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Issue no: 1060/135 • JUNE 26 - 28, 2018 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue... Stadler Plans to Build Factory in Georgia NEWS PAGE 2 Despite Optimistic Growth Forecasts, Trade Defi cit up in April ISET PAGE 4 Fashion Tourism – the Next Big Industry Trend? FOCUS ON THE NEIGHBORS Erdogan wins the Turkish presidential elections PAGE 2

Source: Financial Tribune Mandatory Inspection of State Vehicles to Kick off July 1 BUSINESS PAGE 5 How Almaty Region Plans BY THEA MORRISON to Attract New Business

rom July 1, 2018, vehicles of state agen- BUSINESS PAGE 10 cies and legal entities will have to undergo obligatory technical inspec- Parliament May Adopt tion. The technical inspection will be Draft on Energy Effi ciency availableF in 32 accredited periodic technical inspection centers throughout Georgia. of Buildings Georgia’s Ministry of Economy and Sustain- able Development reports that in order to facil- itate mandatory technical inspection and improve services, a website, www.pti.ge, has been cre- ated. There, users can arrange a visit to any available inspection center in advance. Moreover, on January 3, 2018, the hotline 1484 was activated which serves people interested in the process and provides relevant informa- tion regarding the conditions and terms of the technical inspection. Continued on page 2 Photo source: Legal Beagle BUSINESS PAGE 15

Prepared for Georgia Today Business by Markets Asof22ͲJunͲ2018 STOCKS Price w/w m/m BONDS Price w/w m/m BankofGeorgia(BGEOLN) GBP19.27 Ͳ0,0% Ͳ16,2% GEOROG04/21 100.87(YTM6.41%) Ͳ0,1% Ͳ0,4% GeorgiaCapital(CGEOLN) GBP11.32 Ͳ8,2% na GEORG04/21 106.45(YTM4.39%) +0,1% +0,7% GHG(GHGLN) GBP2.55 Ͳ5,6% Ͳ15,8% GRAIL07/22 105.08(YTM6.31%) Ͳ0,3% +0,0% TBCBankGroup(TBCGLN) GBP16.90 Ͳ0,9% Ͳ3,8% GEBGG07/23 99.95(YTM6.01%) Ͳ0,0% Ͳ0,5%

COMMODITIES Price w/w m/m CURRENCIES Price w/w m/m CrudeOil,Brent(US$/bbl) 75,55 +2,9% Ͳ5,1% GEL/USD 2,4587 +0,0% +0,6% GoldSpot(US$/OZ) 1270,56 Ͳ0,7% Ͳ1,6% GEL/EUR 2,8680 +0,5% Ͳ0,2% GEL/GBP 3,2596 Ͳ0,1% Ͳ0,6% INDICES Price w/w m/m GEL/CHF 2,4852 +1,2% +0,8% FTSE100 7682,27 +0,6% Ͳ2,5% GEL/RUB 0,0389 Ͳ Ͳ2,5% FTSE250 21009,89 +0,0% Ͳ0,9% GEL/TRY 0,5224 +0,5% Ͳ DAX 12579,72 Ͳ3,3% Ͳ4,5% GEL/AZN 1,4443 Ͳ0,1% +0,7% DOWJONES 24580,89 Ͳ2,0% Ͳ1,0% GEL/AMD 0,0051 Ͳ +2,0% NASDAQ 7692,82 Ͳ0,7% +4,3% GEL/UAH 0,0937 +0,4% Ͳ Chat with us MSCIEMEE 154,34 +0,3% Ͳ6,1% EUR/USD 0,8580 Ͳ0,4% +1,1% MSCIEM 1088,00 Ͳ2,3% Ͳ4,7% GBP/USD 0,7537 +0,1% +1,2% SP500 2754,88 Ͳ0,9% +1,1% CHF/USD 0,9881 Ͳ1,0% Ͳ0,5% MSCIFM 2675,83 Ͳ2,4% Ͳ4,8% RUB/USD 62,9873 Ͳ0,2% +2,9% GTIndex(GEL) 1582,68 ͲͲTRY/USD 4,6771 Ͳ1,1% +0,2% GTIndex(USD) 1208,13 ͲͲAZN/USD 1,7004 +0,5% +0,3% GEORGIA TODAY 2 NEWS JUNE 26 - 28, 2018 Stadler Plans to Build Factory in Georgia

metro trains in the capital,” Kaladze BY THEA MORRISON stated. Stadler has already implemented a suc- cessful project in Georgia- the four ne of the world's leading double-decker trains ‘Stadler KISS,’ car- rolling stock manufactur- rying railway passengers from Tbilisi to ers, the Swiss company Batumi and back. The trains are adapted Stadler, is to build a for people with disabilities and are fully regional factory in Georgia. equipped with European standards of OTbilisi Railway JSC, Tbilisi City Hall and safety and comfort. the Swiss company Stadler signed a Mem- Georgian Railway believes that it is orandum of Cooperation on June 22. thanks to Stadler’s successful entry onto The document was signed by Tbilisi the Georgian market, and the improve- Mayor Kakha Kaladze, owner of Stadler ment of the country’s business environ- and Chairman of the Supervisory Board, ment, that the management of the com- Peter Spuhler, and General Director of pany decided to establish a regional Georgian Railway, Davit Peradze. enterprise with the support of the Gov- Before the signing of the memorandum, ernment of Georgia, Georgian Railway the sides held a meeting where the pros- JSC and Tbilisi City Hall. pects of future cooperation were dis- “Launching such a high-tech enterprise cussed. The meeting was also attended in our country bears paramount impor- by Vice-Mayor of Tbilisi Irakli Khmaladze tance for increasing the export potential and Konstantine Guntsadze, Chairman of Georgia, providing high-end fully of the Supervisory Board of Georgian equipped railroad passenger trains as Railway. well as metro and tram rolling stock for According to the Mayor of the capital, the regional and worldwide markets,” construction of a new factory is very the statement of the Georgian Railway important in terms of creating new jobs. JSC reads. “We signed a memorandum with Stadler, Stadler Rail was founded in 1942 and which envisages launching negotiations since then the company has been pro- in order to build a metro carriage and ducing high-quality and reliable produc- train manufacturing factory in Georgia. tion. It is also focused on niche products It is an important project in terms of and is one of the last European manu- subsidiaries with locations in Algeria, lic, Hungary and Belarus. Stadler Rail Stadler formed a joint venture with transport development as it will enable facturers of rack railway rolling stock. Germany, Italy, the Netherlands, Austria, employed approximately 7,000 employ- Azerbaijan-based company International us to introduce new buses and renew The holding company consists of eight Poland, Switzerland, Spain, Czech Repub- ees in 2017. Railway Distribution LLC in 2014. Erdogan Wins Presidential Elections in Turkey

this election and its results to hide their state media. BY THEA MORRISON failure,” Erdogan addressed his support- As declared, the voters’ turnout was ers. 87% for both the presidential and par- Erdogan had also said in the simulta- liamentary elections. urkish President Recep neous parliamentary contest that his Around 59 million people were eligible Tayyip Erdogan won the ruling Justice and Development Party, to vote in both presidential and parlia- presidential polls on Sun- the AKP, and its allied Nationalist Move- mentary elections Sunday. Erdogan said day, extending his 15-year ment Party, the MHP, had together the participation rate was 90%, an extraor- grip on power. retained their control of parliament. dinarily high number for any election. TThe election body of the country stated State media said that the AKP had won Under constitutional amendments on Sunday night that the incumbent had 42% and its MHP ally had 11%, while approved after a controversial 2017 ref- won with 97.7% of votes counted. Ince's main opposition the Republican erendum, Turkey is making a transition Erdogan declared himself the winner People's Party (CHP) had 23% of the from a parliamentary system to a presi- before the offi cial results were announced. vote. The pro-Kurdish Peoples' Demo- dential one. The changes took effect after “Our people have given us the job of cratic Party (HDP) had 11%, which put the elections. carrying out the presidential and execu- it above the 10% needed to enter parlia- Erdogan has been the President of Tur- tive posts…I hope nobody will damage ment. The opposition nationalist Iyi key since 2014. Before that, he was Prime this democracy by casting a shadow on Photo source: AP (Good) party had 10%, according to Minister. Mandatory Inspection of State Vehicles to Kick off July 1

