Caucasian Business Week #43 by Caucasian Business Week

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BUSINESS WEEK February 24, 2014 #43

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February 24, 2014, Issue 43

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Georgian President: Our Economy Continues Recovery Pg. 2

BE INFORMED, DO BUSINESS

GEORGIA GEORGIA, EU DISCUSS ENERGY ISSUES

he EU supports the idea of Georgia’s accession to European Energy Association, the office of the Georgian prime minister reported. The announcement was made during a meeting between Georgian Prime Minister Irakli Garibashvili and European Commissioner for Energy Gunther Oettinger in Tbilisi. Pg. 2

NBG:The Sanctions against some Iranian Companies Remain in Force Pg. 9

FINANCE MINISTRY EXPECTS 8% ECONOMIC GROWTH IN JANUARY

ccording to preliminary data of the Ministry of Finance, a 8% economic growth was observed in January compared with the same period of the previous year. Pg. 6

JANUARY RECORDS 5 YEARS’ MAXIMUM IN TRADE TURNOVER

oreign trade turnover of Georgia increased by 15% in a year. In January 2014 foreign trade turnover of goods in Georgia (without unorganized trade) equaled to $761 million, which is 15% more than previous year data. Pg. 6

AEROFLOT RETURNS TO GEORGIAN MARKET

ivil Aviation Agency stated about entrance of the 3rd Russian air company on the market. The agency states that license is not yet issued. Pg. 6

SALES OF GEORGIAN WINE IN UKRAINE DECREASED

he wine companies surveyed by “Commersant” are talking about the decline in sales in this country in light of developments in Ukraine. Pg. 6

RATING OF LEADING BANKS IN TERMS OF ASSETS

y January 1, 2014 share of 5 largest banks according to actives equals to 77,3% (01/01/13 -81,6%). Share of Bank of Georgia has reduced by 2,9%, TBC - by 2,1%, ProCredit - 1,3%. Pg. 7

AZERBAIJAN SOCAR FURTHER EXPANDS UNDERGROUND GAS STORAGE

zerbaijan’s state news agency SOCAR has commissioned a new well on the Kalmaz onshore field on the basis of which operates one of two underground gas storage facilities in Azerbaijan. Pg. 11

CIS S&P SAYS UKRAINE “LIKELY TO DEFAULT”

&P has cut Ukraine’s rating one notch deeper into junk status, as the political instability grows and the number of dead has climbed to 80. Pg. 12

WORLD NEWS FACEBOOK BUYS MOBILE MESSAGING SERVICE WHATSAPP FOR $19BN

n its largest acquisition Facebook has bought a mobile messaging service WhatsApp for $19 billion in cash and stock. Pg. 13

Pg. 5

Consulting Companies were not Involved in Slogan Formation Process

iorgi Sigua, a head of the National Tourism Administration says Georgia has got new tourism slogan – Georgia is the Country of Life. “Qualified specialists, branding companies, experts were involved in the process of selecting the slogan. We have also carried out inquiries by Facebook. Georgia is the Country of Life and this is the worldwide recognized truth and fact”, Sigua noted.

In 2014 the tourism administration expects to draw 6.5 million tourists to Georgia, while the department’s budget is over 9 million GEL and this resource is mainly spent on AD campaigns in various countries. CBW has interviewed Kakha Maghradze and Levan Koberidze on the issue whether Georgiabased branding and consulting companies had been involved in the slogan development process, whether the slogan is valuable and what are the standards for developing slogans.

ALDAGI BUYS GEORGIA’S FOUR MAJOR CLINICS

Pg. 4

Emzar Jgerenaia: Commercial Banks should not Act as Insurance Business Monopolists Pg. 9 Lasha Papashvili Favors the Setting Limits on Non-core Assets for Banks Pg. 9

“IASHVILI “ and “ Tsitsishvili “ clinics confirm the launched negotiations with “Aldagi”

GEORGIAN FAMOUS DOCTORS OPPOSE THE ACQUISITION OF THE CLINICS BY “ALDAGI” Economic Expert: “Bank of Georgia” is trying to gain a higher degree of market power in the hospital sector through “Aldagi”

Giorgi Pertaia: The Inflow of Investments will Grow in 2014

Khudoni HPP Investor to Pour Millions in Svaneti Development Fund Annually Pg. 10

HAVE ATLASJET AND PEGASUS CONCLUDED CARTEL COLLUSION

Irakli Sesiashvili: Khudoni HPP is a Guarantee for Energy Security”

Why does GASA Airline sell tcikets of two competitive airlines

Temur Chkhonia Began to Study Peculiarities of the Abkhazian Business Pg. 4

Pg. 5

Pg. 10

MAIN EVENTS caucasian business week

February 24, 2014 #43

GEORGIAN PRESIDENT: OUR ECONOMY CONTINUES RECOVERY

I GEORGIA, EU DISCUSS ENERGY ISSUES

he European Union supports the idea of Georgia’s accession to European Energy Association, the office of the Georgian prime minister reported. The announcement was made during a meeting between Georgian Prime Minister Irakli Garibashvili and European Commissioner for Energy Gunther Oettinger in Tbilisi. With regard to preparations for Georgia’s accession to the organization, negotiations on this issue will last about six to eight months, and the relevant agreement will be signed by October 2014. The parties also discussed a number of energy projects and the special attention was paid to the issue of implementation of the second phase of development of Azerbaijani Shah Deniz offshore gas condensate field, which will allow increasing the transit of Azerbaijani gas to Europe through Georgia. Oettinger said that as a result of transit of Azerbaijani gas, Georgia will get five percent of the transported volume, which will improve the country’s gas supply. Georgian Foreign Minister Maia Panjikidze and the country’s Energy Minister Kakha Kaladze also attended the meeting. “The meeting was very interesting. We discussed the cooperation agenda with the EU, as well as partnership priorities in energy issues. We have once again confirmed our readiness to timely fulfill the tasks set at the Vilnius Summit and, primarily our goal is to sign the association agreement as quickly as possible,” Panjikidze said at a joint press conference with Oettinger.

She said that energy is one of the priority areas in relations between Georgia and the EU. “Mr. Oettinger’s visit is the official opening of talks on Georgia’s accession to Europe’s energy association,” Panjikidze said. She added that Georgia welcomes this fact, as it is another important step in the country’s integration. “Joining the energy association, Georgia will become a part of the common European area. We are ready to intensify our energy diplomacy in this direction,” Panjikidze said. The reserves of the Shah Deniz field are estimated at 1.2 trillion cubic meters of gas. The contract for development of the Shah Deniz offshore field was signed on June 4, 1996. The agreement’s participants include such companies as the State Oil Company of Azerbaijan Republic (SOCAR) with a 16.7 percent share, BP (28.8 percent), Norway’s Statoil (15.5 percent), Iran’s NICO (10 percent), the French Total (10 percent), Russia’s Lukoil (10 percent) and Turkish TPAO (nine percent). The contract was signed following the adoption on the final investment decision on Shah Deniz -2 on December 17, 2013, in Baku. The final investment decision envisages ensuring production of an additional 16 billion cubic meters of gas per year. If initially the peak production volume under the first phase of development of the field was planned at the level of nine billion cubic meters, currently work is underway to increase this figure to 10.4 billion cubic meters. The cost of the second stage of the Shah Deniz development is estimated at $25 billion.

n his speech in Parliament, President Giorgi Margvelashvili expressed hope that many problems existing in the country will be solved on the background of a 6% growth predicted by the World Bank in 2014. “2013 was a difficult , since it was a period of transition. During this period, the business has been relieved of pressure and started a real respect for the principles of inviolability of property . Naturally, in such a situation, business is showing some caution and not in a hurry to invest that reduced the growth of the economy in the country. At the same time the government has done everything possible in order to solve these problems and now, against the backdrop of political stability in the second half we see clear signs of economic recovery . Naturally, these issues were reflected in the budget , but we hope that against the projected 6 % growth in the economy , budgetary difficulties will be solved. I also want to emphasize that a healthy economy provides a large share of small and medium-sized businesses in the economy, and in Georgia, their share is still small. There-

fore, it is important to deepen competition, to carry out reforms promoting the development of small and medium-sized businesses . In addition, the diversification of export markets is a very important factor as well as attraction of investment , and the introduction of new technologies, “- said the President.

GEORGIAN GOV’T TO REVIVE ECONOMY

he revival of the economy is the main priority of the Georgian government. Georgian Prime Minister Irakli Garibashvili made the remarks in his speech at a forum “Challenges of Economic Growth for Georgia” in Tbilisi on February 18. The chief economist of the World Bank for Europe and Central Asia Region Hans Timer attended the forum. The forum participants discussed the development of the Government’s policy priorities - Georgia 2020 Project for the socialeconomic development strategy of the country.

He said the real impact of the country’s economic development on each of its citizens is the main challenge for the Georgian authorities. Garibashvili noted that the forum held in Tbilisi provides an opportunity to talk about Georgia’s economic strategy and its main directions together with experts from the World Bank. “I would like to thank them for their support and cooperation. We discussed the problems and outlined the ways to solve them. The government has a long-term strategy for the country’s development, as well as local industry development strategy, but difficulties still remain,” Garibashvili said.

GEORGIA, TURKEY, AZERBAIJAN FOREIGN MINISTERS MEET

MOSCOW, TBILISI TO CONSIDER POSSIBILITY OF PUTINMARGVELASHVILI MEETING

eorgian Prime Minister’s Special Representative for relations with Russia Zurab Abashidze and Russian Deputy Foreign Minister Grigory Karasin will meet in Prague on March 5 to mull settling the TbilisiMoscow relations. Abashidze said the results of the first stage of the dialogue, a visa regime and regular flights will be the main topic of the talks. “We will also discuss issues of trade-economic and cultural relations,” he noted. The next round of the Geneva talks will also discuss preparation of a meeting between the Russian and Georgian presidents, Vladimir Putin and Giorgi Margvelashvili. Vladimir Putin recently voiced the possibility to meet with his Georgian counterpart. “If he wants, why not?” Putin said. Giorgi Margvelashvili, in turn, noted that he needs to consult within the country and with foreign colleagues concerning a possible meeting

with the Russian leader. Recently, Georgian Foreign Minister Maia Panjikidze said the Georgian side does not prepare the presidents’ meeting. “There is no preparation, but nothing is excluded. We are ready. If the meeting can be organized and lead to competitive results, we support it,” she said speaking at the European Parliament in Brussels. Georgia and Russia, its giant northern neighbor, have maintained no diplomatic relations since a brief war in 2008. Tbilisi broke off relations with Moscow in August 2008 when Moscow crushed a Georgian assault to reassert control over two rebel regions -South Ossetia and Abkhazia- and later recognized the regions. Georgia announced the two unrecognized republics as occupied territories in September 2008. The first meeting of Georgian and Russian official representatives was held in Geneva on December 14, 2012, the last fifth meeting - in Prague on November 21, 2013.

he foreign ministers of Georgia, Azerbaijan and Turkey met on Wednesday in Azerbaijan’s second largest city Ganja to discuss regional cooperation. Georgian Foreign Minister Maya Panjikidze said they talked about the 2013-15 action plan, which describes political dialogue, and cooperation in different fields among the three countries. She said the meeting specifically dealt with important economic projects that unite the countries. The Georgian president had suggested to hold

the next meeting in Tbilisi in May, an initiative which was welcomed, Panjikidze said, but the next meeting will be held in Turkey. This was the third meeting between foreign ministers of the three countries. Also on Wednesday, the foreign ministers attended the opening of a new Georgian consulate in Ganja, which the Georgian representatives said will contribute to the development of bilateral relations in the humanitarian, cultural and economic fields and be good for citizens who are unable to go to Baku for their consular issues.

