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BUSINESS WEEK May 13, 2013 #04

caucasian business week

May 13, 2013, Issue 04

caucasian1 PM Criticizes Labor Code Amendments

BE INFORMED, DO BUSINESS

GEORGIA

GLOBAL BAROMETER OF HOPE AND HAPPINESS 2013 Georgia Ranks First among Hopeful Countries, Portugal Emerges the Last

Pg. 2 Pg. 3

Margvelashvili Named as GD’s Presidential Candidate

DEFLATION IN APRIL WAS 1.7%

akstat reported that deflation in April made up 1.7% if compared with the same month of last year. Pg. 5

SOCAR HEAD OFFICE: WE WILL CONTINUE GAS SUPPLY TO GEORGIA AT LOW PRICE

Pg. 2

iversification of gas imports is Georgia’s sovereign right, and Azerbaijan , in any case, will continue to supply gas to Georgia at a low price. Pg. 5

CENTRAL BANK CUTS KEY RATE TO 4.25%

he National Bank of Georgia (NBG) reduced its refinancing rate by 25 basis points to 4.25% as annual inflation remains in negative territory, well below the target. Pg. 6

GEORGIAN AIRWAYS TO LAUNCH REGULAR FLIGHTS TO IRAQ

eorgian Airways has notified the civil aviation agency of Georgia on appointment of regular flights to Iraq: TbilisiErbil-Tbilisi and Tbilisi-Suleimana-Tbilisi. Before, the airline used to perform charter flights to these directions. Pg. 8

AZERBAIJAN EBRD LOWES AZERBAIJAN’S GDP GROWTH FORECAST TO 3.5%

n the updated forecast of Regional Economic Prospects the European Bank for Reconstruction and Development (EBRD) lowered the forecast on GDP growth in Azerbaijan for 2013. Pg. 10

ARMENIA ARMENIAN PRESIDENT APPOINTS NEW GOVERNMENT

n Wednesday Armenian President Serzh Sargsyan signed a decree appointing the new government, Mediamax reported. Pg. 11

CIS BASE DEFLATION IN APRIL 0.1% - STATE STATISTICS SERVICE

ase deflation (core CPI, BCPI) in Ukraine in April 2013 was 0.1% compared to the previous month, the State Statistics Service of Ukraine announced on Wednesday. Pg. 12

TI GEORGIA: PROPERTY OF $5.57M AND 25.34M LARI WAS GRANTED TO THE STATE IN

008-2012 Transparency International – Georgia (TI Georgia) declared that property of $5.57 million and 25.34 million lari was granted to the state during 2008-2012. In list of granted property, cars prevail, but there are also cases when private individuals and com¬panies had granted land sites and other property, report of the organization said. At that, cases were revealed, which rise grounded doubts regarding real value of granted property, while documents, presented by the Ministry of Economy and Sustainable Development, often do not indicate cost of property at all, TI Georgia said. In particular, Gurtel Telecommunication, founder of mobile operator Geocell, had granted in 2008 2.5% from its wholly-owned stake, which was assessed as worth of $250,025, according to the Economic Ministry. To remind, the Ministry had conducted negotia¬tions regarding acquisition of this stake in late 2008, planning to purchase it for $7 million. In the same year, Itera CIS had granted 20% in LLC Borjomigas, which cost is not indicated in the documents. In 2009, CBR Capital Limited had granted to the state a land site of 2,057 square m, which value made up 2.62 million lari. In 2010, LLC Avia Service had handed over

The Economist

mili¬tary equipment of 1.98 million lari. In the same year, shareholders of JSC TAM Tbili¬si Aviabuilder had granted to the state 18.03 mil¬lion shares (100% of the chartered capital) of this aviation plant. As TI Georgia points, documents, which the organization has obtained, do not indi¬cate cost of the stake. In the same 2010, LLC Block Georgia had hand¬ed over to the state whole stakes in 58 hospitals, which costs were not indicated also. TI Georgia said that in 2011, cases of granting real estate and business shares to the state were fixed also, but information is incomplete and does not provide possibility to determine cost in majority of cases. In 2012, Block Georgia additionally handed over to the state outpatient clinic and maternity hos¬pital, as well as own stake of 34% and per 33% stakes of its subsidiaries Medex and Block Invest in district hospital in Mestia (Zemo Svaneti re¬gion). According to TI Georgia, cost is not indi¬cated again. In the same year, oil-company CanArgo had handed over per 50% stakes in its subsidiaries, operating on oil fields of Nazvrevi, Norio and Ni¬notsminda. The cost is not indicated as well. To remind, according to TI Georgia’s report for 2004-2007, cost of properly, granted to the state, totaled to 137.84 million lari, $6 million and 10,000 EUR. Pg. 3

CAUCASIAN CIRCLES

Gigla Agulashvili: Despite Shortcomings, Agriculture Cards Projects will Be Successful

Pg. 4

Energy Minister: The Goverment Will Do Its Best To Avoid Situation, When The Country Has Single Gas Importer Pg. 5 NBG President Expects Loan Interest Rates to Slip to One-Digit Figure in Coming Years Pg. 7

Business Ombudsman: violations are found during Barambo’s sequestration equestration Pg. 8

EBRD CUTS GEORGIA’S ECONOMIC GROWTH FORECAST

he European Bank for Reconstruction and Development (EBRD) has cut its 2013 growth forecasts for Georgia’s economy by two percentage points, saying country’s “prospects have worsened relative” to its January forecast. EBRD predicts Georgia’s economy will grow 3% in 2013, instead of 5% it forecasted in January and well below of the Georgian government’s official forecast of 6%. In its latest Regional Economic Prospects report, covering EBRD’s 34-country operating area in central and eastern Europe, the former Soviet Union and North Africa, Europe’s development

bank has revised 2013 GDP growth forecast for whole EBRD region down to 2.2%, versus 3.1% forecasted in January. EBRD cited slowdown in growth in Russia, as well other large economies such as Poland and Turkey as a reason behind the downward revision. On Georgia the report says that country’s economic growth slowed down at the end of 2012, “likely due to lower investment and uncertainty related to post-election political transition.” “As the external financing package mobilised by a range of donors during the twin crises of 2008 [global financial crisis and war with Russia] has largely been exhausted, the new authorities’

challenge will be to mobilise private sources of financing for supporting investment in key sectors,” the report reads. “Uncertainty about the external environment has been mitigated by aprecautionary arrangement with the IMF. Further normalisation of trade relations with Russia should help support export-led growth over time,” EBRD said. Georgia’s economic growth slowed to 1.7% yearon-year in the first quarter of 2013, according to preliminary figures released by the state statistics office, Geostat, late last month. According to preliminary data real GDP grew 2.9% y/y in January, slowing down to 2.1% in

February and 0.2% in March. 2013 Q1 growth of 1.7% was down from the 2.8% y/y expansion in the last three months of 2012. President of the National Bank of Georgia, Giorgi Kadagidze, told journalists on May 8 that the central bank was considering revising downward targeted 6% annual growth for 2013. “Unfortunately, available data does not allow us to suppose that we will be able to have 6% growth by the end of this year,” Kadagidze said. “The reason on the one hand is slowing down foreign direct investment and on the other internal economic factors, I mean business remains passive; the business remains still in wait-and-see mode.”

TOP NEWS

caucasian business week

May 13, 2013 #04

ALASANIA DISCUSSES GEORGIATURKEY COOPERATION IN DEFENSE INDUSTRY

MARGVELASHVILI NAMED AS GD’S PRESIDENTIAL CANDIDATE

ducation Minister Giorgi Margvelashvili, whom PM Ivanishvili once described as his “friend” and “exemplary” minister, has been named by the Georgian Dream coalition as its presidential candidate for October 2013 elections. Margvelashvili, 43, who was a rector of a Tbilisibased Georgian Institute of Public Affairs (GIPA) in 2000-2006 and then again in 2010-2012 before becoming an education minister in PM Ivanishvili’s cabinet, was repeatedly named in media speculations among potential candidates GD was considering. In parallel of holding his education portfolio in the cabinet, in February Margvelashvili was pro-

moted to also become Deputy PM. It happened after PM Ivanishvili stripped this status of first vice-premier from Defense Minister Irakli Alasania; at the time Ivanishvili said that he demoted Alasania after the latter’s discussions within his Free Democrats party, which is part of GD coalition, and behind PM’s back about Alasania’s possible presidential candidacy triggered unhelpful rumors. New constitutional provision, which will go into force after inauguration of new president following elections this October, will significantly increase PM’s authority at the expense of cutting presidential powers. Civil.ge

efense Minister, Irakli Alasania, said he would discuss potential “joint projects” with Ankara in defense industry sphere during his visit to Turkey this week. “We are opening a huge prospects for cooperation with Turkey, which has a very serious military industry. I will be leaving for Turkey on Thursday evening… and we may implement joint projects in military [industry],” Alasania told the Georgian Public Broadcaster on May 8. “I hope that the potential which our [military industrial complex] Delta has will be used and we will be able to agree on efficient cooperation in this regard with Turkey, as well as with other countries,” he added. Azeri-Press Agency reported earlier this month quoting unnamed Azerbaijani “military sources” that Tbilisi had offered Baku to set up a joint venture to produce “modernized versions” of Su-25 (Frogfoot) ground attack aircraft at the Tbilisi Aircraft Manufacturing (TbilAviaMsheni, or TAM). TAM, which was privatized in 2004, was regained back by the state in 2010 as part of the government’s drive to develop domestic military industrial complex. TAM is now part of military research-technical center Delta under the Ministry of Defense (MoD). Since then Delta has developed, among others, infantry fighting vehicle Lazika and wheeled armored vehicle Didgori. Civil.ge

U.S. AMBASSADOR ON FBI DIRECTOR’S VISIT TO GEORGIA “The director of the FBI Robert Mueller was in town today for meetings at the Ministry of Interior, the Ministry of Justice and with the Prime Minister to talk about exactly these kinds of things and we’re very grateful for the cooperation we are getting from the Georgian government,” the U.S. Ambassador said.

PM CRITICIZES LABOR CODE AMENDMENTS

M Ivanishvili said on May 7 that he was against of Justice Ministry-proposed amendments to the labor code, which the Parliament has already passed with its first reading, and called against “tipping scales in favor” of employees and adopting such legislation that may “scare off investors”. Ivanishvili said that existing labor code “is terrible” and it should be amended, but not in a way envisaged by the current bill, which, he said, was giving “excessively more rights” to employees. He also said that he “fully” shared criticism of the proposed bill voiced recently by Education Minister and Deputy PM Giorgi Margvelashvili. “Actually all the possible rights can be given to an employee and it is normal, but we should stay in touch with reality and we should not forget that… the greatest injustice that we are now facing is that Georgian citizens cannot find jobs; total unemployment is the biggest problem for our country. Business, investors are those who can employee people; so if we tip scales in favor of opposite side and give excessive rights to employees… we will eventually remain in unemployment,” Ivanishvili told journalists in Batumi after meeting leadership of Adjara autonomous republic. “I told [GD] parliamentarians about my stance

over this issue; I told them that when there is a debate about… what kind of labor code we should have and whether there should be 50/50 [in rights between employers and employees] or in favor of which side scales should be tipped – in favor of an employee or an employer, my position is that it should be in favor of employers… At this stage we should be in favor of employers in order for investors to have desire to invest,” the Prime Minister said. “What we should do at this stage is to create human conditions for employees, but not to discourage investors. I absolutely agree with Margvelashvili when he criticizes the draft that [was passed by the Parliament] with its first reading and I have talked about it with lawmakers. We can create the best possible labor code and be proud of it, but if we scare off investors the major problem, that is unemployment, will remain unresolved,” Ivanishvili said. Echoing concerns voiced by the business lobby groups, Education Minister and Deputy PM Giorgi Margvelashvili said last week that the Justice Ministry-proposed amendments would fail to guarantee “balanced” employee-employer relations and would encourage “shadow employment.” Responding to Margvelashvili’s remarks, Deputy Justice Minister, Alexander Baramidze, who was actively involved in drafting of the bill, said on May 3: “This is Georgian Dream voters’ dream labor code, which is fully in line with those promises, which the Georgian Dream gave to voters during its pre-election campaign.” “This is the labor code, which guarantees balance in rights and obligations of employers and employees and it is in full compliance with Georgia’s international commitments,” Baramidze added. Civil.ge

BUSINESS WEEK

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FBI Director Visits Georgia

BI director, Robert Mueller, visited Tbilisi on May 8 to discuss with the Georgian authorities cooperation in counterterrorism, including in the view of 2014 Winter Olympic Games in Russia’s Black Sea city of Sochi, U.S. ambassador to Georgia, Richard Norland, said. He made the remarks when speaking with journalists on Wednesday after he was asked to comment on Georgia’s ongoing investigation into August, 2012Lopota gorge clash in which at least seven suspected militants with links to North Caucasus insurgency and three Georgian troops were killed. Georgia’s PM Ivanishvili has said that the investigation might substantiate allegationsvoiced by the Public Defender that Georgia’s previous government trained and equipped militants to then send them to Russia’s North Caucasus. Asked how important and “needed” such investigation was, especially against the background of “Russia’s allegations that Georgia trains terrorists”, the U.S. Ambassador responded: “I think that in the wake of the Boston Marathon bombings everybody is paying a special attention to developments in the North Caucasus and so I think there will be an interest in the investigation and making sure it’s a good, thorough investigation.” He also added that “a number of countries are helping the United States to investigate the Boston Marathon incident.”

