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July 28, 2014 #64

July 28, 2014, Issue 64

caucasian1 Khaduri: January to June GDP Growth will Exceed 6%

BE INFORMED, DO BUSINESS

GEORGIA GEORGIA AND AZERBAIJAN HAVE ALREADY INVESTED $2,8 BILLION IN BAKU-TBILISI-KARS

$2,8 million has been invested in the construction of Baku-Tbilisi-Kars railroad in Georgia and Azerbaijan, - embassy of Azerbaijan in Moldova Namik Aliev stated on the meeting with Minsiter of Transport and Road Infrastructure of Moldova Pg. 2 - Vasil Bornar.

RUSSIA’S STATE VTB BANK TO STRENGTHEN POSITIONS IN GEORGIA AND UKRAINE

GEORGIA’S EXPORTS TO EU GROW BY 41%, TO CIS - 11%

eostat informs that in January-June 2014 foreign trade turnover of Georgia with EU countries equaled to 1,408 billion. Pg. 2

H&M MAY ENTER GEORGIAN MARKET

well-known brand H & M might enter the Georgian market. “CBD Development” confirms negotiations with the brand in a conversation with CBW. Pg. 5

CIS UKRAINE AND EU SIGN FREE TRADE ZONE DEAL

kraine has signed the economic part of the Association Agreement with the EU, with Georgia and Moldova also joining the pact, even though big economic risks lie ahead. Pg. 10

AZERBAIJAN AZERBAIJAN REMAINS GEORGIA’S 2ND LARGEST TRADE PARTNER

zerbaijan remains the second largest trade partner of Georgia, the foreign trade report of the National Statistics Service of Georgia shows. Pg. 11

WORLD NEWS CAN AFRICA’S DESERT SUN POWER EUROPE?

p to 20% of power demand in Europe can be obtained by connecting African deserts to European cities, according to the DESERTEC Foundation. Pg. 13

VTB to Decapitalize VTB Bank Georgia

ussian ВТБ plans decapitalization of the subsidiary banks in Georgia and Ukraine. Russian state credit organization made official statement about it. Increase of the authorized capital of Georgian subsidiary VTB Bank Georgia is planned by 116,24 million GEL ($65,5 million). Authorized capita of Ukrainian subsidiary will increase by 1,2 billion Hryvna. Decapitalization of Georgian subsidiary will be provided by placement of 116,24 million additionally emitted stocks, nominal of which will be 1 GEL. Decapitalization of Ukrainian subsidiary will be provided by emission of the stocks of 12 billion; nominal of each stock will be 0,1 Hryvna. In the case of making decision about increase of the authorized capital, Russian bank may purchase 112,53 million stocks of VTB bank Georgia for the market price determined by independent evaluator company Center for Professional Evaluation. Besides, share of ВТБ in the capital of Georgian subsidiary equals to

DREAMLAND OASIS RESORT ZONE CONSTRUCTION STARTS IN CHAQVI

no less than 96,81%. In the case of refusal of existing shareholders of Georgian bank on the privileged right to redemption stocks, VTB will be able to purchase remaining 3,7 million stocks. In this case share of ВТБ in VTB Bank Georgia will be no less than 98,1%. In the case decision making about increase of the authorized capital of Ukrainian subsidiary, hey can be able to purchase no more than 11,997 billion stocks. Besides, share of mother-company in the authorized capital is no less than 99,9737%. In the case of refusal of the existing stockholders, the mother-company can purchase additionally 3,156 million stocks. In this case their share in the authorized capital will be 99.9737%. The Bank’s supervisory board members are Vasil Titov, Mikheil Yakunin, Igor Piun, Grigol Lomidze, Vsevolod Smakov. VTB Georgia stakeholders are as follows: Russian VTB Bank (96.80%) and LLC Lakarpa Enterprise Ltd (1.80%). The Russian government holds a 59% stake in Russian VTB. Pg. 5

Kurt Conti hopes that they will become contractors of Georgian government on Anaklya port

Pg. 2

Pg. 4

Seaborne Silk Road MIKHEIL VARDOSANIDZE Pg. 6

Mamuka Bakhtadze: Our ambition is to deliver containers from the Black Sea to the Caspian Sea in 48 hours

Pg. 6

Guga Tsanava: RAKIA is very strong in free industrial zones in Ras Al Khaimah so they know exactly how it should be run Pg. 4

MAIN EVENTS caucasian business week

July 28, 2014 #64

RBC: RUSSIA CONSIDERS 3 VERSIONS TO “PUNISH” GEORGIA, MOLDOVA AND UKRAINE

R GEORGIA AND AZERBAIJAN HAVE ALREADY INVESTED $2,8 BILLION IN BAKU-TBILISI-KARS $2,8 million has been invested in the construction of Baku-Tbilisi-Kars railroad in Georgia and Azerbaijan, - embassy of Azerbaijan in Moldova Namik Aliev stated on the meeting with Minsiter of Transport and Road Infrastructure of Moldova - Vasil Bornar. Abc.az reports that on the meeting the sides discussed new development perspectives of the conference - “Baku-Tbilisi-Kars - Silk Way”, which is scheduled on October 15-15 in Baku. The conference will evaluate capacities and perspectives of the railway, which connects central and Southeast Asia and Europe.

The ambassador mentioned that project is expected to complete in 2015, amount of the investment is about $2,8 billion only on the territories of Georgia and Azerbaijan. Baku-Tbilisi-Kars railroad will enable transportation f 20 million tons of freight and 1 million passengers. It’s noteworthy that freight shipment from northwestern border of China to Europe will be possible in 1517 days. Naval shipments take 35 days. Recently, Azerbaijani media released information, based on Azerbaijani Railway, that the company has already orders passenger train for the route in Switzerland.

REAL ESTATE MARKET GROWS BY 3% Y-O-Y

ccording to official data of National Agency for Public Registry, in April-June of the current year number of registration transactions of the real estate increased by 3% in comparison with the same period of last year and equaled to 127 450 unit (23 945 primary and 103 505 secondary transactions). In the Q2 2014 primary transactions equal to 18.8% in the total number, secondary transactions - 81,2%. Similar trend was mentioned in the Q2 of last

year: 19.7% primary transactions and 80.3% secondary transactions. Compared to the same period of last year, in the Q2 of the current year number of primary transactions reduce by 1.6%, number of secondary transactions - increased by 4.2%. Besides, compared to the previous quarter, in April-June 2014 number of primary transactions increased by 16.25, number of secondary transactions - by 5,3%. In the same period total number of registration transactions increased by 7,2% in comparison with Q1.

GEORGIA’S EXPORTS TO EU GROW BY 41%, TO CIS - 11%

eostat informs that in January-June 2014 foreign trade turnover of Georgia with EU countries equaled to 1,408 billion, which is 15% more than corresponding data of last year. Export has increased by 41$ and equals to $296 million. As for import, products of $1,113 billion have been imported from these countries. It’s 9% more than in the same period 2013. Share of these countries equaled to 26% in the

foreign trade turnover of Georgia, among them 21% in export and 28% in import. In 6 months foreign trade turnover with CIS countries amounted to $1,716 billion, which is 10% more in comparison with January-June 2013. Export has increased by 11%, to $758 million, import - by 9%, to $957 million. Share of CIS countries was 31% in the foreign trade turnover of Georgia, among them 53% in export and 24% in import.

TEXTILE’S RATIO IN ACHARA’S JUNE EXPORTS MARK 83%

n June textile of $6,87 million have been exported from Adjara. Exporters Association of Adjara informs that the textile comprises 83% in the total export.

Tiles of timber and shavings rank second with $939,3 thousand, drugs rank third wit $335 491. Their share in the export is respectively 11% and 3%. Then comes Platyphillin hydrotartratis - $166 thousand, fruit - $101 521, cranberries - $98,9 thousand, tea - $57 105, bay leaf - $51 175, natural juice - $24 006, leather - $23 275, plastic scrap $10 781, Eucalyptus leaf - $4800, decorative plants - $3040, bamboo - $1675. As for re-export, it includes vacuum gasoil - $5 469 204, black oil - $4 004 305, copper concentrate - $2 366 732, Tiles of timber and shavings - $38 769.

