Document of The World Bank Public Disclosure Authorized

Report No: 29316-GE

IMPLEMENTATION COMPLETION REPORT (IDA-30400)

ON A

CREDIT

Public Disclosure Authorized IN THE AMOUNT OF SDR 3.4 MILLION (US$4.49 MILLION EQUIVALENT)

TO

GEORGIA

FOR A

CULTURAL HERITAGE PROJECT Public Disclosure Authorized June 15, 2004

Environmentally and Socially Sustainable Development Sector Unit South Caucasus Country Unit Europe and Central Asia Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective June 3, 2004) Currency Unit = Lari (GEL) Lari (GEL) 1 = US$ 0.52 US$ 1.00 = Lari (GEL) 1.92

FISCAL YEAR January 1 December 31

ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy DCA Development Credit Agreement IDF Institutional Development Fund LIL Learning and Innovation Loan M&E Monitoring and Evaluation NGO Non-Governmental Organization PAD Project Appraisal Document PIU Project Implementation Unit

Vice President: Shigeo Katsu Country Director Donna M. Dowsett-Coirolo Sector Manager Alexandre Marc Task Team Leader/Task Manager: Janis D. Bernstein

GEORGIA CULTURAL HERITAGE PROJECT

CONTENTS

Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 7 5. Major Factors Affecting Implementation and Outcome 12 6. Sustainability 13 7. Bank and Borrower Performance 14 8. Lessons Learned 18 9. Partner Comments 19 10. Additional Information 20 Annex 1. Key Performance Indicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 23 Annex 3. Economic Costs and Benefits 25 Annex 4. Bank Inputs 26 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6. Ratings of Bank and Borrower Performance 29 Annex 7. List of Supporting Documents 30 Annex 8. Evaluation Report: Fund for Preservation of Cultural Heritage of Georgia 31 Annex 9. Partner Comments: Ministry of Finance of Georgia 50

Project ID: P055573 Project Name: CULTURAL HERITAGE Team Leader: Janis D. Bernstein TL Unit: ECSSD ICR Type: Core ICR Report Date: June 15, 2004

1. Project Data Name: CULTURAL HERITAGE L/C/TF Number: IDA-30400 Country/Department: GEORGIA Region: Europe and Central Asia Region Sector/subsector: Other social services (71%); Central government administration (29%) Theme: Participation and civic engagement (P); Other financial and private sector development (S)

KEY DATES Original Revised/Actual PCD: 11/20/1997 Effective: 05/18/1998 05/18/1998 Appraisal: 11/20/1997 MTR: 11/15/1999 02/28/2000 Approval: 02/13/1998 Closing: 12/31/2001 12/31/2003

Borrower/Implementing Agency: Government of Georgia/Fund for Preservation of Cultural Heritage of Georgia Other Partners:

STAFF Current At Appraisal Vice President: Shigeo Katsu Johannes F. Linn Country Director: D-M Dowsett-Coirolo Judy M. O'Connor Sector Manager: Alexandre Marc James Christopher Lovelace Team Leader at ICR: Janis D. Bernstein Thomas Blinkhorn ICR Primary Author: Wendy Schreiber Ayres

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S

QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective:

The project’s objective was to improve the management and promotion of Georgia’s rich cultural heritage by: (a) testing approaches that could revive the once dynamic tourism industry, and (b) engendering social cohesion and national identity during the difficult economic transition. The project would achieve this objective by financing work to restore four sites of significant historic importance (including work to prevent further deterioration of private homes); activities proposed by community groups and others to restore or preserve historical and cultural assets (including music, dance, and handicrafts) in danger of being irrevocably lost; and technical assistance to strengthen capacity of the project implementation unit to manage the project, build awareness of the public of cultural heritage, and strengthen the capacity of people to develop and implement site management plans.

The overall project objective was, and remains, appropriate. It reflected the importance of Georgia’s cultural heritage to both citizens of the nation and to people of the world. Georgia is home to some 12,000 culturally significant monuments, and religious buildings, forts and walled cities, some dating to the last centuries B.C. Tbilisi, its capital city, protected from the development pressures that have changed the character of most cities in the rest of Central and Eastern Europe, still contains large neighborhoods dominated by traditional houses and shops. Georgia also has a rich and unique history of music and literature that is a strong focus of national pride and identity. At the time the project was conceived and prepared, the country had been independent from the Soviet Union for just six years. Interest in the history and culture of Georgia was rising rapidly as citizens sought to recapture a national identity based on its diverse ethnic and cultural traditions.

The project’s objective was also in line with the government’s strategy of reviving tourism, a potentially important source of growth for Georgia. According to government statistics, tourism and travel accounted 1 for about 10 percent of GDP in 2002. Tourism, along with the other economic activities, had collapsed with the breakup of the Soviet Union, and revitalizing the industry by restoring and protecting cultural sites and by reviving traditional music, dance, handicrafts, and other artistic activities was, and still is, viewed as important to stimulating the economy as a whole. Finally, the project was designed to help promote social cohesion in a country divided by conflict among various ethnic and political groups that threatened to tear the nation apart.

The project’s objectives also supported the objectives the Bank’s country assistance strategy (CAS). These were to promote economic growth and diversification, to strengthen public finance, to protect the environment, and to reduce poverty. The project promoted economic growth by rehabilitating historic sites and revitalizing cultural traditions of interest to both Georgians and foreign visitors. It helped to strengthen public finance by insisting on transparency and accountability in procurement and financial management of project-related expenditures. It helped to improve environmental conditions in Tbilisi by encouraging the municipality to address the severe underground water problem, and in the other pilot sites, by supporting the development of environmental management plans. It also helped to reduce poverty by stimulating development in the areas where it operated. Finally, the project fit well within a broader program of Bank support to Georgia, which included a municipal infrastructure project and a social investment fund project, both of which aimed at revitalizing Georgia’s cities and towns. ______1 Statistics on tourism are very weak in Georgia and appear to capture not only tourists spending time in Georgia, but also lorries passing through Georgia transporting goods among neighboring countries.

- 2 - The project was the first stand-alone cultural heritage project to be supported by the Bank. Because of its innovative nature, a Learning and Innovation Loan (LIL) was used to pilot a variety of approaches to revive and protect cultural heritage. The project was the first in the Europe and Central Asia Region to benefit from this Bank instrument, which was introduced in fiscal 1998.

3.2 Revised Objective:

The objectives of the project were not formally revised during implementation. The Development Credit Agreement (DCA), however, was amended three times. The DCA was amended on July 22, 1998 to add operating costs to categories eligible for financing. The DCA was amended on May 5, 2000 to revise procurement procedures, as recommended in the midterm review. The DCA was amended on November 29, 2001 to reallocate proceeds of the Credit.

3.3 Original Components:

The project comprised two broad components:

(1) Investment (US$3.57 million). This included two subcomponents: l Emergency Rehabilitation Program (US$1.03 million). This subcomponent focused on preventing the permanent loss of both immoveable and moveable cultural heritage by financing activities such as stabilizing buildings in danger of collapse, microfilming and archiving old manuscripts, and recording 2 traditional songs and dances. The program was to provide as grants a maximum of US$75,000 to community groups, nongovernmental organizations (NGOs), institutes, and others whose proposals were selected by the 52-member Georgian Cultural Revival Board through a rigorously transparent selection process. The staff of the Fund for the Preservation of Culture Heritage of Georgia (hereafter referred to as the Fund), which was established under the IDF and became the project implementation unit (PIU), would provide technical assistance to the committee and to beneficiaries, screen proposals for presentation to the committee to ensure that they complied with the criteria, and monitor and evaluate their implementation.

l Pilot Priority Cultural Heritage Sites (US$2.54 million). This subcomponent focused on comprehensively restoring the historic buildings, and monuments, and the surrounding areas of four important cultural heritage sites. The sites¯Old Town, Tbilisi; the famous northern mountain town of defensive towers, Shatili; the walled town of Signaghi; and the ancient rock city of Uplistsikhe¯were chosen after wide consultation with stakeholders on the basis of their cultural significance; evidence of community commitment to help protect, manage, and maintain the site; and evidence of community willingness to consider piloting new approaches for financing site management and maintenance, including through the forming public-private partnerships and implementing measures to recover costs. Funds were to be provided as grants to local authorities or community groups in accordance with a signed memorandum of understanding that would reflect a simplified plan, budget, and schedule for operation and maintenance. The Fund would assist communities prepare the plans. This subcomponent also included funds to rehabilitate private properties in Tbilisi and Signaghi officially designated as historic, called the Neighborhood Fund. ______2 The subcomponent was originally titled the Emergency Rehabilitation Fund. The name was later changed to avoid confusion with the Fund for the Preservation of Cultural Heritage of Georgia, the PIU for the project.

- 3 - (2) Technical Assistance (US$1.4 million). This component included five subcomponents: l PIU Support and Institution Building. This supported and strengthened the PIU by providing technical assistance in areas such as project management, finance and administration, procurement, monitoring and evaluation, and engineering. It also helped build capacity of the Ministry of Culture and other cultural heritage-related institutions by financing the participation of their staff in study tours and training sessions. l Training and Study Tours. This involved training of staff of the PIU, the Ministry of Culture and other cultural heritage institutes, municipal authorities, and community groups in project management, community mobilization, methodologies of economic evaluation, and others according to demand. This subcomponent also included study tours to destinations in Western Europe to learn about their experiences in successfully preserving and promoting cultural heritage. l Public Awareness Program. This involved preparation of articles for magazines and newspapers, programs for radio and television, and brochures and information booklets designed to increase public awareness of the importance of cultural heritage and the activities of the Fund. It also included funds to present photo exhibits, cultural fairs, seminars, the design and operation of a website, and the like. l Integrated Conservation Master Plan, Old Town. This involved preparation of a plan intended to guide future development in Old Town, Tbilisi. The master plan would incorporate principles of planning in areas with important historical urban architecture and would involve economic and market analyses. l Monitoring and Evaluation. This supported the development of a management information system to be used to monitor implementation of the project and its impact. This subcomponent would also support technical and financial audits, beneficiary assessments, and reports of independent evaluators. Finally, it would support participatory monitoring by cultural heritage committees at the pilot sites.

The project was expected to be executed over three years. Overall responsibility for project implementation rested with the Fund, which was constituted as an autonomous agency for this purpose through decree. The Fund had gained experience with Bank procedures and project management by implementing the US$430,000 Cultural Heritage Initiative approved in 1996, financed by an Institutional Development Fund (IDF) grant, that had established the institutional foundation for the project. The Cultural Heritage Initiative Board of Trustees¯established by decree in 1996 with the support of the IDF grant and comprising representatives of government agencies and NGOs¯was to facilitate coordination, provide policy guidance, and oversee implementation. The Georgian Culture Revival Board would have a major role in evaluating and selecting proposals for funding under the ERP. Groups whose proposals were approved were responsible for implementing the proposed activities. The Fund would provide technical assistance and oversight. Community cultural heritage committees, with the technical assistance of the Fund were to implement small-scale activities at the pilot sites. The Fund was responsible for all procurement.

3.4 Revised Components:

Project components were not formally revised during project implementation. However, funds were reallocated to allow six competitions to be held for funding under the popular Emergency Repair Program (ERP), rather than the three originally envisaged. The total cost of this subcomponent rose to US$1.46 million from the originally envisaged US$1.03 million.

- 4 - The project closing date was extended twice. The first extension to December 31, 2002 was granted to allow work in Tbilisi and Uplistsikhe to be completed. Works in Tbilisi could not start until repairs of the underground water systems conducted by the Municipality of Tbilisi and the Municipal Development Fund were complete. Moreover, an earthquake in November 2000 damaged the caves at Uplistsikhe, which required emergency reinforcement and delayed the start of the works. The second extension to December 31, 2003 was given to permit work in Tbilisi to be completed. Work had been delayed by bad weather last winter, an earthquake in April 2002, and unexpected difficulties in making arrangements for the temporary relocation of residents of the Erekle St. caravansary.

3.5 Quality at Entry:

Quality at entry is rated marginally satisfactory. The project’s development objectives were reasonably clear and appropriate, although too broad to allow measurement of the project’s achievements. They were consistent with the government’s development strategy and the Bank’s CAS. The project aimed to rescue cultural heritage in danger of permanent loss—critical both for stimulating economic development and for preserving and re-creating a national identity. The Bank’s Quality Assessment Group did not assess the project’s quality at entry.

The project design benefited substantially from discussions with other organizations active in preservation of cultural heritage in Georgia, including the Council of Europe, Getty Trust, World Monuments Fund, UNESCO, and the Soros Foundation. It also reflected lessons learned from the implementation of the IDF grant and from the experiences of other countries with preservation of cultural heritage. These included incorporating a demand-driven fund for emergency rehabilitation of cultural heritage among the project’s components, undertaking social assessments at the pilot sites, establishing community cultural heritage committees to help design and implement activities at the pilot sites, and supporting activities to raise public awareness of issues related to cultural heritage.

The design also accounted for Georgia’s limited experience with and capacity for implementing Bank-supported projects by using a autonomous PIU (that is, the Fund) to implement the project, staffed with many of the same people that had executed the IDF grant. While the use of independent PIUs is often criticized for creating structures parallel to those of the government, most Bank-supported projects in Georgia are implemented by such PIUs to compensate for exceptionally weak government capacity. The project also included substantial resources to develop human resources and to strengthen institutional capacity over time.

The design was consistent with the Bank’s safeguard policies. The project, classified environmental impact assessment category B, included funds for environmental analyses to be conducted at the pilot sites. Building on work that the Bank undertook in preparation of the project, the design also took account of the severe underground water problems in Old Town, Tbilisi by ensuring that rehabilitation of infrastructure and buildings took place only after the problem was resolved. The project included funds for the development of a resettlement and rehabilitation plan should the need for resettlement arise.