Asked to elaborate further into details of the FBI director’s visit, the Ambassador responded: “The FBI is responsible for protecting Americans against terrorism and so in the run up to Sochi Olympics, Mr. Mueller has been consulting throughout the region on what can be done to protect the athletes at the upcoming Olympic Games.” Before visiting Tbilisi on May 8, the FBI director held talks in Moscow on May 7. The U.S. Ambassador made the remarks while speaking with journalists after touring together with PM Ivanishvili and healthcare minister Davit Sergeenko the U.S.-funded biological research facility in Tbilisi outskirts. The U.S. has already invested USD 150 million in the state-of-the-art lab, which was named after former U.S. Senator Richard Lugar and which aims at protecting public and animal health through dangerous pathogens detection and epidemiological surveillance.

In Georgia Sen. Lugar Visits U.S.-Funded Bio Lab - 2012

“This is a Georgian facility and control now is moving to the Georgian authorities, who will be managing this [facility] in cooperation and partnership with experts from the United States,” U.S. Ambassador Norland said. “This facility has the regional significance. This is the state-of-the-art facility unlike anything in almost any country in the region,” he said and added that the facility was open for participation by experts “from anywhere in this region.” “This is an open invitation to participate in this state-of-the-art scientific facility,” the U.S. Ambassador said. Civil.ge

May 13, 2013 #04

FOREIGN PRESS GEORGIA

caucasian business week

CAUCASIAN CIRCLES SQUABBLES BETWEEN THE PRESIDENT AND PRIME MINISTER DISTRACT ATTENTION FROM GEORGIA’S REAL PROBLEMS

EVEN months after the general election in Georgia, its protagonists are still campaigning against each other. President Mikheil Saakashvili, whose party lost the election to the Georgian Dream coalition led by Bidzina Ivanishvili, a business tycoon who is now prime minister, rallied his supporters in Tbilisi last month. Mr Ivanishvili seems more preoccupied with attacking the outgoing president than with reviving Georgia’s stuttering economy. Emotions are running high and accusations abound. Yet unusually enough, life for most Georgians has so far carried on as normal. The traffic police still do not take bribes and the streets are still lit. Indeed, the difficulty of cohabitation between winner and loser is a side-effect of a broadly positive development in Georgia, where political power had never before been transferred peacefully and losers often vanished overnight. Mr Saakashvili has chosen to remain as president until his term expires in October, when Georgia will become a parliamentary republic. A recent poll showed that, although support for Mr Saakashvili’s United National Movement party is down to only 10%, most Georgians believe in the virtues of a strong opposition. Mr Saakashvili is talking openly of his mistakes and says his defeat “is not a disaster” for Georgia. Soberer members of Mr Ivanishvili’s coalition, notably Irakli Alasania, the defence minister, and David Usupashvili, the parliamentary speaker, are showing maturity when talking about the problems faced by the government. The election victory for Mr Ivanishvili, a reclusive businessman who made his first fortune in Russia in the 1990s, broke Mr Saakashvili’s monopoly on power and opened up the political

system. But it has not so far produced anything resembling a coherent programme or even a coordinated government. The coalition includes extreme nationalists and xenophobes as well as liberal Westernisers. Mr Ivanishvili himself remains a political enigma. Even his supporters see him as a man who gives opportunities to others rather than as a politician in his own right. The economy is slowing: annual GDP growth, which averaged 6% over the past nine years, has fallen sharply and unemployment remains high. Mr Ivanishvili’s supporters say this is a legacy of political transition. Yet he has done little to soothe nerves among foreign investors, the main drivers of economic growth in Georgia. At the World Economic Forum in Davos in January he declared that Georgia’s high ranking in surveys for the ease of doing business was artificial. There are signs of a reversal of economic liberalisation and of the state crowding out the private sector. Mr Ivanishvili subsidises farmers out of his own fortune. The new government is also reversing its predecessor’s tough policies on crime. Many of the senior policemen who were fired under Vano Merabishvili, Mr Saakashvili’s former interior minister, are back. Georgia’s parliament has adopted a sweeping amnesty, letting out some 8,400 pre-trial or convicted inmates. Figures are hard to find, but most Georgians say crime is rising. Meanwhile, prosecutors have opened hundreds of investigations into officials who served under Mr Saakashvili, including the current mayor of Tbilisi. The problem is partly of Mr Saakashvili’s making. The judicial system was always one of Georgia’s weakest points. Under Mr Saakashvili, courts were obedient and the police acted as an arm of the party, not as an independent institu-

tion. Plea-bargaining was often abused to extract money and assets from businessmen to finance government projects. “We had a system where the prosecutor was the chief economist in the country,” says Mr Usupashvili. Indeed, the overuse of prisons was one of the reasons for the defeat of Mr Saakashvili’s party. Every other family in Georgia knew somebody who had been to jail. Now, says Mr Usupashvili, the people are demanding retribution; and, as a democratically elected government, “we have to respond”. Mr Usupashvili recognises the risks of this turning into a political witch-hunt. “We have not emptied the prisons to fill them up again,” he says. The only way to serve justice, he argues, is to make the process as transparent as possible by subjecting it to the scrutiny of the media and international watchdogs. Both he and Mr Alasania have been a saving grace of the coalition so far. Yet when Mr Ivanishvili learnt that Mr Alasania was discussing the possibility of running in the presidential election he publicly slapped him down. Suspicion is said to be one of Mr Ivanishvili’s main traits. Mr Ivanishvili’s supporters and his opponents agree on one thing: he is not a natural politician. “He does not have political ambitions. Sometimes he speaks without considering the effect his words are going to have. He is not politically correct,” says Gia Khukhashvili, one of his closest confidants. Having threatened to investigate Mr Saakashvili for his role in the 2008 war with Russia, Mr Ivanishvili more recently supported allegations that the previous government had helped to train Chechen terrorists for insurgency in the North Caucasus. These statements were music to the ears of Vladimir Putin, who once promised to hang Mr Saakashvili by the balls.

If anything goes wrong during the Sochi winter Olympics next year, Georgia will undoubtedly get the blame.

Why Ivanishvili is willing All this raises questions about Mr Ivanishvili’s motives. With an estimated fortune of over $5 billion, he does not see the job as a way of adding to his wealth, unlike so many others drawn to political office in the former Soviet Union. Neither does he seem to have much taste for politics, having shunned public life until last year. One explanation, supported by Kakha Bendukidze, a former businessman and reformer, is that Mr Ivanisvhili is seeking a safe exit for himself and his family. The richest man in a poor country, he saw Mr Saakashvili, powerful and unpredictable, as a threat. The best way to neutralise him was to dilute political power among several small parties, none of which would be strong enough to survive without his help. Although from different camps, Mr Khukhashvili and Mr Bendukidze agree that, far from trying to consolidate power in his own party, Mr Ivanishvili prefers to see many small ones. He has often promised not to stay in power for long and even to withdraw from politics once Georgia has a multiparty democracy. He may keep his word (though Mr Saakashvili thinks he may instead run for president). A rich and powerful figure pulling strings behind the scenes can be bad for democracy. Georgia has never suffered from a lack of pluralism. With its economic problems, its history of civil war in the 1990s and a powerful and bitter Russia on its doorstep, it can ill afford political chaos. The economist

GLOBAL BAROMETER OF HOPE AND HAPPINESS 2013 Georgia Ranks First among Hopeful Countries, Portugal Emerges the Last

lobally Net Economic hope rises from -2% to 7%. Western Europe is slightly gloomier than at year end a year ago but North America is slightly less. A global poll released on the eve of the new year conveys a hopeful message that economic gloom is subsiding worldwide and hopes on the economy have risen from -2% to 7%; a rise of 9% from a year ago. The gloomy trend in Western Europe still faces challenges. On the other hand, in North America it appears to have declined, and is more hopeful than a year ago. The global survey was carried out by WIN-Gallup International Association, the world’s largest independent network of opinion pollsters, in 54 countries, with more than 55,817 men and women, covering a vast majority of the world population. The network has conducted this annual poll since 1977. According to the WIN-Gallup International global barometer of hope and happiness, 35% of the world’s population is hopeful about economic prospects in 2013, while 28% expect it to be worse; 29% expect no change from the previous year while 8% were unable to give an answer.

Happiness with or without Economic Hope Notwithstanding views about economy, a majority of the world feels happy about their life. Responding to the question: “As far as you are concerned, do you personally feel happy, unhappy or neither happy nor unhappy about your life?” 53% said they felt happy; 13% said they felt unhappy; 32% felt neither way and the remaining 2% did not answer. The global barometer of Hope and Happiness shows that a large number of people refuse to be gloomy despite their poor view on economic prospects for their nation.

3 year Trend on hope about Economy Global economic hope was 2% on new year’s eve in 2010; it declined to -2% in 2011 but has risen

notably to 7% in 2012. This positive change is mainly due to resurgence of hope in India and China. In North America it has also improved from -25% to -12%. Nevertheless, Western Europe has slightly declined from -46% a year ago to -48%.

Top 10 Most Hopeful Countries Net Hope on Economy Georgia .......................................... 63% Azerbaijan ..................................... 56% Brazil ............................................. 45% Mozambique ................................. 42% China ............................................. 32% Peru ............................................... 31% India ............................................... 27% Saudi Arabia .................................. 27% Philippines ..................................... 25% Ecuador ......................................... 24%

Top 10 Most Gloomy Countries Net Hope on Economy Portugal .................................................85% France....................................................67% Lebanon.................................................66% Belgium .................................................64% Spain ....................................................59% Bosnia ...................................................53% Ireland ...................................................51% Germany................................................46% Poland ...................................................45% United Kingdom....................................41% Methodology: The global barometer of Hope is an annual tradition initiated by and designed under the chairmanship of Dr. George Gallup in 1977. It has been conducted every year since then. This year it was carried out by Members of WIN-Gallup International Association in 54 countries around the world.

INTERVIEW

caucasian business week

May 13, 2013 #04

GIGLA AGULASHVILI: DESPITE SHORTCOMINGS, AGRICULTURE CARDS PROJECTS WILL BE SUCCESSFUL

An interview with Parliament’s Agricultural Committee Chairman Gigla Agulashvili

- Was the government team aware of about what was happening in different spheres of agriculture? - We didn’t possess absolute information and can’t because the committee’s resources and functions don’t envisage this type of activity. We received information on these bugs from our colleagues and farmers. After that we responded to these facts and informed the Ministry of Agriculture. It, in turn, tried to verify them. Separate cases have not been confirmed while separate

cases confirmed. Despite the fact that the shortcomings casts a shadow on the process a bit, it will yield a positive result. It would be nice if the people who are involved in these projects, were more responsible. - What does fact that the minister took political responsibility and resigned from his position until the investigation is completed indicate the minister was not aware regarding this information or he believed that this trend should not have nothing in common with corruption? - I cannot give myself the right to express a bold assumptions in one or the other direction. I have no reason not to believe investigative bodies at this point and I have no reason not to believe him. His step in connection with a political liability indicates that he is a responsible person. Until now, no one did things like this. This is the first such case in Georgia. On the other hand, I am obliged in any case to protect the presumption of

THERE WILL BE 3 GROUPS UNDER BUSINESS OMBUDSMAN

usiness ombudsman Giorgi Gakharia said that 3 groups were created, aiming facilitate business activity. The first group consists of auditors and lawyers and, in case of neces-

sity, environmentalist specialists, for example, Gakharia declared to journalists today. The second group unites business associations, while the third group’s authority is consideration of complaints, submitted to the ombudsman.

GSMEA OFFERS NEW TAXATION REGIME TO FINANCE MINISTRY FOR CATERING FIELD

innocence and wait for the court’s evaluation and its results. The court must answer these specific questions. But in my opinion, I assume that the minister doesn’t have direct connection to the people, if they are guilty. - on May 2, “National Movement” Secretary General stressed the fact that was of course well known to the journalistic community. In particular, David Kirvalidze had some problems with investigative agencies under Shevardnadze’s rule. Was you aware of whether that person who had signed a plea deal after the “Rose Revolution” due to facts of corruption was appointed a minister? - To tell the truth, I have never seen such a document and whether it exists I do not know. I’ve first heard this information is the first time I understand. Very often, the plea bargains, which were made by law enforcement agencies during the previous government do not cause my confidence my confidence because law was often used

as a tool of political persecution by the previous government. Often these types of transactions related to the economic interests. - In what form the preferential agro-credits project will be continued, what will be a fate of the launched projects? - I can definitely say one thing: there will not be problems. Everything that was planned will be continued. Moreover, bring the people who were involved in corruption schemes to justice will serve a lesson for others. All beneficiaries and everyone who was involved in this project should believe that we will not allow anyone to have money from their pocket and to warm hands. The program will be continued as well as the fall program and the cooperation program. The work on the land code will be continued. Be sure that everything will be fine. I tell you this with full responsibility. commersant.ge

BATUMI HOSTS INTERNATIONAL TOURISM EXHIBITION

he 6th international tourist exhibition ExpoBatumi 2013 was opened today in Batumi. The event, which will last until May 12, is organized by LLC GeonetExpo. Representatives of 8 countries take part in the,

including Armenia, China, Iran, Poland, Spain, Turkey and Ukraine. As head of advertisement unit in Ajara Tourism Department Nino Jincharadze declared, the exhibition is more representative this year, being attending by over 70 companies.