BUSINESS WEEK caucasian

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

ussia may impose sanctions to Georgia, Moldova and Ukraine. As Russian information agency RBC reports, establishment of nonzero tariff for the goods imported from the 3 countries is not the only possible response for the singing of Association Agreement by Georgia, Moldova and Ukraine. The edition writes that Moscow may impose trade restrictions to the neighbors, similarly to Western sanctions. However they mention that the scenario is doomed for appellation in World Trade Organization. RBC reports that after the validation of Association Agreements, Russia reviews 3 versions for the protection of domestic market. It is proved by a working document of Ministry of Economic Development of Russia, which was obtained by RBC and authenticity of which is approved 3 government officials. First version is known - White House officials talked about it many times. For the defense Russia may use Appendix 6 of CIS Free Trade Zone, according to which agreement participant countries may establish non-zero tariffs to the CIS free trade zone countries in the case if the foreign import sharply increases in one of the countries. Second version implies suspension of Free Trade Agreement with the countries, which had signed agreement with EU. Enacting of this version is possible if the evidences provided that the country violates d agreement or situation, in which the agreement was signed, was radically changed. Third version is the strictest one and considers defense measures for the safety of the country. Its validation in fact means total prohibition of the trade with specific commodity groups. Vali-

dation of this version is possible in the framework of General Agreement on Tariffs and Trade, Article 16. “It’s the Joker, which can be used by the country because everyone has own subjective understanding of security”. It’s a reserve version and even officials do not support to its usage. “All three versions are technical, Russia will try to avoid them. We are more occupied by discussion issues with our partners, which do not correspond to the obligations taken by them and new obligations created in the implementation period of Association Agreement”, - representative of Ministry of Economic Development of Russia Alexander Tsibulksy stated to RBC. He said that in September negotiations will be held on the ministers’ level, where the sides will try to reach compromise. Till then expert groups will work, which will evaluate risks of Russia. “On July 11 EU recognized first time that Russia may get loss from Association of Free Trade Zone members in the Europe. Therefore, we consider if we can prove differences between the liabilities, then our partners, among them European partners will sign additional protocols”, Tsibulsky hopes. It’s noteworthy that on July 18 Minister of Economy and Sustainable Development of Georgia George Kvirikashvili, during the ratification of Association Agreement with EU in the Parliament of Georgia, stated that Tbilisi does not expect special turbulence from Russia. Kvirikashvili stated to MPs that Georgian and Russian experts already met in Prague, where Georgian specialists informed Russian colleagues about Association Agreement and they found out that Moscow was not aware about many details.

KHADURI: JANUARY TO JUNE GDP GROWTH WILL EXCEED 6%

ccording to preliminary evaluation of Ministry of Finance, in JanuaryJune economic growth will surpass to 6%. Minsiter of Finance Nodar Khaduri stated about it on Wednesday on the parliamentary plenary session. He said that this year real growth of GDP may be more than planned 5%. “In 2014 predicted real growth of GDP is 5%. According to preliminary data of January-May, economic growth equaled to 5,9%. IN January-June, according to evaluation of the

Ministry, the growth will exceed to 6%. Economic activity has increased into almost all sectors and total turnover VAT-payer enterprises have increased by 13%. Considering dynamics in the economic processes, we may reach higher than 5% GDP real growth”, - Nodar Khaduri mentioned. He also stated that 43,6% of the total planned incomes has been mobilized in the first half 2014, among them 47% of the annual plan of the taxes. Reminding that Geostat will publish preliminary data of the economic growth of 6 months on July 30.

COMMERCIAL BANKS’ ASSETS AS OF JULY 1

ccording To the National Bank of Georgia, as of July 1 2014, the banking sector in Georgia is represented by 21 commercial banks, including 17 foreign-controlled banks and two branches of non-resident banks. Compared with the previous month, the total assets of Georgian commercial banks increased (in current prices) by 0.6 billion GEL (or by 3.1 percent) and constituted 18.3 billion GEL. The

banking sector’s own funds (equity capital) equal 3.2 billion GEL, which makes up 17.5 percent of the commercial banks’ total assets. The share of foreign capital in banks’ total paidin capital constituted 78.5 percent. In June 2014, the banking sector finished with a net profit of 54.9 million GEL. The five banks with the largest assets constituted 76.1percent of the total share of assets in the banking sector.

AIRZENA CONTINUES PERFORMING FLIGHTS TO TEL-AVIV

irzena” airline company continues to perform Tel - Aviv flights in the usual way. According to the airline’s managing director, there is no danger to fly to Tel - Aviv airport. Iase Zautashvili notes when it was reported that large companies had suspended flights to Israel, they contacted their representative in Israel and spoke to the airport authorities, who said that the flights were completely safe. In his words, after the abolition of the visa regime

with Israel, the demand for this direction has dramatically increased. “Airzena” operates flights to Tel - Aviv dayly, and ticket prices start from 250 Euro.

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

PUBLICITY July 28, 2014 #64

caucasian business week

INTERVIEW July 28, 2014 #64

caucasian business week

GUGA TSANAVA - RAKIA IS VERY STRONG IN FREE INDUSTRIAL ZONES IN RAS AL KHAIMAH SO THEY KNOW EXACTLY HOW IT SHOULD BE RUN GUGA TSANAVA - CEO of Rakia Georgia The government of Georgia signed an agreement with Ras Al Khaimah Investment Authority (RAKIA) on the development of a free industrial zone adjacent to the country’s biggest Black Sea port of Poti in 2008. Since 2006, RAKIA’s investment portfolio in the country has expanded to include the retail and tourism sectors. Guga Tsanava, the authority’s CEO in Georgia, met with The Report Company to explain Georgia’s appeal to foreign investors.

- You have recently returned to Georgia after studying abroad. What made you come back, and what made you join RAKIA? - A lot of Georgians go abroad to gain contemporary knowledge and western experience which is unfortunately not yet available within the boundaries of our country, and the sooner these guys come back to Georgia the better for all of us because they bring new knowledge, new connections and new experience which is very important. I had planned to stay for a while in Palo Alto, California to acquire more experience and gain more connections but I ended up in Georgia sooner than I planned. The timing was pretty good because it was right after the elections so we were all in a transition period. A lot of things were changing and a lot of plans were on agenda. Both the government and the private sector were looking for new blood and I turned out to be one among those people who actually expressed their willingness to support the current government and the private sector. I had different offers but then at the end of the day I chose RAKIA. This was probably the most difficult choice. RAKIA is one of the biggest investors in Georgia, but at that time they wanted to pull out of the country. Luckily the new government brought in a new reality and the messages that they were sending to investors convinced Sheikh Saud Al-Qasimi to stay. An overwhelming business restructuring process was put on the agenda and I was tasked to lead the change. The first months were really tough because we were facing nu-

merous issues. But now, as of today, we have the right team and we have managed to restructure our business portfolio. We stayed in Georgia and RAKIA is willing to continue investing in the country. - What projects are underway now? - We have already approved a budget of around US$15 million to invest in a mall. This mall is going to have the first children’s entertainment centre and the first multiplex cinema in Georgia. By the end of this year it will be finished. It will be one of the biggest shopping centres in the region. We have already invested more than US$100 million into it and the further US$15 million is to complete it. We want to turn it into a destination rather than just a shopping mall. We also have the Sheraton renovation project under consideration. We are very actively working with architects and designers to come up with the right plan to transform it into a real five-star luxury hotel in Tbilisi. Its location is one of the best, the view is great and the reputation is good. - What is the current status of the free industrial zone in Georgia? - During the previous management the free industrial zone was at the end of the list of priorities, while we think that it has huge potential because it is one of a kind in Georgia. If you set up a business there you are exempted from 99 percent of the taxes. RAKIA is very strong in free industrial zones in Ras Al Khaimah so they know exactly how it should be run. We are sending our guys there to get acquainted with the procedures and management approaches and then cut, adapt and paste them here. In the free industrial zone, every business for us is a priority and we want to take care of them simultaneously. We want to keep our client turnover as low as possible. We are in active negotiations with a couple of anchor companies, offering whatever assistance will be needed from us. We are also working towards international financial reporting standards. - Why did the Sheikh originally choose Georgia as a place to invest? - He always highlights that he likes Georgia a lot. He loves the nature here, the people and the hospitality. He’s been here quite a few times. He was here a couple of months ago and he reconfirmed that he would be assisting Georgia in whatever he can.. The only thing he

KURT CONTI HOPES THAT THEY WILL BECOME CONTRACTORS OF GEORGIAN GOVERNMENT ON ANAKLYA PORT

ead of Conti Group Kurt Conti hopes that they will become contractor of Georgian government on Anaklya port in about 6 months. American businessman stated about in on Maestro TV. Kurt Conti says that Georgia has a great potential to establish as a transport hub. “We talked to many experts and learnt potential of Anaklya port. Georgia is the shortest transit way between Europe and Asia and we think that its main advantage will be becoming a

transport hub. The country may share experience of New Jersey, which is located between Philadelphia, Washington And Boston. The region has a large port and transport network, by development of the port, railway and auto bans became locomotive of the economy. We think that in the nearest 6 months we’ll sing agreement with your government on Anaklya port. Starting value of the budget was determined at $400-500 million. However we think that its budget will increase to 1 billion. It’s about 10-years long project”, - Kurt Conti states. He considers that “providing prudent management and effective tax regime, Georgia has great potential for economic development”. TBC Group brought Conti Group in Georgia. Conti states that businessman Mamuka Khazaradze has been his friend for 15 years and recently, during their meeting in Great Britain; they decided to establish a joint company. It’s already known that the sides will build an American hospital in Georgia. They will invest $60 million in it. It’s noteworthy that expression of interest on the construction of Anaklya Port was announced on July 10. According to preliminary information, American, Chinese and other large foreign companies are interested in the construction of the port.

