sales in Russia have fallen 7 percent so far this year, as a new WTO tax utilization levy has forced the country to tweak its industry standards and technical regulations in response to low tariff barriers. “The car industry is quite sensitive in the face of the WTO conditions, we have big investment projects in the car industry, we have the biggest global worldwide car companies like Renault, Peugeot Citroen, GM, Ford,” Ulyukayev said. Overall, the Russian auto sector has become more efficient, as output has increased 24 percent and the workforce has fallen nearly 29 percent. Many of the industry lay-offs were a result of the 2008-2009 financial crisis. In 2016, Russia is slated to be Europe’s largest automobile market. Other emerging markets like China, India, and Brazil will also see their car sales increase. Rt.com

WORLD NEWS December 09, 2013 #33

caucasian business week

BLOWBACK: FITCH, S&P AND MOODY’S UNDER EU PENALTY THREAT

he EU regulator is threatening to fine or deregister three of the top credit agencies. Its sovereign debt investigation has revealed huge “deficiencies” in the way the agencies assigned ratings, which can be strong market movers. The European Securities and Markets Authority (ESMA) could fine the three largest US rating agencies: Fitch Ratings, Moody’s and Standard & Poor’s – for “observed deficiencies and main concerns” in the course of the revision

of sovereign credit ratings. A report by the regulator has blamed the agencies for their involvement in “the disclosure of upcoming rating actions to an unauthorized third party,” as well as delays in the publication of ratings changes. “ESMA’s investigation revealed shortcomings in the sovereign ratings process which could pose risks to the quality, independence and integrity of the ratings and of the rating process,” the report said. On top of that, the regulator accused the rating

agencies of a possible conflict of interest. Failings or potential risks identified could compromise the independence of the ratings process and the rating’s quality. ESMA has concerns over the “assigning lead analyst responsibilities to junior or newly hired staff” and the involvement of senior company management in rating decisions, the report added. “The impact which changes in these ratings can have on financial markets, and sovereign states, can be significant. Therefore, it is imperative that users can have confidence that the CRAs have adequate systems and controls in place to ensure that ratings are rigorous, free from conflicts of interest and timely”, said Steven Maijoor, the ESMA chair. Among the measures which can be applied to the agencies, the ESMA could levy fines or withdraw an agency’s registration, says the Financial Times. Since the beginning of the financial crisis CRAs were subjects to criticism both in Europe, and in the United States for inaccurate assessment of securities reliability and their out-of-date publication. In 2011 the sovereign credit rating of Greece was lowered during negotiations with international creditors. The same year Washington was hit when S&P lowered the United States’ high credit rating. Rt.com

NOBEL LAUREATE ECONOMIST PREDICTS POSSIBLE US STOCK MARKET BUBBLE

obert Shiller, 2013 Nobel laureate in economics, told a German magazine sharp rises in equity and property prices may signal a dangerous financial bubble, which could have an extremely bad end. The Sterling Professor of Economics at Yale University, who shared the Nobel Prize with two other Americans for research into market prices and asset bubbles, called the Brazilian property market and the US stock market areas where care is needed. “I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets,” Shiller told Der Spiegel magazine. “That could end badly,” he said. Describing the overvaluation of the financial and technology sectors he commented: “I am most worried about the boom in the US stock market. Also because our economy is still weak and vulnerable”.

Shiller is worried about house prices in Rio de Janeiro and Sao Paulo, saying Brazil as another area of concern. “There, I felt a bit like in the United States of 2004,” he said. The scientist draws a parallel between middle class growth and investment opportunities in Brazil to a similar trend he observed in the US around 2000. The 2008 financial crisis was triggered with the help of a US housing bubble. “Bubbles look like this,” he commented to the magazine. “And the world is still very vulnerable to a bubble.” Financial bubbles appear when the investors don’t mind the increasing distance between asset price and market fundamentals, continuing to inject funds. The US stock market has risen steadily over the past two months. The Dow Jones industrial average crossed 16,000 for the first time and the Standard & Poor’s 500 index rose past 1,800, to a new record high. Rt.com

irbus and Boeing look set for a photo finish in their annual order race this year, but Airbus was well in front of its rival in the first 11 months as negotiators work out the small print of big U.S. deals clinched at the Dubai Airshow. Europe’s Airbus (EAD.PA) increased the number of orders by more than 100 to 1,373 since the beginning of January, compared with 1,212 for U.S.-based Boeing (BA.N), data by both companies showed on Thursday.

oody’s Investors Service increased Spain’s credit rating outlook to stable from negative amid improving growth prospects, Bloomberg reports. The country’s Baa3 rating, the lowest-investment grade ranking, was also affirmed. A twoyear recession in Spain’s economy endedin the third quarter. Moody’s decision was based on factors such as a decrease in market access risks for Spanish sovereign debt and the lower risk of contagion from negative events in the eurozone. Reduction in contingent liabilities for the nation from the Spanish banking sector also spurred the improved outlook.