Continued from page 1 5,953 vehicle owners addressed techni- The next stage, to be launched on July Vehicles which are four years old or has not gone through a periodic techni- cal inspection centers for a second round, 1, requires all vehicles registered to state less will not have to undergo an inspec- cal inspection will be subject to a fi ne Obligatory technical inspection of cars of which 243 vehicles failed to meet the entities to undergo a mandatory check, tion. Cars that are four-six years old will to the amount of 50 GEL, and legal enti- took effect on January 1, 2018. A total of necessary standards again. which will be followed by inspections of undergo testing once every two years ties or individual entrepreneurs will be 36,394 vehicles have been inspected in The fi rst stage of the mandatory tech- all automobiles with 3.0 engines and above and cars older than six years will have fi ned 200 GEL. Georgia as of June 20, 2018 and 75% of nical inspection, launched in January, from October 1. From January 1, 2019, the to be tested every year. Under the Georgia-EU Association them (27,143 vehicles) have been assessed required trucks of over 3.5 tons and pas- government will start the fi nal phase of In addition, driving an uninspected car Agreement signed in 2014, Georgia is as worthy, Georgia’s Ministry of Economy senger cars with more than 8 seats to the campaign and require all other vehi- will result in a 50 GEL fi ne. Moreover, obligated to ensure all vehicles are in announced last week. undergo safety checks. cles to undergo mandatory testing. transfer or disposal of a vehicle which line with EU standards.

GEORGIA TODAY 4 BUSINESS JUNE 26 - 28, 2018

Despite Optimistic Growth Forecasts, Trade Defi cit up in April

cantly to the GDP growth forecast. Foreign Direct Investment, however, shrunk by 32.9% in the fi rst quarter of 2018 compared to the same month of the previous year. According to Geostat, the main reason for decreasing FDI was the transfer of ownership in some companies from non-residents to residents, and the reduction of debt liabilities to non-res- ident direct investors (mostly payment of loans). The main countries of origin for foreign direct investment were the United Kingdom (29.6% of total FDI), Azerbaijan (18.2%), China (14.9%), the the region experienced signifi cant accel- Netherlands (11.6%), and the United BY DAVIT KESHELAVA eration of economic activities in the fi rst States (8.5%), accounting for 82.8% of AND YASYA BABYCH four months of 2018. The Armenian total FDI. The economic sectors that economy advanced by 8.9% annually, depressed FDI growth the most were while the Russian and Azerbaijani econ- transport and communication (-37.7 ppt) SET-PI has updated its forecast omies grew on average by 1.4% and 1.2%, and real estate (-24.2 ppt), while other of Georgia’s real GDP growth rate respectively. Improved economic condi- sectors positively contributed to the for the second and third quarters tions in the wider neighborhood further growth fi gure – manufacturing (+8.1 ppt), Source: National Statistical Bureaus of 2018. Here are the highlights of stimulated the Georgian economy though fi nancial (+7.8), and construction (+3.5 a small, but positive, impact on real GDP this month’s release: trade, remittances and tourism channels. ppt). growth. EXPANSION OF MONETARY I• Geostat has released its GDP growth AGGREGATES estimate for the fi rst quarter of 2018. The PROMISING STATISTICS INCREASE IN NATIONAL CREDIT EXPANSION The other set of variables that had a sig- Q1 growth stands at 5.2%, which is 1.1 OF EXPORT, REMITTANCES CURRENCY DEPOSITS Domestic credit to the private sector nifi cant positive effect on our forecast percentage points above the recent fore- AND TOURISM Total deposits (stocks) in commercial extended by commercial banks grew by is related to currency in circulation. The cast. In April 2018, total exports grew by 8.3% banks amounted to 21 billion GEL by the 20.8% (even after excluding exchange Monetary Policy Committee of the • ISET-PI’s forecast of real GDP growth year over year (slightly decelerated end of April - 20.4% higher than in the rate effect growth rate, domestic credit National Bank of Georgia met in May for the second quarter of 2018 remains growth rate compared to the earlier same month of the previous year. In still was 19.3%) in April of 2018. The and June, and decided to leave the mon- unchanged at 5.9%. The fi rst estimate months of 2018), driven by the export of particular, the stock of national currency credit portfolio grew due to the increase etary policy rate unchanged at 7.25%. for the third quarter growth forecast is alcoholic beverages, higher re-exports deposits grew substantially, by 46%, in loans issued in the national currency, However, all of the monetary aggregates, at 7.2%. of motor cars to Azerbaijan, Ukraine and while the stock of foreign currency as well as the expansion of loans issued including the largest - Broad Money (M3) • Based on April’s data, we expect Armenia, accelerated export/re-exports deposits increased by only 9.1%. The in foreign currency. Rapidly growing - experienced signifi cant yearly growth annual growth in 2018 to be 6.2% in the of tobacco products (increased by more largest yearly increase was observed for credit positively contributes to the short- (M3 aggregate rose by 17%). The largest worst-case or “no growth” scenario, and than 22 times on an annual basis), and National Currency Time Deposits with term growth fi gures by stimulating pri- increase was observed for Monetary 6.5% in the best-case or “average long- mineral/chemical fertilizers. Re-export less than 3 months of maturity – a 169% vate consumption. However, the growth Aggregate M2, which went up by 22% term growth” scenario. Our “middle-of- of copper and copper ores, however, was increase relative to the same month of rate of domestic credit signifi cantly relative to the same month in the previ- the road” scenario (based on average reduced by 51.4%. The main destination the previous year. The second largest exceeds the growth of Georgian economy ous year. Moreover, Currency in Circu- growth over the last four quarters) pre- markets for Georgian export products yearly increase was experienced by and borrowed money is often spent on lation itself increased by 8% in yearly dicts 6.3% real GDP growth in 2018. were Turkey, Russia, Azerbaijan, Bulgaria National Currency Demand Deposits purchasing imported goods and services, terms. Rapid expansion of monetary Geostat has released its preliminary and Armenia, accounting for 55% of total – a 95% increase year over year. Overall, which might have negative consequences aggregates contributed positively to real estimate of GDP growth for the fi rst exports. National Currency Total Deposits to long-run economic growth. GDP growth forecast. quarter of 2018. Its estimated growth During the same period, imports of increased by more than 46% yearly. fi gure is 5.9%, which is 1.1 percentage merchandise goods increased by 22.0%, National Currency Deposit-related var- Our forecasting model is based on the Leading Economic Indicator (LEI) point higher than ISET PI’s forecast. As driven by petroleum and petroleum iables had a positive contribution to our methodology developed by the New Economic School, Moscow, Russia. We a result, our projected real GDP growth gases, motor cars and copper ores and GDP growth projection constructed a dynamic model of the Georgian economy, which assumes that all for the second quarter of 2018 has also concentrates. The main trading partners The dollarization rates of non-bank economic variables, including the GDP itself, are driven by a small number of been revised upward to 5.9%. Moreover, of Georgia for imports were Turkey, deposits and loans decreased in April of factors that can be extracted from the data well before the GDP growth esti- ISET PI’s fi rst forecast of the third quar- Russia, China, Azerbaijan and Ukraine, 2018. Dollarization of deposits fell by 0.4 mates are published. For each quarter, ISET-PI produces fi ve consecutive monthly ter growth is also very optimistic, at 7.2%. accounting for the 47% of total imports. ppt, amounting to 62.5%, while loan dol- forecasts (or “vintages”), which increase in precision as time goes on. Our fi rst forecast (1st vintage) is available about fi ve months before the end of the quar- These high forecast figures can be As a result, the trade defi cit deepened larization was reduced by 0.1 ppt to 55.0%, ter in question. The last forecast (5th vintage) is published in the fi rst month of explained by the fact that quarterly by 29.5%, compared to the same month compared to March of 2018. According the next quarter. growth rates typically follow a certain in 2017. to our model, deposit dollarization had pattern, captured by ISET-PI’s empirical Both remittances and tourism showed forecast model. Thus, the higher-than- signifi cant yearly increases in April of usual growth in the fi rst quarter may 2018. Money transfers rose by 17.1% in result in an overly optimistic forecast the fourth month of 2018, driven by about the next quarter’s performance. remittances from Israel (32% annual Indeed, ISET PI’s forecasts for Q2 and growth), Italy (43.6%), Greece (35.2%), Q3 are largely infl uenced by the high Q1 Germany (32.9%), Azerbaijan (35.2%), actual growth. and Turkey (8.7%). Notably, remittances Yet, looking at the economic landscape from the Russian Federation experienced from the standpoint of April data, we a slight yearly reduction. Nevertheless, note that several variables changed sig- Russia remains the top country of origin nifi cantly, affecting growth predictions. for money infl ow, accounting for 28% of Improved external statistics, the accel- total remittances. erated growth of national currency The number of all type of visitors in deposits, credit expansion and increased April of 2018 increased by 16.8% year monetary aggregates were the main over year and exceeded 619,000 peo- contributors to real GDP growth. ple. Out of these, 56.6% were classifi ed as tourists, and the growth rate of IMPROVED ECONOMIC these visits reached 24.9% annually. CONDITIONS IN THE The top fi ve countries of origin for WIDER REGION international visitors were Turkey The beginning of 2018 showed strong (16.6% of total visitors), Azerbaijan growth fi gures in the wider region. (15.9%), Armenia (14.6%), Russia Tel: (995 32) 2 45 08 08 According to the rapid estimates of real (14.4%) and Iran (4.2%). Both tourism 10 Galaktion Street E-mail: [email protected] GDP growth, most of the countries in and remittances contributed signifi - GEORGIA TODAY JUNE 26 - 28, 2018 BUSINESS 5 Fashion Tourism – the Next Big Industry Trend?