needs, like any investor in any country, is a secure investment environment. And that was the key message from the new government; that nobody is going to do any harm to any investor, just come to Georgia. - Can investors feel safe and confident in Georgia? - Of course. Especially now under the new government, because a very significant number of government officials come from business so they know exactly what the key success factors are for every investor. They have a very open and simple strategy towards the private sector: Do what you want. If you need our assistance, we are here. - What is RAKIA’s strategy for Georgia? - We have three main directions. The first is our existing portfolio, the second is that we are thinking of doing something new in 2015 which potentially can be energy or logistics or housing and the third one is the active relationship with the Georgia Co-Investment Fund, which is specifically there for dealing with large investment funds where one investor cannot invest solely because of the amount of money or risk, so the investment fund is willing to both participate in investment and share the risk, making you feel more comfortable. We are actively working with them - As Georgia moves closer to Europe, what would you say it has to offer the EU? - Georgia is very unique. If you take the geography of Georgia, and the relationship of Georgia with Turkey, Azerbaijan and Armenia, this is a gateway to much more and a much bigger market than the 4.5 million who live here. Moreover, if you add to this upcoming signing of the association agreement and DCFTA with the EU, then we are really speaking about huge market outreach. Georgia has the location and it also offers a unique labour proposition because Georgian labour is cheap. This does not mean inferior. We have a great combination of literally and relatively cheap labour. Most Georgians speak more than one language; most speak both Russian and English. The new generation speak French additionally. These guys are literary but because of various reasons they are still much cheaper compared to the rest of the world so there is a great opportunity in that regard as well. In the energy sector there are opportunities because of both the existing amount of natural resources such

as water and the close proximity to export markets such as Turkey, and especially now when you observe how some countries are using energy as an economic weapon, energy is becoming one of the cornerstones of future global political strategy. In Georgia, you have a country which heads towards Europe, while seeking to maintain a good relationship with neighbouring countries and which offers a resource in hydropower that hasn’t yet been exploited. Thethe government is open and they are going to support investors. They took out all the obstacles they could and now it is very simple to start up. The potential is huge. Even leisure businesses, more hotel brands are coming, which is another indicator. Diplomatically speaking, Georgia is the only kind of hub for the rest of the Caucasian countries. - To become a hub for the rest of the region, what does Georgia need to improve on? - I think infrastructure, which is already on the agenda. You need ports, you need infrastructure, you need the basic things to be able to provide the logistical fundamentals and Georgia is the right transit country. You just need to pick the right spot and raise adequate investment and do it. - As a Georgian, what gives you confidence in your country’s future? - The young people, because they think differently. One of the many good sides of the new government is that they don’t just rely on the young people but they also listen to the older people. The previous government kind of neglected them because they said that their mentality and was of thinking came from the Soviet Union. The young people are more literate, they have contemporary knowledge, they possess the right skills to move as fast as possible in the right direction. If everything continues as it is, in the next three to five years Georgia will be radically different. I have a lot of friends outside of Georgia right now and it makes me so happy when they tell me they want to come back. There are some brilliant minds in the universities around the world who now want to come back to Georgia and this shows me that the country is going in the right direction. In parallel I have also had discussions with different global retail brands which didn’t even consider Georgia, but now they’re calling me saying they are interested and want to come. http://www.the-report.net/

THE MANAGEMENT OF GEORGIAN INDUSTRIAL GROUP INITIATED NEGOTIATIONS WITH THE LARGEST COMPANY OF CHINA HARBIN ELECTRIC INTERNATIONAL COMPANY LIMITED

he Georgian Industrial Group “GIG” planned to implement large energy projects, in particular, to commence the construction of thermal power station in Tkibuli. The company management conducted the negotiations with a potential contractor, one of the largest companies of China “Harbin Electric International Company Limited”. The parties considered a possible partnership and cooperation perspectives within the framework of implementation of energy project. The Chairman of the Supervisory Board of “Harbin Electric International Company Limited”, Chairman of HE Group, GONG JINGKUN, Vice President WANG SHIMIN, Marketing Manager MALIJUN and Head of Marketing Manager

LI QINGJIA represented the China in negotiations. Deputy General Director of GIG Zura Gelenidze, Director General of GIEC Zura Gozalishvili and Director of GIEC Business Development and Project Management Revaz Ghlighvashvili were participated in the meeting on behalf of Georgia. Georgian Industrial Group continues to contribute to the economic growth of the country. The GIG Group plans to make new investments in the new energy projects. The projects will contribute to strengthening Georgia ‘s energy security, economic development and creation of new jobs. in June 2014 the three partial Agreement was signed by and among the Ministry of Economy and Sustainable Development of Georgia, Ministry of Energy of Georgia and the daughter

company of Georgian Industrial Group - Georgian International Energy Corporation LLC (GIEC). The Agreement was signed by Mr. Zurab Gozalishvili, the General Director of GIEC, by the Minister of Energy Mr. Kakhi Kaladze and the Minister of Economy and sustainable development Mr. Giorgi Kvirikashvili for and on behalf of the Government of Georgia. According to the Agreement, GIEC will build a new coal-fired thermal power plant with the installed capacity of 100-150 MW in Tkhibuli municipality, Georgia. The Agreement also envisages the construction of new high-efficiency gas-fired thermal power plant in Gardabani municipality in accordance with the parameters and conditions determined by the Government of Georgia.

VISTA GEORGIA OBTAINED BOEING FOR FLIGHTS FROM TBILISI

ir Company Flyvista, with brand of Vista Georgia, obtained Boeing plane (B737-300) for the flights from Tbilisi. The company, which is based in Dubai and provides charter and plane leasing and management issues, distributed a press release about it. Commercial director of Aerovista Dimitri Korshunov stated that Vista Georgia, which is affiliated with them, will provide flights from Tbilisi with

B737-300. On the official website Vista Georgia has stated that they are low-cost air company and will have flights to from Tbilisi to the neighboring countries from summer 2014. The website also indicates that the consumer should expect appointment of flights to Teheran, Kiev, Moscow and Almaty directions. However currently booking is impossible from Vista Georgia website, as they indicate that the section is under construction. 2 statements dated to May are published on the web-

site of Civil Aviation Administration of Georgia. According to one, Vista Georgia applied to the agency for the appointment as a regular provider for Tbilisi-Minsk-Tbilisi flight; according to the second statement - for TbilisiTel Aviv-Tbilisi direction. According to data of Public Registry, 49% of LTD Vista Georgia belongs to citizen of Russia Angelica Lakhialova, 51% - to Ana Saparova. At the moment of LTD established, in 2010 100% of it belonged to Lali Bolkvadze.

ECONOMY July 28, 2014 #64

caucasian business week

GEORGIA’S EXPORTS TO TURKEY GROWS BY 37% Y-O-Y

xport to the number one trade partner of Georgia has increased by 37% in a year. According to official statistic, Turkey remains number one trade partner of Georgia and trade turnover with them has increased in comparison with 6 months of last year - both import and export. Export amounted to $112,2 million, which is 30,3 million more than in January-June 2013. Supply of textile products has sharply increased in export. It amounted to $21,5 million in 6 months, instead of 13,2 million last year. Semi-fabricates of non-alloyed steel and iron increased to 20,8 million. Export of the group

has increased by 11 million. In 6 months of the current year nitrogenous fertilizers of $16,7 million were exported, in the same months of 2013 fertilizers only for 1,4 million. Ferroalloys export increased from 3 to 7 million, neat and fish flour export reduced from 8,4 to 6,8 million. As for import, commodities of 827,2 million were imported from Turkey. In the first 6 months of the year air turbines rank first in the import basket with $66,7 million; remedies of 28,5 million and isolated wires and cables of 20,4 million were transported. Top-5 list includes sanitary-hygienic products ($19,1 million) and ready-made textile products ($16,8 million).

KOPENBUR TO INTRODUCE NEW PRODUCT ON GEORGIA’S INSURANCE MARKET

new player on the Georgian insurance market plans to occupy a significant share of the market. The official opening of the company was held today. According to the company’s Director Ivane Kakhadze, at the first stage the company will operate in the field of non-life insurance. In Kakhadze’s words, the company will introduce suchinnovative product that has not been released by any market player. He says,’’ Kopenbur” plans to occupy a major proportion of the market share.

The company focuses on high quality and innovative insurance products. To this end, the company plans a strategic cooperation with a variety of Georgia’s leading companies. “Kopenbur” will serve individuals as well as legal entities. As the company says, insurance products have been developed and fully fit local market requirements, staff was prepared as well as service points By this time, up to 40 people are employed in the company, but by the end of the year the number of employees will increase to 150.

РБК RESEARCH: GEORGIAN WINE WAS RANKED FIFTH 20% of readers of the famous Russian business newspaper “ РБК” give preference to Georgian wine, which, according to the survey, is the fifth in the rating after Italian (41%), Spanish (34%), Chile (27%) and French (25%) wine . This is a result of the РБК research, which question sounded as follows: whichcountry’s wine do you prefer? Abkhazia was included in a list as a separate state and the Abkhazian wine (14%) follows in

the footsteps the Georgian wine. Wine produced in Russia, Argentina, Germany, Ukraine and other countries was at the bottom of the list. Recall that in the first quarter of 2014, Georgian wine returned to the Russian market took the third place among top-selling imported wine after French and Italian wines. Its share on this market amounted to 14.1% and was even ahead of Spanish wines.