Q3 UNEMPLOYMENT IN FRANCE AT 16YEAR HIGH

rance’s jobless rate inched up in the third quarter to a more than 16-year high of 10.9 percent, Reuters said, citing the INSEE statistics agency’s figures. The increase, measured according to the International Labor Organization’s (ILO) criteria, brought the jobless rate closer to an all-time high for France of 11.2 percent reached in 1997. The rate was 10.8 percent in the second quarter. President Francois Hollande had pledged to get unemployment firmly on a downward trend by year-end.

PENTAGON APPROVES $1.1 BILLION RAYTHEON MISSILE SALE TO SAUDI ARABIA

AIRBUS LEADS ORDER RACE, LAGS BOEING ON DELIVERIES After cancellations, Airbus logged 1,314 net orders. Boeing remained ahead on deliveries, which drive revenue and are the most widely used benchmark for ranking the top two jetmakers. It delivered 580 planes compared with 562 from Airbus and looked on course to maintain the industry’s No.1 spot for a second year when full 2013 data is released in January. Encouraged by a mixture of high oil prices and low interest rates, demand for civil airliners remains strong as U.S. airlines replace old models, and airlines from the Gulf to Asia expand their fleets to divert traffic and serve new markets. Boeing stacked up 259 orders and commitments for a revamped version of its 777 long-haul jet at last month’s Dubai Airshow, but more than 200 of them have yet to be posted in its backlog of orders as firm contracts are drawn up. Airbus won an order for 50 A380 superjumbo aircraft from Dubai’s Emirates, but this was also waiting to be finalized and has yet to appear in company data. The Emirates A380 deal marked a turnaround in orders for the world’s largest airliner after a pe-

MOODY’S INCREASES SPAIN’S CREDIT RATING OUTLOOK TO STABLE

riod of slack sales. Two industry sources said there was speculation that only half the order for 50 aircraft would definitely be fulfilled and that the remaining 25 were subject to reconfirmation, but top Emirates and Airbus officials strongly denied this. In its latest monthly order update, Airbus confirmed an order for 50 A350s from Abu Dhabi’s Etihad Airways. But it suffered a setback for its A330 freighter, whose backlog has been dwindling while cargo markets have been weak. While celebrating orders for five A330 freighters from Qatar Airways and one from Etihad at last month’s air show, Airbus also took a cancellation for eight of the same aircraft from OH-Avion LLC, resulting in a net drop in pending orders. The aircraft were originally ordered in 2007 by Avion Aircraft Trading, in part for Icelandair, in a deal that never materialized, and there were doubts whether the aircraft would be delivered, Aviation Week reported earlier this year. Freight markets have been in the doldrums throughout the global financial crisis, but the International Air Transport Association this week reported a 4 percent increase in cargo traffic in October, reflecting an improvement in economic confidence. Reuters

he Pentagon has approved the sale of more than 15,000 Raytheon Co anti-tank missiles to Saudi Arabia under two separate deals valued at nearly $1.1 billion. The Defense Security Cooperation Agency, which oversees foreign military sales, notified Congress on Thursday that it had approved Saudi Arabia’s request for nearly 14,000 tubelaunched, optically tracked wire-guided (TOW) missiles for its national guard, and more than 1,700 similar missiles for the Royal Saudi Land Forces. The potential sales were announced during Defense Secretary Chuck Hagel’s current visit to the Gulf, aimed at underscoring the U.S. commitment to Middle East security. Lawmakers have 30 days to block the proposed sales, although such action is rare. “The proposed sale will contribute to the foreign policy and national security of the United States by helping to improve the security of a critical partner who has been, and continues to be, an important force for political stability in the Middle East,” DSCA said on its website. The agency said Saudi Arabia would use the missiles to support defense and counterterrorism missions, strengthen its homeland defense and provide a deterrent to regional threats. Adding the missiles to the Royal Saudi Land Forces’ arsenal would also improve the compatibility of those forces with U.S. forces, and demonstrates the U.S. government’s continued commitment to Saudi military modernization efforts, DSCA said. Raytheon’s website describes the TOW weapon system as the “premier long-range, precision anti-armor, anti-fortification and anti-amphibious landing weapon system” used around the world. It said the system is in use in nations around the world. Raytheon shares were little changed at $85.99 in afternoon trading on the New York Stock Exchange.