The project appraisal document (PAD) realistically appraised the risks the project would face. In particular, it recognized that the risk of failing to mobilize resources for the operations and maintenance was substantial. The PAD did, however, mistakenly consider as negligible the risk that counterpart funds might not be forthcoming, and as modest the risk that no agreement with occupants of the Erekle Street caravansary on temporary resettlement could be reached. Credit effectiveness conditions¯depositing counterpart funding for the first year of the project (US$100,000) in a bank account, and completing and

- 5 - adopting the project operation manual acceptable to IDA—were appropriate given the government’s poor track record in providing agreed counterpart funds for donor-financed projects and the need to have clear implementation arrangements prior to project launch. Credit disbursement conditions that applied to financing of the renovation of the Erekle Street caravansary¯confirming that underground water problems were not an impediment to restoration, and completing a resettlement and rehabilitation plan acceptable to IDA¯were essential to ensure that project resources were not wasted and that the project complied with the Bank’s safeguard policies. A dated covenant that the PIU recruit four technical specialists (project management advisor, procurement advisor, financial expert, and monitoring and evaluation specialist) was also appropriate.

The design of the project was, however, weak in several ways. First, the plans for community participation were underdeveloped. Thus although the PAD states that resources for renovating pilot sites would be provided as grants to local authorities or community groups to implement subprojects, this was not implemented.

Second, the project design failed to pay adequate attention to issues of raising funds for operating and maintaining the project investments. While it was envisaged that the project would support experiments with cost recovery techniques, the project designers appear to have been unaware that such experiments at public sites require a special decree before they can be carried out, an obstacle that ultimately blocked such experimentation. Even where entrance fees can be charged, such as at museums, the low number of visitors at most sites and the laws that require revenues raised through such fees to be submitted to the central treasury mean that other methods of raising funds for operations and maintenance must be found.

Third, the project design lacked an economic analysis that might have revealed where resources could best be targeted. For example, Shatili was selected as one of the pilot sites, despite being snowbound nine months of the year—not an area where tourism is likely to rise significantly in the near future (although Shatili is located near the Chechen border, it was considered a safe ecotourist destination at the time the project was designed). Although Shatili holds a special place in the hearts of Georgians because of its unique defensive towers, economic analysis may have shown whether the existence values alone could justify the use of public funds for renovations in a inaccessible village that is home to just 25 families, or whether the resources could be better spent elsewhere. Disagreements among the Bank team that arose during implementation with regard to Sighnaghi’s prospects for increased tourism also may have been avoided.

Fourth, the PAD did not present hypotheses that stated what questions were being explored through the project. This is a serious omission, given that the purpose of a LIL is to understand the effectiveness of the various approaches being tried. Although the project was prepared before clear guidance on the purpose and content of LILs had been prepared and the new template for LILs (which emphasizes their learning aspects) became available, more attention could have been paid to clearly articulating what the project designers expected to learn from the project and how the learning would take place. Fifth, despite including a subcomponent in the project on monitoring and evaluation (M&E) and the contracting of an international consultant to help design an M&E system, the plan for M&E was poorly articulated. Key performance indicators specified to measure impact were either too vague to be useful (incorporation of lessons learned through the project by government and communities in future efforts to preserve and promote cultural heritage), or would be difficult if not impossible to attribute to the project without the use of sophisticated econometric techniques (increase in number of tourists visiting the sites benefiting from the project, and increase in number of cultural heritage-related activities, such as the national music competitions, during the project life). The PAD lacked benchmarks or details of the tools that would be used to measure project impacts. The PAD also failed to acknowledge that statistical

- 6 - capacity in Georgia is extremely weak, and to propose measures that would allow necessary information to be collected in the face of the weaknesses.

Finally, establishing a three-year time frame for implementing the project was too ambitious, especially considering its experimental nature. All experiments require time to carry out, evaluate, redesign, retest, and reevaluate. Successfully concluding several experiments simultaneously, as in this project, in just three years is not likely.

4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective:

Achievement of the objectives of the project is rated satisfactory. While the project’s objectives were broad, which makes measuring achievements difficult, the project has contributed to permanently improving the management and promotion of Georgia’s cultural heritage by demonstrating the value of a variety of approaches to protecting and rehabilitating cultural heritage, forging ties with private benefactors and international groups, and taking the lead in formulating key legislation designed to protect historic properties and to encourage private investment in preservation. Importantly, the project stimulated economic development in areas where it operated. Especially noteworthy is the project’s impact on the revitalization of Old Town, Tbilisi. By restoring facades, resetting the cobblestone pavement, installing street lights, and landscaping public parks in Old Town, Tbilisi, the project has encouraged private investors to renovate on their own several of the city’s most important old buildings. Many of the workers executing these private developments received their training working on project-financed activities. Rehabilitation of the area has also led to the opening of hotels, cafés, restaurants, shops, and galleries in the area and to an influx of residents and offices. This has led to a significant increase in property values in the historic district. The project generated widespread public awareness throughout the nation of the importance of cultural heritage and of actions that community and other groups can take to protect and rehabilitate it. By employing many workers with special skills, it helped to revitalize knowledge of crafts and workmanship that will be used in future preservation efforts. Finally, the project assisted in strengthening the capacity of the Ministry of Culture, institutes, NGOs, community groups, and others interested in protecting cultural heritage by providing technical assistance and training in preparing proposals and implementing projects. Finally, it helped to build the capacity of cultural heritage committees to prepare and implement participatory community action plans.

4.2 Outputs by components:

Component 1: Investment (US$3.7 million)

ERP (US$1.03 million revised to US$1.46)

Outputs of the ERP are highly satisfactory. The program helped to protect from further deterioration or permanent loss over 100 cultural and historic treasures through 58 projects, including churches, monuments, frescoes, mural paintings, archeological sites, forts, manuscripts, folk music, photos, films, and dances. The ERP supported projects in all regions of the country through a competitive process that is regarded by the cultural heritage community of Georgia as transparent, fair, and effective. Both the eligibility criteria and the process through which proposals are selected have contributed to the success of the program. Among the eligibility criteria are that projects can cost a maximum of US$75,000 and that no single group can submit more than one proposal per competition. This ensured that resources were

- 7 - available to fund a large number of projects sponsored by diverse groups. The popularity of the program led to an expansion from three competitions to six competitions.

Perhaps surprisingly, all 58 proposed projects were completed, most on schedule and within budget. This is due in large part to the technical assistance and supervision of implementation offered by the Fund to the project sponsors. Noteworthy is that several projects in the regions under dispute were implemented jointly by members of different ethnic groups. For example, subprojects in Javakheti and in South Ossetia (Ikorta, Azmana, Tighva) were implemented and are being maintained by people of various ethnic groups and religions. Observers believe that this has helped to strengthen social cohesion and a sense of national identity in such areas.

Pilot Priority Cultural Heritage Sites (US$2.54 million, revised to US$2.08 million)

Outputs of the pilot priority cultural heritage sites subcomponent are satisfactory. The component rehabilitated urban spaces, parks, historic homes, and museums in Tbilisi and Sighnaghi; prepared for visitors the ancient cave city of Uplistsikhe; and rehabilitated 29 unique medieval towers, the water supply system, a meeting hall, and a historic brewery in Shatili. Quality of construction, while largely satisfactory, has sometimes been disappointing due to early problems with the quality of technical drawings and specifications, and inadequate supervision of work. These problems were partly, but not fully resolved. While strong on archeological and historical conservation and research techniques, the Fund was unable to establish an effective supervision unit to cover conventional construction, resulting in poorly conceived and implemented finish work.

The project helped to resolve underground water problems in Old Town, Tbilisi first by mobilizing trust funds to assess and find solutions to the problem, and second by leveraging municipal funds and coordinating closely with the Bank-supported Municipal Development Fund to ensure that repairs to the underground water system were given priority in its schedule of activities. The project responded rapidly to reinforce the caves of Uplistsikhe that were threatened with collapse following an earthquake in November 2001. The project was not however able to renovate the Erekle Street caravansary, the oldest caravansary in Tbilisi. Although the Fund and the municipal authorities spent several months attempting to negotiate an agreement with the residents of the building on a temporary resettlement plan, agreement was not reached by the time of an earthquake in April 2002. By then, the building had suffered structural damage from the earthquake and project funds to fully repair the structure were insufficient, even if agreement had been reached. Instead of undergoing a complete renovation, the caravansary has had its main section reinforced and the roof rehabilitated. The municipality provided temporary external supports for the rear part of the building and continues to seek funds to complete its renovation.

The Neighborhood Fund repaired or replaced the gutters and drain pipes, and repaired balconies and facades of 36 historic homes in Tbilisi and 37 historic buildings in Signaghi. While the Neighborhood Fund was successful, it was the most troublesome element of the pilot sites subcomponent. The Neighborhood Fund financed up to US$1,500 of exterior improvements (US$4,500 to for a multiple-family dwelling) to private properties in Tbilisi and Signaghi that were included in a registry of historic homes. The purpose of the program was to save historic homes from further deterioration by making inexpensive but critical repairs to the exterior of buildings (most have not been maintained since they were transferred to private ownership soon after Georgia became independent from the Soviet Union, and had already been seriously neglected under the Soviet regime), and to encourage private investment in restoration by demonstrating its ability to increase home values. The Neighborhood Fund proved to be difficult to manage. Many homeowners, whose properties had until independence been nominally maintained by the state, felt that the project should finance renovations to interiors in addition to exteriors, and demanded the

- 8 - full US$1,500 even when this was not needed to fund work on the exterior. People whose houses were not on the official list of historic houses questioned the fairness of the program. Tensions between the Bank and the Fund arose over the issue of cost recovery, with the Fund proposing that better-off homeowners be offered loans rather than grants to ensure the sustainability of the program and the Bank team explaining that providing loans would significantly increase the complexity of the program. In sum, the Neighborhood Fund required substantial resources for administration and consultation that might have been better spent on renovating public streets, urban spaces, and historic buildings. Nonetheless, the program arrested the deterioration of historic buildings, thus contributing to the preservation of a part of the architectural legacy of Tbilisi and Signaghi.

New legislation and regulations in support of the preservation of cultural heritage was drafted under the leadership of the Fund and subsequently enacted by parliament. These include the Law on Preservation of Cultural Heritage (June 1999), the Law on Export and Import of Cultural Properties (June 2001), the Law on Museums (June 2001), and amendments to the Law on Preservation of Cultural Heritage (May 2002). With the encouragement and technical assistance of the Fund, Georgia also acceded to several international conventions, including the Granada Convention on Architectural Heritage Protection and La Valetta Convention on Archaeological Heritage Protection (both in February 2000). Laws on archaeology, on territorial-spatial planning and urbanization, and on sponsorship and charity in the sphere of culture¯which are still awaiting enactment by parliament¯have also been drafted with the help of the Fund.

Site management plans for the four pilot sites were developed under the project with the active participation of local cultural heritage committees and other community groups. The management plans include measures to mobilize funds for operations and maintenance and plans for the sustainable development of the sites. The plans have been approved by the State Monument Protection Department. However, funding for implementing the site management plans other than that provided under the project has for the most part not materialized. Some of the elements of the plan for Shatili are being implemented with funds raised by the community, including rehabilitating the local hydropower station and assisting local residents create attractive spaces in their homes for tourists.

Component 2: Technical Assistance (US$1.4 million, revised to US$1.37)

Fund Support and Institution Building

Outputs of this subcomponent are satisfactory. After initial delays, the Fund contracted the services of three international experts to support project management (ten months), financial management (nine months), and monitoring and evaluation (six months). Detailed job description for each position in the Fund were prepared. Organization of the Fund was brought in line with its responsibilities. Training through seminars and hands-on experience was provided to staff in modern management practices, financial management, use of management information systems, accounting, procurement, disbursement, and monitoring and evaluation.

A management information system and a monitoring and evaluation system were developed. Weekly staff meetings were introduced to ensure that all staff members knew what others were doing and to foster a sense of teamwork. These measures quickly led to improving execution of the project. The Fund benefited from additional support during the project. Under a separate grant-financed exercise, Fund staff participated in training in community action planning. They subsequently led a participatory community planning exercise in Sighnaghi. The action plan is of high quality and aspects of it are already being implemented. The action plan also has led to a Swiss investment in improving Sighnaghi’s water supply system.

- 9 - Some problems took time to resolve. Despite considerable assistance from the Bank, financial reporting remained somewhat opaque until close to the end of the project, although in 2000 the Fund started using accounting software recommended by the Bank. Although the Fund did not follow up the Bank’s recommendation to contract technical assistance in this area, it consistently clarified any questions regarding financial statements and explained any discrepancies as they arose. Moreover, the audits did not reveal problems in financial management. Another issue related to the monitoring and evaluation system. Although it was developed with the assistance of the international expert, the system was deemed inappropriate for use by the Fund. Time was required before a workable system was put into place. Once the system was established, the Fund significantly improved its monthly, quarterly, and annual reporting to the Bank.

Some aspects of technical assistance were not well used. Social assessments conducted by the Fund were too weak to be useful and needed to be redone by outside consulting firms. Whether even these were used to guide project investments is not clear. Market studies were not carried out. Training on the methodologies of economic evaluation was not provided. Approaches for recovering costs were developed, but never implemented because the Fund lacked authority to introduce charges at public sites.

Training and Study Tours

Outputs of this subcomponent are satisfactory. Key staff of the Fund, the Ministry of Culture, and NGOs participated in a study tour to England taken in early 2002. The visit involved meetings with the National Trust, the Architectural Heritage Fund, the English Heritage Fund, the Bath Preservation Trust, the Victoria and Albert and other museums, several visitors centers, and other sites. Participants learned about the use of revolving funds, legal instruments, and financial incentives to encourage private owners to restore their historical properties. They also met with experts on site management planning and value-led conservation, operation of trusts, use of cost recovery mechanisms and concessions to finance operations and maintenance, and use of promotional and educational materials to raise public awareness of the importance of cultural heritage. Participants rate the tour as highly useful and staff of the Fund are actively exploring ways to replicate some of the approaches in Georgia.

Cultural heritage committees were established at all four pilot sites. All remained actively involved in planning and implementing activities at their sites. All continue to pursue new sources of funding to implement the site management plans, although with varying degrees of success.