PARAVANI HPP TO START GENERATING ELECTRICITY IN AUGUST

aravani HPP built by the Turkish conglomerate “Anadolu Group’’ starts to produce electricity. According to Director of “Georgian Urban Energy”, a subsidiary of “Anadolu Group’’, construction works have been completed and at this stage installation of electromechanical equipment is in progress. Nodar Kurtanidze says that a 87 megawatt Paravani HPP will start generating power in August and according to a Memorandum signed with the

high-standard American hospital will be constructed in Tbilisi in two years, the news-conference at Tbilisi Marriott hotel told reporters. The news-conference was attended by vice Prime Minister Giorgi Kvirikashvili, a Minster for Economy and Sustainable Development, TBC Group President Mamuka Khazaradze, Kurt Conti, a head for Conti global development and construction holding and USA-based Georgian doctor Dimitri Tvildiani. The new hospital will be constructed near Tbilisi International Airport. The project is jointly implemented by TBC Holding, Conti Holding and David Tvildiani Medical School Aieti. The investments make up 60 million USD. The new hospital will employ 400 persons. It is worth noting Tvildiani Medical School is also a founder of Georgian Doctors Specialization Fund abroad, where over 200 doctors from the USA and other developed countries work are involved in. “This will be an international-level, Americanstandard medical asset. Many Georgian citizens go to foreign counties and spend a lot of mon-

ey for treatment. This hospital will enable both Georgian and the South Caucasus population to have access to high-level international-standard medical services. It is worth noting prices will be affordable and lower compared to expenditures our citizens take in foreign clinics. The assets with importance of medical hubs will enable high level specialists working in the USA and other foreign countries to take part in formation of the hospital as not only doctors, but also as founder stakeholders. It is very important gifted and talented citizens of Georgia become able to return to Georgia and work for a high-level medical asset. I welcome this project”, Giorgi Kvirikashvili noted. The American standard multi-profile hospital with 150 beds will introduce JCAO standards and technologies that have no analogy in Georgia. Georgian doctors licensed in the USA are invited to the hospital. With the participation of Aieti medical school and the USA leading medical university, a training and medical center will be formed on the basis of the hospital. The center is to promote expansion of the network of medicine professionals.

State, electricity will be used by the Georgian State Electrosystem(GSE) in the winter and in summer energy generated in excess will be sold to Turkey. A total cost of the Paravani HPP project is USD 180 million. Kurtanidze adds that ‘’Georgian Urban Energy” plans to start a new project, but the details are not disclosed until a final agreement is reached. It is only known that a capacity of the new power plant will be much more than Paravani HPP’s and it will be able to generate 300 megawatts.

H&M MAY ENTER GEORGIAN MARKET

well-known brand H & M might enter the Georgian market. “CBD Development” confirms negotiations with the brand in a conversation with “Commersant’’, but notes that a final decision regarding the brand’s entry into Georgia has not yet taken. ”CBD Develop-

AMERICAN HOSPITAL CONSTRUCTION TO START AT TBILISI INTERNATIONAL AIRPORT

ment” is building a multi-functional complex worth USD 90 million in Tbilisi. According to the company, 85% of the spaces have been rented, but names are not specified. It is only known that the complex will include a large supermarket, electronics stores, home repair and materials stores, the children’s entertainment center will be located on the territory of 3 500 square meters, movie theaters and a bowling center as well as brand shops, cafes and restaurants. The price of the rent space in the complex starts from USD 35. A multi-functional complex is the company’s first project and its opening is planned for the spring of 2015. Note: The Swedish clothing brand planned to open its first shop in Georgia in “Tbilisi Mall” three years ago, but rejected these plans because of lack of space. The company produces and sells clothing. It is known for affordable pricing policies.

DREAMLAND OASIS RESORT ZONE CONSTRUCTION STARTS IN CHAQVI

onstruction of the new resort zone project - DREAMLADN OASIS started in Chaqvi. The resort zone and necessary infrastructure will be developed around the hotel Oasis. It will include hotel-type residential houses equipped with the services of international standards. The hotel owners inform that 21 residential blocks are building, in total 1000 hotel-type apartments, 3 open and 1 closed swimming pools, aqua park, courts, squares. Construction works have already been started. The hotel management attracted investment of 105 million for the infrastructural development about the hotel Oasis. In addition to the construc-

tion of hotel-type houses, it will also be spent for the arrangement of Chaqvi beach. On July 16, at 19:13 Austrian investors o the company will attend presentation along with Prime Minsiter of Georgia Irakli Garibashvili, representatives of Cabinet and high officials of Adjara. “We are glad tan out company will make great contribution in the increase of tourism attraction of Adjara. European investment project of such scale, which also provides infrastructural development along with tourism, is implemented first time at the seaside of Georgia. By development of DREAMLAND OASIS we hope to considerably increase interest of high-income tourists and international investors in Georgia”, - representative of the company Nikoloz Geguchadze states.

GEORGIAN RAILWAY caucasian business week

July 28, 2014 #64

SEABORNE SILK ROAD

he Great Silk Road, that is a transcontinental trading road, connects China with the Mediterranean and Black Sea coasts. Trading along this route started in the second millennium BC. The last years have recorded an ex-

treme change in political and economic maps in Europe and Asia. Today Georgia is a member of the Council of Europe and the World Trade Organization (WTO). Several weeks ago Georgia also concluded an associated membership agreement with the European Union (EU) and this is

the first step to become an EU member country. Changes in the Central Europe have seriously affected Georgia, because our country is located in the Asia-Caucasus-Europe corridor and this corridor is to provide continuous railage from Asia to Europe (TRASECA). Today the world market is recording significant growth in container freights thanks to interchange of various types of transports in the logistics chain. A major ratio of container freight is recorded for seaborne transports because of less expenditure. Containers grow efficiency of multimodal carriages, because it enables to cut expenditures related to cargo transportation, preservation and transit. Georgia has got certain advantages in the Caucasus in this respect thanks to seaports in the Black Sea waters. These seaports are located on the territory of Georgia. Not only Georgia, but all countries of the Caucasus and Asia employ these seaports. It is also important the Georgian government has recently announced plans for constructing a seaport in Anaklia. The new seaport will grow turnover and lower transportation tariffs. The last years have recorded growth in competition on the container freight market and transportation companies have met new challenges for creating a joint efficient transportation chain system. This implies multimodal transportation by one expeditor that lowers tariffs and spares the consumer time. To this end, LLC Trans Caucasus Terminals permanently

offers new services to its customers. LLC Trans Caucasus Terminals is one of the wellorganized transportation companies in the Region. The new management has introduced such services as: 1. a container park that enables clients to send cargo items to Central Asia by containers; 2) PotiTbilisi and Poti-Baki block-trains enable clients to save money and time, because these trains run in line with timetable; 3) Seaborne transportation enables clients to receive cargo items from any point of the world. 4) LLC Trans Caucasus Terminals and LLC Georgia-China Trade Chamber joint project – Cargo Consignments from China. A major ratio for the world’s container transportation is recorded for the Peoples Republic of China. This, first of all, is preconditioned by growing rates of production in China. LLC Trans Caucasus Terminals pays considerable regard to this market from where the company carries out container freight in this corridor systematically. To provide maximum of comfort, we offer clients such services as: planning of total trade tour (tickets and suites order), services of guides, purchases, internal carriages, examination of suppliers, storing and exports. LLC Trans Caucasus Terminals jointly with JSC Georgian Railways will permanently care for improving the services and provide continuous search and development of new services and draw new partners in various countries. For example, for the last two months China has held logistics exhibitions, where our company has taken part successfully. Similar events enable us to establish our name and services on international market, draw more cargos to our corridor and gain partners in the global world.

MAMUKA BAKHTADZE - OUR AMBITION IS TO DELIVER CONTAINERS FROM THE BLACK SEA TO THE CASPIAN SEA IN 48 HOURS MAMUKA BAKHTADZE - CEO of Georgian Railway Linking the Black Sea with the Caspian Sea, and Europe with Central Asia, Georgia’s rail network is vital for the region. Georgian Railway, the country’s rail operator, aims to capitalise on Georgia’s excellent location to make it the first choice for freight and passenger traffic in the Caucasus. The Report Company met with CEO Mamuka Bakhtadze to find out more.