WORLD NEWS caucasian business week

December 09, 2013 #33

EUROPEAN BUSINESS SCHOOL RANKING: ANALYSIS

he 2013 Financial Times European Business School ranking, celebrating its 10th anniversary, is topped for the first time by joint winners: HEC Paris of France and IE Business School of Spain. The two schools head the table of the best 75 business schools in Europe. Unlike the other rankings produced by the FT, this European edition ranks business schools rather than their programmes. The tables are based on the indexed scores achieved by schools taking part in the 2013 FT MBA, executive MBA, masters in management, and open and custom executive education rankings. Both quality and quantity are required to reach the top. Quantity counts since schools taking part in all five rankings typically make it into the top half of these tables. However, quality is foremost: only schools that did consistently well across the rankings make the top 20. HEC Paris returns to the top position it lost last year thanks to a very strong performance across all the FT rankings. It came first for customised education, second for open-enrolment programmes, third for EMBAs with its joint programme Trium and fourth for its masters in management. IE lost one or two places in some rankings but scored highly enough to retain the top spot it gained last year, in particular being ranked fourth for its MBA and fifth for its masters in management. Students value these two schools for the quali-

ty of the faculty and fellow participants, the international exposure and the extensive alumni networks. While some were disappointed by the schools’ career office (HEC and IE were ranked 80th and 90th for placement success in the MBA ranking), the extremely strong reputation of their brands more than make up for it. Other schools registering strong performances this year include France’s Edhec, which rises eight places to 17th with its participation in both MBA and EMBA rankings. The Netherlands’ TiasNimbas is ranked 20th with the help of a top 100 MBA programme and Germany’s HHL Leipzig Graduate School of Management is up

to 23rd after entering the top 100 EMBA programmes. Schools from 19 European countries feature in this ranking, although half are from either the UK or France (20 and 18 respectively). Masters in management are the most popular type of programme offered in Europe, with 61 to choose from in this ranking. In comparison, MBA and Executive Education programmes are offered by only about half of the schools ranked. Which graduates enjoy the highest salary three years after graduation? Graduates from Germany dominate masters in management programmes with an average salary of $70,000,

closely followed by Spain at $69,000 and Switzerland on $65,000. French MBA graduates perform best with an average salary of $145,000, mostly thanks to Insead’s programme, followed by Spain on $144,000. Finally, Spain’s EMBA graduates come top with an average salary of $174,000, and the UK’s alumni second on $170,000. France’s Télécom Business School has the most gender-balanced faculty at 50 per cent female, while Switzerland’s University of Zurich has 9 per cent of women in its faculty. IMD, also in Switzerland, has the most internationally diverse faculty, whileSt Petersburg Graduate School of Management’s faculty is all Russian.

TBILISI GUIDE December 09, 2013 #33

Embassy United States of America Embassy 11 Balanchivadze St., Dighomi Dstr., Tbilisi Tel: 27-70-00, 53-23-34 E-mail: tbilisivisa@state.gov; askconsultbilisi@state.gov United Kingdom of Great Britain and Northern Ireland Embassy 51 Krtsanisi Str., Tbilisi, Tel: 227-47-47 E-mail: british.embassy.tbilisi@fco.gov.uk Republic of France Embassy 49, Krtsanisi Str. Tbilisi, Tel: 272 14 90 E-mail: ambafrance@access.sanet.ge Web-site: www.ambafrance-ge.org Federal Republic of Germany Embassy 20 Telavi St. Tbilisi Tel: 44 73 00, Fax: 44 73 64 Italian RepublicEmbassy 3a Chitadze St, Tbilisi, Tel: 299-64-18, 292-14-62, 292-18-54 E-mail: embassy.tbilisi@esteri.it Republic of Estonia Embassy 4 Likhauri St., Tbilisi, Tel: 236-51-40 E-mail: tbilisisaatkond@mfa.ee Republic of Lithuania Embassy 25 Tengiz Abuladze St, Tbilisi Tel: 291-29-33 E-mail: amb.ge@urm.lt Republic of Latvia Embassy 4 Odessa St., Tbilisi Tel: 224-48-58 E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: 75 21 11, Fax: 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16