TBILISI TO HOST YOUNG WINES FESTIVAL

eorgian Small and Middle Enterprises’ Association submitted draft “Periodic Inventory” to the Finance Ministry for consideration. The draft envisages raw materials’ cost deduction by enterpreneurs, based on periodic inventory. GSMEA explains that after research of catering

sphere, it was revealed that deduction of raw materials’ cost is almost impossible there. As a result, there appears an extra shortage, which serves as a base for tax service’s fines. GSMEA notes. In case of the draft approval by the Ministry, amendments should be made in the Tax Code and regulation of the Ministry.

he 4th Young Wine Festival will be held tomorrow in Tbilisi Ethnography Museum, being organized by National Wine Agency and Wine Club. This year, up to 30 wine companies and several family wineries will take part in the event. Annual Young Wine Festival is held by initiative of Wine Club since 2010. Last year, 15,000 guests had attended the event.

“GARDABANI HEAT POWER STATION – EXPENSIVE AND INEFFECTIVE PROJECT”

eorgian Ministry of Energy and Natural Resources reports that Partnership Fund plans to construct heat power station of 230 MW in Gardabani. According to Deputy Minister Ilia Eloshviili, “this is the basic power, which our country needs most”. However, he admits that the project has negative sides also – the power station works on natural gas, which Georgia should acquire from Azerbaijan”. The newspaper reminds that gas turbines, constructed under the previous government, turned out unprofitable for their owner EnergyInvest.

Currently, the turbines are owned by EnergoPro Georgia (regional energy distributor). Expert Rezo Arveladze does not see necessity in construction of heat power station, working on gas. “It is better to build heat station, working on coal”, he declares and adds, “It will cost us cheaper as we have coal deposits”. Mariam Valishvili, Deputy Minister of Energy, says that construction of such stations is considered near coal deposits of Tkibuli and Vale. Feasibility study is underway at this stage. Georgian Industrial Group also plans construction of coal power station in Gardabani.

May 13, 2013 #04

BUSINESS & ECONOMY

caucasian business week

DEFLATION IN APRIL WAS 1.7%

akstat reported that deflation in April made up 1.7% if compared with the same month of last year. To remind, deflation in March was 2.1%. In April, prices decreased by 3.7% for food and non-alcoholic beverages. At that, significant drop was fixed for sugar, jams and sweeties (10.6%), vegetables and melons (7.7%), dairy, cheese and eggs (6.8%), fish (6.4%). Price increase was observed in healthcare group (3.9%), HoReCa (hotels, cafes and restaurants –

2.3%), alcoholic drinks (2.3%), water, electricity and gas (0.8%). Price decline was fixed in transportation group (4.7%), apparel and shoes (4.5%), holidaymaking, entertainment and culture (2.6%), education (1.8%), furniture, household goods and house maintenance means (1.5%), communications (0.3%). If compared with March, inflation of 0.4% took place in April. In March, if compared with February, deflation of 0.1% was observed. Sarke

“WHETHER THE NEW BILL RESTRICTS ENERGY MINISTER: THE THE INDEPENDENCE OF UNIVERSITIES questing him to put a veto on this decision. The OR NOT” GOVERNMENT WILL DO ITS BEST draft bill was initiated by the Ministry of Educa-

eorgian Parliament has adopted a bill, which envisages transformation of the universities from entities of private law into ones of public law (as they were until

2012). Rectors of Tbilisi State University and Ilia State University have appealed to the President, re-

tion and Science. Gigi Tevzadze, rector of IliaUni, declares that the new bill enables the Education and Science Ministry to control the university directly, while the Finance Ministry – to block its financial operations. Sergo Ratiani, member of the Parliament minority, also points that “current status of the universities does not allow the government to take away their material or intellectual property”. In her turn, member of the Parliament majority Eliso Chapidze regards that “current legislation provides the Education Ministry with more possibilities of meddling in the universities’ activity than they will have after the enforcement of the new bill”. Sarke

24% OF INTERNET USER TBILISI RESIDENTS USE ONLINE SHOPPING

eorgian customers prefer foreign website for online shopping. ACT, public opinion research and strategic consulting company made a research on electronic shopping trends. The organization interviewed 73% of Tbilisi residents who uses Internet. It appeared that 24% of the respondents uses online shops to buy item, although only 17% bought item or ser-

vice from online shops during last 6 months. The research revealed that 16% of “internet shopaholics” uses Georgian shops, 77% prefers to buy items abroad and wait for shipping. As for the items, selected by Tbilisi residents in online shops, their majority comes on the clothes - 53%, home and electronics subscription is also very popular - 35%, shoes - 28%, accessories 24%, books - 5%, service - 4%. The category choosing miscellaneous items is also large - 47%. It’s noteworthy that on response selection more than one answer was acceptable. Therefore, total answers exceed to 100%. ACT made a research on online shopping in February. On the basis of representative selection, telephone interviews were conducted to 426 adult resident of Tbilisi. As organization reports, statistic error of the data does not exceed to 4,8%. It’s noteworthy that ACT will make next research on discount websites. gbc

469 095 TOURISTS ARRIVE IN GEORGIA IN JANUARY TO APRIL

n April of the current year 326 695 visitors entered to Georgia, which is 21% more in comparison with analogic period of last year. As Analytic Department of the Ministry of Internal Affairs informs, 1 291 593 visitors crossed Georgian border in JanuaryApril 2013, which is 32% more than JanuaryApril 2012 data. Out of this data, 469 095 tourists crossed state border (36% of the total number), 202 697 visitors entered for transit (15,7% of the total number), 619 801 visits were made for other reasons

(48% of the total number). In April 2013 the most visits in Georgia were made from Turkey (+2,7%), Azerbaijan (+11,6%), Armenia (+50,8%), Russia (+49,3%), Ukraine (+80,2%) and Iran (+11%). Also, growing trend remains from EU countries, Poland (60%) can be mentioned in terms of arrival growth in April, Uzbekistan and Kazakhstan (41% and 30% accordingly) - from middle East counties, Belorussian citizens with 32% growth from the Eastern European countries. gbc

TO AVOID SITUATION, WHEN THE COUNTRY HAS SINGLE GAS IMPORTER

eorgia’s Minister of Energy and Natural Resources Kakha Kaladze said that the government will do its best to avoid situation, when the country has single gas

importer. “There should be several diversified sources, while intensive competition will be interesting in terms of prices also”, Kaladze declared at the press briefing today. He said that he does not understand why the gas cannot be imported from other countries also. The Minister held the briefing in response to today’s statement of the Georgian President, who

declared that “Consideration of Russia as serious alternative source in terms of energy is radical revision of Georgia’s independent course”. The President said that the country surely needs alternative sources, in what end work is required with Turkmenistan, Kazakhstan, while Russia absolutely does not suit the goal. He noted also that Azerbaijan’s gas is much cheaper than Russia’s one. In his turn, Kaladze said that no negotiations are held on this stage and his declaration is only general thought, but the government will try to achieve diversification in future. Sarke

SOCAR HEAD OFFICE: WE WILL CONTINUE GAS SUPPLY TO GEORGIA AT LOW PRICE

iversification of gas imports is Georgia’s sovereign right, and Azerbaijan , in any case, will continue to supply gas to Georgia at a low price - the Azerbaijani state oil and gas company “SOCAR” headquarters said yesterday commenting on the statements made by the representatives of the Georgian government in connection with the import of natural gas. Mikheil Saakashvili made a comment regarding the Energy Minister Kakha Kaladze’s statement that Georgia might possibly resume the purchase of gas from Russia and the country should not depend only on Azerbaijan. The latter said, it was “a very strange statement.” Considering Russia as serous alternative energy source is fundamentally against Georgia’s independent course- President of Georgia Mikheil Saakashvili declared . The Energy Minister said that “the president’s statement is a lie “ and talks that Georgia refused to cooperate with the Azerbaijani side and import gas from Azerbaijan is not true. Kaladze said, and the diversification and energy security is very important for Georgia. “Our government will do everything possible to ensure that in future there will be two, three, four providers ... There will be more competition in the market and it will be interesting in terms of price, “- said Kaladze. He said that if the electricity, especially during winter, we buy from Russia, why we cannot import gas from the Russian Federation, Kazakhstan, however, the minister noted that in the case of Kazakhstan we’ll have to deal

with “Gazprom” because “Gazprom “ has imports - exports obligation on Kazakhstan’s gas. Along with that, the energy minister says that if it does not reflect positively on the gas tariff, it will not be done. According to him, there are no negotiations on Russian gas imports and he spoke generally about the need of diversification. At the same time, “SOCAR” recalls an accident at the pipeline running through Russian territory in January 2006 and says that just as then, in the future in similar situations are ready to gratuitously supply gas to Georgia in order people not to remain without natural gas. Georgia is supplied with the cheap gas under a long-term contract signed with Azerbaijan. Georgia receives gas from four different sources and different price, including two Shah Deniz sources and it is limited. In total, about 250 million cubic meters of gas at a price of 55 USD, 500 million cubic meters of gas for 64 USD. The country receives gas from Russia – Armenia transit - 150 million cubic meters of gas at a price of 110 USD. The remaining 900 million the country gets from Azerbaijan, under two different contracts - the first is the so-called social gas which volume is about 500 million cubic meters and its price is 189 USD, the remaining 400 million cubic meters of gas has the commercial price of 240 USD. Russia sells to its a strategic partner of Armenia thousand cubic meters of gas for about 220 USD. commersant.ge

ECONOMY

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May 13, 2013 #04

“THE SCHEME, ACCORDING TO WHICH SABOTAGE FOR DAVIT KIRVALIDZE WAS ORGANIZED”

T PARLIAMENT AND GOVERNMENT TO AGREE COMPROMISE LABOR CODE

arliament and government work on compromise version of Labor Code, David Usupashvili, parliament Chairman stated about it on the Wednesday meeting. As he stated, several issues in Labor Code are left to be agreed, that’s why intensive meetings with business representatives and foreign exerts has been arranged for 3 weeks. “We have such a discriminatory labor legislation, that this issue concerns to everyone. That’s why there are emotions. We are very close to the agreement of formulations, which the most adequately reflects international standards and on the other hand – interests on employers and employees”, - David Usupashvili stated. AS he also said, main parameters of the draft law

will be provided and the parliament will renew working on this issue next week We remind that Prime Minister and vice premier criticized Labor Code adopted by first hearing. As Bidzina Ivanishvili stated, Labor Code should support more employer. Meanwhile, it should guarantee human working conditions for employees. “Today we should manage to create human conditions to the employees, but should not loose interests of the investors… I also shared my opinion to the Members of Parliament, that we can adopt Labor Code, for which we’ll be proud in the whole world, but we will not have jobs”, Prime Minister mentioned. George Margvelashvili stated that new labor code contains risks for unemployment increase. Draft law was prepared by Ministry of Justice.

REZONANSI: “EXOTIC BUSINESS – A STRANGE WHIM OF INVESTORS AND THE GOVERNMENT”

ranian PISC Company plans to arrange an ostrich farm in Ajara. The company is also interested in establishment of cosmetic enterprise in Georgia. The newspaper reminds that exotic business (breeding of frogs, crocodiles and ostriches), started by local and foreign investors in the past,

have failed in Georgia. Namely, the ostrich farm in the village Teleti near Tbilisi has worked near 5 years. It has been the only farm of such kind in South Caucasus. Fail of business was explained by the ostriches’ bad adaptation with the country’s conditions.

he newspaper VERSIA says that the article, dedicated to scandal of May 1-2 (detention of high-ranks of the Agriculture Ministry and management of state-owned LLC Mechanizator), offers “official as well as confidential facts, which have been already verified”. As it is known, the Minister David Kirvalidze has appealed on the second day of detentions to the government with request on suspension of his authority. According to the Interior Ministry, the arrested persons have wasted a part of 50 million lari, which was allocated in last December for acquisition of farming machinery. While selecting the machinery, this people has chosen the worse and then imposed pressure on expert group in order to cover the crime, the Interior Ministry notes. Through this way, 2.5 million lari was spent in January. Among the detainees are head of department of Agriculture Ministry Omar Tedoradze, director of Agricultural Mechanization Institute Zaza Makharoblidze, director of Mechanizator Vazha Nakhutsrishvili and his two deputies, professor of Agricultural University Otar Karchava. The article quotes anonymous competent source, saying that Mechanizator did not held a tender at all while procuring the machinery, “sending letters exactly to those companies, which they wish to see the winners, submitting list of that machinery, which should be purchased”. According to this source, all big tenders, conducted under the previous government, were won by World Technique and GT Group through lobbying of Mechanizator. The article also brings comments of rural development expert Noe Khozrevanidze, who states that 80% of the Ministry’s employees are staff

of previous government, while some of them “gained about $5-6 million from each conducted tender”. Khozrevanidze is against Mechanizator and declares: “how can the Ministry of Agriculture plough, sow and collect a harvest itself – such LLC does not exist in any European country”.

