My City, Tbilisi
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Investor.ge APRIL-MAY 2014 3 Investor.ge Investor.ge CONTENT AmCham Executive Director 6 After Crimea 26 ISO Certification is Not Amy Denman Will the crisis affect Armenia the Same as Performance and its path toward the Improvement Copy Editor Russian-led Customs Union? TBSC Consulting’s Paul Clark Alexander Melin and TemoKhmelidze on 8 The Road to a Free Trade the difference between ISO Marketing & Promotion Agreement with the US Certification and performance Sophia Chakvetadze Georgian Prime Minister improvement. IrakliGharibashvili’s trip Promotional Design to Washington was an 29 Hotel Construction Renews Levan Baratashvili encouraging step for an Building Boom in Tbilisi Magazine Design and Layout eventual FTA. Giorgi Megrelishvili 34 Georgian Entrepreneurs: 10 Fifteen Years of Georgian An interview with Writers Business LashaPapashvili Emil Avdaliani, Helena Bedwell, Paul Investor.ge looks at how the Clark, Maia Edilashvili, Monica Ellena, Georgian economy and doing 36 Reforming Tax Appeals: An ISET, TemoKhmelidze, Nino Patsuria, business in Georgia has Overview of PwC Research on Cordelia Ponczek, Łukasz Ponczek changed. Best Practices for Tax Appeal Councils Photographs 12 The Economic Report Card: A report published as part of Helena Bedwell, Molly Corso, Grading Georgia on its 15- AmCham’s CLT Committee, Monica Ellena, Davit Khizanishvili / year Performance with the support of East-West UNDP Management Institute, Eurasia 16 15 Years and Counting Partnership Foundation, and Special thanks to the AmCham Editorial Heather Yundt interviews USAID. Board and the AmCham staff, as well as three investors and long time ISET and TBSC Consulting. expats on what brought them 38 Brain Drain: Bringing Back to Georgia, how the business the Best environment has changed, and Investor.ge continues its series how their investments have into brain drain with an fared. interview with Eniko Kovacs, the program manager of Open 20 Cultural, Economic Divide Society Foundations’ Academic Define Women’s Chances Fellowship Program. © The American Chamber of Commerce in Georgia, 2011 to Climb Global Corporate Ladder 40 I am Going Home All rights reserved. No part of this magazine A report from Grant Thornton Helena Bedwell’s first person may be re-printed, or reproduced or utilized in any form or by electronic, mechanical or on women in the business account of the mood in Crimea other means now known or hereafter invented, world. during the March referendum. including photocopying and recording, or in any information storage or retrieval system without 22 The Georgian Tourism Sector: 42 24 Hours Out of Tbilisi permission. An Overview of International The opinions expressed in this magazine do not Travel 44 My City, Tbilisi: refl ect the opinion of the American Chamber of MitrophaneLaghidze and the Commerce in Georgia nor its Board Members or Tale of His Famous Laghidze staff, unless otherwise stated. AmCham Georgia Waters neither endorses, nor can be held liable for any eventuality arising from the use of any product or service advertised within the pages of this issue. Investor.ge is printed by CEZANNE ...... 46 AmCham Georgia 36a Lado Asatiani Street, 3rd fl oor AmCham Georgia Patron Members: Tel: 2 22-69-07 [email protected] [email protected], www.amcham.ge www.investor.ge 4 FEBRUARY-MARCH 2014 Investor.ge APRIL-MAY 2014 5 Investor.ge After Crimea: Will the Crisis Affect Armenia and Its Path Toward the Russian-Led Customs Union? Richard Giragosian: Throughout effectively ended Armenia’s planned ini- the crisis, the Armenian government has tialing of an Association Agreement and been especially cautious, largely due to related Deep and Comprehensive Free a policy decision to refrain from doing Trade Area (DCFTA) with the European or saying anything that would anger or Union set for the Vilnius Summit in late alienate Armenia’s “strategic partner,” November 2013. Russia. At the same time, however, the Moreover, Moscow’s apparent suc- broader context of the Ukraine confl ict cess in forcing Yerevan to backtrack on has signifi cant implications for Armenia, its intention to fi nalize pending agree- Investor.ge interviewed Richard especially in terms of Russian power ments with the EU imposes several Giragosian, the director of the Regional Studies Center (RSC) and influence in the so-called “near signifi cant challenges on Armenia. In in Yerevan, Armenia, about the abroad” and concerning the outlook for the short-term, once Armenia retreated potential impact of the Ukrainian the Russian-led Customs Union. More and reneged on its planned “initialing” crisis on Armenia’s decision to specifi cally, the new Ukrainian govern- of an Association Agreement and related follow Russia into its Eurasian ment’s commitment to signing the As- Deep and Comprehensive Free Trade Customs Union instead of signing sociation Agreement with the EU now Area (DCFTA), it will be hard pressed to an Association Agreement with the European Union. makes the Russian-led Customs Union recover confi dence and credibility. Such