Public Awareness Program

Outputs of this subcomponent are satisfactory. The subcomponent produced numerous articles for magazines and newspapers, programs for radio and television, and brochures and information booklets for distribution to the public. It also financed photo exhibits, cultural fairs, and seminars. It produced and maintains a website that receives thousands of hits a month. It also frequently succeeded in obtaining coverage of its activities from both state and independent media outlets. For example, the independent television broadcasting company, Mze, covered the restoration of a church in Ikorta (on the World Monument Watch list) that was financed under the ERP. Although survey data do not exist, anecdotal evidence suggests that the activities of this subcomponent have substantially increased public awareness of and interest in preserving Georgia’s substantial and varied cultural heritage.

- 10 - Integrated Conservation Master Plan, Old Town

Outputs of this subcomponent are satisfactory. The conservation master plan was developed in close collaboration with experts of the Council of Europe. It is considered a guiding document by the Tbilisi Architectural Service, the Cultural Heritage Subcommittee of the Parliament of Georgia, and many cultural heritage experts. The Tbilisi Architectural Service is now preparing a paper drawing on its recommendations to guide the city in its future planning.

Monitoring and Evaluation

Outputs of this subcomponent are satisfactory. As noted above, the indicators initially chosen to monitor impact were either not quantifiable or not useful. The Fund eventually agreed with the Bank to monitor a revised set of twelve indicators performance indicators for which data were reasonably easy to obtain. After a slow start and with guidance from the Bank on the content and format of the reports, the Fund consistently produced timely and high-quality monthly, quarterly, and annual reports covering all aspects of project implementation. These allowed problems to be quickly identified and solved and helped considerably in implementing the project. Although participatory monitoring and evaluation at the pilot sites was not carried out, the Fund maintained close contacts with cultural heritage committees and solicited feedback which was communicated to the government and the Bank.

4.3 Net Present Value/Economic rate of return:

The PAD did not include an estimate of the net present value or economic rate of return for the project. Sound methodologies for estimating net present values of cultural heritage projects had not been developed at the time the project was being prepared. While methodologies often used to evaluate environmental projects could have been adapted to produce such estimates for this project, considerable time and expense would have been required to produce credible results. Given the short preparation time of the project (three months), undertaking such an exercise would have been difficult. Estimating the net present values of the activities of the ERP was not possible, because these were not known in advance. Estimating net present values of technical assistance is also difficult or impossible.

4.4 Financial rate of return:

The project appraisal document did not include an estimate of the financial rate of return. Few of the specific activities were expected to generate revenues directly, although it was hoped that would do so indirectly by stimulating tourism and economic growth in the areas benefiting from the project.

4.5 Institutional development impact:

Institutional development impact is rated modest. The project succeeded in strengthening government agencies, NGOs, institutes, and community groups involved in protecting and promoting cultural heritage. These organizations benefited both from employing people who learned skills through employment at the Fund, and through their involvement in implementing project-funded activities. A large number of former Fund staff members are now employed at the Department of Monument Protection at the Ministry of Culture, and according to its director, are helping to completely restructure and revitalize the department. Others are now working at various institutes of history and art history in Georgia. Still others have gone on to develop private businesses that produce and sell maps of important monuments and buildings of Georgian architecture, tapes of traditional Georgian music, and the like. Others are providing consulting services. Groups that benefited from the ERP acquired skills in writing proposals and managing projects

- 11 - that they are using to seek additional funding to rehabilitate or preserve cultural heritage. Some have already received funding from other donors on the basis of these skills.

Government bodies, NGOs, and institutes that are members of the Georgian Cultural Revival Board have also been strengthened under the project. The Georgian Cultural Revival Board maintains a permanent representative in the Department of Culture, Education and Sports of the State Chancellery (president’s office) who liaises regularly with the Cultural Heritage Subcommittee of the parliament. Community groups such as cultural heritage committees, have been significantly strengthened under the project through their involvement in planning and implementing project-supported activities. At the end of the project, these groups remain active in driving forward a vision of development based on the preservation of cultural heritage. For example, the cultural heritage committee of Tbilisi now plays a critical role in reporting illegal construction to the authorities.

The project helped in creating the regulatory framework for the preservation of cultural heritage through its leadership in drafting and promoting the enactment of laws aimed at protecting Georgia’s cultural and historical treasures. It has helped to create a partnership between the municipal government of Tbilisi, the central government, and other donor-funded projects to finance different elements of the renovation of Old Town, Tbilisi. This partnership is likely to last beyond the life of the project. Finally, it has played a major role in encouraging private firms and foundations to either donate funds or enter into public-private partnerships to protect cultural resources. This is helping to create a sustainable source of funding for cultural heritage and to broaden support for its protection.

5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency:

The influence of outside factors on project outcomes has been significant. Most important is the failure of expected increases in tourism to Georgia to materialize during the nearly six years of the project. Unresolved separatist movements in the country, tensions between Georgia and Russia over events in Chechnya, and the terrorist attacks in New York on September 11, 2001 have all blunted interest of foreigners in travel to Georgia. Continuing economic stagnation in Georgia leaves citizens with little discretionary income with which to travel. Low tourism has limited the impact of project investments on economic development of the areas where it operated. The failure to generate income through tourism is evident in Signaghi, which is depending on tourism to reverse its decline. While more people are visiting than before the project, and some are staying in the private homes adapted for visitors, many stay no longer than a few hours and spend little money. Further assistance is needed to help residents of Signaghi attract tourists and encourage them to spend more than a few hours exploring the sites.

5.2 Factors generally subject to government control:

The influence of factors within government’s control on project outcomes has been substantial. The unwillingness of government to provide its counterpart funds in a timely manner significantly delayed works in several cases, making project planning and management very difficult. While the unplanned contribution of the municipal government of Tbilisi to reinforce buildings on Erekle Street and to rehabilitate infrastructure of Cotton Row and Iron Row is highly welcome, slow delivery of these funds has delayed works and left contractors unpaid, disrupting implementation of the project. However, these delays did not affect the overall quality of the works.

- 12 - 5.3 Factors generally subject to implementing agency control:

The influence of factors subject to the control of the Fund on project outcomes has been highly significant in a positive way. The competence, dedication, energy, and networking skills of the director?a respected art historian and former professor at Tbilisi State University?and key Fund staff have been critical to the success of the project. In addition to successfully implementing the project, on their own initiative the staff of the Fund raised US$378,000 from donors other than the Bank. These included, among others, the New Georgian Fund (funded with contributions from the TBC-Bank, Aldagi, Martin Bauer, United Georgian Bank, Georgian Wine Services, and Georgian Trans Expedition), the Council of Europe, the Soros Foundation, and the International Oil Corporation. As an indication of their dedication, the Fund staff have been working without pay since the final project disbursement was made in September 2003.

Establishing a small, effective Fund was not easy. With guidance from the Bank, the Fund initially comprised 20 full-time staff members, including a coordinator of the ERP, a public awareness officer, an officer of management information systems, an architect, an engineer, a procurement officer, a sociologist, and a social analysis assistant among others. Many of the functions the staff performed could have been more effectively and efficiently carried out by firms or individual consultants contracted to undertake specific tasks (for example, supervision of construction, financial management). In summer 2001, the Bank informed the Fund that an extension of the closing date would not be possible without a reduction of 50 percent in its staff. Staff of the Fund were later cut to six as the project entered its final year, and nearly all activities were complete.

5.4 Costs and financing:

The PAD estimated total project costs (including contingencies) to be US$4.97 million over three years. The actual project costs over nearly six years totaled about US$4.91 million (US$3.54 million for the investment component, which included 2.08 million for the pilot sites and 1.46 million for the ERP, and US$1.37 million for the technical assistance component). Disbursements from the IDA credit total about US$4.48 million, 100 percent of the credit.

Government counterpart funds to December 2003 are estimated to total US$431,150, or 9 percent of the project costs. This is slightly less than the 10 percent estimated in the PAD.

6. Sustainability 6.1 Rationale for sustainability rating:

While sustainability of most project investments is likely, this is not true for all. With regard to the former, a large majority of the funds provided under the ERP was used to rehabilitate churches and church frescoes, murals, and other religious artifacts that had deteriorated during Georgia’s years as part of the Soviet Union. Most of these churches are now managed by church staff that protect and maintain the buildings and church artifacts. The churches also have active congregations that provide funds and labor for operations and maintenance. Another portion of the funds was used to improve the capacity of state-operated museums to better store and maintain their treasures through procurement of specialized equipment, installation of ventilation systems, and the like. Museum stakeholders, who on their own initiative prepared and submitted the proposals to the Fund, are likely to make full use of the equipment and the renovations. Many of the improvements at the pilot sites are also likely to be maintained. The rehabilitations in Old Town, Tbilisi have stimulated significant private sector investment and the investors are likely to either organize maintenance themselves or to demand that the city meet its obligations to do so.

- 13 - Owners of defensive towers and other buildings in Shatili improved under the project can be expected to maintain them, as they have since they were built in the tenth to twelfth centuries.

Less probable is proper maintenance of other improvements. The city-owned Wedding Palace in Signaghi is rarely used, and already shows signs of deterioration. Encouragingly, a new grant-funded initiative aimed at building on the achievements of the project will finance the operation of a visitor’s center in the Wedding Palace for the next two to three years, and will develop plans intended to assure its longer-term sustainability. A visitor’s center in Uplistsikhe lacks funds to open to the public. Road signs directing visitors to important cultural sites have been vandalized and not replaced. The poor record so far with sustaining these investments stems from the failure of the Fund to identify the sources of funding for operations and maintenance in advance of undertaking the investments, and of the Bank to ensure that this was done before approving the investment. Clearly road signs will need to be replaced over time. The Fund should have made arrangements with the government entity responsible for maintaining road signs before installing them. Likewise, the Fund should have reached agreement with the government on funding needed to operate the visitors center before constructing it, should visitors fees prove insufficient. The Fund is not solely responsible for the lack of maintenance at some sites. It did indeed obtain a commitment from the mayor and community of Signaghi to maintain the sites. The commitment has been only partially fulfilled.

Benefits of investments in capacity building and institutional strengthening are likely to be sustained. As previously mentioned, skills people have acquired as a result of working for the Fund or on activities financed under the ERP are already being used outside the project to strengthen the management and promotion of cultural heritage.

The sustainability of the Fund, however, is in doubt, assuming that the Bank does not finance a follow-on project. Despite its success in mobilizing finance from donors other than the Bank and from private benefactors, the funds have not been sufficient to replace the Bank’s financing. Sustainability of the Fund, at least in the short term, thus appears to depend on government’s commitment to continue funding activities aimed at preserving and promoting Georgia’s cultural heritage. Even if the Fund dissolves, the skills of its staff will remain and will no doubt be employed in preserving cultural heritage through work with other organizations.

6.2 Transition arrangement to regular operations:

Transition arrangements to regular operations had not been made at the time of the project’s closing. Although the former president of Georgia, other government officials, NGOs, and institutes have asked the Bank to finance a follow-on cultural heritage and tourism project as a priority, decisions on whether to move forward with the new project depend on the strategy of the new government. A follow-on project, should one be approved, would be desirable to support the development of a realistic plan for ensuring the sustainable flow of funds for the preservation and maintenance of cultural assets.

7. Bank and Borrower Performance Bank 7.1 Lending:

The Bank’s overall performance in lending was satisfactory. The Bank’s performance in identification was satisfactory. Preserving and promoting of Georgia’s rich cultural heritage was (and still is) important to help revive Georgia’s tourism industry, stimulate economic development in cities and towns, and create a sense among citizens of a shared national identity. The project was designed in accordance with the lessons

- 14 - learned from an IDF grant for the Cultural Heritage Initiative, which was nearly complete at the time the project was identified.

The Bank’s performance in preparation was marginally satisfactory. Preparation was rushed at just three months and many elements of the design were not well developed. For example, the PAD states that funds for investing in the pilot sites would be provided as grants to local authorities, yet little effort went into exploring what would be required to make this work in practice. Ultimately the Bank and the government concluded that the risks associated with inadequate procurement or financial management capacity by local authorities and community groups were too high to implement this concept. No economic analysis was prepared, a difficult challenge for a project supporting renovation of non-income generating assets. Still, applying the techniques of economic analysis used for environmental projects may have guided investment to sites with greater potential for tourism and larger numbers of residents that could benefit from development than Shatili. As mentioned earlier, the monitoring indicators, which the government was required to agree to as part of the Development Credit Agreement, were both too numerous and poorly specified. More consultation on the monitoring indicators both within the Bank, and between the Bank and the government may have led to agreement on a smaller set of more appropriate indicators. Clearer specification of the technical assistance component also would have helped to prevent later disagreement between the Bank and the Fund on what was needed and why.