caucasian business week Kingdom of Spain Embassy Rustaveli Ave. 24, I floor, Tbilisi Tel: 230-54-64 E-mail: emb.tiflis@maec.es Romania Embassy 7 Kushitashvili St., Tbilisi Tel: 38-53-10; 25-00-98/97 E-mail: ambasada@caucasus.net Republic of Poland Embassy 19 Brothers Zubalashvili St., Tbilisi Tel: 292-03-98 Email:tbilisi.amb.sekretariat@msz.gov.pl Web-site: www.tbilisi.polemb.net Republic of Iraq Embassy Kobuleti str. 16, Tbilisi Tel: 291 35 96; 229 07 93 E-mail: iraqiageoemb@yahoo.com Federative Republic of Brazil Embassy Chanturia street 6/2, Tbilisi Tel.: +995-32-293-2419 Fax.: +995-32-293-2416 Islamic Republic of Iran Embassy 80, I.Chavchavadze St. Tbilisi, Tel: 291-36-56, 291-36-58, 291-36-59, 291-36-60; Fax: 291-36-28 E-mail: iranemb@geo.net.ge United Nations Office Address: 9 Eristavi St. Tbilisi Tel: 225-11-26/28, 225-11-29/31 Fax: 225-02-71/72 E-mail: registry.geo@undp.org Web-site: www.undp.org International Monetary Fund Office Address : 4 Freedom Sq., GMT Plaza, Tbilisi Tel: 292-04-32/33/34 E-mail: kdanelia@imf.org Web-site: www.imf.ge Asian Development Bank Georgian Resident Mission Address: 1, G. Tabidze Street

Freedom Square 0114 Tbilisi, Georgia Tel: +995 32 225 06 19 E-mail: adbgrm@adb.org; Web-site: www.adb.org World Bank Office Address : 5a Chavchavadze Av., lane-I, Tbilisi, Georgia Tel: 291-30-96, 291-26-89/59 Web-site: www.worldbank.org.ge Regional Office of European Bank for Reconstruction and Development Address: 6 Marjanishvili St. Tbilisi Tel: 244 74 00, 292 05 13, 292 05 14 Web-site: www.ebrd.com Representation of the Council of Europe in Georgia Address : 26 Br. Kakabadze, Tbilisi Tel: 995 32 291 38 70/71/72/73 Fax: 995 32 291 38 74 Web-site: www.coe.ge

Hotels in Georgia TBILISI MARRIOTT Tbilisi , 13 Rustaveli Ave. Tel: 77 92 00, www.marriott.com COURTYARD MARRIOTT Tbilisi , 4 Freedom Sq. Tel: 77 91 00 www.marriott.com RADISSON BLU HOTEL, TBILISI Rose Revolution Square 1 0108, Tbilisi Tel: +995 32 402200 radissonblu.com/hotel-tbilisi RADISSON BLU HOTEL, BATUMI Ninoshvili Str. 1, 6000 Bat’umi, Georgia Tel: 8 422255555 http://radissonblu.com/hotel-batumi SHERATON METECHI PALACE Tbilisi , 20 Telavi St. Tel: 77 20 20, www.starwoodhotels.com SHERATON BATUMI 28 Rustaveli Street • Batumi Tel: (995)(422) 229000 www.sheratonbatumi.com HOLIDAY INN TBILISI Business hotel Addr: 1, 26 May Square Tel: +995 32 230 00 99 E-mail: info@hi-tbilisi.com Website: http://www.hi-tbilisi.com BETSY’S HOTEL With Marvellous Tbilisi Views Addr: 32/34 Makashvili St. Tbilisi Tel: +995 32 293 14 04; +995 32 292 39 96 Fax: +995 32 99 93 11 E-mail: info@betsyshotel.com Website: http://www.betsyshotel.com

Restaurants CHARDIN 12 Tbilisi , 12 Chardin St. , Tel: 92 32 38 CHINA TOWN Tbilisi , 44 Leselidze St. (ent. from Chardin St.) Tel: 43 93 08, 43 93 80, Fax: 43 93 08 BREAD HOUSE Tbilisi , 7 Gorgasali St. , Tel: 30 30 30 BUFETTI - ITALIAN RESTAURANT Tbilisi , 31 I. Abashidze St. , Tel: 22 49 61 DZVELI SAKHLI Tbilisi , 3 Right embankment , Tel: 92 34 97, 36 53 65, Fax: 98 27 81 IN THE SHADOW OF METEKHI Tbilisi , 29a Tsamebuli Ave. , Tel: 77 93 83, Fax: 77 93 83 PICASSO Tbilisi , 4 Miminoshvili St. , Tel: 98 90 86 SAKURA - JAPANESE RESTAURANT Tbilisi , 29 I. Abashidze St. , Tel: 29 31 08, Fax: 29 31 08 SIANGAN - CHINESE RESTAURANT Tbilisi , 41 Peking St , Tel: 37 96 88 VERA STEAK HOUSE Tbilisi , 37a Kostava St , Tel: 98 37 67 BELLE DE JOUR 29 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 VONG 31 I. Abashidze str, Tbilisi Tel: (+995 32) 230 30 30 BRASSERIE L’EXPRESS 14 Chardin str, Tbilisi Tel: (+995 32) 230 30 30 TWO SIDE PARTY CLUB 7 Bambis Rigi, Tbilisi Tel: (+995 32) 230 30 30 LOFT 11. I. Mosashvili str, Tbilisi Tel: (+995 32) 230 30 30 RESTAURANT NERO 21 Abano Street, Tbilisi Tel: (+995 32) 292 10 15