activities (cut, make and trim). A country BY SAMANTHA GUTHRIE will have a textile industry only so long as it offers the cheapest labor. Once eco- nomic development sets in, textile pro- ea Agladze, the editor-in- ducers will be the fi rst to leave.” From chief of fashion and lifestyle 2000-2010, Turkey had a very strong magazine Bomondi, pro- apparel and textile industry, making up claims that fashion tours of a signifi cant portion of the economy. In Georgia are the next big 2009, 56,000 apparel and textile compa- trendT in the tourism industry. nies operated in the country, employing As head of the popular magazine, Agladze approximately two million people, and is a both a trend forecaster and an arbiter 18.69% of Turkey's total exports were in of taste. This past Friday, Agladze spoke the sector. The boom did not last long, on the subject, saying “Tourist companies however. From 2009-2013, “Turkish sala- bring people interested in fashion to our ries almost doubled, leading to the coun- country, who not only taste our wine, try’s loss of its cost advantage” and its dishes and do sightseeing, they learn “creeping demise,” writes Mariamidze. about the country’s fashion industry. A She explains that as Turkey lost its cost lot of people are interested in successful advantage, Georgia, particularly the Adjara and amateur designers of Georgia. That’s region, “became the natural destination why tours are planned with the involve- of the wandering textile industry...start- ment of all interesting designers. This ing in the mid-2000s.” By 2015, Turkey’s direction helps them release their prod- textile and apparel industry had essen- ucts, increases demand, promotes pen- tially evaporated. Mariamidze warns, etration on markets abroad and in addi- though, that Georgia’s new economic tion promotes tourism in country.” sector will not last forever, as wages will Fashion is no longer simply an enter- inevitably rise, pricing itself out of the tainment industry but plays a signifi cant sensitive industry. She recommends Geor- role in the growth of the Georgian econ- gia follow Turkey’s trajectory, “Rather omy. Many people have become familiar than wait for the CMT industry to move with the country through its fashion Photo: Avtandil on (or become robotized), the Georgian industry and superstar designers such as and-coming designers who showed col- by Lady Gaga and Mary J. Blige, Situation- Colors of Benetton, and Oasis. The com- government could use the current momen- Demna Gvasalia, the creative director of lections in Florence earlier this month at ist, worn by Bella Hadid, and George pany is expected to start with 250 employ- tum to launch a “Designed in Georgia” Balenciaga and head designer for Vete- the bi-annual Pitti Uomo, (in English, Keburia, worn by Rihanna and Kortney ees, eventually expanding to 350, and to branding campaign and in this way chan- ments. Gvasalia brought the post-Soviet "Pitti Men"), one of the world’s most Kardashian. Beyond the reach of most see an annual turnover of 3.3 mil GEL nel Georgians’ innate creativity into the aesthetic to the world stage and turned important platforms for men’s clothing average Georgians, the high-end fashion ($1.3 mil), according to a statement released lucrative fashion design and clothing heads with his Georgian 90s-inspired and accessory collections, and for launch- from local designers inspires street wear by parent company MGMTex. industry.” collections. Even after proclaiming, in ing new projects in men’s fashion. Pitti lookalikes and draws culturally curious In a 2016 op-ed in The Financial, econ- A linkage to Georgian design could, of 2017, that “Eastern Europe is over,” young Uomo is described by GQ as “typically fashionistas to the boutiques and work- omist Tamta Maridashvili predicted course, be fashion tourism, bringing Georgians still fl ock to the bazaars to buy known for generating insane, eyeball- rooms of Georgia’s top fashion houses. Georgia’s participation in textile manu- together two of Georgia’s most popular knock-offs of his designs – and the occa- twitching street style.” Each year, Pitti Fast fashion has also had an impact on facturing will follow Turkey’s arc. “From concepts. Agladze says that fashion tours sional authentic piece. In May, GQ wrote Uomo hosts selected designers, and this the Georgian economy. In April of this an economic perspective, having a strong are currently being developed, and while about the future of fashion and Georgia’s time Georgia was in the spotlight as the year it was announced that a textile fac- textile industry is a double-edged sword,” it is an as-of-yet unexplored direction for role in it in an article on their website, guest nation. tory would begin operations in Kutaisi, she writes, “due to its heavy dependency both Georgia’s tourism and fashion indus- calling Georgia “the wildest country in Big Georgian brands have received inter- manufacturing clothing for brands H&M, on low labor cost, particularly when it tries, with a strong marketing campaign, fashion.” The piece highlighted six up- national success, such as Avtandil, worn Mango, Zara, Coast, Colveta, United comes to the most labor-intensive CMT she predicts long term success. GEORGIA TODAY 6 BUSINESS JUNE 26 - 28, 2018 Asian Development Bank Leads in Transparency

eration (1.8%) and China’s Ministry of BY SAMANTHA GUTHRIE Commerce (1.2%). Since 2016, ADB has made an effort of increase transparency, reviewing its he Asian Development Bank practices of releasing information and (ADB) has been ranked fi rst adhering to high standards. ADB has in the 2018 Aid Transpar- signifi cantly improved the quality and ency Index (ATI), an inde- scope of the information it discloses to pendent measurement of the public. Taid transparency created by British NGO The Asian Development Bank, based Publish What You Fund, released on in Manila, is dedicated to reducing June 21, at the Brookings Institution in poverty in Asia and the Pacifi c through Washington, D.C. inclusive economic growth, environ- This is the fi rst time that ADB has come mentally sustainable growth, and in at the number one spot on the ATI, regional integration. Established in which has evaluated the transparency 1966, it is owned by 67 members—48 of the practices of major aid organiza- from the region. In 2017, ADB opera- tions since 2011. In 2016, ADB was scored tions totaled $32.2 billion, including 84.9% transparent, while in 2018, the $11.9 billion in co-fi nancing. ADB has bank’s score jumped to 98.6% - although been operating in Georgia since 2007 methodology changes since 2016 make and is one of the country’s largest mul- the scores not directly comparable. The tilateral development partners. Sover- ATI evaluated a total of 45 development eign loans to Georgia total $2.42 billion. agencies worldwide. The leading organ- Non-sovereign loans total $330 million. izations, scoring at least 80% and earn- As of January 1, 2017, Georgia’s clas- ing the classifi cation of “very good” were: sifi cation as a middle-income country the Asian Development Bank, United excludes it from further access to the Nations Development Program, UK Takehiko Nakao. “This refl ects a cross- and development data [that] are avail- ment data, and performance. ADB ADB’s concessional ordinary capital Department for International Develop- organizational commitment, including able in an open and comparable format.” received a perfect score for project resources. The ADB says its key devel- ment, African Development Bank, Mil- at the highest level, to improving the ADB is one of “only two organizations attributes and scored within several opment priorities in Georgia are to lennium Challenge Corporation, World quality of our open data. Transparency publishing all index indicators in the tenths of a point from perfect in all other foster inclusive and sustainable eco- Bank-International Development Asso- is a critical aspect of effective develop- ATI standard, making their information categories. nomic growth, reduce poverty, enhance ciation, and Inter-American Develop- ment work and we are glad to be at the fully open and comparable.” On the lower end of the spectrum, regional connectivity, and improve ment Bank. forefront of it.” The ATI measures organizations across ranking below 30% for transparency, public service delivery. Priority sectors “I am proud of the progress that ADB The 2018 ATI report looked at the fi ve categories: organizational planning were the Japanese Ministry of Foreign include transport, water supply and has made since the last Aid Transpar- trends in the aid sector, including the and commitments, fi nance and budgets, Affairs (10.2%), the UAE’s Ministry of sanitation, energy, public sector man- ency Index,” said ADB President Mr. “unprecedented amounts of timely aid project attributes, joining-up develop- Foreign Affairs and International Coop- agement, and fi nance. Where.ge 3rd in Tourism Campaign of the Year 2018 at EBRD Emerging Europe Awards