The Bank’s performance at appraisal was satisfactory. The Bank mobilized trust funds to assess the groundwater problem in Old Tbilisi and appropriately linked investments in the area to its resolution. As a condition of effectiveness, the Bank demanded that the government deposit in a bank account counterpart funds for the first year of the project. This was appropriate, considering the government’s poor track record in providing counterpart funds. It also ensured through a condition of disbursement for the reinforcement of the caravansary that a resettlement plan acceptable to IDA was adopted by the government. Appraisal of implementation arrangements was satisfactory. Although autonomous PIUs are often criticized because they are not truly part of the government structure, in Georgia they have proven far more effective in implementing projects than government entities that are starved of funds and lack highly-qualified staff. However, Bank guidance on the number and type of people that the Fund would need was too specific, leading to more staff than the Fund could effectively deploy, and making it difficult for the Fund to reduce staff when its needs shifted. The Bank should have suggested during appraisal that the Fund keep its core staff small, and hire external consultants on a short-term basis to perform specific tasks as needed. Estimates of project costs were reasonable. The use of a Learning and Innovation Loan for the project was appropriate given the desire to experiment with a variety of approaches to preserve and promote cultural heritage. More effort, however, should have been given to clearly articulating the hypotheses that the project was exploring and to designing an M&E system capable of testing them. The Bank also should have carried out a realistic assessment of sustainability and ensured that the project included sufficient assistance to the Fund in preparing a sustainability plan

7.2 Supervision:

Bank performance in supervision was marginally satisfactory. The Bank fielded ten supervision missions during the project’s nearly six years of implementation. Missions took place every six months during 1998–2000, once a year during 2001 and 2002, and again every six months in 2003. Missions lasted about two weeks each and typically comprised three or more members, including foreign and local consultants investigating a wide range of technical and operational issues. During the early years, supervision missions focused primarily on issues of project management, procurement, financial management, reporting, and Fund staffing. The focus later shifted to design and quality of works. Very little policy dialogue on how to make financing of cultural heritage preservation and maintenance more sustainable and how to promote

- 15 - tourism took place throughout the period the project was being implemented. Only during the last two years of project implementation did attention shift to issues of sustainability and community development. The Bank team responded to the needs of the client by coordinating closely with the Bank-supported Municipal Development Fund to ensure that work on the underground water system in Old Tbilisi was completed quickly. It also mobilized a Norwegian Trust Fund for community-based participatory action planning in Signaghi to help the community find ways to make use of its restored cultural heritage to generate tourism.

Early project supervision however was hampered by several problems. Members of different missions on one or two occasions provided the Fund with conflicting advice. For example, a mission in 1999 recommended that the allocation for investment in the Sighnaghi pilot site be reduced from US$567,800 to about US$150,000 on the grounds that tourism potential in Sighnaghi may not be as large as other places. While the argument had merit, challenging the design after the Development Credit Agreement was signed was inappropriate, and undermined the credibility of the Bank in Georgia. In the face of objections by the government to the proposed change, renovations in Signaghi proceeded with a reduction in funding to about US$380,000. Different missions also provided conflicting messages on the design of the Neighborhood Fund. Although agreement had been reached with the Bank during negotiations that the funds would be provided as grants, one mission in 1999 argued that the Bank should not finance rehabilitation of private property without substantial cost sharing by owners. The Fund subsequently developed a proposal to establish a revolving fund that would provide loans for renovations to households that could afford to repay them. The Bank then again reversed its position, arguing that involving a financial intermediary at this stage would be too complex and was not part of the agreed project design. This too undermined the credibility of the Bank. The lack of continuity of task team leaders was, however, the primary cause of confusion. The project had three task team leaders during its life, each with different interests and ideas.

The project was rated satisfactory at all times during implementation. The project included a midterm review, which resulted in improved implementation and faster disbursement, but no fundamental changes in project design.

7.3 Overall Bank performance:

The Bank’s overall performance was satisfactory. In lending, the Bank responded to the government’s request for assistance in better managing cultural heritage first by obtaining an IDF grant, then by designing a project drawing on the lessons of the IDF grant and of experiences in other countries. It chose the best available Bank instrument for the credit, the Learning and Innovation Loan, given the project’s small size and experimental nature. Preparation was not as thorough as it could have been, due to its short timetable, which caused some problems later. Supervision created some confusion at times, due to conflicting messages of different missions on various aspects of project design. Although the lack of continuity of task team leaders further contributed to strain, each of the task team leaders paid close attention to the details of project implementation such as, procurement and financial management, which contributed to the quality of the project. During the later years of project implementation, more attention was paid to issues of community development and of sustainability.

Borrower 7.4 Preparation:

The borrower’s performance in preparation was satisfactory. The government worked closely with the Bank team to forge a common vision of development based on the preservation of cultural heritage and to devise a number of experiments that would help demonstrate effective approaches. It proved its

- 16 - commitment to the project by successfully implementing the IDF grant, by establishing the Georgian Cultural Revival Board and the Fund for Cultural Heritage (the Fund), and by enacting key pieces of legislation to protect cultural heritage.

7.5 Government implementation performance:

The borrower’s performance in implementation was satisfactory. The government continued to support the objectives of the project in many ways. A department in the President’s Office, whose head was a member of the Georgian Cultural Revival Board, was given the responsibility for coordinating the activities of the Fund. The president himself chaired the Board. The government also highlighted the project during President Wolfensohn’s visit in 1999, taking him to several of the project sites.

Unfortunately, after a good start, the government failed to continue to provide counterpart funds in a timely manner, a problem affecting nearly all donor-funded projects in Georgia. This disrupted implementation of works at several stages and delayed payments to contractors. This likely raised costs of works, as contractors nearly always increase the costs of contracts to compensate for the risks of delayed payment. The government also failed to enact the draft Law on Sponsorship and Charity in the Sphere of Culture. Private sector involvement in preserving cultural assets is therefore lower than it could be if the draft were enacted into law.

7.6 Implementing Agency:

The performance of the implementing agencies was satisfactory. Implementation started slowly. The Fund took time to recruit staff and become fully conversant with the Bank’s procurement, financial management, reporting, and other procedures. The Fund also spent some months focusing on fine tuning operational agreements and procedures and proposing a series of amendments to the Development Credit Agreement. The pace of implementation picked up once training was complete and the Fund reached agreement with the Bank on any remaining issues.

In the early years of project implementation, one management issue concerned the hiring as staff several people whose services could have been provided on an as-needed basis through short-term consultant assignments. In some cases, the Fund employed people whose skills were not well matched to the tasks they were hired to perform, particularly with regard to the supervisor of basic design and construction. Some of these problems were resolved once the Fund substantially reduced its staff in response to the Bank’s direction. Fund staff remuneration and operating expenses comprised about 20 percent of the total project cost, which is high but acceptable considering the complexity of the project.

Despite its slow start, the Fund proved to be highly effective in implementing the project. In large part, this was due to the competence, energy, and commitment of its director and key technical staff, who dealt effectively with changing Bank task teams and with considerable pressures from the government and others with an interest in the field of cultural heritage. Staff anticipated early on that problems with counterpart funding could arise and requested that the Development Credit Agreement be amended to allow the project to finance 100 percent of the civil works of the ERP and the Neighborhood Fund. They also persistently pursued the counterpart funds through letters and phone calls to the Ministry of Finance, the president of Georgia, and others with influence. They coordinated effectively with the Bank-financed Municipal Development Fund to ensure that the underground water problem was resolved before rehabilitation in Old Tbilisi started. They also coordinated closely with the municipal government as a partner in the project. They raised over US$378,000 from donors and benefactors other than the Bank to preserve and restore cultural artifacts. They created and sustained a network of individuals and groups interested in cultural

- 17 - heritage. They also actively promoted the involvement of cultural heritage committees in planning development in their communities on the basis of its cultural assets.

While issues with sustainability remain, the Fund staff over time started to pay increasing attention to this issue. They gave considerable weight in their initial review of the proposals to the ERP to plans for operation and maintenance of the investments. They also insisted that the local authorities and cultural heritage committees of the pilot sites prepare plans for sustainability as a condition of support. They performed less well in situations where operations and maintenance required the involvement of central government agencies rather than local authorities and communities. They never discussed with the relevant transportation authorities a strategy for maintaining and replacing road signs indicating cultural and historical sites. They did not secure funding from the government to operate the visitors center in Uplistsikhe. Although they actively pursued solutions, they did not succeed in developing a sustainability plan to secure the future of the Fund in the absence of a follow-on Bank project. While a sustainability plan was not a planned output of the project, the Bank during implementation emphasized this issue. However, no funds were available to cover technical assistance to support staff of the Fund in developing such a plan.

7.7 Overall Borrower performance:

The overall performance of the borrower was satisfactory. The government demonstrated its commitment to the broad objectives of the project and its approach from identification to completion, although it did not always provide its counterpart funds in a timely manner. The implementing agency also performed satisfactorily. The Fund successfully implemented the project in close coordination with other entities with responsibilities and interests in cultural heritage, such as the Department of Monument Protection within the Ministry of Culture. It carried out the agreed studies and implemented the training program. It handled procurement in accordance with Bank guidelines. Compliance with relevant Bank safeguard policies was satisfactory.

8. Lessons Learned While using autonomous PIUs to implement projects is controversial, doing so helps in achieving positive outcomes in environments with poor governance and weak institutions. PIUs create structures parallel to those of the government and distort local pay scales. They are however able to attract highly-qualified staff and provide training, equipment, and operating funds, which are necessary to effectively and efficiently implement projects.

Finding a way to make the Fund financially self-sustaining would increase the likelihood that project outcomes would be sustained and deepened. In the absence of clear central government commitment to replace Bank funds with its own, or the ability of the Fund to mobilize funds from international or Georgian donors, the Fund is likely to dissolve, and the focus it brings to preserving cultural heritage lost. Several other Funds in Georgia (the Social Investment Fund and the Municipal Development Fund) have established mechanisms that allow them to be financially self-sustaining. These experiences may be able to provide models for the Fund. Expectations for success should however be modest (see next paragraph).

Preserving cultural heritage is largely a public good, which requires a long-term commitment of the government or its development partners for funding. Although scope exists for raising funds through entrance fees and through contributions of private benefactors, in all countries much of the funding for the preservation of cultural heritage comes from the government. The preservation of cultural heritage in Georgia will likely need long-term support of the government and its development partners, especially as

- 18 - the country lacks sites such as Angkor Wat in Cambodia that international tourists are willing to pay significant amounts to visit.

Demand-driven approaches that allow communities throughout the nation to benefit from the project help in building popular support for the preservation of cultural heritage, especially when the process of selecting projects is transparent. The Emergency Rehabilitation Program proved to be a highly popular approach for preserving cultural heritage, and helped to focus the nation’s attention on both the richness of Georgia’s legacy and on the need to protect it. This has helped to create the image among many government officials and citizens of Georgia that the Cultural Heritage Project was the most successful Bank-supported project in the country.

A program offering grants for home improvements to some private homeowners but not to others is likely to be divisive. Many homes in Georgia are in poor condition. People whose homes were in poor condition but were not eligible for a grant under the Neighborhood Fund Program had difficulty understanding why they did not also deserve support. Offering loans or matching grants instead of grants would have helped improve the perception of the subproject as fair.

Comprehensively upgrading historic facades, streets, sidewalks, parks, water systems, and other elements of the urban environment induces private sector investment, especially in cities and towns that are already attracting investment. As in cities around the world, the investments in Old Town, Tbilisi have attracted substantial private investment to upgrade historic buildings and to operate shops, cafes, restaurants, hotels, and other businesses.

Monitoring and evaluation systems must be carefully designed to ensure that monitoring efforts produce data that are useful in assessing project outcomes and impact. Although the project included substantial resources for monitoring and evaluation, performance indicators were poorly specified, and plans for monitoring them could not be implemented. Ultimately, the list of performance indicators was revised and shortened, which made monitoring feasible. Choosing appropriate monitoring indicators and implementing systems that truly allow project outcomes to be assessed during its life is a challenge that requires special expertise.

Mobilizing communities in designing and implementing activities of the project proved effective in both protecting cultural assets and in building social capital. At all pilot sites, cultural heritage committees and other community groups provided meals and assistance to contractors working at the pilot sites. At some sites, they acted as watchdogs, reporting acts of illegal construction and vandalism. In Sighnaghi, they helped bring people together to formulate action plans for the development of community-based cultural tourism. In Shatili, they mobilized private funding to continue work restoring towers and adapting towers for guests. Some community groups raised funds on their own initiative to finance additional stages of work. Significantly, in some communities, cultural heritage committees brought together members of different ethnic groups to work together on a common project. Observers believe this has helped in building social cohesion in such villages.

9. Partner Comments (a) Borrower/implementing agency:

The Ministry of Finance of Georgia has reviewed and discussed this Implementation Completion Report in draft form and agreed with its main findings (see Annex 9). See also Annex 8 - Evaluation Report from the Fund for Preservation of Cultural Heritage of Georgia dated November 12, 2003.

- 19 - (b) Cofinanciers:

Not Applicable. (c) Other partners (NGOs/private sector):

Not Applicable.