- What made you decide to go into the railway business? - Directly after graduating from university, my first job was at Georgian Railway. Nine years ago, I was a project manager with Booz Allen Hamilton during the restructuring of Georgian Railway, so I was involved in that project. In January 2013 I returned to Georgian Railway and I was appointed in April 2013 as CEO. - How has your first year as CEO been? - This year has been very challenging. Our core business is the freight transportation; Georgia is a transit country. The macroeconomic environment of the region has changed dramatically in the last couple of years so it has been challenging not just for us but for the entire region, for our partners in Azerbaijan and the central Asian countries. However, the dynamic is very positive and that gives us confidence and makes us believe that our huge investments in infrastructure will pay off. - What investments have you made into the rail infrastructure in Georgia? - One of the largest projects is a modernisation project. Georgia is a mountainous country and the toughest section is between east Georgia and west Georgia. We decided to triple the capacity there because this is currently a bottleneck. We started this project three years ago and it’s now under construction. We’re going to build two large tunnels which will connect east Georgia to west Georgia which will help us to increase rail speed by 50 percent. This will means that we can triple the capacity. It’s a challenging but interesting project and it will be finished in around two and a half years. The budget of this project is around US$350 million but this is part of a bigger picture of modernisation. The current budget for infrastructure

alone, not taking into consideration the rolling stock, is around US$550 million. Another key project is the construction of a new railway line to Turkey. This is a very interesting project because it involves a connection between the two systems, the Soviet 1,520mm gauge and the European 1,435mm gauge. There aren’t many places with this kind of connection; there are some in Belarus and one in Ukraine. This project is very important considering that last year Turkey finished the construction of the Marmaray tunnel underneath the Bosphorus Strait because it means that we will be able to deliver containers, freight and passenger traffic from this part of the world to Europe, avoiding maritime transport entirely. This will reduce transport times by around 45 percent. The Baku-Tbilisi-Kars railway project is really important. A couple of countries have made a commitment to become players in this new corridor so apart from Georgia, Turkey and Azerbaijan, Kazakhstan is seriously interested, as is Turkmenistan, Uzbekistan and most importantly China. We are the gateway to a number of landlocked countries like Armenia, Azerbaijan, Turkmenistan, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Afghanistan and now the west of China as well. Although Georgia is not a big market itself, through its links it is serving a very large chunk of the total world population. That’s why we believe that the transportation industry has a very bright future. - What does Georgia need to do in order for its ambitions as a regional transport hub to be realised? - There are a couple of things. The government shouldn’t deviate from its commitment to invest in infrastructure and we’re extremely happy that government has already made a decision to construct a deep sea port. This is really very important because the nature of logistics have changed in our region. In the last ten years it was always 50:50 in the proportion of oil and oil products to dry cargo but the future of the logistics industry will be container shipment and so that’s why we have to develop our infrastructure taking into consideration this perspective. Therefore the construction of a new deep sea port will create a very serious competitive advantage for Georgia. - What is the advantage of rail transport over other modes of transport? - Maritime transport is very cheap and aviation is the most expensive. Railway falls somewhere in between,

but it has its own unique advantages. In a modern world everybody understands that railways are one of the greenest ways of transportation, especially in our country because Georgian Railway is 100 percent electrified. Even European countries don’t have 100 percent electrified railways so that’s our main advantage, that we are green. The second advantage is time because our average speed is growing year after year. Our ambition is to deliver containers from the Black Sea to the Caspian Sea in 48 hours and we also plan to deliver containers from the Black Sea to the port of Constantsa in Romania in 40 hours. That will mean that from the EU you can deliver goods to the Caspian Sea in less than four days. The third advantage is the interconnections. Rail transport has really unique opportunities in terms of interconnectivity between countries. The fourth advantage is the tariff policy. We started a new approach towards tariffs six or seven months ago. There are more than ten countries in the transport corridor, but we are now synchronising our tariff policy which means the customer has a one window service. It doesn’t matter if you are in Georgia, Azerbaijan or Kazakhstan, you can buy your ticker. We have already implemented this policy on several cargo routes and now our ambition is to extrapolate this approach to all major types of cargo including containers. - What percentage of your business is made up of freight traffic? - It’s more than 90 percent for our revenue. The volumes are growing, but it’s also becoming more diversified. A couple of years ago it was very simple; 50 percent of our cargo was oil and oil products and 50 percent was dry cargo. Now it has become more sophisticated and we are happy about that. The assortment of oil products is growing so we don’t just have oil, we now have fuel oil, diesel and jet fuel. On the dry cargo side we have also seen serious changes especially in terms of container shipments. This year our port increased container transhipment by 20 percent and so on average we are growing by 20 percent a year which is a really good number. Apart from the positive dynamic we are happy that the structure of cargo is more sophisticated now which also makes business more interesting. - Are you projecting the same sort of growth in cargo transport this year? - Absolutely. If you take oil, as a railway it’s a little bit

hard to compete with pipelines but if you look at oil products and dry cargo such as metals, iron ore and containers, then we are absolutely confident that we will be able to increase the volumes. This will be affected by the macroeconomic situation in Central Asia and in our neighbouring countries but in the long run we are absolutely sure that we will be able to double the volume of some specific cargoes. - Do you see the possibility of an IPO for Georgian Railway? - It’s still under consideration. In 2012 we issued corporate bonds on the London Stock Exchange. Although we are not a public company we follow every requirement of the LSE and so we act as a public company. This means that the transparency is there. We follow all the corporate governance requirements. We are looking at the value creation argument for an IPO. In the value creation argument, you have to take into consideration several things like the macroeconomic situation and the situation in the capital markets. Management believes that the private sector should have exposure to the equity of our company. That’s our vision, but timing is very crucial. - What is your vision to change the culture of Georgian Railway? - It’s not only about changing culture. It’s also about changing the organisational structure. Our vision is to make Georgian Railway a fully vertically-integrated company. For us, Georgian Railway is not only from the Black Sea to the border with Azerbaijan or Armenia. For us it’s a larger picture. It’s a picture that comes from western China and goes to the Danube region in Europe. We would like to increase our capacity and our knowledge. That’s why we are investing intensively not only in Georgia but outside of Georgia as well. We have started a vertical integration process in maritime transport in the Black Sea and we have a subsidiary which is involved in the construction of container terminals in Kazakhstan. We are also reviewing some options regarding Turkmenistan. We also have the idea to provide more sophisticated services like transhipment from one continent to another but first our regional strategy needs some serious changes, both organisational and structural. This is a very challenging but interesting process and we are preparing ourselves now to move forward. http://www.the-report.net/

7 ARTGENI 2014 HELD AT ETHNOGRAPHIC MUSEUM WITH HEALTHY WATER SUPPORT INTERVIEW

July 28, 2014 #64

rtgeni 2014 Festival traditionally took start at the Ethnographic Museum in Tbilisi on July 20. One of the supporters of the festival is Company Healthy Water (Tskali Margebeli). The festival guests had the opportunity to taste Margebeli Products as well as Nabeghlavi and Bakhmaro, unique waters of Healthy Water Company. Margebeli Holding Corner in open air was one of the most distinguished and attractive. Artgeni has turned into peoples’ celebration for already ten years. The festival is non-commercial and aims to popularize Georgia’s folklore, search for less known and unknown works and art pieces and introduce those to the public and finally archive and keep the found materials. This year, the guests had the opportunity to listen to various types of music. On July 20 the event got opened with presentation of Megrelian Folklore. The final concert was held on July 27, at 22:00, where the Group 33a sang hits from old as

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well as new albums. In parallel to concerts, the exhibition of folk craft works was organized during one week. Entertaining performances and folk games were held, in addition, catering outlets were opened where the guests could have the best choice for relaxation. “Artgeni can be named as one of the most important cultural events of the last decade in Georgia, which is of cognitive type. It is very important for Healthy Water Company to support such initiatives contributing to presentation of individual character and culture of various regions of Georgia and to making the youth interested in rich Georgian folklore. Thanks to Artgeni the attention towards Georgia’s folklore is growing and more and more people show interested in our historical and cultural heritage. Our Company will always be ready to popularize the similar events. We do hope that our cooperation will continue in the future and acquire larger scale”- said Victoria Zhizhko, Head of the Public Relations Division of Healthy Water.

PRESENTATION caucasian business week

July 28, 2014 #64

STATISTICS July 28, 2014 #64

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CIS caucasian business week

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SKY NOT THE LIMIT: AIRBALTIC FIRST AIRLINE TO ACCEPT BITCOIN

B UKRAINE AND EU SIGN FREE TRADE ZONE DEAL

kraine has signed the economic part of the Association Agreement with the EU, with Georgia and Moldova also joining the pact, even though big economic risks lie ahead. The signing of the economic part of the agreement comes after 8 months of violent unrest in Ukraine, which broke out in Kiev and spread across the country in November after then-President Viktor Yanukovich decided to reject the trade agreement in favor of trilateral talks. The document contains 31 signatures - Ukraine, all 28 EU member states, as well as that of the President of the European Council Herman Van Rompuy, and European Commission President Jose Manuel Barroso. The agreement will only come into force when it is ratified by every national parliament in the EU. It is expected that the ratification process will be complete by this fall. Georgia and Moldova also signed both political and economic parts of the Association Agreement. Ukraine signed a political part of the agreement in March, shortly after Crimea rejoined Russia. “By signing the association agreement, Ukraine, like European nation, which shares the same rules of law, stresses its sovereign choice to become a member of the EU Association Agreement in the future,” said Ukraine’s President Poroshenko before the signing ceremony. The Ukrainian President sees the trade document as a stepping stone to eventual EU statehood. Friday signing the Free Trade Agreement will open up trade barriers between the former Soviet states, but doesn’t guarantee them EU membership, a main goal of the three governments. “It is their sovereign right, but the Russian Federation will have to take measures in case it negatively effects the local market,” Dmitry Peskov, Putin’s spokesperson said, commenting on the agreements signed between the EU and Ukraine, Georgia and Moldova. Russia has warned these “measures” could in-

clude $500 billion in lost trade and possible bans on Ukrainian imports. “There is no economic growth to be had by suddenly having western European goods dumped at low cost on your marketplace,” Patrick Young, an expert on emerging markets, told RT. In order to fully implement the free trade zone, it could cost Ukraine’s already fragile economy an additional $104 billion, according to a previous estimate by Yanukovich. This will include adopting hundreds of new trade laws and thousands of new laws to comply with EU standards. In 2013, EU exports to Ukraine were worth $33 billion (23.9 billion euro), dominated by industrial equipment, chemicals, and manufactured goods. Ukraine exported 13.8 billion euro worth of goods to the EU, mostly materials like iron, steel, and minerals. Agricultural and food products are also substantial exports. The Association Agreement and Deep and Comprehensive Free Trade Area (DCFTA) will replace the current Partnership and Cooperation Agreement Ukraine signed with the EU in 1998. Eastern Ukraine, which rejects the new Ukrainian government’s authority, is skeptical of Kiev’s European ambition, as is the EU itself. “EU is not ready to integrate at this stage a country like Ukraine,” Jose Barroso, President of the European Commission said before the talks. Brussels started the Eastern Partnership initiative to incorporate six former Soviet Republics into the EU free trade zone. Ukraine, Moldova, and Georgia have followed Poland’s example, whereas Armenia, Belarus, and Azerbaijan are likely to opt for closer trade links with Russia. Trilateral trade talks between the EU, Russia, and Ukraine will take place on July 3-4. Russia has made it very clear that by signing the trade agreement Ukraine can no longer enter the Eurasian Customs Union, which already includes Belarus and Kazakhstan.