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BUSINESS WEEK

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PUBLICITY February 24, 2014 #43

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INTERVIEW caucasian business week

February 24, 2014 #43

NATIONAL INVESTMENT AGENCY: LUXURY - CLASS HOTEL TO BE THE INFLOW OF INVESTMENTS WILL BUILT IN BATUMI BY TURKEY’S GROW IN 2014 LARGEST FINANCIAL - INDUSTRIAL An interview with Head of the National Investment GROUP Agency of Georgia Giorgi Pertaia

- In a recent television appearances Prime Minister said that the government’s priority is economic growth , development, and investment boom . What gives him grounds for such expectations? Are there real reasons for the growth of investment, and if so, from what countries are they expected? - This is not just Prime Minister’s statement, it has the real ground, and the business climate in Georgia is already close to becoming very attractive. It now has a lot of positive sides, but we had problems with a political stability which prevented the inflow of investments . The problems were with the inviolability of private property, the dependence of the judicial system , etc. Expectations are the most important in terms of investment. Now the business is very optimistic - there is no fear that tomorrow a war with Russia can start

that frightened businessmen. As for the other questions, Prime Minister’s meetings during the Davos Forum were very important. In the course of them a great interest was expressed in the Georgia’s business climate and this is the best indication that if all goes as it is now, the inflow of investments into the country will begin in the near future. All potential investors with whom we met in Davos asked us about the situation in the country, and which segments of the economy are the most attractive for investing. This gives us a reason to believe that in the near future the inflow of investment will increase. Although it’s unclear whether they will fall in statistics in 2014 . - Can you name at least ballpark figures? - I cannot name the exact figures, but it is clear that we are talking about more than $ 1 billion. - When the power changed, there was constant talk about the increased interest of Georgian businessmen working in Russia in Georgia as well as the Russian businessmen. What will be the year 2014 in this respect? - As for Russian companies, we are negotiating with several companies that consider investing capital in tourism and energy. While it is difficult to say what will be the amount of investment, as in the last 9 years very negative information about Georgia was spread in Russia, and today it is difficult to regain investor sentiment in a positive way. However, now the Russian businessmen are eyeing Georgia and the share of Russian investments will grow. - The Government has developed a strategy until 2020 which refers to the promotion of investments saying that the current investment legislation is outdated and does not meet the current realities. Will there be any changes in this direction? - In respect of investments there are several laws that really outdated, and the Prime Minister gave specific instructions to start working on making the necessary changes in legislation.

“COCA – COLA BOTTLERS GEORGIA“ FOUNDER BEGAN TO STUDY PECULIARITIES OF THE ABKHAZIAN BUSINESS

do not go to Abkhazia for paternal relationship but to develop my business”. The details of Temur Chkhonia’s Abkhazian business plans became known to ”Commersant “. Note: Temur Chkonia expressed his readiness to open McDonald’s and supply “Coca - Cola” in Abkhazia. The businessman explains that he has an exclusive right to bring a product in Abkhazia

and open the fast food world brand. What are the steps taken by the businessman for this purpose, when he plans to arrive in Sokhumi, whether or not he familiarized the Abkhaz side with his business plans and whether he has a partner in the de - facto Republic ? Temur Chkonia says in a conversation with commersant.ge that he has already begun to study the rules of Abkhazian production and has taken the concrete steps in terms of monetary system and bank transfers but as Chkhonia says, it is a long process, and McDonald’s will not be opened in Abkhazia in a day or two. “I’m not going to Abkhazia not because of paternal feelings, I want to develop my business there, “ - says Chkonia . In Georgian Prime Minister’s opinion, the opening of McDonald’s in Abkhazia needs right assessment of political risk. Garibashvili said at the meeting with Georgian and foreign media at “Sheraton Metehi Palace” hotel that consultation with the Government would be held and only after this “Coca-Cola Bottlers Georgia” founder Temur Chkhonia would be notified. According to Deputy State Minister for Reconciliation and Civil Equality Keti Tsikhelashvili, the law prohibits the illegal activities in the occupied territories , but however, if there is government’s permission for economic activities and the activity is not contrary to interest of Georgia, businessmen are given the right of business activities in the occupied territory.

ommersant” reports that Turkey’s largest financial - industrial groups “Koc- Holding” begins investing in Georgia. According to our information, “Divan Group” hotel chain that is a member of the “Koc Group “ that is engaged in the development of the hotel brand “Divan” across the world , plans to build a

luxury hotel in Batumi. It is known that the presentation of the project will be held in May this year, and the hotel will be placed in the old Batumi. “Divan Group” posted information about the hotel on the official site. “Commersant” expects detailed information about the Turkish group‘s interests in Georgia from the company.

MULTIFUNCTIONAL AQUA PARK “GINO PARADISE” ON THE TBILISI SEA TO BE OFFICIALLY OPENED ON FEBRUARY 25

multifunctional aqua park “Gino Paradise” located on the Tbilisi sea will be officially opened on February 25. The park administration states “Commersant ‘’ that at this stage a swimming pool, 12 gastronomic facilities and a sauna have been completed. The aqua park, which is built on the territory of 22 hectares, is funded by the

EBRD . The Swiss –based Georgian businessman has invested 25 million Euro in the project. Outdoor and indoor pools, sand volleyball and soccer fields and the water attractions will be located in the complex. A wellness center will serve customers as well. The multifunction aqua park project envisages the construction of restaurants , hotels and various entertainment facilities in the future.

PARLIAMENT APPROVES LAND REGISTRATION CHANGES FOR FOREIGN INVESTORS

eorgia’s Parliament has approved a draft law that outlines a moratorium on the sale of land to foreign citizens to be removed for commercial banks and on special

cases. The draft law on Agriculture Land Ownership was approved by Parliament at its final hearing yesterday, February 20. The law on Agriculture Land Ownership outlined: To establish a Government-appointed committee that will judge foreigners’ applications to purchase agricultural land. The criteria, on which applications will be judged, has not been decided and will be elaborated by the Government in the next few months. To exempt commercial banks from the ban, (which had prevented banks from taking agricultural land as collateral for a loan) but not microfinance institutions. In June 2013, Parliament passed a temporary legal ban restricting non-Georgian citizens from purchasing or inheriting agricultural land until December 2014. This also included Georgian entities with foreign minority shareholders – “foreigners”. This ban has now been amended. A group of experts from non-governmental organisation Transparency International (TI) Georgia have voiced concern over the new law and said it was essential for the government to devel-

op a state policy on agricultural land ownership and organise a comprehensive land registration program. As stated on TI Georgia’s website, the organisation believed a proposed committee, that would review applications on a case-by-case basis, as potentially less restrictive than an outright ban on foreign shareholders. “However, its role could be highly problematic – as we outline below – and the Government has not made it clear why there is a need for this mechanism. What is urgently needed is a state policy on agricultural land ownership and a comprehensive land registration program, which the Government had promised to deliver by December 2013,” stated a report published on TI Georgia’s website. Furthermore, TI said the changes must protect the rights of existing landowners, facilitate investment in Georgia and promote sustainable development of the agricultural sector. Last July, Parliament suspended changing the status of agriculture land plots from agricultural to non-agriculture. According to the Government, the moratorium was imposed to avoid the real threat of irrational privatization of land, which may have a negative consequence on the country’s economic security, environmental protection, and state security. This might also significantly damage the rural population, the Government claimed.

GEORGIAN “MCDONALD’S “ CELEBRATES ITS 15TH ANNIVERSARY

cDonald’s” is the world’s largest restaurant chain which 33 thousand restaurants are serving 68 million customers daily in 119 countries around the

world. “McDonald’s “ has been working on the Georgian market for 15 years. 15 years ago, on February 5, 1999 , “McDonald’s “ first restaurant was opened in Tbilisi. Today six restaurants are already operational across the country, four in Tbilisi, one in Kutaisi and one in Batumi. “McDonald’s,” is one of the largest and the most famous brand in the world that is always focused

on high quality of its products . “McDonald’s” regularly arranges the Doors Open Day , where customers are able to see for themselves various products are produced. Neat, tasty and environmentally friendly food these are the factors that made “McDonald’s” one of the favorite restaurants for Georgian customers. • Contribution to the budget by “McDonald’s” system amounts to 35,565,862.62 Gel ( 1999-2013 year) • Total investment: - 18,477,387 • Employees: 508 young people, san average age - 22 years.

BUSINESS February 24, 2014 #43

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ALDAGI BUYS GEORGIA’S FOUR MAJOR CLINICS “IASHVILI “ and “ Tsitsishvili “ clinics confirm the launched negotiations with “Aldagi”

t became exclusively known to commersant.ge that “Aldagi “ insurance company, a subsidiary of “Bank of Georgia”, is interested in purchasing Turkish investor -owned hospitals and clinics. It’s about IASHVILI and Tsitsishvili clinics , Allergology and Rheumatology Centers , as well as the Women’s Medical Center and Batumi Women’s and Children’s republican centers. Note: The privatization of five medical facilities was implemented during the previous government as a result it was purchased by “Avanti Hospital Management Group” and sold them to the Turkish “ Universal Hospital Group” last year. To verify the information “Commersant “ got in touch with one of the shareholders of the Iashvili

clinic Gia Natsvlishvili who confirmed the ongoing negotiations with Aldagi, however, denied an official purchase decision. Negotiations are ongoing between the Tsitsishvili clinic and “Aldagi” as well. According to the clinic Director David Rekhviashvli, the clinic has not moved into the property of “Aldagi” company but negotiations have already begun. Why is ”Aldagi” interested in purchasing the abovementioned medical institutions, and what will this bargain change in the market? Whether it will lead to the creation of a monopoly in the hospital sector ? “Commersant “ has already addressed this question to ALDAGI and we will offer its position as soon as the answer is received . We’ll also try to obtain information and evaluation from the Ministry of Health and experts.

ank of Georgia” is trying to gain a higher degree of market power in the hospital sector – an economic expert Levan Kalandadze says commenting on the information exclusively obtained by “Commersant “. Note: It became exclusively known to commersant.ge that “Aldagi “ insurance company, a subsidiary of “Bank of Georgia”, is interested in purchasing Turkish investor -owned hospitals and clinics. It’s about IASHVILI and Tsitsishvili clinics , Allergology and Rheumatology Centers , as well as the Women’s Medical Center and Batumi Women’s and Children’s republican centers. The Iashvili and the Tsitsishvili clinics confirmed the ongoing negotiations with Aldagi, however, denied an official purchase decision. According to Levan Kalandadze, the purchase of five medical facilities by “Bank of Georgia” subsidiary will increase the price of services . In addition, Kalandadze notes , “Bank of Georgia” wants to occupy a monopoly position on the market , but it’s doing this not on its own behalf but through its subsidiary and plans to gain a higher degree of market power in the

hospital sector. He adds that high quality services are available only through the competition in the hospital sector and the government should be involved in this issue. Director of the cardiological clinic “Guli” Anzor Melia advises “Aldagi” company to refrain from purchasing medical establishments and focus on the development of the insurance company. Zaza Sinauridze suggests the distribution of patients if Aldagi acquires the clinics. He says that despite the fact that this information has not been confirmed officially , it will lead to the distribution of patients in the clinics which will be bought by the insurance company. ”Aldagi” is a strong insurance company that has many beneficiaries. If it buys the clinics , then it will distribute its own clients in these clinics and thus will limit the patients’ right to choose, “ - says Sinauridze . Recall that Health Minister told commersant.ge yesterday that he would meet “Aldagi” leadership today at their own request . However, Sergeenko is not aware of the company’s plans regarding the purchase of the clinics.