10. Additional Information

- 20 - Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Number of sites restored with project N/A 60 sites have been fully or partially restored assistance Number of tourists/visitors to Uplistcikhe pilot Increase to 14,000 visitors in 2004 from 22,000 in 2003 site 10,500 in 1998 Number of tourists/visitors to Shatili pilot site N/A Increase to 1,200 visitors in 2003 from 250 in 1999 Number of tourists/visitors to Signaghi pilot N/A Increase to 1,000 visitors in 2003 from 450 in site 1999 Number of cultural heritage related activities, Increase to 450 in 2004 from 160 in 1998 650 such as promotion, festivals, concerts Number of cultural heritage projects financed Increase to 30 in 2004 from 18 in 1998 70 by the private sector Number of NGOs working in the cultural Increase to 35 in 2004 from 17 in 1998 120 heritage field Number of community-based cultural 4 4 heritage committees operating effectively at the end of the project Number of media activities related to cultural Increase to 250 in 2004 from 0 in 1998 380 heritage

Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate PILOT SITES Old Town, Tbilisi restoration completed N/A Phases 1 and 2 are complete. The buildings and streets restored include: N. Baratashvili Museum, Jvaris Mama Church, Tbilisi History Museum, Gobelin (Tapestry) Museum, Chardin Street (18 buildings), Erekle II Street (13 buildings), Sioni Street (8 buildings) Number of buildings in Old Town fitted with N/A 78, including 36 through the Neighborhood gutters and drain pipes Fund Signaghi: Rehabilitation of Wedding Palace, N/A The restoration is complete. The buildings archeology museum, and other structures and streets restored include: complete St Nino's Church at Bodbe, Wedding Palace at 6, Kostava Street. Sighnaghi Archaeological-Ethnographic Museum, Dodashvili square, St. Stephen's Church, and Sarajishvili, Dadiani, Saradjishvili, and Lolashvili streets Number of buildings in Signaghi fitted with N/A 37 gutters and drain pipes (through the ERP) Uplistcikhe: site management plan and N/A The site management plan and interpretation interpretation center completed center were completed. Many of the recommendations of the site management plan have been put into practice. The interpretation center was not in operation at the end of the project due to lack of funds. Fees collected at Uplistcikhe pilot site Increase to 6,500 GEL in 2004 from 4,500 7,500 GEL GEL in 1998 Shatili: renovation of historic towers and N/A Renovations of 29 towers, a historic brewery, retrofitting of folk hotels completed meeting hall and other buildings, were completed. Eight folk hotels were created in the towers. Community-based site management N/A Four community-based site management

- 21 - programs in two pilot sites operational plans, one for each of the pilot sites, were prepared with extensive community input. EMERGENCY REHABILITATION PROGRAM (ERP) Three competitions completed N/A Six competitions completed, comprising 58 projects that saved over 100 cultural assets Archive collection and conservation improved N/A 19 museums, archives, and related facilities have improved their capacity to archive and conserve historic documents, tapestries, and other material. Examples of renovations include: Reconstruction of the “Golden Fund” (Treasure) of the State Museum of Fine Arts of Georgia, rehabilitation of Poet’s Museum, the Gobelin (Tapestry) Museum, and the State Archives of Film and Photo Documentation, and the creation of the Architectural Heritage Archives Database. TECHNICAL ASSISTANCE Groundwater feasibility study for Old Town N/A The study was completed and used to guide completed investments in the water system for Old Town (under finance from the Municipal Development Fund) and in restoration of buildings and infrastructure in Old Town. Cultural Heritage PIU and local municipalities N/A Training in project management (including strengthened financial management, procurement, community mobilization, and others) permitted the Fund to implement the project effectively and to assist other culture-related institutions develop similar skills. Training in economic evaluation did not take place. Public awareness campaign raises N/A Many events were reported in the media and awareness of the importance of cultural through events. No survey data exist to heritage demonstrate the extent to which public awareness was raised, but it is certain the messages reached a large proportion of the population. This is demonstrated through the large numbers of groups applying for funds through the ERP, which was advertised with the help of the public awareness team. Integrated Conservation Master Plan N/A The Master Plan was developed and is being completed used as a guiding document by the City Architectural Service and Cultural Heritage Sub-Committee of the Parliament of Georgia.

1 End of project

- 22 - Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Investment 2.76 3.54 1.28 Technical Assistance 1.19 1.37 0.86 Total Baseline Cost 3.95 4.91 Physical Contingencies 0.59 Price Contingencies 0.43 Total Project Costs 4.97 4.91 Total Financing Required 4.97 4.91

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 0.54 0.61 2.11 0.00 3.26 (0.49) (0.55) (1.87) (0.00) (2.91) 2. Goods 0.00 0.07 0.05 0.00 0.12 (0.00) (0.06) (0.04) (0.00) (0.10) 3. Services 0.00 0.00 0.00 1.59 1.59 Technical Assistance (0.00) (0.00) (0.00) (1.48) (1.48) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Project Preparation 0.00 0.00 0.00 0.00 0.00 Facility (PPF) (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.54 0.68 2.16 1.59 4.97 (0.49) (0.61) (1.91) (1.48) (4.49)

- 23 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Procurement Method1 Opera- Expenditure ICB Total Cost NCB International National Consulting tional Category Shopping Shopping services expenses 1. Works 0.00 0.36 0.00 2.67 0.00 0.00 3.03 (0.00) (0.28) (0.00) (2.40) (0.00) (0.00) (2.68) 2. Goods 0.00 0.00 0.12 0.08 0.00 0.00 0.20 (0.00) (0.00) (0.10) (0.07) (0.00) (0.00) (0.17) 3. Technical 0.00 0.00 0.00 0.00 1.21 0.00 1.21 assistance (0.00) (0.00) (0.00) (0.00) (1.21) (0.00) (1.21) 4. 0.00 0.00 0.00 0.00 0.00 0.47 0.47 Miscellaneous (operational expenses) (0.00) (0.00) (0.00) (0.00) (0.00) (0.42) (0.42) 5. PPF 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.35 0.12 2.76 1.21 0.47 4.91 (0.29) (0.10) (2.46) (1.21) (0.42) (4.48)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. Investment 0.00 3.19 0.35 0.00 0.0 Technical Assistance 0.00 1.29 0.08 0.00 0.0 TOTAL 0.00 4.48 0.43 0.00 0.0

- 24 - Annex 3. Economic Costs and Benefits Not Applicable.

- 25 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation October 1997 1 PROGRAM TEAM LEADER (1)

Appraisal/Negotiation December 1997 5 PROGRAM TEAM LEADER (1); SOCIAL SCIENTIST (1); FINANCIAL ANALYST (1); OPERATIONAL ANALYST (1); CULTURAL RESOURCE SPECIALIST (1)

Supervision May 1998 4 TASK TEAM LEADER (1); ARCHITECT-PLANNER (1); SOCIAL SCIENTIST (1); PUBLIC SECTOR SPECIALIST (RM) (1)

November 1998 3 TASK TEAM LEADER (1); S S ARCHITECT/PLANNER (1); ARCHITECT (1) May 1999 4 TASK TEAM LEADER (1); S S CONSULTANT/OPERATIONS ANALYST (1); PROJECT TEAM LEADER (1); ARCHITECT/URBAN PLANNER (1) September 1999 1 OPERATIONS ANALYST (1) S S December 1999 4 TASK TEAM LEADER (1); S S SECTOR MANAGER (1); FINANCIAL ANALYST (1); CONSULTANT/OPERATIONS ANALYST (1) March 2000 7 TASK TEAM LEADER (1); S S OPERATIONS ANALYST (1); URBAN MANAGEMENT SPECIALIST(1); SENIOR SANITARY ENGINEER (1); FINANCIAL ANALYST (1); FINANCIAL MANAGEMENT

- 26 - CONSULTANT (1); CULTURAL RESOURCE SPECIALIST (1) September 2000 5 TASK TEAM S S LEADER/SENIOR ARCHITECT (1); CONSULTANT/OPERATIONS ANALYST (1); PUB. SECTOR MANAGEMENT (1); FINANCIAL ANALYST (1); FINANCL MGT CONSULTANT (1) February 2001 1 TASK TEAM S S LEADER/SENIOR ARCHITECT (1) March 2002 2 TEAM LEADER, SOC. DEV. S S (1); ARCHITECT (1) May 2003 1 CULTURAL HERITAGE, CDD S S (1) ICR November 2003 3 TASK TEAM LEADER (1); S S ARCHITECT-PLANNER (1); ECONOMIST (1)

(b) Staff:

Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 16.3 45.4 Appraisal/Negotiation 9.3 38.0 Supervision 99.9 440.6 ICR 9.4 71.2 Total 134.9 595.2

- 27 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA

Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA

- 28 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU

6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU

- 29 - Annex 7. List of Supporting Documents 1. Project Appraisal Document (No. 17275-GE) 2. Development Credit Agreement (Cr. 3040-GE) 3. Operational Manual (April 25, 1998, revised and amended January 31, 2001) 3. Project Supervision Reports 4. Mission Aide Memoires

- 30 - Additional Annex 8. Evaluation Report: Fund for Preservation of Cultural Heritage of Georgia

Background

The 1990s was the most difficult period for the cultural heritage of Georgia. Cataclysms, economic crisis, and civil wars caused by the collapse of the Soviet Union largely affected ancient cultural heritage of the country. The models and mechanisms, regulating the sphere to a certain extent in the past, became obsolete. Being in the process of transition, the country failed to mobilize internal resources for this sphere. Georgia applied some new approaches to cultural heritage management. It was even before the accession of Georgia to the Council of Europe (CoE) that the decision to adopt western models and schemes for safeguarding cultural heritage had been made.

Eduard Shevardnadze, the President of Georgia, while being on an official visit in Strasbourg, requested the World Bank (WB) and the Council of Europe to render assistance to the State Programme for Cultural Heritage Preservation. He noted that this initiative would serve as a model of successful cooperation between the international institutions.

The World Bank and the Council of Europe supported this request following which a project “Cultural Heritage Initiative” was incepted. The project was funded by the WB grant. This was the first CH project funded by the WB.

The Project jointly undertaken by the Government of Georgia, the World Bank and the Council of Europe lasting for 18 months was successfully completed. It was highly evaluated by the WB and the CoE experts. The project prepared fruitful ground for the initiation of a larger project.

Acknowledging the value and potential of the country not only for stimulating national identity and social cohesion, but for developing tourism as well, the Government of Georgia requested a long-term funding for the State Program for Cultural Heritage Preservation in the form of the Learning and Innovation Loan (LIL). A new CHP was institutionally based on the former CHI functioning under the IDF grant from 1996.

On February 18, 1998, the Development Credit Agreement was signed between the Government of Georgia and the International Development Association (IDA) in Washington D.C, through which the World Bank allotted the credit of USD 4.5 million in the form of a Learning and Innovation Loan (LIL). The contribution of the Government of Georgia was USD 480,000. On May 12, 1998, the DCA was ratified by the Parliament of Georgia. This was the first LIL of the World Bank in the region and the first independent CH project of the WB.

The Project continued to collaborate with the Cultural Heritage Department of the Council of Europe. The “Specific Action Plan” for Georgia was drawn up. The basic objective of the Project was to rescue the endangered cultural heritage properties and test new approaches of management in preservation and conservation of cultural heritage. Considering the nature of the LIL, one of the most important project components dealt with the promotion of changes relevant to the emerging market economy. The changes refer to the institutional framework, fund-raising, mentality, public responsibility, stimulation of private investments, etc.

- 31 - The period of the implementation of the Project supported by the LIL with the amount of USD 4.5 million loan initially was 3 years (1998-2001). The Government of Georgia and the World Bank agreed to extend the Project until the end of the year 2003. Under the Presidential Decree #377, the Fund for the Preservation of Cultural Heritage of Georgia is responsible for the Project implementation.

Project Design

The Cultural Heritage Project consisted of the two main components: (a) investment component and (b) technical assistance component.

Investment Component

Emergency Repair Program (ERP)

The ERP aimed at safeguarding endangered cultural heritage properties and covering various areas of cultural heritage all over Georgia appeared to be one of the most effective and visible programs of the Project. It had nation-wide effect, which is attested by a big number of the applications (113) submitted in 4 competitions. In all, the ERP supported 58 projects. This form of investment proved to be most effective and popular. It was a demand-driven and competition-based program. Project proposals submitted to the program were evaluated and selected against special criteria, by the Georgian Culture Revival Board comprised of 52 members and chaired by the President of Georgia. Management of the selected projects (selection of contractors through tenders, supervision, evaluation) was undertaken by the Fund. This program was financed as grant. For the purposes of the ERP, four main (3 in PAD) and two additional project competitions were held.

I. Competition was held in 1999 January - 6 project proposals were selected II. Competition was held in 1999 July - 14 project proposals were selected III. Competition was held in 2000 June - 12 project proposals were selected IV. Competition was held in 2000 December - 12 project proposals were selected V. Additional competition was held in 2000 November - 5 project proposals were selected VI. Additional competition was held in 2001 September - 5 project proposals were selected

The selected projects were approved under the Presidential Orders (#988 dated September 12,2000, #1326 dated December 12, 2000 and #932 dated September 11, 2001).

Four of the short-listed projects were split up into two separate projects based on their proposed objectives (e.g. conservation of the architecture and the mural paintings of the same church, construction works and purchase of goods for the same beneficiary, etc.)

Out of the 58 projects implemented under ERP (14 in PAD), 33 projects addressed conservation of architecture; 5 - of mural paintings, 3 projects dealt with archaeology, 4 projects were related to folk music and 13 projects implied support to archives and collections and improvement of their storage conditions.

Twenty-four projects were completed on schedule and on budget; 7 projects were completed on schedule; with additional funding (contingencies envisaged in the ERP total budget); 16 projects were completed on budget, but with extension;11 projects were completed with additional funding and extension. Each change of schedule or budget was based on the supervisor’s rapport, discussed by the Technical Group and special confirmation of the FD.

- 32 - ERP proved to be very popular national-wide, as the sub-projects were implemented almost in every region of Georgia; besides, the population around the sites participated in the physical works and thus the program had positive social-economical effect.

Four Pilot Projects

Another component of the Project dealt with the four pilot projects: Old Tbilisi (the Zemo Kala District), Shatili, Sighnaghi and Uplistikhe. These projects envisaged restoration/rehabilitation of pilot sites and setting grounds for their sustainable development. The projects were divided into 2 phases: phase 1 included small emergency works while phase 2 was aimed at the development of project concepts and implementation of works on their basis. The World Bank covered eighty percent of the costs associated with the pilot projects, while twenty percent was provided by the Government of Georgia. The civil works carried out under the "Small Repair Works Program" (the so-called” Neighborhood Fund”) were fully financed by the World Bank.

The Tbilisi Pilot Project supported 14 sub-projects, the Signaghi Pilot Project – 9 sub-projects, the Shatili Pilot Project – 3 sub-projects and the Uplistikhe - 3 sub-projects. Apart from this, Tbilisi and Sighnaghi benefited from the program of the “Neighborhood Fund”.

The Sustainable Development Concepts, elaborated for each of the pilot projects by specially hired consultants, which also served as a Site Management Plans and provided basis for actual conservation works in second phases, were very important for the planning and implementation of the activities on this sites. The Concepts addressed diverse aspects, such as site history, environmental analyses, assessment of present condition, identification of problems and priorities, selection of most endangered areas, recommendations for site interventions, tourism development, economic assessment, recommendations for maintenance, and cost estimates.

The programs of Pilot Sites were based on social surveys and involved community participation.

Within the framework of the Pilot Projects, mainly architectural sub-projects were implemented. However, they also included infrastructure improvement activities, improving of preservation conditions in museums, and development of tourist infrastructure, etc.

As a result of these projects, the environment surrounding the sites was significantly improved and this, on its own, resulted in increase of the interest from the private investors and tourist agencies. The local community also revealed increased interest in safeguarding their cultural resources.