BY ROBERT EDGAR

he inaugural Emerging Europe Awards ceremony was hosted by the think tank which bears the same name at the European Bank Tfor Reconstruction and Development's headquarters in London on 22 June. No matter where you go in London, even at a fairly small awards ceremony focusing on Central and Eastern Euro- pean business, it seems that Brexit has a tendency to become the main focal point of any panel discussion or speech. Günter Verheugen, European Commis- sioner for Enlargement between 1999 and 2004, spoke on what he sees as the importance of further integration between member states to act as an economic bulwark against the USA and China. "When I spoke to European astronauts who had been on the ISS, they would fi rst say how vulnerable the world looks from above, but they would also say that Europe does not look very impressive". Doubtless mindful of Europe's turbulent fi re) between Peter Stracar, President deal on simply having an internet con- was third runner up in its category, “Tour- bljana ‘Plecnik’s Year’ (Slovenia) history, he issued a stark warning with and CEO of General Electric Europe, nection and is therefore more insulated ism Campaign of the Year 2018”; We City FDI Promotion Strategy of the reference to Brexit and current events and Olga Grygier-Siddons, CEO of PwC from geopolitical turbulence. Care, the Georgian branch of the global Year – Wrocław, The Meeting Place in Italy and the Czech Republic, "we Central and Eastern Europe. Despite Despite justifi able concern over a lack group MenCare, came fi rst in the “Equal- (Poland) have to live together peacefully, or we getting themselves into diffi culty when of clarity about Europe's likely direction ity Friendly Initiative of the Year 2018”; Renewal Project of the Year – New kill each other". His proposed solution asked about potential opportunities in the coming decades, the panel mem- Invest in Georgia was a runner up in the Bazaar, Tirana (Albania) to what he sees as a rise in populism Brexit poses for the region, with Stracar bers were perhaps more optimistic than “National Investment Promotion Agency Research and Development Initiative (whatever that may mean), was a com- referencing the problems faced by Europe- they themselves realized. Businesses will of the Year 2018”. of the Year – Siemens (Czech Republic) mon economic area stretching from wide production chains and Grygier- always need input and skills from a vari- The full list of winners follows: Global Market Champion of the Year Lisbon to Vladivostok. To my mind, it Siddons stating, “Europe will be weaker,” ety of regions; cross-pollination between Young Empowerment Initiative of the – Solaris Bus & Coach (Poland) was unconvincing: popular disquietude there was a reference later to PwC's role EU and non-EU countries is still hap- Year – Teach for Armenia (Armenia) FDI Project of the Year – Amazon (Slo- over European enlargement is unlikely in Polish cable giant Tele-Fonika Kable's pening organically, regardless of the Social Impact Start Up of the Year – vakia) to be assuaged by yet more enlargement. recent takeover of the British company direction that the EU's political wind Deepdee (Belarus) National Investment Promotion Agency A slightly more optimistic view fol- JDR Cable Systems. Also noted was blows. Equality-Friendly Initiative of the Year of the Year – Invest Lithuania (Lithuania) lowed in the 'fi reside chat' (read 'panel Poland's rapid rise as an IT hub; an As for the ceremony itself, Where.ge – WeCare (Georgia) Lifetime Achievement Award – Günter discussion'. There was - thankfully - no industry whose survival depends a great (part of the GEORGIA TODAY group) Tourism Campaign of the Year – Lju- Verheugen GEORGIA TODAY JUNE 26 - 28, 2018 BUSINESS 7 Survey Shows Majority of Georgians Vacation Once a Year

Photo: Parents’ Magazine

ents. 36% of the surveyed people visit friends' / BY THEA MORRISON relatives’ or their own houses in villages; with 65+ respondents doing so most often (60%). Summer is the most popular season for vacation- recent study conducted by Analysis ers in Georgia, with 94% of people saying they & Consulting Team (ACT), a global prefer to take a vacation in summer. research and consulting company Around 41% of families spend from 500 ($203) to covering the CIS countries and East- 1000 GEL ($406) during their vacations, while 500 ern Europe with offi ces in Georgia, GEL or less is enough for 28% of the surveyed AzerbaijanA & Kazakhstan, revealed that 43% of families. Georgians manage to go on vacation within the Moreover, 55% of the respondents who travel country only once a year. within Georgia accumulate the budget throughout 20% of respondents stated they are unable to have the whole year. 25% of the respondents do not need a vacation within Georgia. Among that 20%, people to save money for leisure (men – 33%, women – 65+ represent the majority (46%). 20%), while 8% of holidaymakers need to take a Lack of money (63%) is the main reason why bank loan or make an installment in order to col- people cannot have a vacation. The other reason lect the required amount. is lack of time (37%), named by 35-44 year-old Georgia’s population is around 3,729,600 people. respondents (73%). Almost 22% of them are under the absolute poverty “It is noteworthy that men (47%) are more likely line, shown by the latest data of 2017 poverty indi- not to go on holiday due to lack of time than cators published by the National Statistics Offi ce women (30%), while the absence of money hin- of Georgia (Geostat). ders women (69%) more than men (57%),” the The average monthly income in Georgia was 1,016 survey reads. GEL (about $413) in 2017, says the Geostat data. The remaining respondents who manage to vaca- Last year the annual unemployment rate in Geor- tion prefer seaside resorts (55%). Mountain resorts gia declined by 0.1 percentage points and equaled are almost as popular, visited by 44% of respond- 13.9%. Georgia Wins EU4Energy Photo Competition

BY SAMANTHA GUTHRIE

he #EU4Energy photo competition was organized within the framework of the EU Sustainable Energy Week, which has June 4-11, 2018. Photogra- phers from Armenia, Azerbaijan, TBelarus, Georgia, Moldova and Ukraine were invited to submit photos, and there were more than 500 entries. The theme of the photo competition was “Sustainable Energy Around You.” Georgia’s Ioseb Dzamukashvili took fi rst place in the competition with a photo (above) showing Ioseb and his friends in the Georgian countryside surrounded by wind turbines, which work to pro- duce green energy in the background. “We should not spoil the planet to produce energy. Nature can provide lots of it without harming the environment. All we need is to encourage one other, go GREEN, and promote renewable energy!” says Ioseb. A jury selected a shortlist of 40 photos, with the winners chosen by public vote. Aside from the fi rst prize of a video drone, 30 more prizes will go to contest participants in Armenia, Azerbaijan, Bela- rus, Georgia, Moldova and Ukraine. You can have a look at Ioseb’s photo and the other winning pictures on the EU Neighbors East Flickr account. Photo: Ioseb Dzamukashvili GEORGIA TODAY 8 BUSINESS JUNE 26 - 28, 2018 Launch of the TANAP Pipeline: Implications for the South Caucasus