HAVE ATLASJET AND PEGASUS CONCLUDED CARTEL COLLUSION Why does GASA Airline sell tcikets of two competitive airlines

here is no cartel collusion between Atlasjet and Pegasus, Levan Elizbarashvili, a head of the Georgian Office of Pegasus airline noted. The network of Gasa company trades in tickets of both Atlasjet and other airlines and there is no problem, he added. Clients have expressed no pretences over the errors in the Gasa system, Elizbarshvili noted. “Citizens have submitted no statement as if they had to buy additional tickets. Anyway, if someone carries out personal identification and the Gasa company error is confirmed, I am ready to remunerate the ticket price by in a double amount”, Elizbarashvili said. Gasa company is not an official representative of Atlasjet. If Gasa operators have genuinely made similar statements during phone conservation with clients, the company will take respective steps and all employees who have misled the clients will bear responsibility, he added. As reported, Georgian citizens accused the airlines of cartel collusion. Namely, a part of the Commersant readers protests one airline sells tickets of another airline, while another part complains about system errors in Atlasjet and Pegasus. “I bought a ticket in the Gasa network and the company operator told me they were official representatives of Atlasjet airline and they offered lower prices compared to travel agencies. But I

had to buy another ticket because of the system error. I applied to the Gasa management and they readdressed me to Atlasjet Office in Georgia. I phoned to the Atlasjet Office and they told me the ticket seller was responsible for the problem and I had to apply to Gasa again”, one of the clients told the Commersant newspaper. All tickets sold by Gasa are insured and the company bears responsibility and clients should apply to this company, Elizbarashvili noted. Atlasjet official representation also confirms clients have expressed pretences against Gasa. Namely, there were some cases when clients expressed complaints after having bought tickets in the Gasa network. “We permanently care to provide high-quality services to our clients. Clients rarely submit their pretences and we maximally take into account their remarks and demands. There were facts when clients put forward pretences after purchase of tickets in the Gasa network. As to the mistakes by Gasa operators, we hope similar facts will not be repeated”, the company noted. Atlasjet tickets are also available at the Georgian head office too. Atlasjet is a member of Iata and follows its own independent strategy and price policy, the company says. The Commersant will continue exploring whether the current situation represents a cartel collusion and show the position of travel agencies too.

GEORGIA’S NEW TOURISM SLOGAN AND EXPERTS’ APPRAISALS Consulting Companies were not Involved in Slogan Formation Process

KAKHA MAGHRADZE – GEPRA Company Naturally, any initiative of the national tourism agency concerning marketing communication and activities in this direction is important for me and for us. The field specialists also find marketing projects of this important public office to be interesting for the country characterization and tourism development. The new slogan cannot be discussed as a separate phrase, because “Georgia is the Country of Life” is a wonderful statement in itself and it contains positive signal. At the

same time, this initiative should be criticized because of the three main reasons: 1. A slogan represents a communication instrument as part of the strategic marketing management field called as the branding and brand management. If the slogan or any communication message is not based on the brand’s platform and its values and if it does not continue the brand’s theoretical grounds and principles, it is huge chance the slogan will not work and it will fail marketing tasks of the brand. In this case the brand’s platform has not been introduced. 2. Slogans are used for forming a main message of the communication and AD campaigns, as well as for uniting and consolidating the campaigns. We have not seen any similar campaign. Therefore, it is unclear what is the goal of the slogan. We suppose the tourism national agency plans to introduce some project in the near future. 3. Testing of the slogan should be carried out at a more professional eleven, because personal inquiries on Facebook and opinion of several experts are not sufficient and the agency head has also confirmed this opinion. Moreover, more valuable and several-stage fundamental research should be carried out by involvement of foreign citizens and experts, not our citizens.

LEVAN KOBERIDZE – BRANDING.GE COMPANY 1. To avoid discussing the slogan as a separate phrase, I have asked for the concept (platform) for this slogan. Unfortunately, I have not received the document and I could not find it myself too. None of my colleagues has the document seen either. 2. It is unacceptable that our tourism concept guides with this slogan and Georgian citizens have nothing heard about this. Our population is a very important participant of this communication, as foreign tourist should realize the importance of

our country not only abroad from AD campaigns, but also in Georgia domestically and they should make sure that this slogan is not ungrounded and it is based on the communication with domestic population too. 3. Unfortunately, no branding and marketing company was involved in the process and no expert consultations were taken. 4. We welcome saving budget resources, but the issue is of tourism concept development that is to bring considerable benefits to the country and I find unacceptable the statements that tens of thousands of USD has been saved and the agency workers have developed the slogan itself – I would call this approach as unprofessional attitude to the duties. 4. Slogan is unclear and neither the platform nor the communication concept is perceptible. 5. It is not determined in which way (by what products and services) this slogan will work when a tourist arrives in Georgia, as good dishes and drinks existed in Georgia without the tourism department. 6. The branding and positioning of the country is very important process (the tourism sector emphasizes this very actively) and this should be tailored to various target groups, not only tourists.

BUSINESS & ECONOMY caucasian business week

FINANCE MINISTRY EXPECTS 8% ECONOMIC GROWTH IN JANUARY “A 43 percent increase is registered in construction sector”

ccording to preliminary data of the Ministry of Finance, a 8% economic growth was observed in January compared with the same period of the previous year. Finance Minister Nodar Khaduri briefed journalists on the economic results of last month after the Cabinet meeting today. “These are preliminary data, but it relies on the figures declared by the taxpayers . This proves that turnover of the VAT payer companies increased by 16% in January,” - says Khaduri. In his words, GDP growth is due to a serious intensification of several fields. “This is the result of the almost doubled activity in agriculture, at the same time construction activity has increased by 43 percent , it is also important that transport carriages have also increased. All this gives reason to believe that our forecasts are conservative ,” – says the Minister of Finance. Real GDP growth forecast was determined at 5% in the 2014 budget.

AEROFLOT RETURNS TO GEORGIAN MARKET

ivil Aviation Agency stated about entrance of the 3rd Russian air company on the market. The agency states that license is not yet issued. The air company submitted regular flight schedule for7 times a week. Aeroflot operated before embargo in 2006 and them restored flights for a short time in 2008. Currently 2 Russian air companies - Siberia and

Ural Airlines operate on Georgian market. Ural makes Kutaisi-Moscow flights, Siberia - TbilisiMoscow. Georgian company Georgian Airways has flights to the same direction as well. Largest air carrier of Russia operates for over 90 years, since 1932. It’s a member of Aeroflot group, which unites 5 air companies: Donavia, Rassia, Orenburg, Sakhalin Airlines and Vladivostok-avia.

February 24, 2014 #43

HYDROLEA WILL BUILD 3 POWER PLANTS IN SVANETI

ice Premier and Minister of Energy Kakha Kaladze and manager partner of the company Hydrolea Radoslav Dudolensky will sign a contract about construction of hydro power stations. The contract obligates the company to construct 3 hydro power plants in Mestia Municipality, on the rivers: Kasleti and Darchi-Ormeleti. In particular, installed capacity of the Kasleti-hesi equals to 8,1MW, supposed annual output - 45,8 million KW/hour Construction of the plant will start in July 2015 and start exploitation in December 2017. Installed capacity of KAsleti-Hesi-1 is 8,1 MW, assumed annual output - 46,4 million KW/hour. Construction of the power station will start in March 2017 and will be exploited in December 2018. Installed capacity of Darchi-hesi equals to 16,9 MW, assumed annual output - 93,6 million KW/ hour. Construction of power plant will start in

July 2018 and exploitation - in December 2020. The company already completed technical-economic research of all three projects. Total investment value of the projects equal to $45 million. According to the contract signed by the sides, the domestic market will utilize winter output of the power stations. Currently company Hyrdolea is constructing a 9,2MW capacity power station. According to the memorandum signed with ministry of Energy, the company started construction of the power plant in July 2013 and will start its exploitation at the end of the current month. Besides, the company carries out preparation works for the construction of Pshaveli-hesi (1,9 MW) and Debeda-hesi (2,5 MW). Construction of the power plants will start in the current year and will be over at the beginning 2015. The investment made by the company Hydrolea in Georgian energy exceeded to $12 million.

JANUARY RECORDS 5 YEARS’ MAXIMUM IN TRADE TURNOVER

In comparison with last ear export increased by 14%, which equaled to $224 million. Import increased by 15%, to $538 million. Both data of export and import are 5-years maximum. Besides, negative trade balance equaled to $314 million and 41% of the foreign trade turnover in January 2014.

STATE FOREIGN DEBT REDUCED BY 26 MILLION IN JANUARY

ccording to statistic of Ministry of Finance, amount of the state foreign debt reduced by 26 million in January, to $4,176 billion (December 2013 - $4,202 billion). Out of the total state debt, $4,062 billion comes on the government’s foreign debt, which is $23,8 less than

December data. $113,090 million are obligations of National Bank, which is $2,58 million less than at the end of 2013. International Monetary Fund is the only creditor of National Bank. It’s noteworthy that NBG plans to pay whole debt this year and first time after 1994, National Bank will not have debt from the Q3.

GRAPE PROCESSING PLANT TO BE BUILT IN KUTAISI FIZ SALES OF GEORGIAN WINE IN UKRAINE DECREASED 90% of restaurants and supermarkets halted in the country

he wine companies surveyed by “Commersant” are talking about the decline in sales in this country in light of developments in Ukraine. “Badagoni ‘’ Director-General says that the processes taking place in Ukraine have not yet been reflected in trade relations between Georgia and Ukraine but Gia Shengelia notes

that 90% of restaurants and supermarkets stopped causing a significant decline in sales. Shengelia adds if wine supply to Ukraine faces problems, it will reduce the company’s sales , but this time a trade partner of “Badagoni” in Ukraine implements wine import according to the schedule . A share of the company’s exports in Ukraine achieved 15-25% of the total export. ”Telavi Wine Cellar ‘’ also confirms the decrease in wine sales in Ukraine. According to the Chairman of the company’s Supervisory Board, the tense political situation in Ukraine is in a particular location that excludes problems for exports. However , Zurab Ramazashvili says that their partner company in Ukraine informs about the sales decline. But problems with the supply of wine have not been created yet. Ramazashvili adds that Ukraine is one of the largest trading partners where 20-25% of the total export are sold.

GRAPE PROCESSING PLANT TO BE BUILT IN KUTAISI FIZ

ommersant” reports that a grape processing plant will be built in the Kutaisi free industrial zone on Georgian- Egyptian investments. According to the manager of the industrial zone, the investors have already bought 30 acres of vineyards in the region. Mikheil Tigishvili

says that the construction of the plant is underway, where the grapes harvested from the company -owned vineyards will be processed. The project envisages an investment of 2 million USD, and Rkatsiteli and Sapervavi wines will be exported to other countries. At this point six Egyptian companies are operating in the Kutaisi FIZ.

of the plant is underway, where the grapes harvested from the company -owned vineyards will be processed. The project envisages an investment of 2 million USD, and Rkatsiteli and Sapervavi wines will be exported to other countries. At this point six Egyptian companies are operating in the Kutaisi FIZ.

SOCAR PAID THE HIGHEST TAXES AMONG THE OIL COMPANIES

il company SOCAR Georgia Petroleum was the largest taxpayer in the state budget in 2013. The company paid 130 million GEL. SOCAR is the latest investor company in Georgia; they invested 78 million GEL in the country’s economy. It’s noteworthy

that Gulf Georgia is among the large taxpayers, which paid about 71 million GEL in the budget and also Wissol Petroleum Georgia, which paid 70,5 million GEL. These companies, along with other representatives of the oil sector were awarded on the 2013 summarizing activity of The Union of Oilproducts Importers on February 14.

GEORGIAN EGGS STRENGTHENING THEIR POSITION IN THE LOCAL MARKET

ccording to the Poultry Growers Association, Georgian eggs are strengthening their position in the local market. As the Head of the Association states “Commersant’’, the price of eggs increased in Moldova, Belarus and Russia – the countries from which import of eggs was carried out in large quantities. Zurab Uchumbegashvili says that due to excess production in the past year, eggs were imported in Georgia at a low price and for this reason local produc-

ers could not compete with imported product but Uchumbegashvili notes that a mandatory labeling of imported eggs and a hike in egg prices in foreign countries stopped importation of eggs. He adds, if by the end of last year a share of Georgian eggs amounted to 90% in the market, now their share grew to 95%. Uchumbegashvili says that in the summer the producers will reduce the price of eggs and a process of a recovery of the reduced products is already in progress.