Technical Assistance

Institutional Building, Capacity Building, Training, Study Tours

Legislation. The Fund for Culture made a significant contribution to the institutional building in the cultural heritage sphere through the improvement of the cultural heritage legislation. Fund for Culture experts took an active part in drafting the Law “On Cultural Heritage Protection” and facilitated its adoption by the Parliament of Georgia. This law, which regulates institutional arrangements in the cultural heritage sphere, promoted needed reforms. In addition, the Fund for Culture experts drafted several other important laws relating to cultural heritage, such as the laws “On Export and Import of Cultural Properties”(adopted on June 22, 2001), “On Museums” (adopted on June 22, 2001), “On Archaeology,”

- 33 - “On Sponsorship and Charity in the Sphere of Culture,” “On Territorial-Spatial Construction - Urban Planning,” and “On the Amendments to the Law on Cultural Heritage Protection.”

Of special note is the draft Law on "Sponsorship and Charity in the Sphere of Culture" providing for tax incentives to engender greater involvement of the private sector in cultural heritage activities. If adopted, this Law will promote serious developments in this area.

During the elaboration of the above-mentioned laws, the Fund's experts studied the experience of the European legislation through the Technical Assistance extended by the CoE.

These laws facilitated significant reforms in institutional building relating to cultural heritage preservation.

Capacity Building

The Fund was strengthened in every aspect of its activities. The staff developed its professional skills through improving knowledge of World Bank guidelines, regulations, and procurement procedures; and gained profound experience in preparing tender documentation and Terms of References, as well as in conducting tenders. If the initial stage of the implementation (submission of the project proposals, tendering etc) took more time than expected owing to the lack of knowledge of World Bank procurement guidelines, the process was facilitated beginning from Spring 1999. The Fund specialists succeeded in attracting the best specialists in the field to carry out Project activities.

Special training program aimed at capacity building in tourism sector, and addressing economic assessment, planning, fund raising, etc was elaborated and submitted to the World Bank, but was not supported. Instead, due to lack of time and urgent need for elaborating mechanisms for sustainability, it was decided to organize a study tour to the United Kingdom. It is noteworthy that the Monument Protection Department also participated in and benefited from this tour.

Study tours to Lisbon and Strasbourg, undertaken by the Fund’s experts working on the issues related to Old Town rehabilitation, were supported by the CoE. The representatives of the Ministry of Culture also participated in these study tours.

Training courses were conducted aimed at the capacity building of the PIU, namely on General Management, Procurement, Monitoring, the English language, computer skills, GIS, SPSS,, PageMaker, and Community Participation.

The Fund for Culture provided technical assistance to specialists from different institutions in areas such as conducting tenders and procurement procedures, as well as in the application of GIS, creation of thematic maps, engineering assessment of the culturally important structures, and conducting inventories.

The Fund for Culture provided training to the specialists of the Institute of Manuscripts in managing the climatic equipment installed under the ERP sub-project aimed at the improvement of storage conditions for the rich manuscript collection.

Local authorities and communities also benefited from the project-financed training in cultural heritage preservation issues, planning of the conservation activities, and preparing project proposals.

The Fund for Culture also provided technical assistance to the representatives of the recently established World Bank-financed Cultural Heritage Project Implementation Units (PIUs) in Rumania, Armenia, and

- 34 - Azerbaijan. Their representatives visited Tbilisi and received advice and recommendations from Fund for Culture experts, who shared their own experience with the foreign counterparts.

Public Awareness

The Fund for Culture carried out numerous activities to raise public awareness of cultural heritage through the mass-media. For example, articles were published and TV shots were produced and televised as social advertisements on leading Georgian TV channels. The Fund for Culture regularly published information on its activities to ensure maximum transparency of its operation. Articles regarding various cultural heritage preservation issues and monuments were also published. Series of programs on the history of Georgian culture (educational program) was broadcasted by the State Radio Broadcasting Company. The Fund for Culture also commissioned six video-films. . A bilingual booklet, English- and Georgian-language journals and a newsletter Sarkmeli (insertion to the daily newspaper Dilis Gazeti) were published.

The Fund for Culture website was developed (www.culturalheritage.ge).

On November 16, 2002 the Fund for Culture arranged an exhibition in the State Museum of Fine Arts of Georgia to present the work carried out under its projects. Mr. Shevardnadze, the President of Georgia, as well as the members of the Government, the Parliament, relevant organizations, scholarly institutions and community groups attended the presentation and gave a high opinion to the work carried out by the Fund for Culture.

Several ERP sub-projects served similar purposes, e.g. the “National Folk Musical Instruments Data bank” CDs were produced and are on sale; CD-s made within the frames of “Golden Fund of Georgian Radio” were used by the Television and Radio broadcasting, the materials of the sub-project “Aralo- authentic Georgian folk songs”.

Video-clips, designed and commissioned by the Fund, have been broadcasted on Channel 1 of the State Television Broadcasting Company.

Arrangement of festivals, concerts, art competitions, educational program for schools etc envisaged in PAD was not possible due to small funds allocated for the PA component.

In collaboration with ICOMOS Georgia and the Monument Protection Department, the Fund for Culture launched a public awareness campaign (exhibitions, conferences, articles in media etc.) aiming at prevention of illegal constructions in old Tbilisi and at mobilizing communities for this purpose. The results of this campaign are already visible.

An exhibition demonstrating the outcomes of the survey carried out by the Fund for Culture in the Kala District was held in the building of the Embassy of Belgium in Strasbourg. The Fund for Culture arranged several exhibitions on Georgian monuments (Mtskheta, Jerusalem, Tbilisi – old town problems).

As a result of the Fund’s activities, numerous articles on cultural heritage in the Georgian press and TV channels increased as well.

- 35 - MIS and Monitoring

MIS and Monitoring system was elaborated by a World Bank-financed consultant and carried out by Fund for Culture experts. It must be noted that some of the monitoring indicators given in the PAD appeared to be inadequate to the Project activities, and therefore were late revised in collaboration with the Project Team. In the course of Project implementation, it appeared that the proposed MIS system was not flexible enough and may be amended for more efficient use. In the future, the M&E system as well as the key performance indicators and log-frame will need to be more carefully designed.

Community Participation

One of the main objectives of the Cultural Heritage Project was to increase community involvement in cultural heritage activities.

The Fund for Culture set up local Cultural Heritage Committees in Old Tbilisi, Shatili, Sighnaghi, and Uplistsikhe. During the meetings, the Fund for Culture experts trained the members of the committees in different issues related to cultural heritage preservation, and highlighted the importance of involving communities in planning, decision-making, and implementation processes.

It must be mentioned that the Georgian people have always cared for their cultural heritage which they view as an essential part of their life. Their interest in their heritage has never faded, as confirmed by the social surveys carried out by the Fund for Culture.

Although the public’s attitude toward and interest in cultural heritage has not faded in the last ten years, the economic situation in the country has changed. Thus, the Government fails to provide for the management of cultural heritage preservation, and communities living in very poor economic conditions are unable to provide even smallest funds. Even private owners of the historic properties cannot afford their maintenance, although the Law obliges them to do so. In many cases, these property owners are forced to sell their properties.

In the last three years of the Fund for Culture’s operation, local communities revealed a distinct interest in and eagerness towards the Project and participated both in planning and implementation processes.

Among the 126 applications submitted to the ERP, 46 were submitted by local communities (including religious groups) and NGOs. They undertook the labor of finding the consultants to fill in the application form and then indicate the scope of work and budget.

There were many instances when local communities helped contractors by assisting in constructing scaffoldings, cleaning construction areas, and providing food to workers, etc. In the village of Azmana where the ERP Project was implemented (ERP- 4-01), the local community consisting of different ethnic groups (Armenians, Georgians) helped the constructors in every possible way. They volunteered to participate in construction works and archeological excavations, supplied construction workers with materials and food; and remained interested in the completed works. Their activity was determined on the basis of two factors: (a) they care for the cultural heritage general, and (b) they hope that the restored sites will attract more visitors and hence, improve their economic condition. The local community undertook the task of the maintaining the site in the future.

Local communities also carried out similar activities at several other sites, including: Urbnisi, Kintsvisi, Chajashi, Nikozi, Tigva, Zugdidi, Gelati, Mravaldzali, Sighnaghi, and Shatili. In Racha, the mountain

- 36 - region of West Georgia, the local community set up a private society "Mravaldzali" aiming at raising funds for continuing the restoration works on Mravaldzali church after the Fund finishes the ERP Project. The society works in close relation with the Fund.

In the region of South Ossetia the community of the village Ikorta, both Ossetians and Georgians, submitted the application to ERP and addressed the Fund with a joint letter requesting financing for the conservation works of the church, as it is the mutual worship place for all of them. They promised to take care of this CH resource together. During the implementation of this project, the entire community of Ossetians and Georgians actively participated side by side in the construction works.

At the four Pilot Sites, the local Committees have been set up to participate in elaboration of the programs, decision making, and supervision. Local Committees in Tbilisi and Sighnaghi participated in preparation and performance of the “Neighborhood Funds.”

The Shatili community was particularly active. They participated in every stage of project development and elaboration of the Site Management Plan (Shatili sustainability Concept); took part in construction works both for salary and free of charge, and participated in carrying out the social investigation in Shatili (most of the owners of the towers live in Shatili only for short time, so the community group found these people, delivered the questionnaires, etc.). The Committee participated in elaboration of the Museum program in Shatili, provided items of old furniture and fittings. Due to the Fund's activities, the community arranged several guest-houses. They are now setting up a “Coordination committee” for coordination of the tourist visits to Shatili. They raised funds for constructing a bridge, for rehabilitation of school and hydro power station; elaborate program for folk crafts.

The Sighnaghi Local Committee participated in short-listing the historic houses for the "Neighborhood Fund" program; helped the fund Social assessment group in carrying out the explanatory work among the residents and delivering the questionnaires. They also participated in elaboration of the II phase work program and supervision of these works. Sighnaghi community participated actively in the Small Grant Program “Scaling up Community Driven Development” and in elaboration of the Action Plan; carried out small scaled activities envisaging tourism development: compiling of itineraries, preparation of tourist booklets, setting up guest house association etc.; At present the group participates in setting up of Tourist Information Center. Several NGO-s were founded that participate in above mentioned activities. The Fund stimulated the local people to arrange the bad and breakfast hotels in their dwellings.

Special interest has been granted to Old Tbilisi Zemo Kala district. Community of this area is multi-ethical, multicultural, heterogeneous; Besides, most of the population lives in bad economical conditions and this causes conflicts and tensions. The Fund have made considerable efforts to mobilize community in the areas of implementation of sub-projects; several sociological investigations were carried out; numerous meetings conducted with representatives of community in order to explain the goals of the Projects, benefits of community, their responsibilities, their involvement in decision-making process, etc. Tbilisi local CH Committee was rather active at the initial stages, especially during the elaboration of the II phase program. But afterwards several most active members moved to other districts and the activity of the Committee reduced. Although during elaboration of the Erekle Street 8/10 caravanserai program local dwellers were involved and special meetings held with them aiming at their participation and support of this project.

During the five years of the Fund's activities, its reputation and image among community of Old Tbilisi significantly improved. More than 100 persons applied to the Fund with different proposals concerning particular CH resources and asked for the recommendations on who to contact for possible financing or consultations, etc. This clearly indicates, that the Fund's activities have a response in community and

- 37 - causes increase of the private initiatives and responsibility.

In its activities the Fund always stressed the importance and the role of local community and tries to explain to people, that the safeguarding of their national CH is in their hands and on their responsibility. For this sake, the Fund elaborated Recommendations for the Local CH Committees, that can help them to identify the objectives, elaborate the site management plans, find the means and ways for CH preservation in their regions, cities, villages.

The Social Assessment carried out by Fund specialists revealed that due to the Fund activities the attitude of the Community on the Pilot Sites underwent significant change, resulting in increase of the interest towards CH and realizing the value of their own property, as well as arising the trust in Government care and support and in foreign investments. This change of mentality is very important. Although the present economical situation does not allow the people to participate in the restoration activities by financial contribution (only in kind -labor, feeding the workers etc), they nevertheless gained the feeling of their own importance in demanding, making decision, monitoring the process and of their responsibility as well. The experience gained by SA group in establishing the questionnaires and the assessment criteria for the CH preservation sphere will be valuable for future planning of such projects.

Partnerships

In course of the Project implementation the Fund established partnerships with different institutions, Governmental bodies, community groups, NGO-s, local authorities, international and local donor organizations (See Fund raising). They include: the State Chancellery, the Parliamentary Sub-Committee on Cultural Heritage Protection, the Parliamentary Commission on Tbilisi Issues, the Ministry of Finance, the Ministry of Culture, the Municipality of Tbilisi, the Monument Protection Department, the Patriarchy of Georgia, UNESCO Georgian office, Georgian ICOMOS, Open Society - Georgia Foundation (Soros Foundation), scientific-research institutes, museums, and NGOs working in the sphere of culture.

The Fund has a very active collaboration with the Council of Europe. CoE participated with Special Action Plan for Georgia form very start of the Project, already during the IDF grant. The Fund became a junction point for the WB and CoE in the CH sphere (E. Shevardnadze, President of Georgia, pointed out this in his speech in Strasbourg in 1999). Co provided Technical Assistance in legislation, CH resources Inventory, Old Town Rehabilitation Strategy, arrangement of study tours. These spared significant finances for the Project and strengthened capacity of the Fund’s experts.

Most active and close partnership was established with the Monument Protection Department of the Ministry of Culture.

The Parliament of Georgia – CH Sub-Committee was actively involved in the Fund’s work, organized several Parliament meetings on different issues of the Project, participated in the work of the Board of Trusties and Board of Experts of the Project.

Ministry of Finances is one of our main partners. The Project had many problems in receiving counterpart financing, although the Ministry declares its support for the CH Project and all activities in this field.

Less efficient was the collaboration with the State Tourist Department, although the Head of the Department was a member of the Board of Trusties and the Georgian Culture Revival Board.