CENTRAL BANK CUTS KEY RATE TO 4.25%

GOVERNMENT AND NATIONAL BANK MOVE ON DIFFERENT ORBITS

iorgi Kadagidze, president of National Bank of Georgia (NBG), declares that “combined data of Statistics Department does not allow us to suppose reaching growth rate of 6% by end of the year”. As the article mentions, IMF was the first, expressing doubts about the government’s forecast for economic growth.

A few months ago, the Fund declared that the forecast might be changed, if economic slowdown, started in Georgia after the elections, will continue. Next mission of IMF will conduct now reassessment in Georgia. Statistics expert Soso Archvadze regards that statement of NBG’s president should be taken into account, as financial and economic showings of the 1st quarter are not optimistic.

GEORGIA ENTERS KAZAKH MARKET WITH TOURISM MARKETING CAMPAIGN FOR THE FIRST TIME

eorgia enters the Kazakh market with a marketing campaign for the first time. Advertising campaign is planned to be intensified in Polish and Is-

raeli markets. The deputy head of the National Tourism Agency Mariam Kvrivishvili states сommersant.ge that in Israeli and Polish markets the focus will be mainly made on social networks and online markets. In particular, the ads and banners will be placed on “Facebook” and leading web - pages. “A lot of tourists come in Georgia from Israel and Poland, which is why we decided to strengthen our marketing campaigns in these countries to maintain the percentage of tourists from these countries,” - says Kvrivishvili. He adds that they have already reached an agreement with Polish and Israeli TV channels and a series of programs about Georgia will begin on TV

in the near future. According to Tourism Agency, the marketing campaigns will start in the abovementioned three countries from the end of May but the department does not rule out the campaigns will start in other countries by the end of the year and claims that the representation of the largest tour operator from Russia has already visited Georgia. In addition, in June leading journalists of the Russian TV channels, including “Ekho Moskvy” journalists, are expected in Georgia who will prepare articles and programs about Georgia. Mariam Kvrivishvili notes that the tour – operators who arrive in Georgia establish partnership relations with the local tour operators with the support of the agency. In her words, the number of Russian tourists has increased by 90% in the recent period compared with the same period of last year and marketing campaign in this market is required as well. сommersant.ge

he National Bank of Georgia (NBG) reduced its refinancing rate by 25 basis points to 4.25% as annual inflation remains in negative territory, well below the target. Inflation dipped by 1.7% on an annual basis in April and it will remain below its target level throughout this year and is expected to approach the targeted 6% by the end of 2014, according to the central bank. The central bank said that 2013 first quarter economic growth of 1.7% was “weaker than expected.”

President of the National Bank of Georgia, Giorgi Kadagidze, told journalists on May 8 that the central bank might revise downward targeted 6% annual growth for 2013. “Unfortunately, available data does not allow us to suppose that we will be able to have 6% growth by the end of this year,” Kadagidze said. “The reason on the one hand is slowing down foreign direct investment and on the other internal economic factors, I mean business remains passive; the business remains still in wait-and-see mode.” civil.ge

MCC 140 MILLION GRANT WILL FUND EDUCATIONAL PROGRAMS

CC 140 million grant will fund general, higher and professional educational programs. Rusudan Kemularia, director in legal issues of Millennium challenge Fund- Georgia stated about it. She participated in the intergovernmental negotiations on May 6-8, in the Washington DC office of Millennium Challenge Corporation. Board of directors of US Millennium Challenge Corporation (MCC) chose Georgia as authorized country for MCC second 5-years compact in December 2012 in order to promote economic development and reduce poverty. Currently the sides are preparing final version of agreement for compact ratification.

May 13, 2013 #04

ECONOMY

PM CALLS FOR PATIENCE TO SORT OUT PROBLEMS ‘LITTLE BY LITTLE’

M Ivanishvili said that not everything had been “fixed” during his first six months in office, which was causing sense of “dissatisfaction” among people, and called for a patience, adding that too much of a hurry would be counterproductive. He made the remarks on May 5 while addressing locals in the village of Shukhuti in the Guria region where he attended a local traditional game known as Lelo Burti, which is played by locals in Shukhuti once a year, on Orthodox Easter Sunday. “I know there is some kind of sense in the people that not everything has been fixed as fast as [it was expected],” he said. “There is a quite dissatisfaction among the people. Many [GD] activists failed to get jobs, because there are few employment opportunities. Not everyone can be employed in the state agencies; economy should be revived and investments should be attracted in order to employ people and we are working night and day on this.” “Don’t get upset if not everything has been fixed as it was desired in these six months,” he continued. “We should be in too much of a hurry in order not to spoil something; we should sort everything out little by little; several more months and you will be satisfied with restoration of justice and rule of justice.” He said that he was receiving complaints about UNM representatives keeping their posts in local

governments in the provinces. “They are our people; we should keep them too… Do not suppress them for being with the [United] National Movement; do not reject them and do not say that they are bad; we are one people, we are a small nation and we all should stand by each other to revive our homeland,” Ivanishvili said. The PM also said that “those who have to be punished” would face the justice and “it will happen with observance of law.” “And it will be understood well by both Americans and Europeans,” Ivanishvili said. “Be little bit patient; it will not take much time to restore justice, but it will take little bit more time to tackle the major issue – revival of the economy; on the second year of [GD’s presence in the government] you will feel it; the third year will be a good one and the third year will be very good. I assure you that investments will start and every family will be able to be employed,” Ivanishvili said. “Last six months represented a huge lesson in patience… That’s what we need to genuinely become equal to Europe and member of Europe. I assure you that revival of democratic institutions will continue unwaveringly, nothing will hamper it,” he said. “We will also return our territories, don’t be afraid. Everything will be ok, we will reunite Georgia and revive everything,” Ivanishvili added. civil.ge

HEALTH MINISTER IN TALKS TO BRING FOREIGN PHARMACEUTICAL COMPANY TO GEORGIA

inistry of Healthcare is holding negotiations to bring foreign pharmaceutical company in the market but the name of the company is still not known. A few weeks ago during a meeting of Prime Minister Bidzina Ivanishvili with regional media he announced about the entry of the largest pharma-

caucasian business week

ceutical company in Georgia. According to him, the company’s leadership is his old acquaintances with whom he has already a conversation and after their entry into Georgia prices of medicines will be reduced, however, Prime Minister explains, the two major market players will not suffer. Today the Health Minister says that he is not only aware of the entry of the market’s third largest pharmaceutical company but is personally holding negotiations but the company’s name remains anonymous. “I am participating actively in the talks. We are engaged in signing official documents, as far as there is still a process of negotiations I will avoid naming this company, “- says Sergeenko. Answering commersant.ge question about whether it is a Russian company, Sergeenko notes: “I do not know, I do not exclude anything.” The minister doesn’t name an expected timing of the company’s entry into the market.

ENVIRONMENT MINISTRY TO INSPECT ENTERPRISES STARTING MAY 15

NBG PRESIDENT EXPECTS LOAN INTEREST RATES TO SLIP TO ONE-DIGIT FIGURE IN COMING YEARS

ccording to the National Bank [NBG] President, over the next few years interest rates on loans should reach a single digit. Giorgi Kadagidze said in an interview with “Forbes” that rates decreasing trend is being observed. However, it is impossible to artificially influence on the process. Kadagidze notes that the interest rates reflect the situation in the economy. In his words, 5 years ago a11% mortgage loan was incredible, and today it is a reality. He explains that if interest rate has reduced from 18-20 to 11-12%% in five years the same, it is possible to reach a single

digit interest rate if events develop in this way. Kadagidze adds, to follow the right path means more investment, more liquidity in the market, more resources for banks, which would reduce the investment cost.

NO PLANS TO ANNOUNCE TENDERS FOR PLACING MINI CITIES ON HIGHWAYS

he Ministry of Regional Development and Infrastructure does not plan to announce tenders for the mini cities placement on highways at this time. Radio “Commersant” was told at the ministry

that tenders will be announced after a section construction of Agara - Ruisi and ZestaponiKutaisi - Samtredia road. Until now, apart from “SOCAR’’ and ‘’Wissol”, the companies won in tenders have also the possibility to open mini cities.

CELL OPERATORS AVOID COMMENTING ON ALLEGATIONS ABOUT CARTEL COLLUSIONS

obile cellular operators do not comment on the existence of the cartel agreement. As we reported, after termination of commission fee payment by companies for pay boxes some experts said that the companies worsened conditions for consumers and it was actually the cartel deal between them. The National Bank had an interest in the issue and said that such behavior of the mobile companies raises some doubts. “Geocell” company does not make any comment in this regard. “Beeline” representative explains that the competent authority will find out the truth and the company has no obligation to comment on the issue and doesn’t plan to enter into polemics. It turned out impossible to get in touch with “Magti”. Radio “Commersant,” FM 95,5

BUSINESS SECTOR DONATES PROPERTY OF 5.5 MILLION USD AND OVER 25 MILLION GEL TO THE STATE IN 2008 TO 2012

inistry of the Environment Protection will start inspection of enterprises from May 15. Environment Minister told “Financial” that the state control system would be launched in a few weeks. According to Khatuna Gogaladze, environment supervision department will have 330 employees

and the work will be carried out in three main directions. These are: enterprises inspection in terms of environmental protection regulations, a check of using of the terms of natural resources license and prevention of illegal use of natural resources. The minister notes that their goal is to avoid a negative impact on the environment.

hether or not the largest companies voluntarily donated property to the state? Other facts of property donation to the state became known. According to “Transparency International - Georgia”, in 2008-2012 businesses donated property worth 5.5 million USD and more than 25 million GEL to the state. The organization reports that the country’s largest

companies are among donators. “Toyota Center Tbilisi” donated cars with total value 453 thousand GEL while “Goodwill” granted 49 “Toyota Hi Lux” cars worth 675 thousand GEL. In 2008 “Geocell” founder gifted 2.5% share of 100% share capital to the state. There are several natural persons in a list of the donated property in 2008 as well. The organization announces that several people contacted them and said about forcibly transfer of the property to the state.

BUSINESS

caucasian business week

BUSINESS OMBUDSMAN: VIOLATIONS ARE FOUND DURING BARAMBO’S SEQUESTRATION

usiness ombudsman George Gakharia states that violations are found during Barambo’s sequestration. As Gakharia informs, in parallel with Revenue Service, business ombudsman administration also works on this issue. “It’s a very complicated theme, which can’t be

solved in a day or two. To our opinion, there are violations and it deals to total sequestration of the enterprise. It was possible to sequestrate only half of enterprise”, - Gakharia stated. National Bureau of Enforcement sequestrated Barambo’s real estate on January 29. Confectioning factory Barambo was opened in Natakhtari, in February 2011. 15 million Euros was invested in building and equipment of the factory. It’s noteworthy that the largest shareholder of Barambo was Iago Chocheli, brother of Cesar Chocheli - former Mtksheta-Mtianeti governor. He presented own share of 66,25% of the company to the sister - Mari Chocheli on November 7, 2012. Lukhumi Kapanadze, another shareholder of the company also presented his 22,5% share to the brother, Ucha Kapanadze. 11,25% of Barambo still belongs to Nikoloz Shakarishvili.

USHBA IN TALKS WITH THREE RUSSIAN COMPANIES TO LAUNCH EXPORTS TO RUSSIAN MARKET

he Georgian vodka manufacturers are also interested in the Russian market as well as wine companies. “Ushba Distillery’’ announces that it is in talks with 3 Russian distribution companies. According to them, the working process is underway in order to enter the Ukrainian market

as well. ‘’USHBA” plans to export products to Turkey and is going to compete in quality. Another vodka manufacturer “Gomi’’ announces that if it gets a permission, it will be also interested in the Russian market, and at the stage it continues to export its products to Latvia and Turkey. Radio “Commersant,” FM 95,5

GEORGIAN AIRWAYS TO LAUNCH REGULAR FLIGHTS TO IRAQ

eorgian Airways has notified the civil aviation agency of Georgia on appointment of regular flights to Iraq: Tbilisi-Erbil-Tbilisi and Tbilisi-Suleimana-Tbilisi. Before, the airline used to perform charter flights to these directions.

sion’s sitting today. In future, the Commission is going to publish updated information on its web site annually, by May 1. Resource, available in Tbilisi, was increased by one TV broadcasting channel, as the 4th and 5th channels were cancelled on territory of neighboring Azerbaijan, the Commission said.