RUSSIA REPORTED TO BE CANCELLING DUTY–FREE TRADE WITH UKRAINE

he duty-free trade deal between Russia and Ukraine is coming to an end. Russia says fundamental changes mean that it will invoke Article 62 of the Vienna Declaration to terminate the understanding. The move comes as Russia insists it needs to protect domestic markets after Ukraine signed the Association Agreement on June 27, which gives Kiev duty-free trade status with the European Union. The cancellation of the duty-free relationship with Ukraine will lead to

higher import tariffs of around 7.8 percent. “The circumstances that existed in the time when the CIS free trade area agreements were signed have significantly changed for Ukraine which is historically the main trade partner of Russia being deeply integrated in many areas of the economy,” RIA quotes a source from the government familiar with the situation. Ukraine is already facing recession and may see its economy shrink by as much as a further 2 percent should Russia halt trade as the dispute widens between the two ex-Soviet partners, according to Prime Minister Arseniy Yatsenyuk. Trade relations between Ukraine and Russia are “getting worse,” Yatsenyuk said in an interview to Bloomberg. “We do not have any kind of real relationship. We have the war. It will severely hamper Ukrainian gross domestic product.” This year Ukraine’s GDP may fall by 6.5 percent, according to new government forecasts and the IMF, in May the forecast was for a 5 percent reduction.

itcoin’s latest expansion is into commercial airspace after Latvian airline airBaltic announced customers can start using bitcoins to pay for tickets. AirBaltic is the first airline to offer a bitcoin payment option. “Introducing the bitcoin payment option is a part of our innovative approach to service with a central focus on our customer,” the airline’s CEO, Martin Gauss, said in a press statement. Prices will be displayed in euro and converted into euro at the current exchange rate by Bitpay, a third-party payment processor, the statement said. The move is testimony to the company’s innovative approach to business, which has ranked among the top ten most innovate airlines worldwide, according to Gauss. The press statement doesn’t address how ticket refunds or cancellations would work under the bitcoin regime, or if customers that live in countries that have bans on bitcoin, will be able to use

the feature. Air ticket prices also include taxes, and currently bitcoin is not taxable, since it isn’t backed by any government. While bitcoin has gained popularity, it has also has a dark side, since the anonymity has made it a popular vehicle for crime including drug trafficking, For that reason, many central banks have banned the currency, worried that users may unintentionally become mixed up in complex money laundering schemes or even indirectly sponsor terrorism. Latvia itself doesn’t have a ban on the cryptocurrency, but Russia, Norway, and Iceland have all set up restrictions on using the currency. The low-cost airline, established in 1995, flies to over 60 destinations across Europe, Russia and the CIS, and the Middle East. In 2011 the company became state-owned, but is now in privatization talks, an option Gauss says “isn’t impossible.” In 2013, the budget airline had a net income of $1.4 million (1 million euro).

$200 PER BARREL OIL IF RUSSIA SANCTIONS ESCALATE- OXFORD ECONOMICS

f the standoff with Russia and the West reaches a point where the EU has to completely cut trade with Russia, oil prices could soar above $200 per barrel, sparking a global economic crisis, says Adam Slater, senior economist at Oxford Economics. Cutting off trade with Russia, the world’s second largest oil exporter, would create a shortage in global energy supplies, which would have spillover effects into Europe, Slater told the Guardian. “In such a scenario, world oil prices could soar above $200 per barrel and gas prices would also rise steeply,” Slater told the Guardian. If Russian energy is banned from Western markets, Slater estimates that Russia would lose 80 percent of its energy exports. OPEC producing countries would fill in the market gap. Major economic downturns are associated with high energy prices. “Stage three” sanctions- similar to those Iran experienced during the last decade- would bar the West from all Russia-related business, including exports. The EU buys 84 percent of Russian oil exports, and 76 percent of natural gas exports. About a quarter of European countries completely rely on Russia for gas or oil supplies. As of yet, Russia hasn’t halted European gas supplied through politically unstable Ukraine, but this event itself could trigger “stage three”, or trade-specific sanctions. “These would further damage Russia’s economy. Russia’s next moves remain uncertain but an escalation of the conflict is still a significant risk which would have potentially negative global spillovers in particular via the impact on global

energy markets,” Slater said. The EU hopes that Ukraine and Russia will settle their gas row by autumn. The puzzle that still surrounds the shooting down of flight MH17 has unleashed a new wave of accusations against Russia. Sanctions against Russia have been driven by the US, but Europe has been more reluctant to follow suit, since its economy is still fragile, and disruption with a close trading partner could furtherdestabilize recovery. Russia is the EU’s third largest trading partner, and the largest economies, Germany, France, and Italy have some of the strongest ties. The US just implemented a new round of sanctions, targeting Russia’s energy, finance, and defense sectors. On Thursday, the EU will broaden its industry-specific sanctions on Russia, EU foreign policy chief Catherine Ashton said on Tuesday. The US sanctions block certain Russian companies from long-term dollar loans.

UKRAINE SAYS REVERSE GAS SUPPLIES FROM EU REDUCED DUE TO GAZPROM ACTIONS

he volume of reverse gas supplies from the EU to Ukraine has been reduced, RIA Novosti quoted Ukraine’s Energy Minister Yury Prodan as saying. He said it could

be connected with the actions of the Russian gas giant Gazprom. Ukraine now gets about 7mcm of natural gas a day, Prodan said, adding that technically about 18mcm could be transported.

RUSSIA TO PROTECT ECONOMY DUE TO UKRAINE, MOLDOVA EU ASSOCIATION - MEDVEDEV

rime Minister Dmitry Medvedev on Wednesday confirmed that Russia may introduce measures to protect its economy vis-à-vis the association agreements between Ukraine and Moldova with the EU. “We are objectively assessing the negative consequences of such deci-

sions for our economy,” ITAR-TASS quoted him as saying at a meeting with trade representatives. Risks are serious enough, he said, especially in the areas of technical regulation, standards, and sanitary control. Russia is consulting on the issue with the EU, partners in the Customs Union and the CIS, Medvedev said.

AZERBAIJAN July 28, 2014 #64

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AZERBAIJAN REMAINS GEORGIA’S 2ND LARGEST TRADE PARTNER

zerbaijan remains the second largest trade partner of Georgia, the foreign trade report of the National Statistics Service of Georgia shows. The trade turnover between Georgia and Azerbaijan in the first six months amounted to $584.3 million (10.7 percent of the total foreign trade of Georgia), which is 3.7 percent less than in the same period of 2013. The trade turnover between the two countries amounted to $605.98 million in January-June 2013. In January-June 2014, Azerbaijan was the largest

export market for Georgia with 20.4 percent share in the country’s total export. During this period Georgia exported goods and services worth 290.2 million to Azerbaijan, which is 12.8 percent less than in the first six months of 2013. Also, Azerbaijan imported goods and services worth $294.1 million (7.3 percent of Georgia’s total import), which is 7.6 percent less than in the same period of 2013. Trade surplus between Azerbaijan and Georgia amounted to $41.1 million. The largest trade partner of Georgia is Turkey with a turnover worth $939.5 million. China ranked third with a turnover worth $380.2 million. Georgia’s foreign trade turnover amounted to $5.4 billion in January-June 2014 or by 14.9 percent more than in the same period of last year. The exports amounted to $1.42 billion (14.5 percent growth), imports - $4.03 billion (15.8 percent growth). The foreign trade deficit is $ 2.6 billion or 48 percent of the total turnover. Georgia had 131 trade partners in the reporting period. There was a negative balance in trade turnover with 95 countries, while positive with 36 countries.