- 38 - Close partnership was established with the Tbilisi Municipality and its relevant departments (e.g. Chief Architect’s Office, Municipal Services, etc). In response to the Fund’s demand, the Municipality allocated funds for Tbilisi pilot project sub-projects. Although the Municipality showed eager interest in Project activities, it often failed to allocate money on schedule.

Contacts were established with the Georgian Patriarchy as most of the sites under the ERP are in church ownership and the Fund coordinates its activities the Patriarchy.

The Fund has been actively participating in the events and meetings related to the cultural heritage protection (meetings organized by the Commission on Old Tbilisi Issues at the Parliament of Georgia, ICROM seminar in Rome, ICOMOS seminars in Tbilisi on various issues of CH Preservation; conference on cultural heritage legislation and conservation in Thessaloniki, seminar on cultural heritage protection issues in Netherlands; seminar on city planning issues held by the German Development Agency; scientific session of the Monument Protection Department, UNESCO work-shop on listing the CH resources; work=shops of Ministry of Culture and CoE dedicated to the development of Cultural Politics in Georgia etc.

Efficient collaboration developed between the Fund and Sighnaghi municipality and local Government – both phases of the Sighnaghi Pilot Project were elaborated with their active participation. They provided support for the Fund’s activities in Sighnaghi.

Partnership was established with MDF in the frames of the Tbilisi Pilot Project (rehabilitation of the underground infrastructure facilities) and SIF (rehabilitation of hydroelectric power station in Shatili).

The Fund’s experts participated in works of the scientific board of the Monument Protection Department, State CH Board, Scientific Board for architecture and art restoration of Georgian Patriarchy, of Institute of Georgian art History. Several staff members, after completing their contracts with the Fund started to work in The Monument Protection department, thus sharing experience gained during the Project and strengthening capacity of this institutions.

Tourism Development

Implementation of the CH Project stimulated certain activities related to tourism development.

Among other activities, the Shatili Pilot Project envisaged opening of a local ethnographic museum to provide visitors with comprehensive information about the site; setting up folk hotels in 4 towers

Implementation of the Project resulted in Sighnaghi in increase of number of visitors and engendered arrangement of the folk hotels. Opening of a visitors' center in Sighnaghi under TCTI will facilitate the inclusion of Sighnaghi into tourist itineraries and assist in establishing contacts with tour agencies. As a follow-up of the CH Project was implementation of the Small grant program “Scaling up Community Driven Development in Sighnaghi.”

In Uplistsikhe, the Fund financed infrastructure improvement works, namely, construction of the visitor's center and installation of an access iron bridge for visitors.

The Fund elaborated and implemented the program envisaging the production and placement of new types of road signs to facilitate visitors' access to the cultural heritage sites.

- 39 - In results of Fund’s activities the areas of Old Tbilisi became more attractive for tourists and tourism related activities.

Old Town Master Plan

Old Tbilisi Revitalization Strategy. The Fund elaborated documents considering the methods and strategies of revitalization of the old city, which have been approved and recognized as guiding documents by all relevant bodies and organizations. These documents are based on the special researches and provide a model for elaboration of the rehabilitation strategy for old towns. CoE provided technical assistance for the research works. Usage of GIS for elaboration of the strategy is an advantage of these documents. Several relevant institutions have applied to Fund for using these documents in their work (e.g. for development of the Master Plan of Tbilisi, Sighnaghi).

In result of these work special model for planning the rehabilitation works in the Old Town have been established. The material gathered for it can serve as a basis for different planning and practical activities in Old Tbilisi.

Underground Waters

Funds were raised from the Dutch Trust Fund aiming at elaboration of the Project for rehabilitation of the underground water System in Zemo-Kala. The research works were conducted by joint Dutch-Georgian group and results are given in the Document, that provides assessment of this most important problem, recommendations, scope of work, cost. This documents was used by MDF while designing works in Old Tbilisi and still provides precious information for solving this problem, that causes damage to the houses in Old Tbilisi.

Fundraising

The Fund made effort to raise funds from international and local investment companies and donors:

(a) In 1998, funds were raised from a Dutch Trust Fund to finance emergency works in the cave complex of Vardzia. (b) During 1998-1999, a grant was obtained from a Dutch trust-fund to finance monitoring of (c) underground water level in Zemo Kala (Old Tbilisi). (d) The Council of Europe provided financial and technical assistance through its Special Action Plan for Georgia in the period from the year 1998 to 2000 for drafting laws in the field of cultural heritage. The project was implemented under the coordination of the Fund and with the participation of the Parliament, the Ministry of Culture, the Center of Archaeology Studies and other bodies concerned. (e) Grants were obtained in 1999 and in 2000 from the Council of Europe for making inventory of buildings located in the district of Zemo Kala (Old Tbilisi). (f) The document "Rehabilitation Policy for Old Tbilisi" was elaborated under the Administrative Arrangement between the Council of Europe and the Fund concluded on July 5, 2001. It was published with the financial support of the Council of Europe. (g) The Open Society - Georgia Foundation (Soros Foundation) provided funds for a photo exhibition dedicated to the cultural heritage of Georgia, which was held in Washington DC; also, for a research expedition to Javakheti, conservation of wall paintings of Skhalta Church and structural reinforcement of Kintsvisi Church). (h) The Trust Fund of the Italian Government contributed funds for the emergency conservation of the

- 40 - 13th century wall paintings of St. Nicholas' Church at Kintsvisi: the grant covered the costs of conservation materials, consultancy services of two Italian restorers and elaboration of a design by an Italian climatologist for reducing humidity in the building). (i) The International Oil Corporation financed a survey of the Church of the Forty Martyrs in Tbilisi. (j) "Kartu Bank" allotted funds for purchase and installation of the equipment in the Kekelidze Institute of Manuscripts. (k) NGO "Mravaldzali" supported phase 2 restoration works on St. George's Church at Mravaldzali. (l) The New Georgian Fund (founded by: TBC-Bank, Aldagi, Martin Bauer, United Georgian Bank, GWS, Georgian Trans Expedition) co-financed restoration of St. Nino's Church in Poka. (m) "Magti-Group" financed an engineering-geological survey of Khirsa Church (Sighnaghi Region) and a survey of archaeological materials discovered in Poti by the Archaeological Center of the Academy of Sciences of Georgia. (n) Private sponsor purchased two UPSs for the State Museum of Fine Arts of Georgia. (o) The Tbilisi Municipality provides counterpart funding for the restoration of historic houses on Erekle II Street, Rkinis Rigi, Bambis Rigi, Sioni Streets. (Tbilisi Pilot Project). (p) A private sponsor financed a survey of cultural heritage monuments found in the surroundings of the Tsalka Reservoir. (q) A private sponsor financed archaeological excavations in the surroundings of Antiokia Church in Mtskheta. (r) A private sponsor supported the visit of the Fund Director to Istanbul, Turkey, the objective of which was to study the state of assets of Georgia’s cultural heritage located in the depository of a Georgian Catholic church. (s) The Fund “Gamarjveba” financed the participation of the Deputy Fund Director in a research expedition to the Holly Land, Israel, aimed at the study of monuments of cultural heritage of Georgia located there.

In total, during the four years of Fund’s activities, 378 000 USD was raised from additional sources.

Social Impact

The Fund’s activities had an important social impact. More then 500 specialists were given an opportunity to work in their spheres of specialization after a long interval of unemployment. More then 1800 people were employed in the implementation of the sub-projects. Through its activities, the Fund instigated creation of 37 independent construction companies.

Several hundreds of people in almost all regions of Georgia, where the projects supported by the Fund were implemented, indirectly benefited from the Project by attracting a spend from business trips and selling of construction materials.

Implementation of the “Neighborhood Fund” program in Tbilisi and Sighnaghi also had a social impact as a support for the dwellers of the listed houses who have no economic possibility to maintain there dwellings properly.

Lessons Learned

Experience gained innovations, impacts, improvements

Considering the nature of the LIL introduction and stimulation of amendments responding to the market economy in the sphere of management of the CH of Georgia is a very important aspect of Fund's activities

- 41 - along with the practical implementation of the conservation-restoration projects.. The changes refer to institutional building, capacity building, fund-raising, change of mentality and self cognition and strengthening public responsibility and engendering private initiatives.

The achievement of these objectives is strongly dependant on the development of the market-based economy, the private sector, legislative bases, bank system, tourism industry, reducing of poverty etc., that are independent from Fund's activities.

Improvement of the legislation is one of the most serious output of the CH Project.

The important result of the Fund activities is introducing and instilling new modus operendi in the sphere of CH preservation, namely the tender based selection, which was not current in USSR. Most of the specialists and related organization adopted this mode of work. The Fund inspired foundation of new, independent NGO-s and construction firms.

Important experience has been gained in working with community groups. It showed that to overcome the Soviet mentality i.e. lack of initiative and sense of responsibility ,is not easy task. The community groups demand systematic ‘stirring up” and tend to wait for instructions. But proper methodology of community participation ensures positive results, as e.g. in Shatili and Sighnaghi.. It would give better results in case of more funding and time.

Significant work was carried out while elaborating the "Revolving Funds Program" that can serve as a tool for sustainable activities in conservation-rehabilitation of the old town districts. The program is based on the so called "Lisbon experience" and if becoming operational, will solve many problems in the old town preservation field. The program is based on the public-private partnership and private investments and credit lines (mortgage loans). The Fund can't start the program itself, as the character of the LIL doesn't permit activities related to credits, revenue etc., besides, the program needs initial funding, approximately 1 800 000 USD, that is not available in our budget. But anyway, the elaboration of this mechanism is an important achievement in this field.

In regard to Old Tbilisi problems, the work carried out by "Tbilisi Group" is very important. Based on the research and inventory works (including the thematic maps created in GIS), the group prepared two important documents: " Kala - strategy for rehabilitation of the district" and "Main issues of urban rehabilitation of Tbilisi" (published in 2002), that are admitted as methodical guidelines for the rehabilitation and urban planning in the old districts of Tbilisi. The method of application of the GIS for creating the thematic maps based on inventories and scientific researches, is an important innovation in the Georgian CH preservation.

The Fund’s experts offered the Parliament to make amendment to the taxation regulation in regard with the CH; namely, to reduce amount of taxes for restoration works (they are very expensive all by themselves; and taxing takes nearly more thatn one third of the allocated funds); besides, we offered to make clear distinction in taxing restoration works in the Old Town (the taxes must be very low) and the new construction in same districts (that must be significantly high); this would stimulate private investors to prefer restoration of the old houses instead of destructing them and building new concrete structures.

Fund’s Technical Group elaborated methods and mechanisms for prompt assessment of the structural-engineering condition of the CH resources and elaboration of the relevant cost-estimations. Fund’s expert strengthened their capacity in assessment of underground water problems, in monitoring and planning relevant activities.

- 42 - Due to the Fund's activities, the interest of the media in CH increased. In comparison with 1998, the number of articles and TV broadcasts related to the CH increased considerably.

Important result is introducing the new mechanism of tender selection - procurement procedures - in this field and accustom the relevant organizations and specialists to these rules and regulations. On initial stages of Fund's activities there were many problems with explaining these rules to the applicants, beneficiaries, contractors.

The contractors, used to the Soviet methods of work, were trained by Fund in the new mechanism of procurement, submitting the withdrawal applications, realistic planning of implementation time, elaboration of the projects etc.

The beneficiaries learned how to prepare project-proposals, single out the essential issues, assess the risk-factors etc.

The Fund's activities caused disintegration of the soviet monopolistic system in CH protection field. 35 new building companies were established that participate in the tenders announced by the Fund.

The Fund introduced in the CH preservation sphere the issue of community based planning, of performing the social investigations and social evaluation of the performed activities.

Sustainable Development Concepts. For the four pilot sites, the sustainable development concepts (Site Management Plans) have been elaborated by the special consulting firms. The objective was to prepare a base for the II phase works on these sites, but the concepts exceed these needs and can serve as a base for further activities on these sites, to lay down a conceptual framework for the preservation and protection of these sites. These concepts provide bases for corrects and efficient management of Old Town CH. This two-phase approach, which was not envisaged in the initial design of the Project, proved to be very efficient

In the course of implementation of the ERP sub-projects certain new technologies have been elaborated and tested. E.g., production of the special ceramic tiles for the roofing, including the glazed tiles, based on the study of the old technologies; the new hydrophobic material Boxan (German production) was tested for the stone conservation in Dzalisa, Vani and Gonio-Aphsaros and found appropriate for these needs; the biocide Metatin has been tested in Kintsvisi for the treatment of the results of micro-organism attacks, causing the damage of the painting layers.

All these new methods and materials may be used on other monuments and serve as an important tool in the conservation practice.

It must be noted that in cases of application of these new materials and methodologies, thorough testing has been carried out in independent bodies and laboratories to be sure of the results of their application.

The Fund engendered the creation of the computer data bases and information banks in different fields of CH.

Along with the works aiming at safeguarding - conservation-restoration - of the CH resources, implemented under ERP and 4 Pilot Projects, the significant improvement of the archives and depositories has been carried out through arranging the climatic equipment and creating the computer information banks.

- 43 - The Neighborhood Fund program proved to be socially effective, but post factum it seems it would have been better if whole money was spent only on one large problem (e.g. roofs) instead of dispersing on many different trifles. The unsolved problem of underground water and hence the basements, still make any works in this part of Tbilisi less effective.

In frames of the “Neighborhood Fund” program small repairs of different types were implemented on 36 listed buildings in Zemo Kala, Old Tbilisi (Total of 41 applications were accepted. In all, 7690 m2 of tin roofing was replaced; 13470 m2 of facades and balconies were painted; 25002 of wood was placed under tin roofing; 115 m2 of doors and windows were replaced and 127m2 of flooring was laid.) and 37 buildings in Sighnaghi. (Total of 43 applications were accepted. Works are finished. In all 4430 m2 of tin roofing was replaced, 1010 m2 of tiling was reset, 1205 m2 of facades and balconies were painted; 2740m2 of wood was placed under tin roofing, 137m2 of doors and windows were replaced and 1140m2 of flooring was laid).