MEMORANDUM February 24, 2014 #43

caucasian business week

GEORGIAN GOVERNMENT INTENDS TO TIGHTEN CONTROL OVER THE QUALITY OF MEDICINES

he Government intends to more tightly control the quality of drugs, but is not going to open doors too wide to the local pharmaceutical market - the Minister of Health of Georgia Davit Sergeenko says in response to the skepticism of some experts about the “generic” drugs . “ The market will not wide open to foreign producers until the work on the system of quality control of medicines is completed. This process has already begun and we are trying as much as possible to protect our citizens from potentially dangerous drugs. While this system does not work, any broad intervention is not expected,” says the Minister . The plans of the Ministry include the introduction of monitoring systems and the creation of a unified system of packaging. However, many experts believe that before the new rules enter into force, the country might be flooded with substandard medicines. In particular, according to the head of the “Club of Health “ George Turdzeladze , Indian producers , who may enter the market, are expanding around the world, and it is possible that they will appear in Georgia. “However, the government should formulate a clear strategy in order to stem the flow of sub-

standard medicines. In the current legislation, the market may well be flooded with low-quality drugs. In this sense, the activity of India does not look very attractive,” - he notes. However, despite the assurances of Indian investors about the high quality of their “ generic medicines ,” the expert believes Indian medicines are substandard. According to the Deputy Chairman of the Parliamentary Committee on Health Guguli Magradze, at this stage it is difficult to judge the quality of Indian “ generic “ , especially since it is not known exactly what the company plans to enter Georgia. “When talk about the entry of a new player start in the market, of course, the companies operating in the market begin to protest , since they do not need an extra competitor. In this situation it would be right if the Ministry of Health was more open and said exactly who intends to invest in the pharmaceutical industry in Georgia. This would help to remove many of the questions which exist now, “- the MP says. Experts do not exclude that the companies from China, Turkey, Russia, and Ukraine can show interest towards the Georgian pharmaceutical market.

“HOLIDAY INN ‘’ TO BE OPENED IN BATUMI IN EARLY 2015

fter Tbilisi , Adjara Group” will open “Holiday Inn” hotel in Batumi . “Adjara Group” states “Commersant “ that ‘’Holiday Inn” hotel in Batumi will be able to receive guests in early 2015. They say that in contrast to Tbilisi, Batumi “Holiday Inn’’ will have a different architecture. A 5 - storey building will be decorated with French balconies and will

be designed for 180 rooms. Investment of 17 million USD will be spent on the project. Also, ”Adjara Group’’ will open a 130- room “Rooms” hotel in Tbilisi in May. The company will open “Intercontinental” hotel in a former building of “Samshoblo” publishing house in Tbilisi in late 2015 . “Adjara Group” is an operator company of “Holiday Inn” in Tbilisi and “Rooms Kazbegi “ in Kazbegi.

MARRIOTT’S MOXY HOTEL BRAND TO ENTER GEORGIA’S HOSPITALITY SECTOR

eorgia is set to become the first Eastern European country to welcome a new affordable but chic hotel brand to the region. Moxy is the newest hotel by world hotel chain Marriott International and focused on the rapidly growing 3-star-tier market by offering a combination of top service, smart design and affordable prices. Today, Marriott representatives introduced the concept to Giorgi Kvirikashvili from the Ministry of Economy and the Sustainable Development of Georgia. Markus Lenert, Vice President of International Development at Marriott Hotel said Georgia had “the greatest tourist opportunity”. “We welcome the willingness of the Ministry of Economy to support our project. There is a good basis for starting the expansion of the Moxy brand from Georgia throughout the Eastern European countries,” he said. In the next few months, Moxy will undertake a feasibility study of the Georgian market. Investors have expressed their initial interest in developing the hotel in Batumi, the Black Sea tourist city, and Likani, a mountain spa resort in South-Eastern Georgia. In the Black sea coastal Adjara region, global brands like Kempinski, Hyatt, Hilton and RitzCarlton are expected to begin operating in the next five years. Adjara’s first internationallyrecognised 5-star hotel, Sheraton, opened in June

2010. One year later the ribbon was cut to open luxury hotel Radisson Blu Hotel. Presently there are more than 120 hotels in the region. “Investors are mostly interested in Batumi and we discussed the plan to broaden the city,” Minister Kvirikashvili said. “In saying this, they also don’t want to exclude the possibility of building the hotel in the Eastern part of Georgia.” Marriott is represented in the Georgian market by two hotels - Tbilisi Marriot Hotel and Courtyard Marriott. Both are located in Tbilisi, Georgia’s capital city. Last year, Tbilisi Marriott Hotel, a luxury fivestar hotel, celebrated its 11th anniversary. The Marriott brand was brought to Georgia by GMT Group. During its 11-year existence, the Hotel has welcomed many of Tbilisi’s VIP guests and international delegations, including Former American President George Bush, high official Hilary Clinton, English actor Malcolm McDowell, singers Bryan Adams, Andy Garcia and Shakira, to name a few. Currently, the full-service international hotels operating in Georgia include Tbilisi Marriott, Courtyard Marriott, Sheraton Metekhi Palace, Radisson Blu Iveria and Holiday Inn. The latest survey by Georgian National Investment Agency, responsible for attracting investment to the country, revealed that from 106 hotels across Georgia, 60-65 % of the total revenue generated in the hospitality sector was generated by international hotel chains while the remaining 35-40% was held by the local market. The survey also revealed high-quality hotels were concentrated in the capital city, while midrange hotels, guest houses and family houses were more common in the regions. In 2013, there were five hotel franchises operating in Georgia.

MEMORANDUM OF UNDERSTANDING

usiness Association of Georgia, American Chamber of Commerce in Georgia, EU-Georgia Business Council, International Chamber of Commerce in Georgia, Georgian Employers’ Association, Association of Banks ofGeorgia, Association of Oil Products Importers and Distributors Guided by the desire to improve the business environment and promote economic development in Georgia, Expressing their common goal to have a predictable and stable business environment in the country, Cognisant of their responsibilities and the roles as of businesses for the whole country, Welcoming the readiness of the current government to maintain an open and transparent communication with the business sector and by working together with them resolve tasks facing the business sector, Have reached the following understanding: In close cooperation with the government, society, businesses and non-governmental sector, to work in agreement and in coordination to resolve the following importance issues: PARTIAL DE-CRIMINALIZATION AND DIFFERENTIATION OF TAX-RELATED OFFENCES Due to the ambiguous nature of the existing Tax Code, businesses often interpret it as they wish in order to choose the taxation regime. Such decisions are not always motivated by the desire to evade payment of taxes, but it serves the purpose of easing the burden of taxes under the existing legislation. Georgian legislation does not distinguish between Tax Avoidance and Tax Evasion; therefore, interpretation of the law leads to risk of criminal responsibility or accusation for a crime. Such threats have negative implications on the development of entrepreneurship in the country and an adverse effect on the investment environment.

REFORM OF THE INVESTIGATION DEPARTMENT OF THE MINISTRY OF FINANCE Office of investigations, with existing functions, has an adverse effect on the business environment and creates a negative, police image for the Ministry of Finance. For the taxation purposes, it is appropriate to revise the functions of this department and to leave within its competence the function of investigation of offences disclosed during the tax administration process. DEVELOPMENT OF EFFECTIVE MECHANISMS FOR THE REVIEW OF TAX DISPUTES Objective, competent and timely review of tax disputes will have a significant impact on the efficiency of the business sector. Therefore, it is particularly importance to compose the Council of Tax Appeals under the Ministry of Finance primarily with specialists who enjoy high reputation and have comprehensive experience, increase its degree of independence and institutionalize it based on international practice. IMPROVEMENT OF THE MECHANISM OF TAX INSPECTION In orderto ensure that business actors operate in an organized, predictable and transparent environment, it is necessary to refine the tax inspection mechanisms, through standardizing the methodology of inspection and establishing effective mechanisms for risk analysis. The undersigned parties to this Memorandum of Understanding express their readiness and desire,together with respective government agencies, businesses, civil society, international organizations and other stakeholders, to engage in the process of searching for ways and forms to resolve the issues envisaged by this Memorandum.

RATING OF LEADING BANKS IN TERMS OF ASSETS

y January 1, 2014 share of 5 largest banks according to actives equals to 77,3% (01/01/13 -81,6%). Share of Bank of Georgia has reduced by 2,9%, TBC - by 2,1%, ProCredit - 1,3%. Liberty and Republic improved positions and respectively their share have increased by 1,4% and 1,6% in a year. Top-5 leading banks according to actives:

By January 1, 2014 cumulative actives of 21 banks operating in Georgia was 17,3 billion GEL, by January 1, 2013 - 14,355 billion GEL.

ADDRESS February 24, 2014 #43

caucasian business week

President of Georgia, Giorgi Margvelashvili, Administration of the President of Georgia, 1 M. Abdushelishvili Street, Tbilisi 0103, Georgia Prime Minister of Georgia, Irakli Garibashvili Government of Georgia 7 Ingorokva St Tbilisi 0114, Georgia Chairman of the Georgian Parliament, David Usupashvili Parliament of Georgia, 26 Abashidze str., Kutaisi 4600, Georgia Brussels, 18 February 2014 Your Excellencies, Dear Mr. Chairman, I am writing to you on behalf of the Council of Bars and Law Societies of Europe (CCBE) which represents the bars and law societies of 32 member countries and 12 further associate and observer countries, and through them more than 1 million European lawyers. Since its establishment in 1960, the CCBE has been in the forefront of advancing the views of European lawyers, protecting the rights of citizens and defending the legal principles upon which democracy and the rule of law are based. The Georgian Bar Association, which is an observer member of the CCBE, has drawn our attention to recent cases of intimidation of lawyers in Georgia. Particularly, the CCBE was informed that lawyer Romeo Sajaia has been verbally and physically abused by the prosecutor, when the lawyer came to the Prosecutor’s Office for a procedural action. Lawyer Nona Kirtadze, who came to the District Court of Gori to defend her client’s interests, was verbally abused in the premises of the court by an official of the Revenue Service, who tried to abuse her physically, but was stopped by other visitors and a court guard. Another case that was brought to the attention of the CCBE is the case of lawyer Goga Oniani who was subject together with his family members to pressure by state officials. The CCBE was informed that he was hindered by the prosecutor from representing his client’s case. The Georgian Bar Association also raised serious concerns with regard to the case of lawyer Dimitry Gabunia, threatened by a state official who recorded anonymously a meeting with lawyers of two parties settling their dispute and then handed the record to a third party. One of the lawyers was Dimitry Gabunia. The CCBE would like to stress that states have a positive obligation to guarantee the functioning of lawyers, including by safeguarding their security. The state’s duties constitute an important part of the guarantees for the functioning of lawyers, which are set out in the United Nations Basic Principles on the Role of Lawyers (1990) (hereafter, The Basic Principles). Particularly, Point 16 of The Basic Principles states: Governments shall ensure that lawyers (a) are able to perform all of their professional functions without intimidation, hindrance, harassment or improper interference; (b) are able to travel and to consult with their clients freely both within their own country and abroad; (c) shall not suffer, or be threatened with, prosecution or administrative, economic or other sanctions for any action taken in accordance with recognized professional duties, standards and ethics. Furthermore, Point 17 states: Where the security of lawyers is threatened as a result of discharging their functions, they shall be adequately safeguarded by the authorities. The CCBE would also like to highlight that according to the Basic Principles, Point 18,

Lawyers shall not be identified with their clients or their clients’ causes as a result of discharging their functions. In the preamble, the Basic Principles reinforce the role of governments in ensuring the role of lawyers. In particular it states: … The Basic Principles on the Role of Lawyers, set forth below, which have been formulated to assist Member States in their task of promoting and ensuring the proper role of lawyers, should be respected and taken into account by Governments within the framework of their national legislation and practice and should be brought to the attention of lawyers as well as other persons, such as judges, prosecutors, members of the executive and the legislature, and the public in general. The positive obligations of states regarding the rights of lawyers are also repeated in Recommendation N° R(2000)21 of the Committee of Ministers to members States on the freedom of exercise of the profession of lawyer (adopted on 25 October 2000) (hereafter, The Recommendation). The Recommendation, Principle 1 (General principles on the freedom of exercise of the profession of lawyer) states: 1. All necessary measures should be taken to respect, protect and promote the freedom of exercise of the profession of lawyer without discrimination and without improper interference from the authorities or the public, in particular in the light of the relevant provisions of the European Convention on Human Rights. (…) 4. Lawyers should not suffer or be threatened with any sanctions or pressure when acting in accordance with their professional standards. (…) 6. All necessary measures should be taken to ensure the respect of the confidentiality of the lawyer-client relationship. Exceptions to this principle should be allowed only if compatible with the Rule of Law. In view of the above, the CCBE urges you to investigate all these facts of intimidation of lawyers and to prosecute all perpetrators of harassment and violence against lawyers. The CCBE also asks you to take all necessary measures in order to prevent violence against lawyers in the future, and in order to ensure that Georgian lawyers are able to perform all of their professional functions without intimidation, hindrance, harassment or improper interference. All actions and threats against lawyers in the legitimate exercise of their professional duties should be immediately and effectively stopped. We thank you for taking note of our concerns. Yours sincerely,

Aldo Bulgarelli CCBE President

BANKING NEWS February 24, 2014 #43

caucasian business week

NBG:THE SANCTIONS AGAINST EXPERT: COMMERCIAL BANKS SOME IRANIAN COMPANIES REMAIN SHOULD NOT ACT AS INSURANCE IN FORCE BUSINESS MONOPOLISTS

anctions imposed by the National Bank of Georgia in respect of some Iranian companies are still in force and the country continues to cooperate with the UN and international organizations on this issue - said the President of NBG George Kadagidze. According to him, the National Bank meets all regulatory requirements and at this point, no changes are expected. “This does not mean that the sanctions are imposed on all Iranian companies indiscriminately. Everything depends on a particular client and a particular bank,”- the National Bank President states. As reported, Iran’s Deputy Ambassador in Georgia told “Commersant” that the Ministry of Foreign Affairs of the country were negotiating about the lifting of sanctions against Iranian companies. However, the Minister of Foreign Affairs of Georgia Maia Panjikidze denied this information saying that no negotiations on this issue are conducted.