the instability in Iraq, even in the mid- OP-ED BY BENYAMIN POGHOSYAN term perspective it would be diffi cult to bring Iraqi gas into TANAP and then further into Europe. Thus, the TANAP n June 12, the offi cial launch pipeline and southern gas project would ceremony of the TANAP have a limited impact on European pipeline was held in Tur- energy security and geopolitics. key. TANAP is the key However, the situation is not the same component of the South- for the South Caucasus. The region is ernO Gas Corridor, which should bring going through signifi cant political trans- Azerbaijani gas to Europe, circumvent- formations. The “Velvet Revolution” in ing Russia. At the initial stage, annually Armenia, which resulted in the resigna- 6 billion cubic meters of gas will be tion of longtime leader Serzh Sargsyan supplied to Turkey and another 10 bil- and the signifi cant weakening of the lion to South Eastern Europe, mainly former ruling Republican Party posi- Italy. In later stages, the volume may be tion, alongside the resignation of Geor- increased due to additional gas from gian Prime Minister Giorgi Kvirikashvili, however, despite being a CSTO and The additional project linking Azerbai- ethnic Azerbaijani minority. In this the Azerbaijani Shah Deniz fi eld, or are evidence of domestic instability and EAEU member, Armenia also keeps jan with Georgia and Turkey fosters the context, Georgia should be interested potentially involving other gas sources popular resentment against the stagna- partner relations with the US, NATO trilateral cooperation. Meanwhile, in fostering relations with Armenia as such as Iraq and Turkmenistan. tion in economy, widespread poverty and the EU, and Azerbaijan seeks to TANAP circumvents Armenia and bodes a potential balancing act against Azer- If the Southern Gas corridor is to be and lack of good governance. The mass keep a balance, rejecting both the Asso- well for Azerbaijani efforts to isolate baijan and Turkey. fi lled only by Azerbaijani gas, it will not protests in Yerevan and Tbilisi, organ- ciation Agreement with the EU and Yerevan. Azerbaijan successfully por- The launch of the TANAP pipeline have serious implications for European ized with large scale use of digital tech- membership of the Eurasian Economic traits itself as an energy and transpor- stresses the isolation of Armenia from energy security. The maximum capac- nologies and social media, have proved Union. Turkish policy in the region is tation hub for both the East - West and the regional transit projects. However, ity of Azerbaijan export will not exceed the growing infl uence of popular move- based on its strategic relationship with North – South corridors. The launch of Yerevan has its own trump cards. The 20 billion cubic meters annually. Given ments. The situation in Azerbaijan Azerbaijan and efforts to deepen Geor- Baku – Tbilisi – Kars railway and the “Velvet Revolution” has signifi cantly the fact that in 2017, Russian Gazprom remains stable as President Aliyev enters gia’s involvement in the trilateral Azer- railroad connecting Azerbaijan with increased the positive image of Arme- exported approximately 194 billion cubic his fourth seven-year presidential term. baijan – Georgia – Turkey alliance. Iran (Astara - Astara) are other key nia in the West. The improvements in meters of gas to Europe (including Tur- However, the continuing pressure on However, Turkey is keen not to bother components of Azerbaijan strategy to the business environment may gradu- key), even 20 billion could not signifi - the opposition is a sign of concern Russia too much. Iran’s main concern be transformed into a regional hub. ally bring additional FDI into the coun- cantly decrease the Europe dependence among Azerbaijani leadership. is not to allow the South Caucasus to The TANAP pipeline is an asset for try. Meanwhile, Yerevan should pay on Russian gas. Moreover, the main The South Caucasus remains a hot be used as a launchpad against it by the Georgia too. It supports the Georgian more attention to any transit projects consumers of Russian gas are Western spot of the competing interests of Rus- US and Israel. Tehran is willing to accept narrative of a stable transit state which potentially involving Armenia. In this European states, with Germany import- sia, the West, Turkey and Iran. Russia Russian dominance over the region at has the necessary capacities to bring context, the launch of “Persian Gulf – ing some 53.5 billion cubic meters in makes efforts to solidify its control over least up to the moment when it may Caspian energy resources to Europe. Black Sea” multimodal transportation 2017. Thus, if Europe wants to make the region, viewing it as a part of the fundamentally normalize its relations The Azerbaijan – Georgia – Turkey corridor connecting Iran with Europe TANAP a real tool of energy independ- Russian buffer zone which should hin- with the West. deepening relations are signifi cant lev- via Armenia and Georgia serves both ence from Russia, it also needs to involve der the Western encroachment into In this context, the launch of TANAP erage for Georgia in its interactions Armenian and Georgian interests. Arme- other sources. However, the prospects Russia. The West seeks to contain Rus- strengthens the geopolitical and geo- with Russia. Meanwhile, growing Azer- nia may break its infrastructure isola- for a Turkmenistan-Azerbaijan-Trans sia in the Post-Soviet space, and the economic potential of Azerbaijan. It baijani and Turkish infl uence in Geor- tion, while Georgia can add a North – Caspian pipeline are dim due to the South Caucasus is part of this battle. emphasizes the leading role of the coun- gia could be a source of concern for South route alongside the East – West objections from Russia and Iran. Given The main ally of the West is Georgia, try in the regional energy geopolitics. authorities given the existence of a large corridor to its transit potential.

GEORGIA TODAY 10 BUSINESS JUNE 26 - 28, 2018 VRium – Georgian Virtual Reality Startup

Jam by Leap Motion. His team designed gaming and produce hardware and soft- ware has been steadily evolving: research one of the most popular Georgian steam ware which together build a completely shows growth from $3.7 billion in 2016 VR games ‘VRZ: torment.’ Collaboration new dimension. The VR experience to $12.1 billion in 2018 with the predic- with well-known game designer Mark allows audience members to feel like tion of growing up to $40.4 billion by Rein-Hagen brought more successful they are actually in another place and 2020*. As one of the fastest growing projects, including the creation of a large as if they have become another person. industries, VR technology is in the spot- number of mobile games. It is a 360 degree view of a new world light with a potential of being among the - our fi rst Hyper reality game “GENESIS” leading tech industries in the coming MEET THE TEAM was recently launched in Tbilisi Mall, years. VRium has entered the market Our team is created by people passion- on the “VR House” territory. with a strong product which is constantly ate about technology and gaming. We We work hard to inspire, create, and developing. believe in the power of teamwork, where explore, introducing amazing possibili- Currently, our company is at the Seed each member is ready to walk the extra ties of VR technology. We are sure VR capital stage and we are actively work- mile. We are sure that VR gives us an will fundamentally change the entertain- ing on fi nding new experienced investors opportunity to more effi ciently and ment world. VR technology is considered in the VR fi eld from around the world. sustainably change the public percep- a cutting-edge technology holding endless The technology we create is world stand- tion. possibilities in all fi elds of life, especially ard and is improving. t started with a dream of four years, heading the creation of a number VRium creates a fully immersive expe- in the entertainment industry. We are at Georgian friends (Irakli Kokrash- of award-winning products. A project rience by combining physical and digital the forefront of VR game development. For more information please visit our web vili, Mikheil Chkhartishvili, led by him was as runner-up of the 3D worlds. We are established in the VR The market for VR software and hard- page: www.vrium.zone Gabriel Meliva & George Dalak- ishvili) to create something unbe- Ilievable. There was huge challenges ahead as they wanted to create something unique and give people a great experi- ence: to inspire people’s imagination by crafting virtual reality, then bursting that reality by changing people’s perspec- tives. Their playground differs from that of their competitors. Four key elements make their product A* quality: spatial perception; original visual; original sound effects; unique gameplay. The tech team has 10+ years experience of working in the gaming sector. Lead developer Irakli Kokrashvili has been working in the gaming industry for 15 How Almaty Region Plans to Attract New Business