Weak Points and Problems

The appraisal period of the Project was very short (from mid December 1997 until mid-January 1998) and thereafter. Already during the implementation period, many amendments had to be made (in programs, in budget, in staffing etc) that, taking to consideration the short duration of the Project (that is, three years) caused many difficulties for the Fund because many things had to be changed during the implementation. Several changes of the Task manager and WB team also caused difficulties in the Fund activities. although for last three years the previous Task Manager (E. Peterson) and the most recent one (J. Bernstein) worked in close collaboration, and this had a positive effect.

In the future, it would be better to allocate more time and funds for the preparation period to avoid having to make changes in the initial program.

Initially the social-economic development of the country was assessed too optimistic, and this occurred to be unrealistic and this caused the fact that involvement of the private sector was less than envisaged or desired.

The initial design of the project was too versatile - comprises too much diverse activities (with restricted budget and within short time). Probably it would be better to concentrate on one main activity (e.g. ERP) and subdue everything to it. The results would be more visible and effective.

Start of the Project took more time that envisaged, as the PIU itself and the contractors and partners especially had to get aquatinted with the WB regulations (especially that of Procurement), tender procedures; initial program given in PAD had to be revised as well as budget etc.

During the implementation of the Civil works there arouse certain problems. There was limited number of firms or organizations in CH restoration. Especially multidisciplinary. This concerns mostly the highly specialized fields (painting restorers, chemists, stone restorers etc). This problem can't be solved in short time, even in several years, as far as there must be social demand for these specializations. The Project activities stimulated this process and engendered foundation of independent firms and companies.

In regard with the timing, the excessively time-consuming procurement procedures also affected the time (speed) of implementation. Taking into consideration that the restoration works are mostly tightly linked with seasons (best time late spring - summer - early autumn), the procurement procedures sometimes hinder

- 44 - appropriate beginning of implementation. Concerning the ERP architectural projects: most of them were already completed ( at least in main) and approved by the scientific board of the Monument Preservation Department. So there existed the group of authors. It was necessary to finalize the working design and to recruit the supervisors. The sums for these designing-supervision contracts were small enough (ranging from $1000 to$10 000). Due to the small amount of money and on the emergency character of the works it would have been more appropriate to make a direct contract with the group of authors, particularly because their work was approved by the Main Board and being the authors of the project, they have more knowledge and experience of the monument, than anybody else. But as in the Credit Agreement, direct contracts were not envisaged, it occurred to be impossible and caused the significant loss of time. After long negotiations with the WB, we were allowed to hire the consultants for supervision (authors of design) through direct contacts.

During the initial stages of project implementation, there was one issue with regard to hiring the consultants. According to the Credit agreement, hiring of consultants must be done by QCBS method. The CQ and LC are also permissible, but only for the C part of the Project (TA). Up to now the sums of the contracts for the consulting firms, concluded by the Fund, are very small, the number of contracts is big. Hence applying of the QCBS to this small contracts is very inconvenient. the firms were hired by QCBS method (only several firms in ERP were hired by CQ based on the WB no objection ). Based on all these. applying CQ method for hiring firms for small tasks solves the problem. This problem was solved with the help of the Bank Team.

There was still one problem: under ERP, the cost estimates in the project applications were given in dollars, but the contracts are concluded in Lari. It would be better if we indicated the currency for the moment of concluding the contract. It would spare the loss of money for contractors, as far as the Georgian currency is not stable. The contractors were displeased with this (sometimes from signing contract till last disbursement passes enough time and the currency changes significantly). The delay in receiving of No Objections from the World Bank also hindered in a way timely implementation of sub-projects.

Decision made by the World Bank and GoG that evaluation and selection of the project proposals under ERP should be made by the Georgian Revisal Board and not the Fund itself, caused significant delay in implementation of the projects. The Fund had enough capacity and skills to make selection on his own and to undertake responsibility for the decision. On the other hand, this ensured wide community support and involvement in the ERP activities.

Due to the character of LIL it was impossible to make operational “credit lines” or a “revolving funds program” etc, that could ensure sustainability of the Fund.

There were many complications in the work due to lack of experience of PIU during the appraisal of the Project and due to the speeding the appraisal on the behalf of the WB. and certainly due to the present economical and political situation in Georgia.

In the Neighborhood Fund program, if the grant amount for each family were larger, the social effect would be greater. (Small sums dispersed on many small problems do not solve essential problems).

Initially it was not envisaged the time and funds for designing the sub-projects; it was not taken to consideration that the Procurement guidelines do not match well in the rules of restoration work, are not flexible enough.

In case of Old Towns the WB rules that prevented implementing works for private possession caused

- 45 - problems, as most of the buildings in selected areas are private dwellings. The idea was that the Projects finances the exterior works and the private owners- interior. But due to the poor economic condition of the people, this was hardly achievable. The works implemented by the Fund certainly had positive effect in regard with improvement of the condition and architectural image of the buildings, but it would have better effect if there was possibility to rehabilitate these buildings in whole. Neither in Old Tbilisi, nor in Sighnaghi the population could provide counterpart funding.

Taking to consideration the short term of the Project and the present situation in Georgia in whole, it seems unrealistic to state as one of the main goals of the Project the development of tourism, development of new fee collecting and cost recovering systems and methods for monuments and their testing on four of the pilot sites and some others, which hardly can be achieved in such short time. They must not serve as the indicators for evaluating the fund activities. A number of items of the original program appeared unrealistic

Economic assessment. It was envisaged in PAD that training would be provided for Georgian specialist in economic assessment on Pilot sites. This was not done, but the “Site Management Plans” for 4 Pilot Projects considered economic issues among others.

With regard to fee collection mechanisms, the issue is considered in the Sustainable Development Concepts for Pilot sites. Beside, the Fund’s experts elaborated a document dealing with main problems in this regard, e.g. different types of monuments, amount of entree fee etc. several recommendations are given in regard of the different possibilities of cost recovery mechanisms on different sites. These are mostly theoretical considerations, based on experience of our experts but without conducting special economic and cost-benefit surveys. As far as to test new methods and mechanisms demand special decisions and permissions of different relevant institutions and changes in Tax policy, there was not possibility to carry out this work.

One big problem was the Georgian counterpart financing, that was often delayed and this in turn resulted in delay in sub-project’s disbursement and implementation.

Obstacles

Ø The rate of the growth of tourism does not correspond to the originally planned level owing to the political and economic condition in the country, which impedes the generation of income from this sector, while this was assumed to be one of the outcomes of the Project;

Ø Owing to the poor economic condition, the local communities appeared unable to provide financial contribution to the preservation of cultural heritage despite their great desire to do so, while their financial involvement was originally envisaged under the Project;

Ø The law on "Sponsorship and Charity in the Sphere of Culture", which must have served as a major factor of the involvement of private sector in cultural heritage activities, remains un-adopted by the Parliament of Georgia. Owing to this, cultural heritage remains dependent on the support of foreign donors and the Government;

Ø Taxation system effective in the country also creates serious problems because 35%-40% of funding obtained for restoration/conservation activities is applied for paying taxes. It is our opinion that adoption of taxation incentives for such activities will markedly improve the condition of cultural heritage monuments as well as stimulate private sector initiatives, increase employment, generate

- 46 - income and, to a certain extent, relieve burden from the state which fails to provide adequate budget for cultural heritage.

Ø The delay in receiving counterpart funds from the central budget.

Ø The banking system in the country is not developed and reliable enough, that prevents establishing “credit lines” and other activities for engendering small enterprises etc.

Ø Statistical services are very undeveloped in the country and it is difficult to obtain relevant information.

We understand that the sustainability and viability of the outcomes largely depend on the economic-political situation in the country. The concepts and mechanisms devised within the Project will not work unless adequate conditions are created in the country (e.g. improvement of the legal framework, establishing incentives for private sector investments, support to small and medium enterprises, empowerment of local communities, reduction of poverty, etc).

Outputs

The Project outputs were largely attained (please, see above).. Though, it is to be mentioned that considering the nature of the LIL, the realization of the mechanisms that would ensure the long-term development of cultural heritage was not possible. However, the LIL played a decisive role for this sector, as well as for the stimulation and mobilization of local communities. It was within the LIL that the mechanisms, the realization of which could be possible under a different type of a credit, were devised. It can be regarded that the LIL prepared conducive grounds for the further development. It served to improve the management and promotion of cultural heritage (through educational TV shots, video films, bulletins, journals, brochures, reports published through mass media, web-site, exhibitions, which focused on the role of cultural heritage, significance of separate monuments, and contained appeals to public for the involvement in cultural heritage preservation).

90 sub-projects have been implemented in different fields of the CH, more than 270 CH resources have been saved due to the CH Project activities.

Outcomes

Ø The Project played a role of the catalyst in the break-up of the monopolistic system in the field of cultural heritage management typical of the Soviet period, which was followed by the creation of independent consulting and restoration companies (more than 30), and adoption of new market-oriented systems of cultural heritage management (introduction of tenders, etc);

Ø Project activities served to increase the interest of local communities in their cultural heritage and strengthened the sense of responsibility; the local communities seem to be more actively involved in decision-making and in fund-raising; the number of local initiatives has increased markedly; the communities tend to recognize cultural heritage and cultural tourism related to it as a source of income; the community-based participatory approach applied by the Project has significantly increased the sense of ownership in local communities (e.g. in case of the Tbilisi Pilot Project).

Ø The implementation of the Project convinced us that the cultural heritage is a factor which can stimulate social and national cohesion even in multiethnic and conflict zones. I can bring an example of

- 47 - projects that we implemented in Javakheti and in South Ossetia (Ikorta, Azmana, Tighva), where people of various nationalities and religions worked side by side and continue to maintain the monuments;

Ø The Project had an important impact on social sphere - it has stimulated poverty reduction by employing more than 2000 people, including 500 specialists.

Ø Despite the above-mentioned situation in terms of tourism development, the activities carried out under the Project had an important impact on this sector as well. In Shatili, several towers were converted into guest houses; a museum, which is expected to bring some income generating activities for the local community, will be opened. In Uplistsikhe a visitor's centre was constructed and the site infrastructure was enhanced. The activities carried out by the Project encouraged local residents to convert their houses into folk hotels (7). Apart from this, with the recommendation of the PIU, Sighnaghi was included in the World-Bank supported trans-Caucasian Tourism Development Initiative. This will favor the development of tourism infrastructure and generation of income in the region. The Project activities in Old Tbilisi encouraged local investors to take increased interest in this district and also, resulted in the growth of the number of visitors, which, in turn, will bring additional income to the cafes, art galleries and crafts studios located there.

Ø The implementation of the project has promoted capacity building in the fields of cultural heritage management and restoration. Within the framework of the sub-projects new methods and technologies were tested and adopted (e.g. reinforcement of rocks in Uplistsikhe, biocide treatment of Kintsvisi murals, etc). The PIU staff, having acquired significant experience during the implementation of the Project, at present provides consultations to various organizations and individuals.

Ø The Project encouraged local donors and private sector to take increased interest in cultural heritage in terms of making investments in this area. The allocation of funds by the WB served as an example to them. This is attested by the fact that the PIU managed to raise USD 370 000 from external sources for the implementation of various projects;

Ø The mechanism of "Revolving Funds" and the concepts for the sustainable development of the pilot sites, devised within the Project, will continue to favor sustainable management of cultural heritage and application of modern approaches to management and financing. The materials developed within the Project are now used by various specialists employed in this sector;

Ø We would particularly point out the efforts made by the Project in terms of developing legal framework. The law "On Georgia's Cultural Heritage Protection" made a significant contribution to the improved management of cultural heritage and institutional arrangement in the given sector. Several other laws have been drafted in the framework of the Project by envisaging the European experience.

Ø The Project made a significant contribution to the enhancement of the environment on the Project sites (improvement of infrastructure, prevention of destruction processes, landscaping of areas, etc);

Quality of World Bank’s Contribution

First of all, the main contribution is the Credit allocated for the needs of the CH preservation sphere for Georgia, that was rare instance in the World Bank’s practice. In a way, it was a kind of risk, and the Bank ran this risk.

- 48 - The WB task team did its best to support the CH Project. Contribution of Mr. Robert Maurer, who elaborated “Cultural Heritage Initiative” Project (IDF Grant) must be marked out as well as contribution of Mr. Tom Blinkhorn, who overtook the labor of preparing and launching CH Project (LIL Credit); especially, contribution of Mr. Eric Peterson and Ms. Janis Bernstein must be emphasized - as already mentioned above. They worked in tight collaboration on our Project and this had very positive impact.

Taking to consideration, that this was first stand-alone cultural heritage project for the World Bank, there certainly arose some problems, but the Task Team always tried and succeeded to solve this problems as fast as they could. On every stage of project development this support was very apparent and visible. The WB provided international consultants in Management, Financial management, MIS monitoring, Old Town development Strategy. This was essential for the successful start and development of the project. The Task Team provided aid in Project Implementation Rapports, Key performance indicators, in social surveys.

The contacts with the Task Team was always very prompt, timely (in spite of the fact that the WB being rather bureaucratic organization takes too much time for decision making and responding to the on-going problems). They acted as mediators between the Fund and other Departments of the WB. Provided valuable advises and recommendations. The Task Manager and Task team always thoroughly considered the Fund’s suggestions, proposals in regard with different issues (e.g. budget revisions, amendments to Pilot Site program, etc.). The Task manager supported the Fund in relations with the Ministry of finances, demanding timely allocation of counterpart financing; even in dealing with problem with the American contractor who delayed supply of equipment for one of the ERP projects.

It was very good that in the Project program special attention was paid to the institutional building, capacity building, strengthening of local communities, human resources and other issues that must provide sustainable development of the CH preservation field in Georgia. The Bank rightly considered, that only practical conservation activities are not enough to ensure future sustainable development of this field and it is more important to provide the country with “tools” for future independent activities.

- 49 - Additional Annex 9. Partner Comments: Ministry of Finance of Georgia

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