TBC BANK RELEASES STATEMENT OVER NON-CORE BUSINESS ACTIVITIES

ast period our society and business sector makes accent on the so-called non-core or non-bank business activities by commercial banks and available restrictions in this direction. Therefore, the TBC Bank management has decided to openly express the bank’s position and strategy over the issue, the statement reads. TBC Bank has never made non-core businesses in line with the bank’s strategy and corporate culture, the statement reads. The TBC Bank is confined with only bank services and related financial

services like leasing (TBC Leasing), Quick Payment (TBC Pay), Plastic cards processing center (UFC) and similar activities that are related to bank activities and do not represent non-core businesses. “Exceptional cases when the bank is trying to cover bad loans should not be considered as non-core businesses. In this process the bank may temporarily accept problematic assets in ownership for further sales and covering the loan. TBC Bank plans to maintain this position in the future too and not to make non-core businesses”, the statement reads.

BANKS ALLOWED TO BUY AGRICULTURAL LAND Georgian Parliament amended the law on agricultural lands

hanges include the possibility, in some cases, to limit the effect of the law on the moratorium on sale of agricultural land until 31 December 2014, which was passed by

Parliament . This right is given to the government of Georgia if a subject who wants to purchase the land has relevant arguments showing that the sale of land

is in the interests of the country’s economy. According to the head of the Parliamentary Committee on Agriculture Gigla Agulashvili, a change in the law will help improve the economy of Georgia : “The changes will promote the development of agriculture, the introduction of new technologies, mastering of new crops, and ultimately , economic recovery ,” – the MP says.

PROGRESS BANK COMPLETED JANUARY WITH 170 169 GEL LOSS

SC Progress Bank completed January with 170 169 GEL loss. Bank’s net profit in 2013 equaled to 133 242 GEL. At the end of the first reporting month 2014, deposit portfolio (non-banking) equals to 37,4 million GEL (2013 -36,3 million GEL),

loans - 38,4 million GEL (2013-37 million GEL). Overall obligations of the bank equal to 40,8 million GEL (2013 - 39,9 million GEL). 78% of the bank’s stocks belong to Kakha Kaladze, 22% - to Bidzina Ivanisvili. Stock capital of Progress bank is 15,1 million GEL.

conomic expert Emzar Jgerenaia backs the initiative for restricting commercial banks from carrying out non-bank and non-core activities. “I think, first of all, they should be restricted to act as monopolists in the insurance sector. Today if you take a loan from Bank of Georgia, you must get insured at Aldagi insurance company. Commercial banks draw additional profits from the insurance sector and this practice should end. Commercial banks should be restricted to take direct part in the business, including in the housing, education and other sectors. These measures will strengthen the bank system and will make it more competitive. I absolutely back the idea that the issue with ownership of non-core assets by commercial banks be resolved”, the expert noted. At the same time, Emzar Jgerenaia has not introduced a clear program for restricting commercial banks to own non-core assets. “Direct interference in the business activities and this way of ownership of other businesses should be restricted. It is another issue in which form this restriction will be implemented, whether it will be entirely banned or they will own certain shares”, Jgerenaia added.

LASHA PAPASHVILI FAVORS THE SETTING LIMITS ON NON-CORE ASSETS FOR BANKS “I am in favor of regulation, generally all issues are to be regulated. This is particularly necessarily for small countries”

hese are antitrust issues and a very delicate matter. It cannot be banned with one wave of the hand, “- a former banker Lasha Papashvili says commenting on four experts’ initiative regarding a restriction on non-bank and non- core activities of commercial banks. “We should think, the government should carefully study this issue. The danger of a monopoly exists, of course, especially in small countries, so we should carefully study this issue,” - says the businessman. Lasha Papashvili does not exclude that the imposition of a limit on non-profile assets for banks as an acceptable model. “Maybe , why not . Much is limited for banks and some limits maybe imposed in this regard as well. It all depends on the policies of the new government. I favor a regulation, all issues should be regulated, especially in a small country, “ - explains Papashvili. Recall that four experts Levan Kalandadze, Irakli Lekvinadze , Levan Alapishvili and Giorgi Abashishvili proposed the government to ban non-bank and non-core activities of commercial banks. “Recently, a trend has been observed when commercial banks and subjects associated with them are trying to exclusively subjugate a number of business areas.

Experts applied with the above-mentioned initiative to the Prime Minister, the Speaker of Parliament and President of the National Bank.

BASIS BANK COMPLETED JANUARY WITH 1,061 MILLION GEL

SC Basis Bank completed January 2014 with 1,061 million GEL profit (01/02/13413 000 GEL, 01/02/12 - 100 113 GEL). For the reporting period clients’ deposits equal to 215 million GEL (1/02/13 -114 million; 01/02/12- 96,041 million GEL), credit portfolio - over 194,051 million GEL (01/02/13 -99,5 million; 01/02/12 - 75,218 million GEL). For the reporting period overall obligations are 131,088 million GEL (01/02/13- 170 million, 01/02/12 - 133,7 million GEL). Actives equal to 404,4 million GEL (01/02/13204,5 million, 01/02/12 -159 383 274 GEL). Revenues equal to 3 million GEL (01/02/13 - 2 million GEL) and are received from the loans of 2.1 million. Expenditures are 1,9 million GEL (01/02/13 -1,4 million GEL). Basisbank operates since 1993.

HPP caucasian business week

GIORGI KVIRIKASHVILI: “KHUDONI PROJECT IS SURELY ESSENTIAL FOR THE COUNTRY” Irakli Gharibashvili, the Prime Minister of Georgia, named the industrial development as a priority at the joint forum of the Georgian Government and the World Bank. Will Georgia be able to develop production with the existing energy potential and how important is the energy independence? – Giorgi Kvirikashvili, the Minister of Economy and Sustainable Development addressed these issues.

- Energy independence is surely important for development of our industrial potential. Development of local production, what we are discussing today, will be impossible without ensuring the energy competitiveness. Therefore, I think that this is the most important factor and so will be in the future as well. - What do you think about construction of large HPPs. Does Georgia need such projects? - In our opinion, the large HPPs will be essential for Georgia. Otherwise it would be difficult and unimaginable to develop industrial potential in the country. There is demand for several large projects, where investments cannot be made due to insufficient energy. Therefore, we need energy. However, social problems and factors are significant and we shall not choose the forceful approach. There have to be a dialogue and each problem accompanying large projects needs to be solved through this way. - Currently who is the owner of the land where Khudoni HPP is to be constructed? - The land initially taken is owned by the Ministry of Economy of course. There was to be measurements performed but the process has been suspended due to local problems. - So currently the land is owned by the state?

- Yes, major part of the land is owned by the state, i.e. part is owned by the state and part is transferred to the company. - What is the role of the Ministry of Economy in Khudoni HPP, specifically what segment are you controlling? - We control the issuance of the construction permit and also the transfer of land, as regards the energy part and conclusion of agreement with the investor, this is within the competence of the Ministry of Energy and Natural Resources. - Some experts think that implementation of large infrastructure projects is often impeded by lack of communication among public institutions. - This is not true, since we have a very good communication with the Ministry of Energy. There are of course discussions about various issues, but there is no such government with permanent consensus and we do not want it either. We are debating, arguing but in the final decision we take joint responsibility. - One of the arguments of Khudoni opponents is a doubtful financial profitability of the project. What will it bring for the country in reality? - Development of Georgian economy is impossible without large HPPs and the thing that energy will be generated in Georgia means that this energy is going to be used for the local market and afterwards, in case of surplus, for export. Overall, the project will be profitable. There are certain moments, which we are going to address with the investor company, i.e. there are some details that require elaboration though overall the project is needed for the country. - Nodar Khaduri, the Minister of Finance of Georgia answered the question of financial benefit of Khudoni HPP and the other large infrastructure projects: “our infrastructural projects provide for construction of e.g. the east-west highway and it is very important not so much from financial perspective, but for the country’s readiness for large investments. As regards the other projects, we are working on this and the respective ministries will make additional comments.”

IRAKLI SESIASHVILI: KHUDONI HPP IS A GUARANTEE FOR ENERGY SECURITY”

n my opinion, the energy security is the first priority for the country. Azerbaijan has oil we have water. Our oil is the water and it will have the value of gold in the future as experts say. Therefore, this project is very important for the country. 700 megawatts represent the energy security guarantee and cheap electricity in the long run. This means economic development, attraction of investments“ – said Irakli Sesiashvili, the Chairman of the defense and Security Committee of the Parliament in the program Provoker of Palitra TV when addressing importance of Khudoni Projects. Irakli Sesiashvili: “On the other hand, there are sensitive issues and concerns that the project implementation will affect our identity characteristics in all directions – nature, cemetery, church and etc.

Disrespect and negligence cannot be permitted here. We live and exist in order to maintain and preserve the cultural heritage and take care of it. In my opinion, that is why the government works with the public and the significant part of population understands this issue. The state has to find a reasonable solution. The population understands that Svaneti requires significant assignations today and tomorrow that this beautiful region, the diamond of the country shines and develops. This region has serious perspectives but those require respective funds.” As the Committee Chairman stated, he had a difficulty to express his position unilaterally but he was thinking that the project was needed for the country. “However, I would like to stress that without agreement and consultations with the population it would be impossible. This is the way chosen by the Government. As regards the risks, of course, there are some risks and threats, which need to be considered. I would not single out only that one, since there are demographic issues as well such as placement of population by territories and etc. These are significant issues, but in my opinion, these problems can be resolved. When we speak about risks and threats we forget that we face such problems in border regions. There are villages in Svaneti with no threats or risks though left by population naturally. We are going to pass the law on highland, therefore I will reiterate that local population as to approach this issue in a reasonable manner.”- said Irakli Sesiashvili.