JSC BAZALTI MAJOR STAKEHOLDER TO REPLENISH THE STAKE TO 100%

eorge Lejava, owner of 98,32540% voting rights stocks, plans to use compulsory purchase right and states that he wants to repurchase stocks from the other stockholders of JSC Bazalti. Main stockholder states that aim of JSC Bazalti stocks redemption is effective management of the company. According to the statement, published by stockholder, compulsory redemption of SJC Bazalti

GEORGIA REMAINS THE LARGEST MARKET FOR VISA APPLICATIONS THROUGH FLYDUBAI

assenger appetite for travel to Dubai has significantly increased across all destinations. The Russian, Ukrainian, Central Asia and Central & Eastern European markets have been key areas of growth, with an 89% rise in the number of UAE visas facilitated by flydubai for passengers from these countries. UAE visa applications from Ukraine, facilitated by the airline, have significantly grown by 370% in 2012, a trend that is expected to continue, while Azerbaijan, Georgia, Serbia and Turkmenistan remain the largest markets for visa applications made through flydubai. Aside of these countries, Iraq and Sudan are the largest markets for visa applications on the key trading routes. “Easing visa processes has supported the growth of the aviation sector throughout the UAE, over the past few years, by allowing 32 nationalities to benefit from receiving a visa on arrival. This approach has been possible due to the continued efforts of the General Directorate of Residency and Foreigners Affairs. Further simplification of the visa processes will contribute to substantially increased global passenger traffic and will make Dubai an even more attractive destination for both leisure and business travellers in support of the Government’s Tourism Vision for 2020,” said Al Ghaith. Overall passenger traffic at Dubai International Airport soared 13.2% to 57 million in 2012, up from 50 million recorded in 2011. This trend is forecast to continue into this year and the first three months of 2013 have already recorded a strong start with a 15.6% increase in passenger traffic compared to the same period of 2012. Dubai International is now the second busiest airport for international passenger traffic and is currently undergoing an expansion to accommodate growing passenger numbers. Ghaith Al Ghaith, CEO of flydubai - the second largest carrier by passenger numbers operating out of Dubai International – commented on the impact of the expansion of Terminal 2 on the airline’s capacity: “Terminal 2 has been home to flydubai since the airline’s inception and its ongoing expansion and refurbishment will improve services and accessibility for an increased number of passengers

seeking affordable air travel to and from Dubai. The current expansion will more than double the terminal’s annual capacity to accommodate the growth of the airline which has serviced 5.1 million passengers in 2012 and 10.4 million passengers overall since its launch in 2009,” he said. flydubai’s proven track record has demonstrated how it has contributed to the economic growth of Dubai’s tourism and commercial sectors. Its ongoing plans to grow its fleet and network will support Dubai’s Vision for Tourism for 2020. The vision of the Government of Dubai is to transform the trade and tourism sector to further contribute to the growth of the emirate; the sector is expected to contribute $45 billion in revenues to the emirate’s GDP by 2020. This continuous commitment to developing this sector, which was marked in the provision of 16% of its budget for 2013 to infrastructure projects, was a key growth factor for the airline enabling it to provide greater connectivity and accessibility to the region and surrounding destinations. Since its launch four years ago, flydubai has launched 57 routes including up to 32 routes that either did not previously have direct links with Dubai or were not served by an UAE national carrier from Dubai. It now travels to 33 countries spanning North and East Africa, the GCC, Middle East, Subcontinent, Central Asia, Russia, Ukraine and Central & Eastern Europe. flydubai’s excellent on-board experience and professional services have also contributed to increased demand from passengers across its network. The airline launched 14 new routes over the past quarter and intends to announce additional routes during 2013. The airline currently operates a young, modern fleet of 29 aircraft.

Georgian Airways will perform four flights a week. If any other airline submits application on the same direction for 5 days, the civil aviation agency will announce auction, Sarke.ge news portal reports. As reported, on March 25, 2013 Georgian and Iraqi aviation agencies concluded memorandum on mutual undertsanding.

143 FREQUENCIES REMAIN FREE IN GEORGIA eorgian National Communication Commission reported that in total, 143 free radio band frequencies are available in Georgia, including Tbilisi. Frequencies, available in 87.5-108 MHz band, were published, being adopted at the Commis-

May 13, 2013 #04

stocks will be carried out according to procedures provided by Georgian legislation, with fair price established by court. According to procedure, after making decision about compulsory sale of JSC Bazalti stocks, George Lejava will place redemption price for all remaining stocks on the special account, opened for JSC Bazalti stockholders. Other stockholders of JSC Bazalti will be notified about it. They’ll be able to get amount in accordance with their stocks, according to stock price defined by court.

SOCAR TO OPEN MULTI-COMBINED GAS STATIONS IN GEORGIA

resident of the State Oil Company of Azerbaijan (SOCAR) Rovnag Abdullayev has opened a new compressed natural gas (CNG) station in Georgia today. SOCAR reports that the event is dated to coincide with the 90th anniversary of national leader Heydar Aliyev. “As a result, SOCAR already 5 CNG-filling stations in Georgia, and its total filling station network has reached 105,” the Company said. The first CNG station was opened by SOCAR in Georgia on December 19, 2012. At the same time a SOCAR source said that the Company has expanded approach to the development of its gas network in the neighboring country. “If previously SOCAR opened combined gas stations, now it will open multi-combined filling stations at the expense of a possibility of CNG refueling CNG. By the end of 2013 SOCAR will

have no less than 120 filling stations in Georgia,” the source added. At the end of 2012 four CNG stations were in the process of construction in Georgia. Earlier the Supervisory Board of SOCAR Energy Georgia gave permission on construction of CNG stations by company SOCAR Georgia Petroleum. It will tell positively on the dynamics of filling stations in Georgia under SOCAR brand. Due to CNG stations, overall filling station net in Georgia (with taking into account the petrol stations) can be increased up to 110. Originally SOCAR planned to open its own network of CNG filling stations in Georgia through SOCAR Georgia Petroleum in 2012-13. At primary stage their quantity was expected to reach 15. Company’s interest to them is linked with popularity of CNG as engine fuel in Georgia. abc.az

May 13, 2013 #04

BANKING NEWS

caucasian business week

BANK OF GEORGIA ENDS 1Q13 IN 24 MILLION GEL PROFITS

J VTB BANK GEORGIA PROFITS NEARLY HALVE

TB Bank Georgia reported profit of 2.34 million lari for the 1st quarter. If compared with the same period of 2012, the volume declined by 47.42%. As of March 31, total assets amounted to 560.82 million lari (year-on-year growth – 30.66%). Ratio of liquid assets to total assets made up 22.31% instead of 19.69% in the same quarter of last year.

By April 1, bank’s actives are defined by 5,091 billion GEL, market share – by 36% (first quarter 2012 – 296 billion GEL, 34,3%; first quarter 2011 – 3,809 billion GEL, 35,7%). Liquid actives / total actives –29,3% (first quarter 2012 – 24,2%). Average Return on Actives (ROA) is 1,88% (first quarter 2012–3,95%), Return on Equity (ROE) – 9,9% (first quarter 2012 – 21%). Primary capita coefficient (≥8%) is 16,8% (first quarter 2012 – 15,2%), supervision capital (≥12%) - 17% (first quarter 2012–18,2%). We remind that Bank of Georgia Holdings owns 98,35% of the bank, its stocks is traded in the premium-list of London Stock Market. Overall stock capital equals to 978 million GEL (first quarter 2012 - 867 million GEL).

Total credits made up 392.87 million lari (growth – 25.06%). Ratio of idle loans to total credits made up 9.63% instead of 13.83% in the same quarter of 2012. Total liabilities amounted to 498.11 million lari (growth – 38.64%). Shareholders of VTB Bank Georgia are Russian VTB (96.31%) and Lacarpa Enterprises Limited – 2.08%.

VTB BANK GEORGIA OFFERS INSTANT CAR LOANS FOR COMPANIES TB Bank Georgia has started offering recently instant car loans for companies, requiring only presentation of ID card of borrower’s plenipotentiary representative. Rate of interest ranges within 0-12%, depending on co-participation volume and duration of credit.

SC Bank of Georgia completed first quarter 2013 with 24,014 million GEL profit (first quarter 2012 – 43,5 million GEL, first quarter 2011 – 10,015 million GEL). By April 1, overall obligations of the bank equal to 4,1 billion GEL (first quarter 2012 – 3,4 billion GEL). Deposit portfolio (without bank deposits) equal to 2,7 billion GEL, loans – 3 billion GEL (first quarter 2012 – 2,8 billion GEL). Inactive loans/total loans – 9% (first quarter 2012 – 6,9%). According to bank’s quarterly report, interest income from the loans equal to 121 million GEL, expenditure on the deposits (paid interests) – 42,4 million GEL. In the reporting period, gross incomes equal to 162 million GEL, expenditures – 109 million GEL.

Duration may be between 3 months and 5 years, while maximal volume of credit is $40,000 (or same volume in euro). In case of credit approval, borrower gets also car insurance, which cost makes up 3.5% of car cost. Instant car credits of VTB Bank Georgia can be used in car centers of KIA and Hyundai.

BANK OF GEORGIA INTRODUCES LOAN PRODUCTS WITH LOWERED INTEREST RATE

ank of Georgia announced offer on business loans with lowest interest rate. According to Bank’s press release, everyone ported from May 10 to July 15 or use business loan in the Bank of Georgia, will get the lowest effective interest rate from 9,99%. Bank of Georgia will enable everyone, who will satisfy bank’s requirements with credit history, guarantee and incomes to get business loan with the lowest interest rate, without any additional expenditure or currency risk in GEL, for the long-term, - press release states. It’s noteworthy that it’s possible to decline existing low interest rate - interest rate of the business loan (from 9,99%) is connected to National

Bank’s refinancing rate. This rate is changeable and is defined by National Bank 8 times a year. During last years it’s characterized by declining trend. Accordingly, if National Bank reduces interest rate, consumer’s interest rate on the business loan will also reduce and may become less than 9,99%. National Bank defined refinancing rate on May 8 last time and reduced by 0,25%, 50 4,25%. Individuals and legal entities that want to cover other financial obligations, buy real estate and make renovations, or perform any combination of above-mentioned aims, can use long-term business loan in Gel, with the lowest interest rate. Amount of business loan is defined from 30 thousand GEL to 1 million GEL for legal entities, from 30 to 300 thousand GEL - for individuals.

BASISBANK ISSUED NEW CREDIT CARD LADY CARD PRIVATBANK ENDS 1Q13 IN LOSSES

rivatBank reported loss of 553,138 lari for the 1st quarter. In the same period of 2012, the bank had profit of 405,647 lari. As of March 31, total assets amounted to 426.08 million lari (year-on-year decline – 9.41%). Ratio of liquid assets to total assets made up 33.51% instead of 22.17% in the same quarter of last year. Total credits amounted to 263.89 million lari

(growth – 7.65%). Ratio of idle loans to total credits made up 23.71% instead of 15.05% in the same quarter of 2012. Total liabilities amounted to 387.62 million lari (decline – 6.61%). Shareholders of the bank are Ukrainian PrivatBank (62.62%), Unimain Holding Limited (32.38%), Bogdan Lesyuk (2.7%) and Aleksander Chochia (1.3%).

HALYK BANK GEORGIA LOSSES SHRINK NEARLY 20 TIMES

alyk Bank Georgia reported loss of 16,283 lari for the 1st quarter. If compared with the same period of 2012, loss dropped almost 20 times. As of March 31, total assets amounted to 77.04

million lari (year-on-year growth – 57%). Ratio of liquid assets to total assets made up 16.5% instead of 25.63% in the same quarter of last year. Total credits amounted to 51.8 million lari (growth – 1.5 times). Ratio of idle loans to total credits made up 0.61% instead of 1.85% in the same quarter of 2012. Total liabilities amounted to 54.14 million lari (year-on-year growth – almost 2 times). Single owner of the bank is Kazakhstan’s Halyk Bank.

resentation of the new credit card for successful ladies will be held on May 8, on Georgian Cinema Square, in Cuba bar El-Centro. LADY CARD, with its 4 different designs enable holder to use exclusive (5-50%) sales in 20 different trade and service objects. Unprecedented preferential period of the card lasts for 60 days. Its annual interest rate is 15%. As Basisbank informs, card ordering is possible though any service center of BasisBank, also through websites: www.ladycard.ge, www.basisbank.ge and telebanking.

ZIRAAT BANK LOSSES MARKED 70 000 GEL IN 1Q13

SC Ziraat Bank (Tbilisi branch of the Turkish bank) completed first quarter with 0,07 million GEL loss. In the first quarter of previous year banks’ profit equaled to 13 771 GEL. By April 1, Bank’s actives equal to 28,3 million GEL (01/04/12- 25,8 million GEL). Loan portfolio is 2,01 million GEL (First quarter 2012 - 2 million GEL); ration of inactive loans to the overall loans - 0,03% (first quarter 2013 -10,05%). Deposits equal to 10,6 million GEL (first quarter 2012- 8,5 million GEL). Overall obligations are

10,6 million GEL (first quarter 2012 -8,7 million GEL). Return on Assets and Return on Equity (ROA, ROE) are negative and are defined accordingly by -0,96% and -1,63%. Ziraat Bank operates since 1998. Turkey’s state treasury is bank’s stockholder.