turnover amounted to 2.9 billion tkm ANALYSIS BY DIMITRI DOLABERIDZE (including an estimate of the volume of freight turnover of individual entre- preneurs involved in commercial trans- his year it is planned to portation) and increased by 0.6% com- open 100 new business pared to January-May 2017. facilities in the Almaty During the fi rst fi ve months of this region, Kazakhstan, creat- year, the region's enterprises mastered ing 12,000 jobs, a vital fact 144,238.4 million Tenge ($424.9524 ) of Tfor one of the most densely populated investments in fixed assets, which regions of the country. Companies of amounted to 100.5% to the volume of various scale will be presented - from 2017. The main share is accounted for individual entrepreneurships of the local by private ownership (69.5%), foreign population to launching plants together ownership (12.9%), state ownership with foreign partners. Let’s take a look (17.6%). The largest volumes of invest- at what can attract businessmen to open ments in fi xed assets were mastered by production in the territory of Almaty industrial enterprises by 25.1%. region and the costs. According to the Statistical Business Register, the largest number of operat- SOCIO-ECONOMIC ing individual entrepreneurs is concen- DEVELOPMENT trated in Almaty (13.9%), in South In May, Kazakh President Nursultan Kazakhstan (12.4%), in East Kazakhstan Nazarbayev paid a working visit to the (7.8%), and Almaty areas (7.6%). At the Almaty region to inspect facilities, meet same time, a signifi cant number of oper- with local entrepreneurs and to outline ating peasant or farm enterprises were areas that should be developed. In gen- recorded in South Kazakhstan (36.3%) eral, Nazarbayev positively assessed the and Almaty regions (23.1%). socio-economic situation in the region. “The Almaty region, especially in the INFRASTRUCTURE agrarian sector, is an example for all. The largest infrastructure project on The region's economy grew by 4.2%, the mechanism of public-private part- which is higher than the national aver- nership - construction of the Big Almaty age. Agriculture and construction have Ring Road (BAKAD) is being imple- grown and the volume of social facili- mented on the territory of the Almaty ties has increased,” he said. region. The project cost is about 180 According to the Department of Sta- billion Tenge. The road will be open in tistics, growth is noted for all indicators. 4 years. In January-May this year, the volume “Completion of the BAKAD will give of industrial production was 324.8 bil- an impetus to the development of the of the project. 23 projects will be commissioned for a potato processing plant, while Ger- lion Tenge ($956,536,000.00 ), 104.4% region's economy, because it will attract The road to the Kolsai Lakes has been $3 billion. In the context of the regions, man company Baumann is to implement compared to January-May 2017. The about 300 billion Tenge of investment. restored, the capital repair of the Ush- the largest number of investment pro- a project in the meat industry. volume of gross output of agricultural This will give a multiplier effect for aral-Dostyk road has begun, and it is jects planned for commissioning are Cooperation with companies from products (services) for the fi rst fi ve small and medium-sized businesses, planned to repair the road to Lake accounted for by the Almaty region - 5 Switzerland, China, Poland has been months of this year amounted to 124.9 the development of roadside service, Balkhash. projects worth $179 million. established. billion Tenge ($367,830,500.00 ), 103.2% transport and logistics terminals along Foreign investors are showing great compared to January-May 2017: includ- it, and access to markets for industrial INVESTMENTS interest in the Almaty region. The Rus- PROSPECTIVE DIRECTIONS ing livestock - 117.9 billion Tenge enterprises will improve, especially According to Kazakh Invest, in Kazakh- sian company Lukoil intends to build a The most promising areas in the Almaty ($347,215,500.00), crop production - 7 given that in this area we have devel- stan in 2018, together with municipali- lubricant factory, the Italian Cremonini region are agriculture (livestock, horti- billion Tenge ($20,615,000.00), services oped tourism, especially in summer and ties and state agencies, 15 projects with Group will start construction of meat- culture, vegetable growing) and the tour- in agriculture - 0.04 billion Tenge winter sports,” said Governor of Almaty the participation of foreign investments packing plant KAZAK-BEEF, Dutch ism industry. Also of interest there are ($117,800.00). The volume of freight region, Amandyk Batalov, at the start amounting to $1.6 billion will begin and company Farm Frites intends to build the food and manufacturing industries.

GEORGIA TODAY 12 BUSINESS JUNE 26 - 28, 2018

JUNE Agri Review: The Sector at a Glance

here was 2.1% decrease in the main drivers were butter and spread producers are not allowed to label prod- pared to 2016. agricultural production in prices, which went up by 12%. As shown uct as “butter” if it contains vegetable This was mainly 2017 compared to the pre- in the diagram, there were slight price or other kinds of oil. caused by vious year. Production in hikes for walnuts (3%), mayonnaise increased exports the plant-growing sector (2%), and sunfl ower oil (1%). Meanwhile, TRADE HIGHLIGHTS of alcoholic and declinedT by 0.4%, while animal produc- In May 2018, Georgia’s non-alcoholic tion experienced a decrease of 3.8%. agricultural exports beverages (wine Lower production resulted in lower (including food) by 61%, spirits self-suffi ciency ratios for most agricul- amounted to 68 mln by28%, mineral tural products. USD, which is around and aerated Revenue from the sale of agricultural 27% of total Georgian waters by 22%). products in 2017 also decreased com- export value. This indi- As of June 2018, pared to the period 2014-2017, both in cator is 39% higher than agricultural percentage and absolute terms. Reduced in May 2017. As to exports to CIS production is the most likely reason for imports, in May 2018, countries amount this. Georgia’s agro imports to 159 mln USD. While revenue from selling agricul- stood at 100 mln USD, As for imports tural products decreased in 2017, the which constitutes 27% from the EU and level of commercialization in the sector of total Georgian CIS countries, has increased. This trend is particularly imports. Year over year there are no sig- persistent in animal production, where (compared to May nifi cant changes its share in enterprises increased from prices slightly decreased for margarine 2017), agricultural imports increased on an annual 21% to 27%. Since in light of DCFTA, (-1%). One explanation for increased by 6%. basis and steady more food safety regulations will be butter prices might be the recent spike In 2016, Georgia’s agricultural exports trends have not adopted in the future, it is expected that in international prices; according to the in EU countries (including Great Brit- been observed the share of enterprises will grow even Global Trade Info, starting in January ain) increased by 5% compared to the for either EU or faster. As to plant growing, the share 2018, butter prices have been increasing previous year, while during 2017, a 38% CIS countries. of enterprises in 2017 has increased as compared to the previous year. The decrease was observed compared to Imports from well, but there are no increasing trends structural changes in the dairy sector 2016. This change is mainly caused by both regions observed in general, since the share might be putting additional upward a signifi cant decrease (64%) in hazelnut decreased in 2016 keeps changing its direction from year pressure on butter prices. On July 1, exports. It is worth mentioning that compared to 2015, to year. 2017, changes in technical regulations main hazelnut export market is the EU and increased in for the dairy sector came into force, countries. As of June 2018, agricultural 2017. As of June PRICE HIGHLIGHTS which probably increased the produc- exports in the EU amounts to 61 mln Source: MoF, 2018 2018, agricultural In May 2018, prices in the group of oil tion costs of butter as producers must USD. are increasing; there was 2% increase imports from EU and CIS countries and fats increased by 4.6%, compared comply with stricter food safety regu- In the last couple of years, Georgia’s in agro exports in 2016 compared to amounted to 109 and 230 mln USD, to May 2017. According to Geostat data, lations and standards. More specifi cally, agricultural exports to CIS countries 2015, but a 37% increase in 2017 com- respectively. NBG Finalist in the Global Inclusion Awards 2018 vation in fi nancial, social and livelihoods, BY SHAWN WAYNE education, financial inclusion, and entrepreneurial support for children and youth. he National Bank of Geor- The NBG has been listed among the gia (NBG) is a fi nalist in fi nalists of the awards in the category of the Global Inclusion Awards ‘Country Award’ for activities carried 2018 in the category of out in 2017. This year’s Global Inclusion ‘Country Award’ for the Awards Ceremony is organized by Child Tsecond time, the NBG announced. and Youth Finance International and The Global Inclusion Awards 2018 Argentina's G20 Presidency and will recognizes and honors those who achieve take place on July 3, 2018. greatness in furthering the economic It will be held as part of the GPFI Forum: citizenship of children and youth at the "Technological Trends in Digital Finan- national, regional and international cial Inclusion" on 3-4 July at the Ritz- level. The awardees demonstrate inno- Carlton in Riyadh, Saudi Arabia. Permits May Be Required for Street Performers “The main goal of our project is to cre- musicians, which "damages not only our BY SAMANTHA GUTHRIE ate new jobs and support the develop- citizens but leaves unpleasant impres- ment of small and medium businesses, sion on tourists... Most likely, street especially in the tourism and restaurant musicians will be required to have a n his election campaign, Mayor sectors. We want to position Tbilisi as certifi cate that will allow them to play Kakha Kaladze promised that a 24/7 city and organize cultural and in the street." Gvarjaladze said that by Tbilisi nightlife would undergo a sports events for a wider group of peo- 2025, Georgia expects to be hosting revival. On April 20, City Hall ple.” around 11 million visitors per year and presented a concept plan for Gvarjaladze said recently that street according to the current statistics, 50% Ideveloping a night economy in Tbilisi. musicians may be subjected to certain of them will come to Tbilisi. The Night Economy Development regulations and be required to obtain The proposal raises questions about Project is managed by Sergi Gvarjaladze, permits. how City Hall would determine who is who spoke to Georgia Today about the Gvarjaladze said that, while there are a real musician, or whether someone is Project last month. When asked about some very talented street musicians, talented enough to be acceptable for the aims of the project, Gvarjaladze said, there are also people who are not really street performing. Photo: Joy Generoso, fatmoments.com GEORGIA TODAY JUNE 26 - 28, 2018 BUSINESS 13 The Future of Phage Therapy