February 24, 2014 #43

KAKHA KALADZE: THE CONSTRUCTION OF THE KHUDONI HPP WILL POSITIVELY AFFECT THE TARIFF STABILITY

akha Kaladze, the Minister of Energy in the program of Palitra TV addressed perspectives of Khudoni HPP. He made an important statement about tariff stability and project significance in terms of country’s energy security: „As regards the promise given in pre-election manifesto about rejection of gigantic HPPs, we do not have capacity to construct gigantic HPPS and Khudoni is not such either. We did not give up the country’s advancement and its development and energy independence. Once again I would like to reiterate that without our own electricity the country’s economic development as well as creation of new jobs will be impossible. I cannot say that Khudoni is a gigantic HPP, simply it is a large one. Compared to relatively developed countries, e.g. China where 21 thousand megawatt stations are being constructed, Khudoni would not be a gigantic at all. When you have 1500 megawatt Enguri, which is twice as big as Khudoni, the comparison is not fair. Mirror Surface of Khudoni water is much less than those of Enguri and Zhinvali. As regards the alternate project, which implies moving the cascade in an upper direction groundless statements were made. There are no other projects that would replace the one designed for the existing marks. We have worked a lot on these topics. All projects were reviewed, what could have been done as a replacement, but believe me there is no other project that is going to

bring such benefit to the country from energy or economic perspective, as 702 megawatt project planned for the current marks. Construction of Khudoni will help to stabilize tariff. All resources got mobilized to reduce the tariff by 4 tetri. Khudoni construction will make it possible to balance the prices. In general, the tariffs in any country around the globe are increasing. Turkey’s example can be brought here, where the price of one kwt is much higher.“

KHUDONI HPP INVESTOR TO POUR MILLIONS IN SVANETI DEVELOPMENT FUND ANNUALLY

s decided by the Khudoni HPP investor company, 5% of revenue will go directly into a fund serving the development of the region. This will be around a few million lari every year,” - this important statement was made by the technical director of Trans Electrica, David Mirtskhulava, on February the 7th during a meeting organized by the Georgian Infrastructural Projects Initiative. The meet, which included energy experts, economists and various non-governmental organizations, was dedicated to discussing the Khudoni project. David Mirtsukhalava further noted of the investor’s growing plans to aid the region, which includes participation in constructing the Lentekhi-Mestia connection route. “Coming from all this, I’d like to repeat that we do not oppose each other, and nor should anyone say that either party doesn’t love Georgia. Both sides love Georgia, we simply have different

viewpoints. No country has ever seen the issue of a hydro power plant construction and population relocation as an easy matter,” concluded Mirtskhulava.

YOUNG BARRISTERS DISCUSS LEGAL SIDES OF THE KHUDONI HPP PROJECT

he non-profit human rights NGO “Young Barristers” held a conference regarding the legal aspect of the Khudoni HPP project, with emphasis on issues like social and economic disputes, personal property rights, population relocation, and expropriation/compensation matters. The meet, held on February 20th, was attended by our own LevanKalandadze from the Georgian Infrastructural Projects Initiative, among various other organizations and legal experts. The cofounder and lead of the Young Barristers, ArchilKaikaitsishvili, noted that society is generally ill-informed of the details on the Khudoni HPP project and its legal side in particular, which is often overlooked in public disputes. And since the project’s implementation will have significant legal repercussions, this conference

carried an informative nature and welcomed a discussion by the end. Specific matters discussed included the exact calculation of the number of villagers facing relocation (769 individuals in total from 8 settlements), the various compensation options (which include either financial or property indemnities, or both). Special attention was devoted to showcasing the financial benefits of the project, exploring risks and challenges, and discussing culturally sensitive topics like the cemetery present in the village which is facing the bulk of the flooding. The legal analysis of the Khudoni HPP project is a lengthy research effort of the Young Barristers, and many more meetings are planned with municipality leaderships and local populations along with a conference in Mestia, all before a conclusive recommendation packet due in April.

AZERBAIJAN February 24, 2014 #43

caucasian business week

NON-OIL SECTOR JUMPS BY ALMOST 8 PERCENT

he total GDP of Azerbaijan amounted to 4.4 billion manat in January 2014, which exceeds the figure for the same period last year by 0.8 percent, the State Statistics Committee of Azerbaijan reported. The GDP per capita amounted to 465.6 manat ($593.6 dollars) in January, according to the report. During the reported period, 60.4 percent of GDP in Azerbaijan was formed in the areas of production, 50.1 percent - in industry, 7.8 percent - in construction, 2.5 percent - in agriculture, forestry and fish farms. Some 39.6 per cent of gross output was created in the service sector. Net taxes on products and imports made up 6.7 percent of the GDP in Azerbaijan. 7.8 percent of GDP originating in the service sector accounted for trade and repair of vehicles, 7.8 percent - transportation and warehousing, 2.1 percent - tourist accommodation and catering, 1.8

percent - information and communication services, 15.6 per cent - social and other services. Non-oil sector grew 7.7 percent compared to the same period of last year, its share of GDP was 53.8 percent. Value added taxes in the sphere of oil and gas extraction and processing fell by 6 per cent. The value added volume of production in oil and gas extraction and processing fell by 6 per cent. The value added production volume of in the construction sector grew by 18.9 percent, tourist accommodation and catering - 15.7 percent, trade and repair of vehicles - 9.3 per cent, information and communication services - 3.6 percent, agriculture, forestry and fish-breeding farms - 3.3 percent, transport and warehousing - 5.5 per cent, social and other services - 3.6 percent in Azerbaijan in January, 2014 compared with the same period last year. The official exchange rate for Feb. 17 was 0.7844 AZN / USD.

AZERBAIJAN, NETHERLANDS CONSIDER JOINT BUSINESS ACTIVITY

rospects for joint business activity of Azerbaijani and Dutch businessman were mulled as President of the Azerbaijan Entrepreneurs Confederation Mammad Musayev has received Dutch Ambassador Robert Jan Gabrielsen, AzerTag state news agency reported. Musayev said there was great potential for developing the agricultural cooperation, and noted the importance of increasing trade of agricultural products. He proposed the establishment of Azerbaijan-Netherlands Cooperation Council. The sides exchanged views over the projects implemented by the two countries in the agrarian sector. Musayev said the Confederation would support Dutch entrepreneurs wishing to do business in Azerbaijan. Gabrielsen, in turn, said he would attach great

of gas pumped into them. As, the head of the SOCAR company, which include the gas storage facilities on its sheet balance, Rovnag Abdullayev said, storage volumes in underground storage facilities of Azerbaijan rose to five billion cubic meters in total, whereas previously storage capabilities was 800 million cubic meters of gas. Gas volumes in underground gas storage facilities exceeded 3.43 billion cubic meters in Azerbaijan by the end of gas injection season, compared to about 3.3 billion cubic meters in the last season.

ADA UNIVERSITY TO ORGANIZE BAKU SUMMER ENERGY SCHOOL

aspian Center for Energy and Environment (CCEE) of ADA University together with the Azerbaijani state energy company will organize the eighth annual Baku Summer Energy School on July 5-18, 2014. The two-week certificate program will bring together world-renowned scholars, academicians and policy makers to examine and gain a better understanding of global and Caspian energy and environment issues. Besides the regional pipeline and energy security developments, participants will become acquainted with a wide range of issues such as fundamentals of energy, energy law and economics, environmental impacts, management in oil and gas industry, and the strategic outlook of SOCAR. Baku Summer Energy School provides ample opportunity to meet and network with public and private sector leaders from all over the world. Participants will have a chance to discuss challenging issues with the Minister of Foreign Affairs, Minister of Energy, Minister of Ecology and Natural Resources of Azerbaijan, who will be key speakers along with executives of oil companies such as TAP, BP, Exxon, TOTAL, Statoil, LUKOIL.

he Dubai Chamber of Commerce invites the Azerbaijani entrepreneurs to invest in the Islamic finance sector in the emirate, which is scheduled to become an Islamic financial hub in the region. Vice-President of the Chamber, Hassan al-Hashemi made the proposal at the roundtable discussion on “Islamic Finance” held in Baku, Khaleej Times reported. The roundtable was attended by the representatives of the banking sector, consulting firms and business circles of both countries. The Dubai Chamber of Commerce furthermore, invites Azerbaijani businessmen to invest in the emirate, using a favorable investment climate. The experience of UAE companies in the field of Islamic finance, successfully enduring the global crisis, may be of interest to Azerbaijani

businessmen, Al-Hashemi said. “Baku office of the Chamber is ready to provide any support for the development of relations between the entrepreneurs.” The Azerbaijani businessmen also were invited to participate in the 10th session of the World Islamic Economics (WIFE), which will be held in Dubai .

JAPANESE INVESTORS EYE AZERBAIJAN’S NON-OIL SECTOR: ENVOY

importance to cooperation with the Confederation and support efforts to enhance relations between Azerbaijani and Dutch businessmen. The trade turnover between Azerbaijan and the Netherlands amounted to $149.71 million in the first eleven months of 2013, according to Azerbaijan’s State Customs Committee. Some $143.75 million out of this amount fall on imports, while the export of Azerbaijani goods to the Netherlands amounted to $5.96 million in this period. An Azerbaijani-Dutch Business Forum, organized by the Azerbaijan’s Economy and Industry Ministry Azerbaijan Export and Investment Promotion Foundation (AZPROMO) was held in Baku last November. The event brought together representatives of about 50 companies in industry, shipbuilding, consulting, logistics and other sectors of the two countries.

SOCAR FURTHER EXPANDS UNDERGROUND GAS STORAGE zerbaijan’s state news agency SOCAR has commissioned a new well on the Kalmaz onshore field on the basis of which operates one of two underground gas storage facilities in Azerbaijan. The company reported that the daily debit of the well is 240,000 cubic meters of gas. There are two underground gas storage facilities in Azerbaijan: Kalmaz and Garadagh. Drilling of wells for underground storage facilities is carried out in order to increase the volume

AZERBAIJANI BUSINESSMEN INVITED TO INVEST IN UAE

The list of the instructors will be complemented by leading experts from world academia such as University of Oxford, Sciences-Po, Princeton University, Russian Academy of Sciences, etc. Finally, the program gives outstanding recreational opportunities and unique site visits connected to Azerbaijan’s oil and gas industry of the past and present, such as the Baku-Tbilisi-Ceyhan pipeline, the Sangachal oil terminal, Mud Volcanoes, and the museums of Azerbaijan’s first oil baron, Haji Zeynalabdin Tagiyev and the world-renowned Nobel Brothers. Upon completion of the program, participants will be awarded certificates by the ADA University. To apply, please visit http://ccee.ada.edu.az/ summerschool The CCEE is a core institution providing policy relevant and academic research, teaching and training, as well as variety of outreach activities in the sphere of energy and environment in the wider Caspian region. It studies energy and environmental issues in a comprehensive and integrated manner, guiding effective and pragmatic policies to address regional and global energy issues. It strictly adheres to the values of rigorous ethic of objectivity, critical awareness, and civic engagement.

apanese companies are interested in investing in the non-oil sector of Azerbaijan, Japan’s Ambassador to Azerbaijan Tsuguo Takahashi said on February 20. He made the statement in a meeting with Azerbaijan’s Deputy Prime Minister as well as Chairman of the State Committee for Refugees and IDPs Ali Hasanov. Takahashi further said Japanese companies are actively involved in the development of oil fields and pipelines of Azerbaijan. The ambassador expressed his confidence that Japan and Azerbaijan would continue to develop political, economic and humanitarian ties. Hasanov, in turn, said that Japan and Azerbaijan lifted bilateral ties to a higher level, describing Japan and Azerbaijan as ‘friendly’ countries. He also expressed his confidence that this cooperation will continue to develop successfully. Touching upon the Nagorno-Karabakh conflict, Hasanov said Armenia’s aggression forced over 1 million people from their homes and resulted in occupation of 20 percent of the Azerbaijani lands. “The occupied lands are currently used for drug trafficking and cultivating. The lands are considered as a transnational crime zone,” he said. Hasanov pointed out that President Aliyev’s policy enabled Azerbaijan to gain more international backing to its fair position, adding that this dis-

pute has not been solved yet because of the nonconstructive stance of Armenia, which disregards resolutions on the Nagorno-Karabakh conflict adopted by reputable international organizations. Deputy Prime Minister also briefed the ambassador on the measures to improve social and housing problems of refugees and IDPs put in place in the country under Azerbaijani President and with the assistance of international organizations. He emphasized the role of international humanitarian aid, loans, Japan’s technical cooperation and grant projects in making living conditions of IDPs and refugees better. Takahashi, in turn, said despite the hard period Azerbaijan went through in 1991, the country managed to achieve rapid economic expansion thanks to the effective use of energy resources, adding that the country is becoming stronger not only economically, but also politically given its tenure a member of the UN Security Council. The diplomatic relations between Azerbaijan and Japan were established in 1992. Relations between the two countries continue developing. Japan was one of the first countries to support Azerbaijan’s forward-looking oil strategy. Today two major Japanese companies Itochu and Impex are involved in the Contract of the Century. Leaders of Japanese business, Mitsubishi, Mitsui, Marubeni, and Sojits are involved in the energy and infrastructure projects in the country.