AZERCELL LEADS IN DATA SPEED AMONG MOBILE OPERATORS

he most precise system for measuring the data speed - Ookla Net Index once again ranked Azercell as the provider of the fastest speed of mobile Internet in Azerbaijan. Thus, based on the Ookla research, currently Azercell provides 6.12MB/s of mobile Internet speed. This is the highest index among all mobile operators in the country. Ookla is one of the most reliable systems for rating Internet connectivity speed, running up to five million tests on a daily basis. Azercell was also recognized as the country’s fastest mobile Internet provider with the speed of 5.5 MB/s in 2013, according to Ookla Net Index. The testing was done over 300,000 unique IP addresses from Azerbaijan. It is worth noting, that Azercell’s data speed is very close to the level of fixed broadband speed. Internet users enjoy this quality over radio signal instead of cable connectivity. “Indisputably, Azercell Telecom is the provider of the fastest, reliable and the most affordable mobile data in Azerbaijan. Currently, Azercell subscribers can choose from a range of data packs of different value: daily, weekly, monthly 3G packs, as well as 4G data packages. The subscribers can even pick the data pack per the traffic they prefer to consume. In addition, Azercell Telecom constantly offers discounted campaigns

and services for mobile data users of its network as Free Internet on Weekends, 10GB=10AZN, 50 MB= 0.25 AZN,” the company said. Currently, every second subscriber of Azercell is an active user of mobile internet, consuming two time more mobile data, than back in 2013. Today Azercell provides the fastest Internet access not only from phones, but also from different handheld devices. The company was the first to commercially launch 4G technology not only in Azerbaijan, but in the region. Some 300 out of nearly 6,000 Radio Base Stations of Azercell constituted LTE (4G) network for Baku and Absheron peninsula as of late 2013. Azercell Telecom LLC was founded in 1996 and since the first years sustains a leading position on the market. Azercell introduced number of technological innovations in Azerbaijan: GSM technology, GPRS/EDGE, 24/7 Customer Care, full-time operating Azercell Express offices, mobile e-service ASAN imza (ASAN signature) and others. With 51 percent share of Azerbaijan’s mobile market Azercell’s network covers 99.8 percent of the country’s population. The number of Azercell’s subscribers reached 4.5 million people by late 2013. In 2011 Azercell deployed 3G and in 2012 the fourth generation network - LTE in Azerbaijan. The company is the leader of Azerbaijan’s mobile communication industry and the biggest investor in the non-oil sector.

SOCAR LAUNCHES NEW FILLING STATION IN UKRAINE

zerbaijan’s state energy company SOCAR has launched a new filling station in the Ukrainian Cherkassy region. This is the sixth SOCAR filling station in Cherkassy region, providing additional jobs for 22 people, SOCAR said on July 22. The new complex is located at the entrance to the city of Uman. The new filling station provides high-quality fuels and various services for a comfortable stay. In particular, the new petrol complex sells petroleum products meeting eco standard Euro-5 from leader refineries of Poland, Lithuania and Belarus. Two fuel-dispensing units with gasoline A-92, A-95, branded gasoline A-95 TM NANO and diesel fuel TM NANO were installed for their issuance. Also, there is a store and Butacafe. The filling station complex also offers free services, in particular water refilling for washer tank, tire inflation, Wi-Fi, guest parking for cars, WC, including WC for disabled people, changing

tables for guests with children. Vacuum cleaner service is offered separately as well. SOCAR Ukraine, which represents SOCAR in Ukraine, owns over 60 refueling stations in the country. Azerbaijan’s energy giant SOCAR continues to steadily develop its filling stations network both in the capital of Ukraine and other regions. It provides the Ukrainians with quality European oil products in order to strengthen its position in Ukraine’s fuel market. SOCAR invested over $160 million in the development of business in Ukraine from 2009 to 2013. The company’s investments in social and charitable initiatives in this country amounted to over $5 billion in the mentioned period. Currently, the company owns gas stations in Azerbaijan, Switzerland, Georgia and Ukraine. It has representative offices in Georgia, Turkey, Romania, Austria, Switzerland, Kazakhstan, Britain, Iran, Germany and Ukraine, and trading companies in Switzerland, Singapore, Vietnam, Nigeria, and other countries.

GAS CONDENSATE SHARES 44 PERCENT OF IRAN’S TOTAL OIL EXPORT

ran’s gas condensate exports reached 5,784 tons during first quarter of Iran’s fiscal year, indicating a 2.4 times increase year to year. The International Energy Agency’s monthly reports indicates that Iran’s crude oil and gas condensate exports together were 1.11, 1.36 and 1.08 million barrels per day during April, May, and June respectively. Now, Iran’s Custom Administration’s monthly report covering a period from March 21 to June 22, says that Iran exported 5,784 tons or 522,425 barrels per day of gas condensate during the first quarter of Iran’s fiscal year. The figure was about 217, 000 barrels per day during the same period last year. According to the new Custom’s report, published on July 14, Iran’s gas condensate exports during the first months of fiscal year are 846 tons (229 kbbl per day), 4095 tons (229 kbbl per day (1.11 million bbl per day) and 843 tons (229 kbbl per day) respectively. In addition to the condensate export growth, Iran’s liquid petroleum gas (LPG) export experienced a huge increase as well. The Middle Eastern country exported about 509,000 tons of liquefied propane and 320,000 tons of butane during first quarter of fiscal year. Iran’s LPG exported almost two-fold more in the first quarter compared to the same period last year. Iran’s petrochemical products export value increased from $2.646 to $3.076 billion during the mentioned period. The total non-oil exports of Iran (including gas condensate) reached $11.859

billion, indicating an above 20 percent increase, while the imports $12.386 billion with above 36 percent growth. The huge increase in Iran’s gas condensate occurred while Iran loaded the first condensate output of the 12th phase of South Pars gas field last week. IRNA reported on July 13 that the Executive Director of Iran’s Petropars Projects Seyyed Hadi Mirbagheri said, some 950, 000 barrels of the condensate produced at the Phase 12 was loaded to a tanker last week to be exported in upcoming days. Iran inaugurated the biggest phase of the South Pars gas field, Phase 12 last fall, but the output level of natural gas from this phase doubled last week, reaching 25 million cubic meters per day. The Phase 12 is aimed to produce 80 mcmpd of gas and 120 kbbl per day of gas condensate after full commencement, which is scheduled by the end of 2014.

IRAN UPS EXPORTS TO AZERBAIJAN

ran has increased the export of good to neighboring Azerbaijan. Iran has exported goods worth $11.412 million to Azerbaijan in the form of suitcase trade in the first quarter of the current Iranian fiscal year (March 21 - June 20), which indicates an increase by 13 percent compared to the same period of preceding year. Iranian Custom Administration’s latest monthly report said the country has exported goods worth $5.46 million via Astara, $3.39 million via Julfa, $2.48 million via Bilasuvar and $85,000 via Poldasht custom checkpoints to Azerbaijan during the mentioned period. Iran’s total non-oil exports to foreign countries stood at $11.859 billion in the three month of the current Iranian fiscal year, while the country’s total imports amounted to $12.386 billion.

Azerbaijan and Iran have had diplomatic relations since 1918. Iran recognized Azerbaijan’s independence in 1991, and diplomatic relations between the two countries were established in 1992. Data from the State Customs Committee of Azerbaijan shows that trade turnover between the two countries amounted to $281.03 million in 2013, which is 6.13 percent higher than 2012. The figure stood at $263.785 million in 2012. Iran imported $73.347 million worth of goods from Azerbaijan in 2013, while its exports to Azerbaijan stood at $207.683 million during the same period. Iran’s trade turnover with Azerbaijan in the first eleven months of 2013stood at $470 million ($448 million exports and $22 million imports), Iran’s customs administration’s latest report shows.

AZERBAIJAN, EU DISCUSS ENERGY RESOURCES

ooperation prospects between European Union (EU) and Azerbaijan were discussed in an event held under the EU`s regional energy cooperation program (INOGATE). The event co-organized by Azerbaijan`s Ministry of Energy and INOGATE Technical Secretariat was held in Baku on July 17, AzerTag news agency reported. The participants discussed a range of issues, including developing energy resources, energy statistics, increasing the efficiency of standards in energy policy, as well as problems and prospects of Azerbaijan`s energy sector. Addressing the event, representative of Azerbaijan’s Energy Ministry, Iftikhar Huseynov and Head of Operations Section of the EU Delegation to Azerbaijan, Federico Berna highlighted Azerbaijan`s success in energy sector and laid out the details of the assistance to be given by the EU to Azerbaijan in near future. INOGATE experts talked about the experiences of the EU which cover strategic role of statistics for energy market development, energy policy strengthening, as well as approximation of standards, the need for energy efficiency and mechanisms for its promotion. The event aimed to provide an effective forum for continued dialogue and enhanced coopera-

tion between INOGATE and Azerbaijan’s main energy players. INOGATE is an EU-funded program promoting international energy co-operation between the EU and Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, Uzbekistan and Armenia. INOGATE’s activities focus on four key areas: convergence of energy markets on the basis of the EU principles; enhancing energy security; supporting sustainable energy development; and attracting investment in energy (particularly in Sustainable Energy) projects of common and regional interest.

PUBLICITY caucasian business week

TBILISI INTERNATIONAL FESTIVAL OF THEATRE International Program

with elegant touch of reality… SEPTEMBER 20 - OCTOBER 8

23, 24, 25 SEPTEMBER, 2014 Invisible Flock with Hope and Social

BRING THE HAPPY Directed by Invisible Flock

ABOUT PERFORMANCE: Bring the Happy is an ongoing project about happiness, an attempt to map moments and memories of happiness. A first kiss, a lost love, a longed for baby, childhood heroes, a proposal, a dance, a chance encounter – where did it happen and how happy did it make you feel on a scale from 1 to 10? Invisible Flock will create a giant 3D map of the city and invites you to explore the map, discover what makes others happy and where, and in turn submit your own happy moment or memory to add to the evergrowing database of happiness. The memories collected will be taken and transformed into Bring the Happy Live a spectacular performance. The Live show retells the memories and stories collected across the UK and combines them with those from Tbilisi.