SH. RUSTAVELI STATE THEATRE Tbilisi. 17 Rustaveli Ave. Tel: 93 65 83, Fax: 99 63 73 TBILISI STATE MARIONETTE THEATRE Tbilisi. 26 Shavteli St. Tel: 98 65 89, Fax: 98 65 89 THEATRE OF PANTOMIME Tbilisi. 37 Rustaveli Ave. Tel: 99 63 14, (77) 41 41 50 Z. PALIASHVILI TBILISI STATE THEATRE OF OPERA AND BALLET Tbilisi. 25 Rustaveli Ave. Tel: 98 32 49, Fax: 98 32 50

Galleries ART GALLERY LINE Tbilisi. 44 Leselidze St. BAIA GALLERY Tbilisi. 10 Chardin St. Tel: 75 45 10 GALLERY Tbilisi. 12 Erekle II St. Tel: 93 12 89 GEORGIAN NATIONAL MUSEUM - PICTURE GALLERY Tbilisi. 11 Rustaveli Ave. Tel: 98 48 14 KARVASLA’S EXHIBITION HALL Tbilisi. 8 Sioni St. Tel: 92 32 27, KOPALA Tbilisi. 7 Zubalashvilebi St. Tel: 99 99 02, Fax: 99 99 02 MODERN ART GALLERY Tbilisi. 3 Rustaveli Ave. Tel: 98 21 33, Fax: 98 21 33 M GALLERY Tbilisi. 11 Taktakishvili St. Tel: 25 23 34 ORNAMENT - ENAMEL GALLERY Tbilisi. 7 Erekle II St. Tel: 93 64 12, Fax: 98 90 13

Akhvledianis Khevi N13, Tbilisi, GE. +995322958377; +995599265432

Cinemas AKHMETELI Tbilisi. “Akhmeteli” Subway Station Tel: 58 66 69 AMIRANI Tbilisi. 36 Kostava St. Tel: 99 99 55, RUSTAVELI Tbilisi. 5 Rustaveli Ave. Tel: 92 03 57, 92 02 85, SAKARTVELO Tbilisi. 2/9 Guramishvili Ave. Tel: 8 322308080,

Theatres A. GRIBOEDOV RUSSIAN STATE DRAMA THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 93 58 11, Fax: 93 31 15 INDEPENDENT THEATRE Tbilisi. 2 Rustaveli Ave. Tel: 98 58 21, Fax: 93 31 15 K. MARJANISHVILI STATE ACADEMIC THEATRE Tbilisi. 8 Marjanishvili St. Tel: 95 35 82, Fax: 95 40 01 M. TUMANISHVILI CINEMA ACTORS THEATRE Tbilisi. 164 Agmashenebeli Ave. Tel: 35 31 52, 34 28 99, Fax: 35 01 94 METEKHI – THEATRE OF GEORGIAN NATIONAL BALLET Tbilisi. 69 Balanchivadze St. Tel: (99) 20 22 10 MUSIC AND DRAMATIC STATE THEATRE Tbilisi. 182 Agmashenebeli Ave. Tel: 34 80 90, Fax: 34 80 90 NABADI - GEORGIAN FOLKLORE THEATRE Tbilisi. 19 Rustaveli Ave. Tel: 98 99 91 S. AKHMETELI STATE DRAMATIC THEATRE Tbilisi. 8 I. Vekua St. Tel: 62 59 73

THE BEST GEORGIAN HONEY OF CHESTNUTS,ACACIA AND LIME FLOWERS FROM THE VERY HART OF ADJARA MATCHAKHELA GORGE IN THE NETWORK OF GOODWILL, NIKORA AND SMART

PUBLICITY caucasian business week

December 09, 2013 #33