AZERBAIJAN SEES RISE IN CONSTRUCTION MATERIALS PRODUCTION

he companies dealing with production of construction materials in Azerbaijan, produced goods worth 23.2 million manats in January 2014. The figure is more by 7.8 percent compared to the figure for 2013, the State Statistics Committee reported. The companies produced 164.9 tons of cement

(annual growth of 41.5 percent), 9,300 tons of plaster (down 52 percent) and 63,800 tons of ready-mixed concrete (a decrease of 25.4 percent), according to the report. The production of concrete building structures has doubled, reaching 5.3 million tons, the production of recycled marble, travertine, alabaster and their products increased by 61.7 percent to 686.6 tons.

12 RUSSIAN CURRENCY HITS NEW RECORD LOW AGAINST EURO

CIS S&P SAYS UKRAINE “LIKELY TO DEFAULT”

he Russian ruble plunged further in initial trading on Wednesday, hitting yet another record low value against the euro, AFP reported. The ruble dropped below 49.0 to the euro for the first time, to show a fall of 8 percent so far this year. The euro was buying 49.01 rubles, and the dollar rose to 35.61 rubles. Russia is being affected by a change of direction in US monetary policy, which has undermined the currencies of several emerging economies, analysts say.

TRUCKING BODY WARNS RUSSIA AGAINST BORDER RESTRICTIONS

he International Road Transport Union (IRU) warned on Wednesday that Russia could be excluded from an international system of customs guarantees unless Moscow scraps what it claims are illegal border restrictions, Reuters reported. Dropping out of the system of “TIR” guarantees would raise costs for 40 percent of Russia’s overall imports, which were worth $110 billion in 2013. The system of customs guarantees allows truckers to seal their containers at departure and avoid lengthy customs checks.

RUSSIAN FINANCE MINISTRY SUPPORTS DUTY-FREE INTERNET TRADING RESTRICTIONS

he Russian finance ministry has supported a draft bill on restrictions in duty-free internet trading, Interfax reported. The ministry proposes limiting such purchases to 150 euros and 10 kilograms. Currently, individuals are allowed to receive parcels upto 1000 euros and 31 kilograms per month.

UKRAINE SHOULD TURN TO IMF - US TREASURY’S LEW

kraine should ask the International Monetary Fund for help, US Treasury Secretary Jack Lew said. “At the core they have an economic crisis and they are going to need to deal with it,” Reuters quoted Lew as saying at a conference hosted by the World Affairs Council. The best mechanism for Ukraine to deal with it “would be to come to the IMF and have a package where they put in place economic reforms,” Lew said. They could “get the support that they need in exchange for the steps to fix their economy,” he added.

RUSSIA’S GDP DOWN 0.5% IN JANUARY

he growth of Russian GDP in January was 0.7 percent on an annual basis, the 0.5 percent fall compared to December, according to Deputy Economic Development Minister Andrey Klepach. The preliminary estimate is 0.7 percent year on year, taking into account seasonal factors, he said. The fall of manufacturing output in January was 1.8 percent, according to a preliminary estimate.

GAZPROM FINDS RUSSIA’S BIGGEST SHELF OILFIELD IN SAKHALIN

dditional exploration of Gazprom’s Yuzhno-Kirinskoye gascondensate field showed that it contains 464 million tons of oil, Vedomosti daily reported, citing its sources. Reserves of extractable amounted to 682 billion cubic meters, the paper reports. Earlier this month, Gazprom said it was going to invest up to 10 billion rubles ($279 million) in the Kirinskoye gas condensate field in 2014.

February 24, 2014 #43

caucasian business week

&P has cut Ukraine’s rating one notch deeper into junk status, as the political instability grows and the number of dead has climbed to 80. It says the government has little chance to service its debt and further help from Russia is uncertain. Standard and Poors’ reduced Ukraine’s rating from CCC to CCC-plus with a negative outlook. “Ukraine will default in the absence of significantly favourable changes in circumstances,” which it doesn’t anticipate, the Financial Times cites S&P. “The clashes between protesters and security forces that began on Feb. 18 lead us to conclude that a conciliatory end to the political stand-off is now out of reach,” the agency said. WATCH RT’S LIVE UPDATES Further aid from Russia is also now a big question, as the Ukraine leadership has become more

uncertain than ever, the agency added. “We believe that the Russian government’s support for Ukraine is tied to the current leadership and its political orientation away from the EU and toward Russia. As a result of the intensifying political turmoil in Ukraine, we consider that continued Russian support up to the committed $15 billion is increasingly uncertain.” “Should Russian financial support fall short of Russia’s commitments, we expect the government of Ukraine to default on its foreign currency obligations,” the report added. However, Russia’s top officials have said they are not going to scrap the agreed plan for financial aid to Ukraine, adding though that first the situation in the country should stabilize. On Monday Russia’s Finance Minister Anton Siluanov said Moscow would buy $2 billion of Ukrainian Eurobonds by the end of this week, in addition to the $3 billion it bought in late Decem-

ber. The deputy head of the presidential administration and Vladimir Putin’s spokesman, Dmitry Peskov, also said that Russia would stick to the agreement to provide money to Kiev, but added that the situation in the country must stabilize so that the payments could continue. On Thursday the Russian Prime Minister Dmitry Medvedev said cooperation with Ukraine wouldcontinue along agreed lines, though adding that Ukrainian officials need to stay legitimate and effective, rather than “a doormat for everyone to clean their feet.” The sliding hryvnia is also adding pressure on government solvency, as over a half of Ukraine’s debt is denominated in foreign currency. Ukraine’s hryvnia hit its all-time low of 8.95 to the dollar two days ago, despite every effort by the government to keep the currency in check. S&P says the hryvnia is highly likely to devalue soon. Timur Nigmatullin, an analyst from Investcafe, says that all the key figures show that Ukraine’s solvency is now extremely weak, regardless of the next tranches from Russia. The budget for 2013 was based on the absolutely unrealistic GDP growth of 4.5 percent, while in reality the economy was balancing between stagnation and recession last year. “As a result, the budget deficit reached $10 billion,” Nigmatullin said. Also, to support the hryvnia, Ukraine’s government has been actively spending money from its gold and forex reserves, which have fallen to a critical level of $17.8 billion. “This would hardly cover two or three months of imported goods and services and is half the monetary base.” If Ukraine doesn’t find a new source of finance, it would default on its obligations, the analyst concluded.

SLIDING RUBLE TO DRAG RUSSIAN ECONOMY INTO RECESSION

ussia’s GDP growth turned negative in January, with the lowest investment since 2010. Analysts say uncertainty surrounding the ruble, which hit its all-time low against the euro on Wednesday, is weighing on the economy and could drag it into recession. Russia’s GDP shrank during the first month of 2014, though so far there are no exact numbers, a source told the Vedomosti newspaper. Inward investment slid 7 percent year on year in January, as real income was down 1.5 percent and wages grew the slowest since 2009, according to Wednesday’s report by Russia’s statistics service Rosstat. Retail growth also slowed to a four-year low at 2.4 percent. The investment slump, slowdown in consumer demand and a real fall in personal income is all very alarming, said Alexander Morozov from HSBC. “Even if we don’t fall into recession, we shouldn’t account for an economic recovery,” Morozov said. Though a recession is now a real threat for

Russia, it’s too early to make any far–reaching conclusions, as technically it is defined as two quarters of economic contraction, the HSBC analyst explained. “My forecast for investment was extremely pessimistic – minus two percent. And given such a sharp slowdown in retail, I don’t exclude that the economy is de-facto in recession,” says Evgeny Nadorshin, an economist from AFK Sistema. WEAK RUBLE, BANKING ‘CLEAN -UP’ WEIGHS THINGS DOWN Currency operations have become more attractive for Russians than economic activity, as the Russian ruble is being extremely volatile, explains Natalia Orlova from Alfa-Bank. This is a bad signal, as similar things were happening between the autumn of 2008 and the start of 2009, Orlova said. “Everybody has stopped dead, nobody knows what will happen with the ruble,” agrees Valery Mironov from the development center of the Highest School of Economics. Ruble devaluation will benefit Russian export-

ers, but it won’t have any effect on investment, as the companies will keep their money in dollar accounts abroad, Mironov said. On Wednesday the Russian ruble plunged further in initial trading, hitting another record low against the euro. The currency dropped below 49.0 to the euro for the first time, to show a fall of 8 percent so far this year. The euro was buying 49.01 rubles, and the dollar rose to 35.61 rubles. Analysts say the recent fall was caused by the announcement by Russia’s Ministry of Finance that it would buy about $6 billion (212 billion rubles) from the market by the end of May to transfer additional oil revenue to the Reserve Fund. The so–called banking “clean-up” in Russia was another huge blow to the economy, as the country’s banks have cut lending and people are shifting their savings from smaller banks to big state-owned ones, Nadorshin said. In December banking deposits grew at the slowest rate in 13 years, with the country’s biggest lender Sberbank being accountable almost for the entire growth, Vedomosti reports.

EIB STOPS WORK IN UKRAINE AS VIOLENCE ESCALATES ACROSS THE COUNTRY

he European Investment Bank (EIB) has frozen its activities in Ukraine, after the renewed wave of violence in Kiev left 26 people dead. “For the time being the situation is so severe that it would be politically the wrong signal, but also irresponsible vis-a-vis the people we asked to do the job, to do active business in Ukraine,” Reuters quotes Werner Hoyer, the EIB President, who said the Ukraine violence is the worst since the former Soviet republic gained independence. At least 26 people have been killed in Kiev as the Ukrainian capital plunges back into chaos. Rioters have attacked police, seized buildings, torched vehicles, and set up burning tire barricades. Nine policemen are among the dead, all of whom died from gunshot wounds. FOLLOW RT’S LIVE UPDATES The $1 billion worth government bond that ma-

tures in June reached an all-time high of 27.99 percent, hopping 5.06 percentage points during the afternoon. The hryvnia lost 1 percent against the US dollar to 9.0 hitting a 5-year low. The main Ukrainian Equities Index UX is consequently falling for the second day, losing 4.2 percent. Even “brave heart” investors are getting out of assets of Europe’s riskiest borrower, after President Viktor Yanukovich told law enforcement to use “all means” necessary to restore order. The violence against protestors in Ukraine came in for harsh criticisms from European countries with Poland, France and Germany, urging sanctions against Ukrainian officials. “The violent escalation of the political standoff brings nothing good to external debt, especially in the short term,” Vladimir Osakovskiy, a Moscow-based economist at Bank of America Corp, told Reuters. “In the absence of clarity in politics in the next few months, we see escalating risks

for Ukraine to service its debt.” Ukraine has $17 billion of liabilities, excluding interest, due to be repaid through the end of 2015, a record current-account deficit and foreign reserves at the lowest level since 2006, according to Bloomberg data. Russian Finance Minister Anton Siluanov this week promised, Moscow will provide a second bailouttranche worth $2 billion to Ukraine as part of the $15 billion loan programme, after several weeks of stalled payments to Kiev. Earlier this month the Fitch Rating agency downgraded Ukrainian debt from B to a pre– default level CCC, referring to financial instability. Rioting in Kiev renewed on February 18 after a break of several weeks. Mass protests began in November after the government decided not to sign an association agreement with EU. Since then the political crisis in Ukraine has remained unresolved.

WORLD NEWS February 24, 2014 #43

SPAIN BANKS’ BAD LOANS RATIO ROSE TO NEW 13.6% HIGH IN DECEMBER

panish banks’ bad loans as a percentage of total lending rose to 13.6 percent in December, Reuters reported, citing data from the Bank of Spain published on Tuesday. The figure marks a fresh record as credit shrank on a monthly basis. The banks’ bad loan ratio was 13.07 percent in November. The volume of non-performing debts rose by 4.6 billion euro to 197 billion euro in December from a month earlier. Total lending fell by 24 billion euro to 1.45 trillion euro. Bad loan ratio is expected to keep rising over the coming months.