signifi cantly less viable and a much less a move not only imperiled several years ven before the Ukraine crisis attractive project. In this way, Moscow’s of diffi cult negotiations and reform, but and the March 16 referendum apparent “loss” of Ukraine may actually also tested European patience and dimin- Ein Crimea, the confl ict between provide the Armenian government with ished European interest in Armenia. The Moscow and the West was playing out an effective way out of having to join the decision to join the Customs Union also between Georgia and Armenia – two Customs Union and an attractive way for offers Armenia little if any alternative neighbors with close trade relations. Yerevan to “save face” and avoid the em- benefi ts, and may lock Armenia even Today, there is little indication of how barrassment of its move to quickly give more fi rmly within the Russian orbit, events will evolve in Ukraine, or what in to Moscow and give up on Brussels. limiting its future to little more than a impact they might have on other for- Investor.ge: Why did the Armenian captive to Moscow’s grand project for mer Soviet republics. For Georgia and government opt for the Russian-led a rival Customs Union, as the fi rst step Armenia, however, the battle over the Customs Union over the EU Associa- toward the so-called “Eurasian Union.” fate of Crimea and Ukraine could have tion Agreement? What does Russia of- And in that broader context, the danger an immediate effect on foreign policy fer Armenia that the EU cannot? for Armenia stems from greater isola- and future trade relations between the Richard Giragosian: Looking back tion, as closed borders remain sealed, two countries. at the surprise announcement on Sep- and from a newly enhanced degree of Investor.ge: How is the crisis in tember 3, 2013 by Armenian President insignifi cance, as the strategic impor- Crimea affecting Armenia? Is it hav- Serzh Sarkisian in Moscow pledging tance of Armenia may only dramatically ing an impact on the debate around that Armenia would join the Russian-led decrease. And, most distressing, Armenia joining the Eurasian Customs Union? Customs Union, and would support Mos- also faces the very real threat of becom- To what extent do you think it could cow’s efforts to “integrate” the former ing little more than a “small, subservient infl uence Yerevan as the government Soviet space, it is now obvious that it Russian garrison state.” moves toward joining the Eurasian was a missed opportunity and a strategic Further, the longer-term impact on Customs Union? setback for the country. That decision Armenia will also be signifi cant, un- 6 APRIL-MAY 2014 Investor.ge dermining the Armenian government’s clearly failed to see EU engagement as a On a broader level, therefore, this already meager legitimacy by endan- real threat. Such a view may have been shift in Russia’s policy toward EU en- gering the overall reform program and rooted in Moscow’s perception of the gagement stems from a much larger and significantly weakening pro-Western EU as neither a signifi cant geopolitical more assertive Russian stance, driven by reformers within the government. In actor nor as a serious rival. Second, the an attempt to consolidate Russian power addition, from a broader perspective, rather last-minute shift in Russian policy, and position within the former Soviet the Armenian retreat from its planned as demonstrated by the imposition of co- space and to deter Western “interlopers” Association Agreement with the EU and ercive measures on other states, such as in what Moscow views as its natural its move toward Russia’s Customs Union Moldova and Ukraine, viewed Armenia “sphere of influence,” or the “near also reveal several deeper defi ciencies as more of a “sacrifi cial pawn,” designed abroad,” referred to as blizhneyeza- within the Armenian government in to send a more important message of rubezhye (ближнеезарубежье), which terms of closed public policy, inadequate strength to deter similar European aspira- has been elevated and expanded into a strategic planning and an informal tions by Chisinau and Kiev. wider “post-Soviet space.” Moreover, decision-making process. In the case of Georgia, however, there this trend of a boldly assertive Russia But in terms of Armenia’s surprising is little Russian leverage and no utility in has only deepened in recent years, and decision, it is now clear that the “U- trying to deter Tbilisi’s commitment to is now evident in the larger context of turn” or sudden shift in policy actually its EU aspirations. The Russian strategy Moscow’s policies toward the U.S. and occurred in Moscow fi rst. For example, is not benign, however, and it seems over Syria, for some examples. Another the lack of any real Russian pressure on likely that Moscow will initiate a new demonstration of this trend has been Armenia through the nearly four years campaign of pressure against Tbilisi Russia’s heavy-handed use of coercive of negotiations over the Association targeting the implementation process measures targeting some of its neighbors, Agreement suggests two conclusions.