Stepping Closer to the EU's Common Market
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HOW WILL BUILDING THE BRAND: SAYING THE EU DEAL GOODBYE TO IMPACT THE AN INTERVIEW WITH SHEVARDNADZE REGION? SOSO GALUMASHVILI Investor.geA MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE IN GEORGIA ISSUE 40 AUG.-SEPT. 2014 Stepping Closer to the EU’s Common Market AUGUST-SEPTEMBER/2014 • Investor.ge | 3 Investor.ge CONTENT 6 STEM Education for Girls in Georgia A visualization by JumpStart Georgia 7 Investment News A brief list of major investments in Georgia as reported by Georgian media. 10 Regional Implications of the Georgian-EU 10 Association Agreement Georgia ratified its Association Agreement with the EU on July 18. Investor.ge asked Richard Giragosian, the director of the Regional Studies Center (RSC), to analyze the potential impact. 16 Vato Lejava: Maximizing the Gain, Minimizing the Pain of the EU-Deal 17 Georgia: Preparing for NATO’s “Substantive Package” in Wales Investor.ge republishes Monica Ellena’sBNE magazine interview with Minister of Defense IrakliAlasania about the 17 up-coming NATO Summit in Wales, slated for September. 19 Tkemali: Introducing the world to Georgia’s tasty, tangy sauce 22 Sanctions Against Russia: An Overview 24 New Rules for Investment Funds: The Key to Developing Capital Markets in Georgia For years, direct investment has overshadowed portfolio investment in Georgia and hampered the development of the local capital market. 26 Building the Brand: an interview with Soso Galumashvili 20 Marketing and branding are a foregone conclusion in developed economies where perception about a product can be more important than the good itself. 30 Tbilisi’s Underground City: The Tunnels that Beria Built Lavrenty Beria, the Community Party’s secretary in Georgia from 1931-1938, is famous for his cruelty and his love of architecture. While his mark on Tbilisi’s skyline is well known, Beria’s legacy also includes a less well known system of tunnels under the city streets. 34 “I did nothing wrong:” A journalist reflects on the 30 late Georgian President Eduard Shevardnadze 46 NEWS ...... 36 4 | Investor.ge • JUNE-JULY/2014 AUGUST-SEPTEMBER/2014 • Investor.ge | 5 EU COMMITS TO €330-410 max and Post-Panamax ships. The Port will MILLION (780-970 MILLION GEL) be able to process more than 100 million Investment tons of mixed cargo. This is a really large IN ASSISTANCE scale and undoubtedly gives Anaklia the The EU has pledged to provide Geor- basis to become a crucial logistical hub gia with up to 970 million Lari from 2014- for Caucasia and Central Asia,” he said 2017 to help fi nance the country’s demo- during the presentation. cratic reforms, Georgian media reported NEWS on July 18. The funds are part of two deals that were signed between Tbilisi and Brus- 34 HOUR CARGO TRANSPORT TO sels with Georgia to ratify the country’s AZERBAIJAN Association Agreement with the EU: Single A Poti-Baku cargo train route was A BRIEF LIST OF MAJOR Support Framework (SSF) 2014-2017 and restarted on July 15, Georgian media re- ported. The route, known as the Silk Bridge, INVESTMENTS IN GEORGIA The Financing Agreement for the Euro- pean Neighbourhood Program for Agri- will cut transport time for cargo from AS REPORTED BY culture and Rural Development (ENPARD), “several days” to just 34 hours, agenda. GEORGIAN MEDIA. IF YOU agenda.ge reported. ge reported on July 17. HAVE ANY INVESTMENT TIPS The train will operate on Tuesdays OR PROJECTS YOU WOULD GEORGIAN GOVERNMENT and Saturdays, agenda.ge quoted Levan LIKE TO INCLUDE IN THE LIST Jgarkava, the director of Trans Caucasus ANNOUNCES NEW ANAKLIA Terminals LLC, as saying. FOR THE NEXT ISSUE, PORT PROJECT The route, which will eventually extend PLEASE CONTACT Georgian Prime Minister Irakli Ghari- to Central Asia and China, will be oper- [email protected]. bashvili formally launched the state’s new ated by a German company through an program for developing Anaklia Port on agreement with Trans Caucasus Terminals July 10, Georgian media reported. and Azerbaijan Railways, the website said. “It is very important that the Anaklia Trans Caucasus Terminals is a part of Port is able to receive large sized Pana- Georgian Railway. ADVERTISEMENT AUGUST-SEPTEMBER/2014 • Investor.ge | 7 Georgia all, for the institutions of democracy, and for the law… “Your commitment over recent years, Ratifies under successive governments, to pursue ambitious reforms leaves no room for doubt,” Füle said. “Georgians know only too well that rewards come to those who put in the effort. But this is your choice, and EU Deal you can count on the European Union to support you in that choice… “I know that some Georgians fear that implementing the Association Agreement will prove costly. No one should be under On July 18, the Georgian Parliament ratified the country’s Association the illusion that these reforms will be easy. Investment will be needed to meet new Agreement with the European Union, paving the way for Georgia to implement regulatory standards, for