AZERBAIJAN

10 AZERBAIJAN`S INVESTMENT OPPORTUNITIES PRESENTED AT DUBAI

zerbaijan`s presents its investment opportunities at Dubai Annual Investment Meeting. Azerbaijan`s investment opportunities have been presented at the 3rd Annual Investment Meeting in Dubai. Head of the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) Rufat Mammadov addressed the event to highlight Azerbaijan`s economic successes, and business and investment opportunities, AzerTAc reports. The event brought together 5,000 government officials and businessmen from foreign countries. News.Az

BAKU TO HOST 20TH CASPIAN INTERNATIONAL OIL & GAS CONFERENCE

n June 4-7, the 20th Caspian Oil and Gas Conference will be held in Baku. APA-Economics says BP, SOCAR, TAP and Nabucco have already affirmed their participation in the conference. The participants of the conference under the chairmanship of President Ilham Aliyev will discuss international cooperation to increase the resource base and diversity supply, volatility of global oil markets: impacts on gas pricing and long-term contracts, transportation solutions to diversity supply routes from the Caspian region, oil and gas exploration in Azerbaijan and etc. BP Azerbaijan’s President Gordon Birell, SOCAR President Rovnag Abdullayev, Director-General for Energy Policy of the Ministry of Economics and Technology of Germany Detlef Dauke, Vice President of Shah Deniz at BP Al Cook, TAP Managing Director Kjetil Tungland, Nabucco CEO Reinhard Mitschek will make speeches at the conference. News.Az

SOCAR CONDUCTS EXPORT OF GASEOUS HYDROCARBONS FROM ITS TERMINAL IN GEORGIAN PORT KULEVI ON FACTUAL VOLUMES

he State Oil Company of Azerbaijan (SOCAR), which started physical export of gaseous hydrocarbons through its Georgian terminal on 25 December 2012, conducts their shipping on factual volumes. SOCAR reports that already 12 tanker shipments have been dispatched from the terminal. “In May alone 4,000 tons of such hydrocarbons were dispatched from BST. As a whole, dispatch is carried out on factual volumes of their receipt from the producer,” the Company said. As a whole, today terminal’s monthly transshipment reached 5,000-5,500 tons of gaseous hydrocarbons - hydrocarbons butylene-butadiene fraction and propylene. Special capacities, the unique in Georgia, were created for such export at the SOCAR’s Black

Sea Terminal (BST Ltd) launched on 16 May 2008. Originally shipping of the first tanker at the terminal for loading with liquid propylene was scheduled for mid-July, but repairs at production capacities in Sumgait did not allow doing that. At primary stage shipping of liquid propylene will be carried out by tanker shipments of 2,000 or 3,000 tons. Work on creation of special terminal capacities at BST Ltd were completed at the beginning of this summer. Besides Kulevi, no one terminal in Georgia has capacity for transshipment of such cargo. Moreover, after the Ministry of Economic Affairs of Georgia’s sanction it was constructed a nitrogen system unit required for export of such goods. Liquid polypropylene designed for export will be produced at SOCAR

chemical sub-company Azerikimya located in Sumgait. The new terminal facilities are designed for transshipment of liquid polyethylene and liquid polypropylene. Their construction was delayed because of troubles with delivery of manufacturing equipment from South Korea. New capacities, in addition to liquid polyethylene and liquid polypropylene, will enable, if necessary, also transship liquefied or compressed gas. Currently the Company orients to transshipment of 8,000-9,000 tons of LPG per month or 110,000120,000 tons per year with annual capacity of the new terminal up to 150,000 tons. Currently terminal BST Ltd is designed to transship 10 million tons of oil a year. It is able to accept Aframax tankers. abc.az

EBRD LOWES AZERBAIJAN’S GDP GROWTH FORECAST TO 3.5%

n the updated forecast of Regional Economic Prospects the European Bank for Reconstruction and Development (EBRD) lowered the forecast on GDP growth in Azerbaijan for 2013. According to the Bank’s forecast, this year’s economic growth was reduced from 4% to 3.5%. It is not reported on the change in the forecast for 2014 (+4%). The EBRD also expects country’s inflation of 3.4% against 0.7% in 2012. “After successfully weathering the financial crisis, Azerbaijan’s economy has slowed as the pace of oil extraction decelerated. The decline of oil output has been more than offset by the encour-

aging growth of the non-oil sector, led by construction and services. The lack of diversification of the economy remains important as risks associated with high oil dependence became apparent during the 2008-9 crisis, when oil prices declined. Some recovery of the oil sector and continued expansion of the non-oil economy should lead to an acceleration of output growth in 2013. Immediate macroeconomic risks continue to be mitigated by a very strong fiscal position including from oil reserves,” the forecast says. abc.az

PASHA BANK’S ASSETS TOTALED AZN 703.496 MILLION

ne of the largest private credit institutions of Azerbaijan, PASHA Bank OJSC, still cannot restore growth of assets moving away more and more from record level of AZN 760 million. The Bank reports that return on equity (RoE) of PASHA Bank for April remained at the level of 18% (as well as in February and March, 16% in January and 18% following 2012), while return on assets (RoA) rose up to 5% (against 4% March, 4% in February, 3% in January and 4% in 2012). Bank’s assets in April decreased from AZN 711.817 million to 703.496 million. Last year

they reached AZN 742.1 million. For the reported month capital declined from AZN 163.49 million to AZN 158.878 million with preservation of share capital at AZN 157 million. In 2012 the figure reached AZN 178.08 million. PASHA Bank’s profit before taxation as of 1 May 2013 reached AZN 9.56 million against AZN 26.658 million in 2012 and AZN 19.329 million in 2011. This April the index was AZN 2.55 million versus AZN 2.4 million in March, AZN 2.506 million in February and AZN 2.07 million in January. Net income by the reported date was AZN 2.356 million versus AZN 11.7 million in 2012 and

AZN 11.7 million in 2011. In April 2013 it totaled AZN 3.907 million versus AZN 2.37 million in March, AZN 2.267 million in February and AZN 1.6 million in January 2013. This year the Bank plans to bring its assets up to AZN 850-900 million. abc.az

IRAN COMMENCES A LARGE ALTERNATIVE ENERGY PROGRAM

GAS EXPORT FROM SHAH DENIZ FIELD HITS 40BN CU M rom late 2006, when gas production was launched from the Shah Deniz field, to the first quarter of 2013, circa 40bn cubic metres were exported from the field to markets. Up to now, 10.7m tonnes (85m barrels) of condensate were exported from the field, Gun.Azreports, citing BP Azerbaijan. In the first quarter this year, 2.42bn cu m of gas and 0.63m tonnes of condensate (circa 5m barrels) and daily around 27m cu m of gas and over 55.300 barrels of condensate were exported from the field. Gas production for Azerbaijani, Georgiana and Turkish markets continued during the past period. Shah Deniz Stage 1 gas continues to be sold to Azerbaijan, GOGC (Georgia), BOTAS and BTC. News.Az

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ran is launching a large program of alternative energy. Azerbaijani sources say that Iranian alternative energy program aims to improve energy supply of its Caspian coastline. “Iran plans to develop alternative energy in its littoral provinces by building dozens of small hydroelectric power plants.

Such a program can have an effect, as these regions have a large number of rivers flowing into the Caspian Sea. They have good elevation changes and water content,” the source said. At the moment Iran begins engineering of small hydro power plants on the rivers flowing into the Caspian Sea. abc.az

AXA GROUP PROMISES SIGNIFICANT BUSINESS GROWTH IN AZERBAIJAN UNTIL 2015

orld leader AXA Group believes in the potential of the Azerbaijani insurance market. AXA MBASK’s chairman of board Yavuz Olken has stated that the Company is interested in developing and expanding the business in Azerbaijan. “At the present time, the share of Azerbaijani company AXA MBASK is not significant in the portfolio of AXA Group, but the Company is interested

in developing business in Azerbaijan, as there is potential. We are confident in providing development as we set a goal and already in the next 2 years we will be able to talk about a serious share of the Azerbaijani subsidiary in the portfolio of AXA Group,” Olken said. French insurer AXA Group is one of the largest insurance groups in the world and named the ninth largest company in the world in profitability by Fortune Global 500 for 2010. abc.az

ARMENIA

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ARMENIAN PRESIDENT APPOINTS NEW GOVERNMENT

CREDITOR BANKS AGREE TO WRITE OFF PENALTIES AND FINES OF ARMAVIA

T O

n Wednesday Armenian President Serzh Sargsyan signed a decree appointing the new government, Mediamax reported. Armen Gevorgyan has been appointed as Minister of Territorial Administration, Deputy Prime Minister, Artem Asatryan - Minister of Labour and Social Affairs, Derenik Dumanyan - Minister of Health, Hrayr Tovmasyan - Justice Minister, Armen Yeritsyan - Minister of Emergency Situations, Foreign Minister - Eduard Nalbandian, Minister of the Nature Protection - Aram Harutyunyan, Sergo Karapetyan - Agriculture Minister, Vahram Avanesyan - Economy Minister, Armen Movsisyan - Energy and Natural

Resources Minister, Armen Ashotyan - Minister of Education and Science, Asmik Pogosyan Culture Minister, Seyran Ohanyan - Minister of Defense, Yuri Vardanyan - Minister of Sports and Youth, Hranush Hakobyan - Minister of Diaspora, Gagik Beglaryan - Minister of Transport and Communications, Samvel Tadevosyan - Minister of Urban Development and David Sargsyan - Minister of Finance. By another decree of the President former finance minister Vache Gabrielyan has been appointed as head of the administration of the Armenian government. The first meeting of the new government will be held today, on May 8. Trend.az

he creditor banks had agreed to write off the penalties and fines of Armenia’s national air carrier, Armavia company, Transport Communications officer Isabella Muradyan said in an interview with ARKA news agency. Muradyan is a deputy chief of Armenia’s Public Council of Air and Transport Communications. Armavia company has stopped operating flights on 1 April and declared bankruptcy. “We are aware that the banks agreed, and penalties were written off. It refers to the debt amount only, which is covered by the air company’s pledged property,” she clarified. According to Russian “Kommersant” daily newspaper, Armavia’s debt to some Russian banks, airports and Rosaviation stands at nearly $25 million. Besides the Russian banks, the company owes money to several large Armenian banks. Particularly, Armavia owes several million rubles to Vnesheconomban, and $22 million –to VTB. Chairman of VTB Bank (Armenia) Yuri Gusev earlier said the bank together with its stockholder, Armenia’s Central Bank and Armavia’s owner are seeking for the maximally painless solution to the debt issues. According to Muradyan, Armenia’s government should follow the creditors in the write-off, because the company’s debt to the government is not big, and the penalties and fines exceed the debt amount three times. “I think, in the current situation, when the gov-

ernment can’t provide a direct financial assistance to the company, it should at least write off the penalties,” she noted. Muradyan highlighted in order to solve the issues, it is necessary to create an institute of a national air carrier where the government will hold block of shares of the company. “Armavia has submitted a list of proposals to the Public Council on how the company can relaunch its operation, and I think, it is the best solution, and it is important to follow the path of re-organizing both: the sphere and the carrier,” she resumed. In the list of proposals, Armavia mainly insists on rebuilding the parity at the market. The company also requires to remove 10,000 drams (the socalled “tax on air”) from the ticket cost. Armavia also proposes to the government to gain a part of shares of the company thus restructuring the debt to the state budget. Some other conditions are to define the clear criteria of “basic airport” and “national air carrier” terms, and to introduce a 30% discount on airport fees compared to the foreign companies. The analogical discount is proposed for leased areas for basic air carriers. In addition, in order to avoid the collapse of the national air deliveries, it is proposed that one and more air carriers should operate, and air companies should buy air fuel themselves and pay affordable fees for airport services. ARKA

ARMENIA’S PRESIDENTIAL ELECTIONS WERE HELD WITH RESPECT OF FUNDAMENTAL FREEDOMS

he final report of the OSCE Office for Democratic Institutions and Human Rights (ODIHR) regarding the Armenian presidential elections reaffirmed that the Presidential elections of the Republic of Armenia held on February 18, 2013, were well-administrated and are characterized by a respect for fundamental freedoms. As reports “Armenpress” the aforesaid report is introduced in the official website of the OSCE/ ODIHR observation mission. The report, which was published on May 8, states that it’s necessary to increase public trust in the integrity of the electoral process. In particular the observation mission stated that the contestants were able to campaign freely and media fulfilled their legal obligation to provide balanced coverage without impartiality of the public administration system and pressure. Among other things the report states that public

officials should refrain from the abuse of state resource. Authorities are also encouraged to develop and implement safeguards in order to ensure a clear separation between State and party, in line with the 1990 OSCE Copenhagen Document. The election commissions, law enforcement bodies and courts should follow the implementation and preservation of the electoral legal framework taking into consideration the intent of the law. The election commissions and courts are also recommended to duly consider the substance of all complaints and appeals and thoroughly consider all evidences. The report encourages the authorities to proceed with preparing the necessary legislative amendments, in order to address previous and present recommendations, with the participation of all relevant stakeholders, including political parties and civil society. ARMENPRESS

ARMENIA’S PRESIDENT EXPECTS 7% GDP GROWTH FROM GOVERNMENT

rmenia’s president Serzh Sargsyan said at a government meeting Wednesday the GDP growth target is the same for 2013 as it was for 2012. “Last year the government’s task was to ensure 7% economic growth. The target is the same this year, but this time we will be also expecting highquality performance indicators and solutions to social problems. We will be asking you not about what has been done, but about what is the result”, the president said. Armenia’s economic growth was 7.2% as of the end of 2012. The 2013 GDP growth projection is 6.2% under the budget. The president said the results of the work should be measurable and tangible to anyone, and should lead to salary and pension increases in particular.