BY SHAWN WAYNE

or fi ve years, Patti Swearingen battled a urinary tract infection that refused to go away. Doctors prescribed round after round of antibiotics, but the infection kept coming back. Eventually, the micro- scopicF war inside her body left Swearingen so weak and debilitated she could barely leave her living room couch. In March, she and her husband, Gary, decided modern drugs had failed them. Instead, they turned to a treatment from the past. They fl ew to Tbilisi where, in a small clinic, doctors had her drink live viruses twice a day for two weeks. Now Swearingen’s medical records confi rm the outcome: She is cured. “I feel great,” said Swearingen, speaking from the sun-fi lled dining room of her house in Rowlett. “I Image Source: Dallas News honestly feel like I’ve gone from death to life in a States. For that reason, the therapy has not been few months.” approved by the US Food and Drug Administration. The viruses she drank are called bacteriophages, “Phage therapy has long deserved this chance to or phages for short. Similar to probiotics, they per- be evaluated,” said Steffanie Strathdee, associate meate our guts and nasal passages and exist eve- dean of global health sciences at UCSD and co- rywhere in nature, including in soil and drinking director of the new phage therapy center. “We want water. They are bacteria’s natural enemies. Similar to answer once and for all if it’s something that parasites, they invade bacterial cells and use their deserves to get scaled up.” machinery to replicate, destroying the bacteria in Their clinical trials will evaluate phages for use the process. Before penicillin was developed in the against lung infections in patients with cystic fi bro- 1940s, doctors used phages to treat infections like sis, to treat infections in those with artifi cial joints strep throat and appendicitis. News reports from and organ transplants, and for complex urinary the ’20s and ’30s in magazines like Newsweek hailed tract infections like Swearingen’s. Swearingen, too, phages as “nature’s G-men,” “infi nitesimal friends learned about phages after watching a TEDx video of mankind” and “helpful little bodies.” featuring Strathdee and contacting her for advice. Antibiotics, when they arrived, proved more She learned the path to acquiring phages for her potent, and phage therapy died out in the West. condition in the US was long and uncertain. So she Doctors in Poland and in Georgia continued to use and her husband made the decision to fl y to Tbi- bacteriophages as alternatives to antibiotics. lisi’s Phage Therapy Center. Now, as bacteria have become increasingly resist- Georgia’s experience with phage therapy dates ant to antibiotics, interest in phage therapy has to the 1930s. The French-Canadian researcher who grown. Recently, the University of California San developed phage therapy befriended a Georgian Diego announced the opening of the fi rst phage bacteriologist when both worked at Paris’ Pasteur therapy center in North America. The Center for Institute. Together, they co-founded Tbilisi’s George Innovative Phage Applications and Therapeutics Eliava Institute of Bacteriophages, Microbiology will conduct clinical trials of phage therapy and and Virology, which mixes most of the phages in help provide phages on an emergency basis to use across Georgia today. patients for whom other treatment options have Swearingen enjoyed her experience in Tbilisi and run out. praised the doctors and microbiologists who cared While case studies and anecdotal evidence sug- for her. gest phages can be safe and effective, the treatment “Tbilisi is wonderful,” she said. “If you can go, has not passed rigorous clinical trials in the United go.” Increased Bilateral Ties Between Georgia, Iran

the importance of expanding bilateral banking ties, BY SHAWN WAYNE the Iranian minister proposed that necessary grounds would be prepared so that Iranians and Georgians can use their ATM cards in both coun- n a meeting held on Sunday in Tehran, Ira- tries. nian Minister of Economic Affairs and Finance Shalva Kiknavelidze, the Chief of the Georgian (MEAF) Masoud Karbasian met with parlia- Parliament Friendship Group with the Parliament ment members of Georgia. The two sides of the Islamic Republic of Iran, said that Tehran- vowed to boost bilateral ties in various fi elds. Tbilisi ties have entered a new phase. IKarbasian said that Iran and Georgia had previ- Establishing close relations with Iran is among ously inked suitable MOUs related to customs and the major foreign policies of Georgia, he said, add- tax, adding that Iran is ready to sign an agreement ing that Tbilisi is ready to expand cooperation in with Georgia in other areas as well. Touching on various fi elds including economy and culture. GEORGIA TODAY 14 BUSINESS JUNE 26 - 28, 2018 Creating a Common Natural Gas Market for the Eurasian Economic Union public administration and planning sys- content of the fi rst stage. In the future, BY DIMITRI DOLABERIDZE tem and in Kazakhstan the "main buyer" the main focus should be shifted to the model is realized, characteristic for formation of institutions of supranational monopolistic types of market structures. level that ensure coordination and reg- he participating countries In Russia, the market corresponds to the ulation of the common gas market at its of the Eurasian Economic characteristics of monopoly competi- functional stage. Union are implementing tion, where, along with the dominant The target model of the future com- an ambitious project to cre- player, independent organizations oper- mon natural gas market of the EAEC ate a common market for ate. The markets of Armenia and Kyr- should contain answers to key questions Tnatural gas by the EAEC by 2025. As of gyzstan are at the initial stage of forma- regarding the distribution of strategic- the end of 2016, the basic conditions for tion and have all the signs of a monopoly regulatory competence between the the future market were agreed and the structure. EAGE authorities, which includes the concept for its creation adopted. The All the countries of the Unifi ed Energy structure of the common market, the next stage of the "road map" for the for- System unite a high degree of state inter- availability of competition, the status of mation of the regulatory and legal frame- vention in the functioning of markets, participants, the mechanisms of trade, work for gas integration will be the Pro- and sometimes see the direct involve- the contract scheme, pricing principles gram of Practical Actions for the ment of the state in economic activities. and calculation of tariffs, regulation of implementation of the concept, which Competition is poorly developed, and access to infrastructures, markets and should be approved by the end of 2018. is often absent. There are high barriers consumers, the structure of the external The formation of a common natural for new players to enter the market. integration circuit and relations with gas market in the EAEC will be success- Regulation of gas prices is based on third countries, regulate problems of gas ful if its participants can overcome the various methodologies for their calcula- exports to third countries which now institutional heterogeneity of the current tion, price levels are largely dependent are formally made out of the brackets of models of national natural gas markets on the socio-economic and political goals the EAEC integration agenda. and will be able by consensus to design pursued by national governments. As a Today, the EAEC states have all the the Target Model of the future common consequence, prices are subsidized. initial prerequisites for implementing natural gas market. Considering the differences in the start- deep integration processes in the gas The national gas markets of the EAEC ing conditions of the national gas markets sector. These are a signifi cant resource countries, on the basis of which a com- of the EAEC member states, the two- potential, the presence of a developed mon market should be formed, are at stage format of the movement towards gas transport infrastructure, modern different stages of evolutionary develop- the common market seems to be the technologies and qualifi ed personnel. ment and differ in the variety of func- most optimal. Ensuring the institutional The historical experience of the func- goals of development and the coinci- global geopolitics create an additional tional models. The gas market of Belarus homogeneity of models of national mar- tioning of the gas industry as a part of a dence of the positions of the EAEC favorable background for deepening functions within the framework of the kets on agreed key criteria should be the single economic complex, the common countries on key issues of regional and mutual integration. OSCE Addresses Good Governance