example. But the reforms and obligations the country needs to fulfill to become closer to some benefi ts will quickly become ap- the European Union and its Common Market. The agreement is a huge step for parent.” Georgia, a step toward European standards for business, trade and economic EU AMBASSADOR TO GEORGIA policy – as well as for a higher level of democracy, human rights protection, PHILIP DIMITROV: and rule of law. The following is a collection of quotes from Georgian and “As for the recommendations, you have to fulfi ll the Association agenda. Of European politicians about the agreement, its potential impact on Georgia and course, the Association Agreement con- the road forward to implement it. siders that the Georgian market will enter the joint European market… “This process will have its stages, but Georgia will immediately receive the main benefi t. Of course, I do not mean that PRIME MINISTER IRAKLI peans have already existed for centuries. Georgian business will be given breakfast in bed, but the country will be provided GHARIBASHVILI, SPEAKING AT This is a relationship which has stood time… “The Association Agreement is an with modern resources and your effort PARLIAMENT ON JULY 18: action plan for our country’s moderniza- should be great to receive them.” congratulate, on this historic tion, Europeanization, and we should event, everyone for whom implement this plan thoroughly. This plan US AMBASSADOR RICHARD “I democratic values are pre- envisages commitment to democratic cious, as well as those who are committed NORLAND: principles and I believe that it will be the “The signing and ratifi cation [of the to European democratic ideals and who process of tireless work.” Association Agreement], following the see Georgia’s future within the large family ‘pause’ in the political season after the of European states… recent elections, represent an opportu- “I am confident that Georgia has EUROPEAN NEIGHBORHOOD nity for all Georgians to now focus on a already overcome its most critical time… POLICY, STEFAN FÜLE: future-oriented agenda that will enhance “June 27, 2014 was written in the “Using the Association Agreement political stability, improve the investment history of our homeland as a new date as its foundation, Georgia will introduce climate, expand economic growth, and of importance. The historic dream of all reforms which will progressively bring the create jobs… Georgians came true on this day. This country into the European mainstream – “While only Georgians can decide day has brought us closer to Europe – the economically, socially, and politically… their national priorities, the challenges of space which is so near and natural for us, “Given the difficult situation in the the moment call for all of Georgia’s ener- the space which our country had been wider region, I believe that Georgia’s pro- gies to be focused on the future, and the artifi cially kept apart from for hundreds European forces have a strong interest U.S. is committed to supporting that path.” of years, and the idea of unifi cation with in uniting. You have a common interest which has been brought to us by numerous in capitalizing on this great potential for generations of Georgians… unity,” Füle said. “I urge all of you to refl ect MP GIGLA AGULASHVILI: “Now we are standing on the verge of a spirit of unity and solidarity in the execu- “The ball is in our court and now it is fully this space. We should enter Europe as a tion of your responsibilities as Georgia’s up to us to use the opportunities provided country with an ancient history and unique leaders. by this agreement...With the ratifi cation of culture; a country which will make its con- Disagreement and debate are essen- this agreement we are carefully knocking tribution to the diverse European culture. tial in a healthy democracy, along with on the EU’s door… and we will keep on Our ideological links and those of Euro- respect for divergent views and, above knocking on this door.” 8 | Investor.ge • AUGUST-SEPTEMBER/2014 AUGUST-SEPTEMBER/2014 • Investor.ge | 9 Georgian Prime Minister Irakli Gharibashvili REGIONAL IMPLICATIONS OF THE GEORGIAN-EU ASSOCIATION AGREEMENT 10 | Investor.ge • AUGUST-SEPTEMBER/2014 Armenian President Serzh Sargsyan Azeri President Ilham Aliyev GEORGIA RATIFIED ITS ASSOCIATION AGREEMENT WITH THE EU ON JULY 18. INVESTOR.GE ASKED RICHARD GIRAGOSIAN, THE DIRECTOR OF THE REGIONAL STUDIES CENTER (RSC), AN INDEPENDENT THINK TANK IN YEREVAN, ARMENIA, TO ANALYZE THE POTENTIAL IMPACT OF TBILISI’S MOVE TOWARD EUROPE ON THE REST OF THE REGION. RICHARD GIRAGOSIAN* AUGUST-SEPTEMBER/2014 • Investor.ge | 11 THE BROADER IMPACT a misguided decision to “mortgage” the hile the new Association country’s future in favor of submitting Agreement represented to Russia. Wan important success for Over the medium-term, however, Georgia, the move will also impact the Armenia may actually be able to salvage broader South Caucasus region in several its strategic future and avoid being drawn RICHARD GIRAGOSIAN IS THE ways.