UK INFLATION DIPS BELOW 2% TARGET FOR FIRST TIME SINCE 2009

caucasian business week

FACEBOOK BUYS MOBILE MESSAGING SERVICE WHATSAPP FOR $19BN

n its largest acquisition Facebook has bought a mobile messaging service WhatsApp for $19 billion in cash and stock. The social media giant is paying $12 billion in stock and $4 billion in cash for WhatsApp. The agreement also includes an extra $3 billion in restricted stock “to be granted to WhatsApp’s founders and employees that will vest over four years subsequent to closing,” Facebook said in a statement. “WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable,” Mark Zuckerberg, Facebook founder and CEO, said in the statement. WhatsApp is used by over 450 million people per month, Facebook said, adding that the messaging

service is growing steadily and “currently adding more than one million new registered users per day.” Jan Koum, co-founder and CEO of WhatsApp, will join Facebook’s Board of Directors. “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,” Koum said. “We’re excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world.” Facebook will keep WhatsApp as its own service, similar to when it acquired Instagram for the now dwarfed sum of $715.3 million. The purchase of WhatsApp is Facebook’s largest acquisition to date.

CHINA’S DONGFENG TO PURCHASE PEUGEOT STAKE FOR $1BN

hinese state-owned Dongfeng Motor has signed an agreement to purchase a stake in Peugeot Citroen for 800 million euro ($1.1 billion), CNN reported, citing an exchange filing made on Wednesday in Hong Kong. The French government will also acquire an equal stake in Peugeot on the same terms. All three stakeholders will have two board seats as part of the deal. The deal expands on an existing joint venture between Dongfeng and Peugeot, which allowed the French automaker to manufacture and sell its models in China.

SCOTTISH GOVT TO GET POWER TO ISSUE INVESTMENT BONDS

he Scottish government will be given power to issue its own investment bonds, the BBC reported, citing UK ministers. The move will give Scotland an extra source of financing when it gets new borrowing powers in 2015. The Scottish government said the move was “nothing new,” adding that only independencewould give Scotland full control of its economy and finances.

REFORMS TO ADD $2.25TN TO GLOBAL ECONOMY BY 2018 - IMF

he share of Gazprom on the European and Turkish gas market has increased from 26 percent in 2012 to 30.07 percent in 2013, the Russian gas giant has said. Last year, the company supplied to Europe and Turkey 162.7 billion cubic meters of gas. The whole market is estimated at 541 billion cubic meters of gas. The current 30 percent is a record for Gazprom as the previous maximum was reached in 2011 – 27 percent (150 billion cubic meters of gas), Interfax said.

usiness growth in the eurozone eased this month, a closely watched survey suggests. The Markit eurozone composite purchasing managers’ index (PMI) dipped to 52.7 from 52.9 in January. The bloc’s economy continued to expand at a “robust pace,” according to the survey. German companies saw strong growth, while activity among French firms declined for the fourth month in a row. A similar survey in China indicated on Thursday that the country’s manufacturing sector had contracted for the second consecutive month.

eforms could add $2.25tn to the size of the global economy by 2018, the Financial Times said, citing an International Monetary Fund report published ahead of G20 finance ministers meeting this weekend. Efforts to rebalance, reform product and labor markets, and boost infrastructure investment could increase global growth by 0.5 percentage points a year, the report says. It is not clear whether coordinating reforms at the G20 will make individual countries more likely to carry them out.

ritain’s inflation rate slipped in January below the official 2 percent target for the first time since 2009, AP said. This makes it less likely that the Bank of England will move soon to raise interest rates. Consumer prices were up 1.9 percent in the year to January, down from the 2 percent rate in December, official figures showed on Tuesday. The drop was due to retailers slashing prices on furniture, alcohol and tobacco.

GAZPROM’S SHARE OF EUROPEAN GAS MARKET REACHES 30%

BUSINESS GROWTH IN EUROZONE SLOWED IN FEBRUARY - PMI

FINANCIAL DEATH TOLL RISES TO 6, AS JP MORGAN EMPLOYEE JUMPS FROM ASIAN HQ

third JP Morgan employee has died under mysterious circumstances in a matter of few weeks. A still unidentified “Chinese male in his thirties” jumped from the roof of Charter House, the 30 floor Hong Kong headquarters of JPM. An eyewitness told the South China Morning Post he saw a man climb onto the roof of the skyscraper shortly after lunchtime on Tuesday. Despite attempts to talk him down, the man jumped before emergency crews arrived, landing on the road outside the building. The man who jumped was taken to Ruttonjee Hospital where he was declared dead on arrival. The unidentified man, aged about 33, was a junior employee who served a supporting function at the bank and wasn’t involved in investment activity, according to Bloomberg. Rumors circulating in the media say that his last name was Li. A colleague of the man said that before the suicide he had complained about heavy work-related stress, though police say no suicide note has been found. “Out of respect for those involved, we cannot yet comment further. Our thoughts and sympathy are with the family that’s involved at this difficult time,” JP Morgan said in an e-mailed statement. The latest apparent suicide marks the 3rd sudden death at JP Morgan and the 6th in the global financial world in just a few weeks. On February 3, a 37 – year old JP Morgan executive director died at his home in Stamford, Connecticut. The cause of death, however, remains unclear and will be determined after a toxicology report is completed. About a month ago, 39-year-old Gabriel Magee, a JP Morgan vice president in technology operations, died after falling from JPMorgan’s London headquarters. Other apparent business suicides include a 58year-old former senior manager for Deutsche Bank, who was found hanged in his home; Karl Slim, the managing director of Tata Motors aged 51, and 50-year-old Mike Dueker who worked for Russell Investment and was found dead on January 29 close to the Tacoma Narrows Bridge in Washington State after being reported missing

on the same day. Also reporter David Bird, who works in the Dow Jones newsroom went missing on January 11 when he left his New Jersey home for a walk. FINE BURDEN Major world banks are under regulatory scrutiny over their so called “pre-crisis cheating” and multi-billion dollar rigging of benchmark and commodity rates. JP Morgan and Deutsche Bank have been hit the hardest, with JPM being fined a record $4 billion and Deutsche Bank facing a $1.93 billion bill. In January, JP Morgan also admitted it had aided the Bernie Madoff Ponzi scheme by turning it a blind eye, but the US Department of Justice decided then not to send anyone from the firm to jail under a deferred prosecution agreement. In March 2013 the US Senate Permanent Subcommittee on Investigation published a 307 page report that described in detail JP Morgan’s financial irregularities and deliberate masking of some critical financial information. More recently, JP Morgan was fined $614 million for concealing the full risk associated with the mortgage securities it sold Freddie Mac and Fannie Mae ahead of the crisis. In September last year JP Morgan Chase agreed to pay $920 million in fines to settle probes related to the “London Whale” financial debacle of 2012. Bank employee Bruno Iksil, nicknamed “London Whale” for the size of his operations, was notorious for his “casino bets” of other people’s money, which caused the bank about $6.2 billion in losses. Overall, eight world banking giants were fined a record combined total of €1.71bn by the European Commission for manipulating with the benchmark Libor and Euribor rates. According to the EU investigation, Deutsche Bank, Barclays, Société Générale, RBS, UBS, JPMorgan, Citigroup and RP Martin were part of two separate illegal cartels which conspired to manipulate Euribor and Libor to benefit their own positions in euro and Japanese yen-denominated interest rate derivatives markets. Deutsche bank is now running internal probes into whether its traders manipulated interbank and foreign exchange rates.

UK GOVT. FINANCES SHOW £4.7BN SURPLUS IN JANUARY

overnment finances for January showed a surplus of 4.7 billion pounds, the BBC reported, citing the Office for National Statistics. The figure was less than the 6 billion surplus recorded a year ago. For the financial year-to-date, government borrowing was 90.7 billion pounds, 4 billion pounds lower than at the same point a year earlier.

GUCCI POSTS WEAKEST QUARTERLY SALES GROWTH IN 4 YEARS

ering’s Gucci luxury-goods brand posted the weakest quarterly sales growth in four years, amid softening demand in Europe and China, Bloomberg said. The fourth-quarter comparable sales gained 0.2 percent, according to Paris-based Kering. The shares fell as much as 3.7 percent, wiping about 700 million euro ($960 million) off Kering’s market value. Revenue growth has been under pressure for about a year as luxury consumers switch to brands they perceive to be more exclusive.

SHELL AGREES TO SELL AUSTRALIAN DOWNSTREAM BUSINESS TO VITOL FOR $2.6BN

il giant, Royal Dutch Shell, has agreed to sell its Australian downstream business to oil trading firm, Vitol, for $2.6 billion, the BBC said. The sale includes a refinery in Geelong, 870 service stations, the company’s bulk fuels and chemicals unit, and part of its lubricants business. Shell is looking to dispose of assets as part of a new strategy.

PUBLICITY caucasian business week

February 24, 2014 #43

TBILISI GUIDE February 24, 2014 #43

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 16 Akhmeta Str., Avlabari, 0144 Tbilisi. E-mail: embassy.georgia@mfa.gov.lv Greece Republic Embassy 37. Tabidze St. Tbilisi Tel: 91 49 70, 91 49 71, 91 49 72 Czech RepublicEmbassy 37 Chavchavadze St. Tbilisi Tel: 291-67-40/41/42 E-mail: czechembassy@gol.ge Web-sait: www.mzv.cz Japan Embassy 7 Krtsanisi St. Tbilisi Tel: 75 21 11, Fax: 75 21 20 Kingdom of Sweden Embassy 15 Kipshidze St. Tbilisi Tel: +995 32 2 55 03 20 , Fax: +995 32 2 22 48 90 Kingdom of the Netherlands Embassy 20 Telavi St. Tbilisi Tel: 27 62 00, Fax: 27 62 32 People’s Republic of China Embassy 52 Barnov St. Tbilisi Tel: 225-22-86, 225-21-75, 225-26-70 E-mail: zhangling@access.sanet.ge Republic of Bulgaria Embassy 15 Gorgasali Exit, 0105 Tbilisi, Georgia Tel: +995 32 291 01 94; +995 32 291 01 95 Fax: +99 532 291 02 70 Republic of Hungary Embassy 83 Lvovi Street, Tbilisi Tel: 39 90 08; E-mail: hunembtbs@gmail.com State of Israel Embassy 61 Agmashenebeli Ave. Tbilisi Tel: 95 17 09, 94 27 05 Embassy of Swiss Confederation’s Russian Federation Interests Section Embassy 51 Chavchavadze Av., Tbilisi Tel: 291-26-45, 291-24-06, 225-28-03 E-mail: RussianEmbassy@Caucasus.net Ukraine Embassy 75, Oniashvili St., Tbilisi Tel: 231-11-61, 231-12-02, 231-14-54 E-mail: ukraina_pu@wanex.net; emb_ge@mfa.gov.ua Consular Agency: 71, Melikishvili St., Batumi Tel: (8-88-222) 3-16-00/ 3-14-78 Republic of Turkey Embassy 35 Chavchavadze Av., Tbilisi Tel: 225-20-72/73/74/76 E-mail: turkemb.tbilisi@mfa.gov.tr Address: 8, M. Abashidze str. Batumi, Georgia tel: (8-88-222) 7 47 90 Republic of Azerbaijan Embassy Kipshidze II-bl . N1., Tbilisi Tel: 225-26-39, 225-35-26/27/28 E-mail: tbilisi@mission.mfa.gov.az Address: Dumbadze str. 14, Batumi Tel: 222-7-67-00 Fax: 222-7-34-43 Republic of Armenia Embassy 4 Tetelashvili St. Tbilisi Tel: 95-94-43, 95-17-23, 95-44-08 E-mail: armemb@caucasus.net Web: www.armenianembassy.ge Consulate General, Batumi Address: Batumi, Gogebashvili str. 32, Apt. 16

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

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

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

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

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

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

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

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

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

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

PUBLICITY caucasian business week

February 24, 2014 #43