migration. Statistics suggest that the risk BY SHAWN WAYNE of human beings displaced through sud- den natural disasters is 60% higher today than it was 40 years ago. It’s a very real ollution, ocean acidifi cation, threat that cannot be ignored. climate change, deforestation, However, the global focus on migration these are just a few of the due to these natural factors should not environmental challenges that divert our attention from displacement the world faces today. At the as a result of confl icts and violence of a sameP time, poverty, corruption and ine- human nature. According to the Internal quality threaten our economic security Displacement Monitoring Center’s 2017 and contribute to challenges such as Global Report, there are twice as many migration and political instability. internally displaced people as refugees There is, however, a growing consensus in the world, and that they may any day that good governance has a tangible become international migrants, thereby effect on environmental outcomes, as adding to the already large movements well as being of importance to poverty of migrants and refugees. reduction and sustainable development. In Georgia, there are up to 300,000 This approach is what is needed if not internally displaced persons out of a just for Georgia, but if global civilization population of 3.7 million – victims of is to effectively address the challenges ethnic cleansing and several waves of of its time. forcible displacement from Georgia’s At the Organization for Security and occupied regions of Abkhazia and South Co-operation in Europe, a comprehen- Ossetia. sive approach to security that links A tragic component of warfare has been political and military affairs, democratic not only its impact on civilians, but also institutions and human rights, econom- its destruction of the environment. This ics and the environment, and science affects the resilience of countries and and technology has always been the main societies, including disruption to water focus. This multi-dimensional approach supplies and disposal systems, which to security is rooted in the understand- ultimately results in the discharge of ing that each dimension affects the other pollutants into freshwater sources. After – that political stability is not possible years of war, tainted natural environ- ments and resources could become per- manent. The ultimate goal of promoting inter- without human rights, that security is operation among governments, includ- For real progress to be made, the impor- national co-operation on economic and not possible without a healthy environ- ing implementation through the landmark tance of fi ghting corruption and promot- environmental issues is strengthening ment and that prosperity is not possible Paris Agreement on climate change, is ing good governance must be recognized. security and stability. When the Parlia- Statistics suggest without economic co-operation. what is needed. According to World Bank estimates, mentary Assembly meets in Berlin on In the OSCE’s founding document, the Participation at last November’s UN businesses and individuals pay an esti- July 7-11, readiness to work with govern- that the risk of Helsinki Final Act of 1975, participating Climate Change Conference in Bonn by mated $1.5 trillion in bribes each year, ments in deepening partnerships to States recognized that observable a coalition of more than 2,500 mayors, which is about 2% of the global GDP. In enhance co-operation on these vital humans displaced “changes in climate” may be the result governors and others from across the the fi ght against corruption, it is not issues will be the deciding factor on of human activity, and issued warnings United States who released the “Amer- enough to have a comprehensive legal whether or not civilisation will continue about the effects of degradation of the ica’s Pledge” report, outlining the scope framework. Worldwide effective imple- a destructive way of life, or evolve into through sudden environment on human health. of subnational climate action in the US, mentation of anti-corruption provisions something better. Climate change that is “pushing civi- was a great encouragement following and monitoring is what is necessary, The future of security in economics, natural disasters is lization into uncharted territory,” such the Trump administration’s regrettable where there can be no exceptions. environmental preservation, human dig- as rising sea levels, melting Arctic ice decision to withdraw from the Paris Today, civilization is at a record high nity and ultimately civilisation, depends 60% higher today and record high temperatures, will be a Agreement. Hopefully, the remaining of human mobility, displacement and on the cooperation, partnerships and focus point in the Parliamentary Assem- signatory parties can still live up to the migration. Natural disasters, with the actions of global governance, setting an than it was 40 bly’s 27th Annual Session in Berlin early commitments made under the agree- help of climate change, have led to a example for the average individual to years ago next month. Action and enhanced co- ment. signifi cant increase in environmental follow. GEORGIA TODAY JUNE 26 - 28, 2018 BUSINESS 15 Georgia’s Breakaway Territories within the Regional Perspective Parliament May Adopt Draft on Energy Effi ciency of Buildings energy consumption and more. BY THEA MORRISON The law allows the use of high effi ciency alterna- tive systems in designing a new building or recon- struction of a building if it is functionally, ecolog- he Ministry of Economy and Sustain- ically and economically feasible. able Development of Georgia has The main aim of the project is to increase the prepared a draft law which envisages number of so-called zero-energy buildings in the promotion of energy effi ciency, which country. will reduce greenhouse gas emissions According to the draft law, from 2029, all new andT bring many other positive results, including buildings must meet the requirements of near zero- new jobs in the construction sector, development energy buildings. and innovation of technology, reduction of air, The draft will be submitted to the parliament's water and soil pollution, reduction of taxes on bureau at the nearest sitting. The perfect pairing of Business and Lunch! Ambassadori Club cordially invites you

Georgia to Russia – Verkhniy Lars Border Crossing. Source: pineappleexplorer.com

simultaneously is a defi nite challenge. ANALYSIS BY EMIL AVDALIANI Take the example of Transdnistria. With Ukraine antagonized, Russian troops now no longer enjoy the ability to reach the breakaway land. Samacha- his year marks 10th anniversary of the blo is yet another case. It is so much cut into the Russo-Georgian war of 2008 and the heart of Georgia, and therefore so open to potential recognition by Moscow of Abkhazia military action, that the Russians will always have and Samachablo (the so-called South to think about reinforcements. For the Russians, Ossetia). A philosophical question is the demarcation line in between Samachablo and Toften always heard in the analytical community as the rest of Georgia poses a signifi cant challenge as to how Tbilisi would return the breakaway terri- there are few geographic barriers the Russians tories under its control. could rely on to build a veritable defensive line. In international relations, it has always been about The fences in fact zigzag across low mountainous the balance of power. We should consider the issue area and small rivers, making it uncomfortable to of Georgia’s breakaway territories within the regional defend from a purely military posture. or even global picture. True, it is important what Yet, the problem is larger than that. Samachablo the minorities in Abkhazia and Samachablo think is separated from Russia by the Greater Caucasus about their place in a reunited Georgia. However, mountains. Geographically, it will never be a part their potential willingness to live within Georgia of Russia, nor connected to Russia economically. will be infl uenced by what is going on in the larger We might be worried as to what will happen to region overall; how the power balance shifts and Tskhinvali and whether Ossetians want to be again what will happen in Russia, which serves as Sokhu- with Tbilisi, but the geography dictates that this mi’s and Tskhinvali’s patron. breakaway region cannot actually “be with” Russia. Georgia is much stronger both economically and On a much higher geopolitical level, Russia is militarily than what it was decades ago, but Russia experiencing tough economic issues as well as is stronger in almost every component. We could signifi cant western pressure. There is a certain be more attractive in providing the Abkhazians possibility that this pressure will not abate in the and Ossetians free education, healthcare etc., but long-run. Moreover, as I already wrote in previous it is still very unlikely that Moscow’s infl uence will editions for GT, Russia faces a far larger problem be signifi cantly undermined in this way. on its western borderlands than just the EU and What matters more is to understand in what US infl uence. Ukrainian nationalism could possibly direction Russia’s position is evolving in the Eura- isolate Russia from eastern Europe to the farthest sian landmass. There are long-term indications spaces of the Eurasian continent. that Russia is falling increasingly behind the Euro- Thus, when one considers the problem of break- pean Union for the crucial land corridor from the away Abkhazia and Samachablo, we need to put Baltic to the Black Sea. Ukraine and its open antag- the issue within the larger picture of Russia-West onism towards Russia since 2014 is a primary exam- relations. The tilting balance of power towards the ple in this discussion. West might be a good indicator of the things to But it also matters that Moscow, in order to keep come, namely, the gradual decline of Russia’s infl u- the borderlands under its geopolitical infl uence, ence across Eurasia. facilitated numerous breakaway confl icts where Seeing these trends from Tbilisi, the country’s Abkhazia, Samachablo, Transdnistria and the Don- road towards EU/NATO should remain unchanged. Lunch times: 12:00 $ 14:00 In order to book a table, please, contact us on: bas are indirectly supported. This became a whole This is based not on the thinking that that Europe Dinner times: 18:00 $ 20:00 +995 32 243 9494 or +995 599 57 16 40 web of statelets, the support for which has become is just culturally closer to us, but on pure geopo- Delicious dishes, soft drinks and desert Visit us at: Ioane Sahvteli Street 17, strenuous. The fi nancial brunt for Russia is impor- litical calculations where the stronger wins, and Cozy atmosphere, high-class service. Ambassadori hotel. Ground Floor. Prices 20 - 25 USD per person Italian-Georgian restaurant. tant, but the ability to respond to so many theaters that is West, not Russia.

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