Somewhere between a wedding and a wake, the memories collected in all of their beautiful, sometimes tragic, sometimes ridiculous and often hilariously mundane glory are taken and retold in an emotional roller coaster of an evening.! In collaboration with Hope & Social the live performance promises to be an interactive, intimate and highly moving evening where you are invited to toast, dance, laugh, cry and join us in celebrating happiness. Venue: KAKHA BAKURADZE’S MOVEMENT THEATRE Duration: 90 Minutes, without intermission Web-site: www.bringthehappy.co.uk www.invisibleflock.com www.tbilisiinternational.com www.facebook.com/TbilisiInternational

July 28, 2014 #64

13 CAN AFRICA’S DESERT SUN POWER EUROPE? WORLD NEWS

July 28, 2014 #64

p to 20% of power demand in Europe can be obtained by connecting African deserts to European cities, according to the DESERTEC Foundation. The idea is to build a large number of concentrated solar power (CSP) plants in Middle Eastern and Northern African (MENA) countries, and to transmit electricity to Europe by means of efficient highvoltage direct-current cables. CSP in deserts, as explained in greater detail below, has the potential to generate renewable electricity, predictably, for up to 16 hours per day, thus overcoming two major problems with photovoltaic and wind power: intermittency and few operation hours. A prominent technology roadmap of the International Energy Agency published in 2010 had optimistic prospects for CSP, and projected a significant amount of electricity transmission from MENA countries to Europe – up to 15% of total electricity consumption in 2050 (see IEA 2010). The DESERTEC project has lost traction since Siemens withdrew from the partnership in October 2012, but the idea of building a trans-Mediterranean power grid is still attractive for many proponents of a quick transition towards a zeroemission European power system. The main questions we address in this column are the following: • Is it economically, technologically and politically feasible to cover a large fraction of power demand in Europe from the MENA deserts? We answer these questions by relying on numerical scenarios generated using the integrated assessment model WITCH to study when, how much and where it is optimal to invest in CSP, and what the potential size of an EU–MENA power market is (Massetti and Ricci 2013). We find that it is premature for Europe to invest now in large CSP projects. There is scope for pilot projects, but large economic benefits from transMediterranean CSP trade emerge only from 2050 onward. However, the threats to European energy security from extensive trade in electricity with MENA countries should not be underestimated. THE NEED FOR A CARBON-FREE POWER GENERATION SYSTEM Europe is setting increasingly strict greenhouse gas emission-reduction targets, with the intent to lead the world in the fight against climate change. If Europe truly aims at achieving the heralded +2°C temperature limit, more stringent targets will follow because aggregate emissions must basically drop to zero. With uncertain prospects in Europe for both nuclear power and fossil-fuel power plants with carbon capture and storage, renewables will likely play a major role in the future technology mixture. The problem with renewables such as wind and photovoltaic is that they are intermittent – winds are erratic and the sun does not shine at night. A power system that relies on wind and photovoltaic for the bulk of its generation capacity must be upgraded with new transmission and distribution grids, with storage capacity and backup capacity. This is expensive and thus penalizes renewable technologies, compared with coal or natural-gas thermoelectric power plants (EPRI 2011 and IEA 2014). CONCENTRATED SOLAR POWER The ideal technology should provide steady, adjustable, predictable power from totally renewable sources. CSP generation is very close to this optimum. The idea is extremely simple and as

caucasian business week

old as Archimedes’ mirrors during the Siege of Syracuse – reflecting surfaces are used to concentrate direct sunlight in a narrow area to heat a fluid. The fluid is collected and used to transform water into steam, which is then used to rotate a turbine in a thermoelectric plant. Direct sunlight substitutes coal and gas. The temperature reached by the fluids during the day is so high that it is possible to store heat for most of the night and generate an almost continuous stream of power. A natural gas turbine may complement the system to guarantee 24-hour power generation. The major drawback of CSP is that it needs virtually cloud-free sky (unlike photovoltaic, which works well even under cloudy skies). The best sites for CSP are deserts because the lack of humidity largely reduces average cloud coverage. Deserts also offer large inexpensive areas of land to host large expanses of mirrors. The problem is that deserts are usually not close to where people live and work. The idea is then to use new generation transmission cables that have minimal power losses to connect deserts to cities. With a few exceptions in Spain and in southern Italy, Europe lacks the best climatic and geographic conditions for CSP. A large-scale development of CSP is not possible in Europe. However, many of the states on the southern Mediterranean shore have an abundance of deserts with ideal climatic conditions – hence the plan to build a network of cables up to central and northern Europe. ECONOMIC, TECHNOLOGICAL AND POLITICAL FEASIBILITY CSP is a proven technology that can work on a large scale. The leading country is Spain, with 2300 MW of installed capacity, followed by the US, where four plants became operational in the past 10 months, reaching 1435 MW of total installed capacity. More plants are to come in 2014 and the following years in the US, China, India, South Africa, and other countries in the Middle East and Northern Africa (Figure 2). Is CSP economically attractive? At present, CSP power generation is four or five times more expensive than fossil power generation (see IPCC 2011). Of the investment in CSP, 98% so far has needed public support (Stadelmann et al. 2014). But how would investment incentives change if carbon emissions start being penalized and learning-by-doing contributes to reductions the investment and operation costs of CSP? Will a climate-friendly investment environment incentivize large investments in CSP, and will it become attractive for Europe to import CSP from the deserts of Africa and of the Middle East? In a recent study, we used the integrated assessment model WITCH to answer these questions (Massetti and Ricci 2013). We generate numerical scenarios of investments in CSP under the assumption that countries agree to reduce emissions to limit the mean global temperature increase to below 2°C above the pre-industrial level with about 50% probability. We find that it will be economically efficient to invest in the large-scale deployment of CSP only after 2050. In the first half of the century there are other, less expensive options to reduce greenhouse gas emissions. With limits to nuclear and/ or to fossil-fuel power plants with carbon capture and storage, large investments start instead in the first half of the century. Quite interestingly, investing in CSP becomes attractive also without climate policy in regions that have high domestic production potential. Europe finds it attractive to import electricity

from solar plants in the MENA region around 2035–2040. In the second part of the century the price of CSP declines as a result of learningby-doing, and Europe starts importing a large amount of electricity from the MENA countries in our scenarios. CSP electricity covers from 18% to 46% of total electricity consumption in Europe after 2050, depending on whether nuclear and carbon capture and storage have constraints or not. Thus, a strong climate policy signal in line with the declared targets would make CSP economically very attractive and would create the incentive to build a large trans-Mediterranean power network. Thus, according to our analysis, DESERTEC-like projects seem premature but economically sound – if the right policies are in place. Is it however conceivable, from a geopolitical point of view, that Europe will rely on MENA countries to cover a large share of its electricity demand? This is clearly an open and delicate research question that deserves greater attention. We suggest two main points: • First, if the market will be dominated by a small group of large (state) operators there is a concrete risk of rent-seeking behaviour. With our model, we show that MENA regions

have the incentive to form a cartel to supply electricity at a price above the marginal cost. Devising institutions that are able to increase market competition appears an enormously complicated task in the present geopolitical conditions, but it is not impossible. • Second, and most importantly, a large transMediterranean power market has the potential to increase the energy dependency of Europe. It is important to keep in mind that demand and supply must be constantly balanced in order to guarantee the correct functioning of power systems. A sudden large imbalance typically causes a blackout. This means that an unexpected drop in power generation from the MENA regions would put the whole European network under the risk of a blackout. It seems that the main limit to transferring electricity from the deserts to Europe in the long term is neither technological nor even economic. It is, rather, a series of geopolitical considerations that suggests caution. These problems can be worked out, especially over long time horizons. Under the current state of international affairs, CSP seems to have only a marginal role in the future of Europe. This is a limiting factor towards a fully de-carbonized economy, compared with the US and China, because both countries have very large domestic CSP generation potential.

Figure 1. The DESERTEC EU–MENA concept

Figure 2. Installed and planned concentrated solar power plants by country

PUBLICITY caucasian business week

APARTMENT

Every Wednesday At 21:00 On GDS TV Full of humor

Anchors â&#x20AC;&#x201C; Kotiko Toloraia, Levan Gogoreliani will offier refined humor, provide good mood and invite interesting guests for the program audience. The program consists of three parts: the first block offers humor and apolitical monologue with funny video clips, pictures and so on. The second and third blocks are dedicated to famous public figures that will be invited as guests. The show will start Wednesdays at 21 oâ&#x20AC;&#x2122;clock and it will cover all interesting issues excluding politics to guarantee good mood for the audience.

Guests: Chele, Nutsa Mestumrishvili, Nuka Orjonikidze, Qeti Jaoshvili, Ruska Chumburidze, Tamuna Morchiladze

July 28, 2014 #64

TBILISI GUIDE July 28, 2014 #64

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: +995 32 2 75 21 11, Fax: +995 32 2 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

July 28, 2014 #64