“We have the most favourable period ahead for plunging into work and solving our citizens’ problems while building securer Armenia”, Sargsyan said. The president said people expectations from the new government are high and he sees no obstacles for efficient work. The president wished success to the new cabinet. “Please do not forget a lot depends on you success”, he said. Armenia’s premier Tigran Sargsyan assured the government is conscious of the high expectations of people and will do its best to achieve tangible results. Armenia’s president signed new cabinet appointments Wednesday. ARKA

UKRAINE SUPPORTS OSCE MINSK GROUP’S EFFORTS TOWARDS THE PEACEFUL SETTLEMENT OF THE ARMENIAN-AZERBAIJANI CONFLICT

kraine supports the efforts of the OSCE Minsk Group towards the peaceful resolution of the Armenian-Azerbaijani conflict, OSCE Chairman and Ukrainian Foreign Minister Leonid Kozhara said at a meeting of the UN Security Council on Wednesday. The Minister spoke about the issues that Ukraine will prioritize during its chairmanship of the OSCE regarding politico-military, economic, enviromental and humanitarian affairs. He stressed that the most important task on Ukraine’s agenda is to achieve progress in resolving conflicts in the OSCE area, the Azerbaijani Permanent Mission to the United Nations told Trend. Touching upon the Armenian-Azerbaijani conflict, Leonid Kozhara stressed that Ukraine’s chairmanship of the OSCE supports the efforts of the OSCE Minsk Group to resolve the conflict peacefully. He will call for more active negotiations during a visit to the South Caucasus region in June. He said that the Nagorno-Karabakh region of Azerbaijan and the surrounding territories are under Armenian occupation. He emphasized that resolutions 822, 853, 874 adopted by the Security Council in 1993 recognize that military force was used against Azerbaijan and a serious violation of international law occurred. He regretted that the main requirements of the Security Council have not been implemented yet and the efforts of more than twenty years of mediation within the OSCE have given no results. Armenia’s attempts to belittle the importance of the Security Council’s resolutions and distort the rules and principles of international law, as well as its unreal aggressive claims pose a threat to the conflict resolution process. These threats are dangerous to international and regional peace and security. Moreover, Armenia is constantly taking measures to further entrench its occupation and hamper more than 700,000 Azerbaijani IDPs in the quest to return home. Illegal activity such as the resettlement of Syrian Armenians in Nagorno-Karabakh as well as in other occupied territories of Azerbaijan and flights to these areas are clear examples of Armenia’s colonization of Azerbaijani lands. He said that Azerbaijan will never make concessions on its territorial integrity and the freedom and rights of its citizens.

CIS

RUSSIAN BILLIONAIRE SENATOR MOVES ASSETS TO SWISS CHARITABLE FUND

ussian billionaire senator Suleiman Kerimov has moved his business assets to a charitable fund to allow him to stay in the governmental service. A new law forbids officials from holding bank accounts abroad or owning foreign-issued securities. “Kerimov made the decision the other day to transfer beneficiary rights to his business assets to his charitable fund, the Suleiman Kerimov Foundation,” Aleksey Krasovsky, Kerimov’s spokesperson is quoted by the Ria Novosti news

SUGAR BEET SOWN ON 90% OF ACREAGE 264,000 HA

agency as saying. The decision came after Kerimov was elected Senator to the upper chamber of Russia’s parliament - the Federation Council - from the North Caucasus Republic of Dagestan. According to Vedomosti business daily, Nafta Moskva, Kerimov’s investment group refused to comment on the news. Spokesperson for Kerimov’s charitable fund registered in Switzerland has confirmed that the asset transfer papers have been signed. According to current Swiss legislation Kerimov can’t withdraw his assets. Despite being registered in Switzerland, the fund mainly focuses on large-scale educational, medical, culture and social projects, Krasovsky told Ria Novosti news agency. Kerimov’s spokesperson did not specify which assets have been transferred to the Swiss-based fund. Forbes magazine estimated Kerimov’s fortune at $7.1 billion. He is listed as Russia’s 20th richest man. His major assests include a 40.22 percent stake in Poltus Gold (worth a reported $3.8 billion) and 17.16 percent stake in Uralkali(worth $3.63 billion). State officials in Russian will soon be banned from holding either foreign bank accounts or

stocks or bonds abroad as a part of the Kremlin’s anti-corruption campaign. The bill passed in the lower house of Russia’s parliament, the State Duma on April 24, and was approved by the upper chamber on April 27, 2013. The bill will come to power after it is signed by the President. State officials will have three months after the signing to get rid of their foreign accounts and move their assets to Russia. Those not willing to give up assets abroad will have to quit their posts in the government. State and government officials are however allowed to own property abroad, if they declare it and explain the sources of the income used to buy it. Some officials have begun preparing for the new legislation for a while. First Deputy PM Igor Shuvalov, the top-earning official in the Russian government, has opened a‘blind’ trust registered in the British Virgin Islands and begun transferring his offshore assets back to Russia. The Shuvalov family offshore trust and income were exposed during last year’s campaign, after which President Putin introduced the foreign assets ban bill, aimed at strengthening state control over officials’ earnings. rt.com

RUSSIA, UK TO SET UP ENERGY PROJECTS GROUP - PUTIN

s of May 7, sugar beet was sown in Ukraine on 264,100 ha, which is approximately 90% of the plan. In total, in the current year, the country’s agricultural producers intend to sow sugar beet on 292,800 ha, UKRINFORM reports citing Kharkivtsukor. “According to live data, the sowing campaign is held in Kirovohrad, Vinnytsia, Kyiv, Ternopil, Kharkiv, Khmelnytsky, Cherkasy, Volyn and Ivano-Frankivsk regions. In addition, sowing of sugar beet is being completed in Poltava region - 95% of the plan,” the association informs about this. The lowest sowing rates are shown by Cherkasy agricultural producers, where sugar beet is only sown on half of the planned acreage. The Crimean Autonomous Republic has not started sowing of sugar beet at all. UKRINFORM

Kazakhstan

1 airports will be given to foreign companies. According to Deputy Minister of Transport and Communications of Kazakhstan Azat Bekturov created national multi-modal operator on the basis of JSC “NC” Kazakhstan Temir Joly “can transmit 11 public airports for the management of the foreign company. “Public airports in the majority are in quite poor condition. Many of them are low-activity, low-density, requiring reconstruction, improvement of management. In this regard, it was decided to merge all these public airports and transfer to such company, who then plans to attract foreign management in the form of a large company that deals with professional management of the airports around the world, “- said Bekturov. In Kazakhstan there are 20 airports, 15 of them have international status. 11 are state-owned airports. Kazakhstan: Croatia offers to use the Suez Canal to supply Kazakhstan goods to Europe, First Deputy Minister of Foreign and European Affairs of Croatia Joško Klisović said during the Kazakhstan-Croatian business forum.

Kazakhstan

azakhstan and Belarus to set up industrial technology park. Belarus and Kazakhstan will set up a joint venture for the investment project to build an industrial technology park of agricultural and utility vehicles and equipment, Belarusian Prime Minister Mikhail Myasnikovich said at a press conference following the meeting of the heads of government of Belarus and Kazakhstan in Minsk. The Prime Ministers of Belarus and Kazakhstan Mikhail Myasnikovich and Serik Akhmetov signed a relevant agreement. “This will be a landmark project, which will bring together major automobile and tractor plants, Lidselmash, Bobruiskagromash. Together with Kazakh partners they will produce modern agricultural

Uzbekistan

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ussia and the United Kingdom have agreed to set up a special group to work on energy projects, Russian President Vladimir Putin said after talks with British Prime Minister David Cameron. “Energy is one of the most promising spheres of cooperation, and we have agreed to form a special group that will deal with the promising projects,” Putin told journalists. Cameron arrived in Russia’s Black Sea resort city of Sochi on Friday for talks with Putin. Last year, trade between Russia and the UK grew by 10 percent, the Russian leader said adding that the British investment in Russia’s economy has reached almost $27 billion. RIA Novosti

EU, RUSSIA CLOSE TO DEAL ON BASE DEFLATION VISA LIBERALIZATION - LAVROV stage of agreeing on the wording,” Lavrov told IN APRIL journalists after informal talks with his German and Polish counterparts. 0.1% - STATE He said Russia “will be ready to sign” the agreement as soon as the document is approved and STATISTICS the respective domestic procedures in Russia and the European Union are completed. SERVICE “I will not be guessing about the terms now,” ase deflation (core CPI, BCPI) in Ukraine in April 2013 was 0.1% compared to the previous month, the State Statistics Service of Ukraine announced on Wednesday. “The base consumer price index (BCPI) in April 2013 amounted to 99.9%, from the beginning of the year 99.7%,” the statistics service says. As reported, in April the State Statistics Service recorded zero inflation, and from the beginning of the year consumer prices rose by 0.1%. UKRINFORM

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egotiators are in the final stage on reaching an agreement on the liberalization of visa regime between Russia and the European Union, Russian Foreign Minister Sergei Lavrov said on Friday. “The issue is now in the hands of the negotiators from the European Commission that is cooperating with our negotiators. They are in the final

Lavrov said. German Foreign Minister Guido Westerwelle and his Polish counterpart Radoslaw Sikorski said on Friday they favor the idea of mutually scrapping visa requirements for Russian and EU nationals. Moscow has made visa-free travels with EU a foreign policy priority. Russia submitted a draft deal on scrapping the visa regime to the EU at a Russia-EU summit in 2010, but the EU has been reluctant to move ahead with the issue amid concerns that it could lead to a rise in crime and illegal immigration. RIA Novosti

wo Chinese companies will implement four projects worth 15.56 million dollars in special industrial zone “Jizzak”. The Uzbek government approved a decree “On Measures for the organisation of high-tech industries in the special industrial zone “Jizzak””. According to the document, the Ministry of Foreign Economic Relations, Investments and Trade of Uzbekistan and China’s ZTE (HK) Ltd and Wenzhou Jingshen Trade Co. Ltd. will implement four projects in FEZ “Jizzak.”

EXPORT FROM BELARUS TO AZERBAIJAN INCREASES BY 6%

n Q1 2013, export from Belarus to Azerbaijan rose from $44 mln to $46.6 mln by rising 5.8%, APA-Economics reports citing State Customs Committee of Belarus. According to information, share of the export from Belarus to Azerbaijan makes 0.2% of total trade turnover of this country. During the reporting period, export from Azerbaijan to Belarus rose from $2 mln to $2.7 mln. Note that, main trade partners of Belarus are Russia, Netherlands and Ukraine. News.Az

WORLD NEWS

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TRADE ALLIES THROW LIFELINE TO IRAN’S STEEL SECTOR

hina, Russia and Kazakhstan are among the few trade allies still providing a lifeline to Iran’s vital steel and iron ore sector after most Western suppliers and buyers have cut ties due to growing sanctions pressure. While industry data shows steel imports have more than halved in the last year, Tehran has kept an inflow from some partners and slightly boosted domestic production of the material, used in construction and vehicle production but also potentially for nuclear use and munitions. Iran has also doubled exports of the steelmaking raw ingredient iron ore, worth about $3 billion a year at current prices. The country does not have enough capacity to use much more of its ore to produce steel, but exporting it provides muchneeded income now that its oil revenues are down by about 50 percent due to sanctions over its disputed nuclear program. “This only allows Iran to ease the pain or offset some of the effects of what is happening because of sanctions. It does not enable them to overcome the sanctions,” said Scott Lucas, founder of the EA WorldView news site. “The Iranians are having to go to a shrinking number of customers to try and look for this increase in exports like iron ore to compensate for sharp drops in its main product, which is oil,” said Lucas, whose site provides analysis on Iran. While EU and U.S. bans on specific ferrous products have pushed most Western players away, fearing repercussions on their international trade, Chinese interest in Iranian iron ore has increased, and China has increased steel supplies to Iran. Top steel producer China is now buying about 2 million tons of Iranian iron ore a month, double the amount it was buying in early 2012, data from

consultancy the International Steel Statistics Bureau shows. “The growth in exports is absolutely true ... [The business] is growing from an infant to a small child,” said a spokesman for the Iran Iron Ore association. It is not yet a “key form of income at this point”, he said, adding that cash was the primary payment choice. Market participants, however, say much of the trade now involves barter and funds deposited in bank accounts in China, South Korea and other countries that can be exchanged for goods. Tehran has ambitious plans to expand domestic steel output and hopes it can in the short term become self-sufficient. “Iran is in a position to produce more steel domestically; they have the technology, energy, iron ore to do that,” said Edwin Basson, director general of industry body WorldSteel. Nevertheless, industry experts say it will take the country many years to become independent from foreign producers, especially for semi-finished products such as billet. “We have enough factories, and they can make anything they want, but the raw product is often coming from abroad,” an Iranian property developer said by phone. While some of the finished products he needs such as steel beams come directly from China and Russia, others are manufactured by Iranian companies from billets coming from abroad, he said. Iran still has to contend with the dragnet of sanctions, which is cutting supplies of steel. New U.S. regulations coming into effect on July 1 are set to tighten metals trade with Iran. themoscowtimes.com

TAX HAVENS INVADED: UK OFFSHORES OPEN UP THEIR DATABANKS

s president of the G8 summit this year, Britain has headed the crusade against those who they don’t feel are paying their fair share of taxes, both individuals and corpo-

rations. “This may be the beginning of the end of bank secrecy havens,” Charles Intriago, the head of the Association of Certified Financial Crime Specialists, said at a G20 meeting in April. The offshore zones will provide a network of bank account information to Britain, as well as the ‘G5’- France, Germany, Italy, and Spain will also receive automated information. The information exchange with major EU countries will take place in the coming weeks or months, but will likely provide ‘old’ offshore data, predating the 2008 crisis. Later in 2013 the data will be distributed to tax authorities who will have potential evidence for lawsuits at their disposal. Information that will be exchanged is names, addresses, birthdays, and other bank account details. The influx of data will allow British and other authorities to research any individual or company suspected of stashing their money overseas. George Osborne has called on other countries to remove the “hiding places for those who seek to evade tax and hide their assets.” Tax havens exist worldwide, outside of the EU in Hong Kong as well as Malaysia.

Some of the world’s ‘biggest’ tax havens, in terms of financial assets, are much nearer than the tropical beaches of the Atlantic Ocean. Neighboring Switzerland is a notorious destination for tucking away assets. Luxembourg, the largest tax haven within the EU, holds about 2.1 trillion euros ($2.73 trillion) in assets. Though yields in Luxembourg and Switzerland are as high as in the BVI or Bermuda, the security puts investors’ nerves as ease. At an April 19 meeting in Washington, D.C., the G20 agreed to mount pressure on Switzerland, Panama, Guatemala, Trinidad and Tobago, as countries that didn’t meet international transparency standards. Bermuda and other offshore havens will offer up similar transparency measures to the US. Bermuda Minister of Finance Bob Richards confirmed Bermuda’s intentions to sign the FATCA IGA Model 2 treaty with the UK, US, and G5 countries. In response, US Treasury official Mark Mazur said: “The US Treasury welcomes this decision by the Government of Bermuda to sign one of the Model Foreign Account Transaction Compliance Act [FATCA] Intergovernmental Agreements. We appreciate Bermuda’s leadership and look forward to helping facilitate an efficient exchange of tax information and strengthening Bermuda’s commitment to global tax transparency,” the Bermuda Sun reported. rt.com

BALTIC AMBITION

Latvia looks likely to become the euro zone’s 18th member next January

ALDIS DOMBROVSKIS is undeterred. In spite of Cyprus, Slovenia and the continuing euro crisis, the prime minister of Latvia wants his country to join the single currency on January 1st 2014. This week he flew to Paris to persuade the French who, along with the Spanish, are among the most sceptical about Latvia’s designs. On the face of it Latvia should be a shoo-in. The tiny Baltic state effortlessly fulfils the Maastricht criteria. So far the euro zone has never rejected a country that complied with all of them. Moreover, Latvia’s economy is growing robustly, its currency has been pegged to the euro for nearly ten years and as much as 90% of its private and corporate debt is already in euros. Its northern neighbour, Estonia, joined in 2011 and Lithuania, the third Baltic state, is hoping to follow in 2015. Yet Latvia has only recently become a Baltic success story. A deep slump saw GDP shrink by some 20% in 2009. In December 2008 the Euro-

pean Union and the IMF agreed to a €7.5 billion ($10.1 billion) bail-out for Latvia. A period of stringent austerity that drastically reduced public spending and wages followed. Unemployment and poverty increased. Today Latvia is the EU’s third-poorest member. Latvia’s banks are another concern. Non-resident deposits represent about half of all deposits in Latvian banks. As much as 90% of these come from Russia, Belarus, Uzbekistan and other countries of the former Soviet Union. They go to Latvia because it is safer than at home, and the staff speak Russian and understand their business mentality. Yet Mr Dombrovskis rejects any comparisons with Cyprus. He insists that Latvia’s banking sector is comparatively smaller, its banks are better capitalised and the government has tightened up its money-laundering rules in recent years. The prime minister’s biggest problem may be public opinion in Latvia. According to recent polls, only around a third of Latvia’s 2.2m people favour joining the single currency. The Harmony

Centre alliance, mainly supported by ethnic Russians, is calling for a referendum on whether to join. “People are very afraid of inflation,” says Morten Hansen at the Stockholm School of Economics in Riga. After Latvia switched from the rouble to the lat in the wake of the collapse of the Soviet Union, inflation rocketed, wiping out many people’s savings. Switching from the lat to the euro will hardly be inflationary, maintains Mr Hansen, but this is hard to explain to older folk. Mr Dombrovskis hopes that, once Latvians see increasing investment from the euro zone and a boost to exports, many will change their minds about the benefits of the single currency. Life will also be easier for the large majority of Latvian borrowers who earn wages in lats but borrow in euros. Everything depends on the report about Latvia’s euro prospects now being drafted by the European Central Bank and the European Commission, which is due in May. The omens are good, even if most Latvians remain to be convinced. economist.com

WORLD NEWS

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caucasian business week

G7 FINANCE MINISTERS TO DISCUSS BANKING REFORMS

inance ministers from the G7 group of industrialised nations are set to begin a two-day meeting on Friday. Banking reforms will be top of the agenda at the meeting, which is being held close to London. March’s emergency rescue of Cyprus will still be fresh in ministers’ minds. The meeting is a rarity, because in recent years the G7 have tended to get together on the sidelines of the G20 and the International Monetary Fund (IMF) meetings. The G7 is comprised of the United States, Germany, Japan, the UK, Italy, France and Canada. UK Chancellor George Osborne, who will be chairing the meeting, said: “We will be talking about how to nurture the recovery.

LEAVING EARTH: 78,000 APPLY FOR A ONE-WAY TICKET TO MARS

he Mars One project to establish the first human settlement on the Red Planet by 2023 has received 78,000 applications in just two weeks, with as many as 500,000 expected to apply by the time applications close on August 31. Mars One, a Dutch not-for-profit organization, is planning the project to have no return ticket back to Earth due to a lack of technology, and the physiological changes the human body will undergo after it adjusts “to the 38% gravitation field of Mars, and be incapable of returning to the Earth’s much stronger gravity,” the Mars One website explained. The company has already received thousands of application from over 120 countries. The majority of applicants are from the US (17,324), followed by China (10,241), the United Kingdom (3,581), Russia, Mexico and Brazil. The funds for the $6 billion project are being raised through a planned reality TV show that will follow the applicants as they train and prepare for their one-way journey. The mission has currently raised $84,121. The applicants have a wide range of personalities, professions and ages. “This is significant because what we are looking for is not restricted to a particular background,” Mars One Chief Medical Officer Dr. Norbert Kraft said. When applying, individuals were told to explain why they want go to Mars in a one minute video. Twenty-year-old private security contractor Benjamin Payne from the US describes himself as a “space cowboy” who wants to “explore new planets and new things.” Undergraduate student Connor, 24, wants to be part of the first human colony on Mars because“it is groundbreaking, revolutionary, and historical. I feel it is our duty as human beings to maintain, advance and ensure the survival of the human

species. Mars is a stepping stone for that,” he said in his video. Even the older generation is interested in making the trip despite the lengthy training – at least seven years – plus the seven-month journey to Mars. Retired systems engineer Richard, 60, believes that Mars is “explorer’s golden ring for the next 25 to 30 years and I’d like to be a part of that experience.” Successful candidates will receive at least seven years of training before leaving Earth, the company explained. Once on Mars, settlers will be involved mainly in construction work such as installing greenhouses, maintaining the settlement’s systems and researching Martian climate and geological history – all in inhospitable environment with no breathable air, and with temperatures as low as -50 degrees Celsius. The perfect candidate for the mission would not be a scientist with specific skill sets, but people with “a deep sense of purpose, willingness to build and maintain healthy relationships, the capacity for self-reflection and ability to trust,” Mars One explained. This is not the only ongoing Mars project. Previously, Russian space agency Roscosmos signed a deal with the European Space Agency (ESA) to participate in the ExoMars project, a new attempt to discover life on the Red Planet. The mission will drill 30 times deeper beneath the surface of Mars than the currently operating Curiosity rover, reaching a depth of approximately 6.5 feet (2 meters). In 2010 and 2011, Russia carried out the Mars-500 experiment: A group of six volunteers were locked inside a simulated spacecraft at the Institute of Biomedical Problems in Moscow for 520 days – the time it would take to travel to Mars and back. rt.com

“There is no doubt that there is greater stability - and that is reflected in financial markets - than perhaps there was last year.” The meeting will give Mr Osborne the chance to meet with the man he has chosen as the next governor of the Bank of England, Mark Carney, who is due to step down as the head of Canada’s central bank at the beginning of June. Mr Carney will replace Sir Mervyn King, who is stepping down as governor of the Bank of England after 10 years.

‘Photo opportunity’

The G7 group represents more than 66% of net global wealth ($223 trillion; £144tn), according to the Credit Suisse Global Wealth Report, published in September.

The meeting will be informal and there will be no communiqué. The rise of emerging markets heavyweights such as Brazil, China and India has meant that the G20 meetings are seen as being much more important than the G7, in terms of formulating global financial policies and reforms. “As often is the case, the G7 is a photo opportunity. But it’s important that it stays together as a forum to address the issues,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. One official told Reuters that this meeting was unnecessary because the talks could have taken place on the sidelines of the IMF’s meetings in Washington in midApril. BBC

CHINA WANTS TO END WORLD BANK BUSINESS RANKINGS

ispleased with their low ranking, China wants to eliminate the World Bank’s ‘Doing Business’ global report, saying the institution shouldn’t be ranking its members. China was ranked 91st in ease of doing business, which pointed to the difficulty in paying taxes and the long waits for construction permits as unfavorable business conditions in the world’s second largest economy. The Chinese say the report doesn’t fairly assess fast-growing economies and also has a built-in bias towards regulation. Last autumn, China’s World Bank Deputy Executive Director Bin Han said the report, “used wrong methodologies, failed to reflect facts, misled readers and added little value to China’s improvement of the business environment,” Financial Times quoted. China’s Executive Director at the World Bank, Shaolin Yang, has not yet commented on the crusade against the ratings. Jim Kim, the Korean-American President of the World Bank, set up an independent review of the report, which is chaired by South Africa’s Planning Minister Trevor Manuel, but the impartiality of his panel has raised questions of bias. Jeffery Owens, the former head of tax at the Organization for Economic Cooperation and Development, who is involved in the review process, told FT: “Basically countries that have no labor regulation whatsoever get the best marks,” he said. “The publication does have a deregulating bias which I don’t think can be got rid of without removing the ranking or even the indicators altogether.” In favor of the report, seeing it as objective and fair, is Simeon Djankov, the former finance minister of Bulgaria who helped established the report in 2004. “If you don’t have the aggregate ranking then you’re going to lose a lot of the immediate contact you have with policy makers,” said Djankov. “The moment you start saying that we’re afraid to publish this report in this way then what is next?” The panel will report their findings at the end of May and Jim Kim will have to either accept or refuse its recommendations

“We will make decisions about the report after we get the review, not before,” a spokesman for the bank told FT. Kim, whose first trip to Washington DC was to protest the Bank, became the 12th president of the 185 member lending organization in July 2012, just as the report was being published. In a February interview Kim told RT, “the bank of 20 years ago is very different to the bank today. Today, I have to say, the fundamental values and mission of the bank are completely in line with the work that I’ve done my entire life.” China’s assertiveness over the ranking is a recent example of its challenge to liberal economic paradigms. The report, released in October 2012 ranked the World Bank members on their ease of doing business, from 1-185, using benchmark calculations from June 2012. Singapore came out on top for the seventh consecutive year, and Georgia made its debut into the top ten. Poland jumped the highest in the rankings, with great improvement in property registration, taxes, and contract enforcement in the last year.

TBILISI GUIDE

May 13, 2013 #04

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 12 T. Tabidze St. Tbilisi Tel: 55 03 20, Fax: 25 12 26 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 61 Agmashenebeli Ave. Tbilisi Tel: 91 01 94, 91 01 95, 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.

caucasian business week

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 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 Resident Mission of the Asian Development Bank (ADB) Address: Chavchavadze Ave. 39a 0162 Tbilisi Tel: 225-06-19, 225-06-20, 225-06-21 Fax: 225-06-22 e-mail: tpapuashvili@adb.org 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

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 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

Price: 2.950.000$ Business center Total Space: 3000 sq.m. Home conditions: New building Renovation: Newly renovated Adress: , Tbilisi, Vake-Saburtalo, Didi digomi, Agmashenebeli alley Telephone: 2333560; 599363399

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

PUBLICITY

caucasian business week

May 13, 2013 #04