Economy Still Top Concern for Georgians, Support for NATO & EU

facebook.com/ georgiatoday

Issue no: 912/61 • JANUARY 17 - 19, 2017 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue...

President Calls on Citizens to Buy Georgian NEWS PAGE 2 International Arbitration & the Globalization of Life Sciences FOCUS PAGE 4 ON THE GAZPROM DEAL Tourism Market Watch NGOs and think tanks GALT & TAGGART PAGE 6 criticize closed-door deal with Russian energy giant PAGE 3, 10 Green Bond Market in Georgia – a NDI Poll: Economy Still Top Growing Opportunity Concern for Georgians, PAGE 7 Support for NATO & EU Stable End of

oll results released Monday by the cent believe Georgia is going in the right direc- Days: What National Democratic Institute (NDI) tion, up from 20 percent in the March 2016 poll, and CRRC Georgia reveal that eco- while 63 percent feel the country is not chang- Empowers nomic anxieties continue to top ing or going in the wrong direction. ISIS? Georgians’ list of primary concerns. “In multiple polls for years now, Georgians PThe top issues for Georgians remain jobs (58 have consistently expressed concern about the POLITICS PAGE 11 percent), rising prices and inﬂ ation (38 percent), country’s and their economic well-being, and and poverty (30 percent). they are not feeling any relief or improvement,” As in previous polls, the vast majority of Geor- says Laura Thornton, NDI Senior Director. “With Newly Equipped Disability gians considers themselves unemployed, 66 per- elections completed, the new government has cent, and only a third feel their economic situa- a clear mandate to start responding and focus- Friendly School & New Gov’t tion will improve. Few (17 percent) believe their ing their attention and resources on addressing household is better off since 2012, while 82 per- employment and the poor state of the country’s ‘Healthy Youth’ Initiative cent report that they are the same or worse off. economic security.” With regard to the country’s direction, 32 per- Continued on page 2 SOCIETY PAGE 12

Prepared for Georgia Today Business by Markets Asof13ͲJanͲ2017 STOCKS Price w/w m/m BONDS Price w/w m/m BankofGeorgia(BGEOLN) GBP27.87 Ͳ3,0% Ͳ14,0% GEOROG04/21 106.13(YTM5.13%) Ͳ +1,9% GHG(GHGLN) GBP3.40 Ͳ Ͳ8,7% GEORG04/21 110.99(YTM4.02%) +0,2% +1,7% TBCBankGroup(TBCGLN) GBP14.50 Ͳ0,3% Ͳ2,9% GRAIL07/22 109.19(YTM5.77%) +0,2% +2,7% BGEOLN07/23 101.69(YTM5.69%) Ͳ +1,6% COMMODITIES Price w/w m/m CrudeOil,Brent(US$/bbl) 55,45 Ͳ2,9% Ͳ0,5% CURRENCIES Price w/w m/m GoldSpot(US$/OZ) 1197,34 +2,1% +3,3% GEL/USD 2,7150 Ͳ1,3% +2,1% GEL/EUR 2,8913 +0,2% +2,3% INDICES Price w/w m/m GEL/GBP 3,3024 Ͳ2,0% Ͳ1,9% FTSE100 7337,81 +1,8% +5,3% GEL/CHF 2,6846 Ͳ0,6% +2,1% FTSE250 18371,94 +0,2% +3,7% GEL/RUB 0,0456 Ͳ1,1% +3,9% DAX 11629,18 +0,3% +3,1% GEL/TRY 0,7296 Ͳ3,3% Ͳ4,3% DOWJONES 19885,73 Ͳ0,4% Ͳ0,1% GEL/AZN 1,4860 Ͳ2,5% Ͳ1,0% NASDAQ 5574,12 +1,0% +2,0% GEL/AMD 0,0056 Ͳ1,8% +1,8% MSCIEMEE 148,47 Ͳ0,7% +0,8% GEL/UAH 0,0981 Ͳ3,8% Ͳ3,5% MSCIEM 895,98 +1,7% +2,1% EUR/USD 0,9395 Ͳ1,0% Ͳ0,2% SP500 2274,64 Ͳ0,1% +0,1% GBP/USD 0,8210 +0,9% +3,9% MICEX 2195,19 Ͳ0,8% Ͳ2,3% CHF/USD 1,0084 Ͳ0,9% Ͳ0,4% MSCIFM 2527,30 +0,8% +5,0% RUB/USD 59,5782 Ͳ0,1% Ͳ1,8% GTIndex(GEL) 1177,93 +0,1% +29,6% TRY/USD 3,7233 +2,2% +6,6% GTIndex(USD) 849,93 Ͳ0,2% +23,9% AZN/USD 1,8354 +1,7% +1,9% GEORGIA TODAY 2 NEWS JANUARY 17 - 19, 2017

President Margvelashvili visited Georgian Forbes Includes factories and promoted Georgian production Georgia in Top 12 Underrated Wine Regions to Visit in 2017

President Calls on Citizens to Buy

Local winemakers in Kakheti. Source: Taste Georgia

tinct food and hospitality and beguiling BY THEA MORRISON scenery. The article notes that within wine cir- Georgian cles and, increasingly, mainstream travel month-by-month guide media, the word on Georgia as a wine Margvelashvili also visited the factory “Through the initiative, we aim to BY THEA MORRISON published by Forbes on destination has spread. of Dynasty, located close to the border- strengthen our country’s local produc- Friday, which offers its “Villages remain authentically charm- line of Georgia’s occupied region South tion, ask for Georgian products while readers the Top 12 Under- ing, the countryside still a peaceful ref- Ossetia, where he met with locals and shopping and by doing so improve our rated Wine Regions to Visit uge and the unique winemaking tradi- he President of Georgia, took part in the production process – country’s economic situation, strengthen AIn 2017, includes Georgia’s oldest wine- tions endure intact,” the guide reads. Giorgi Margvelashvili has wrapping and labelling dried fruit, Tklapi, those individuals who are employed in making region Kakheti along with other The article says that the best time to initiated a campaign - Ask and Churchkhela. Georgian companies, create new job well-known places of the world. visit Kakheti is May. for Georgian- to promote The President hopes the campaign will opportunities, contribute to overcom- The month-to-month guide identiﬁ es “Kakheti, nestled at the foothills of the Georgian production. raise public awareness of the Georgian ing currency problems, and give hope the new frontiers of enotourism. Of the Caucasus Mountains, is the main region, TAs a part of this campaign, the President food industry and popularize Georgian to others that we can strengthen one twelve regions offered by Forbes in 2017, known for fermenting wine underground visited four factories in Shida Kartli and products on the local market. another by standing side by side. Once some are up-and-coming, while others in terra-cotta jars called Qvevri. A deli- Mtskheta-Mtianeti: Campa, Kula and The President has also joined the move- again, while shopping in stores or mar- have been underrated for far too long, cious food culture sweetens the incen- Kareli Fruit, tasted Georgian products ment KAR.GE and the initiative of pho- kets, ask for Georgian products,” the yet all delivering high-quality wine, dis- tive to visit,” Forbes writes. and took part in the production process. tographer Goga Chanadiri - Buy Georgian. President said.

NDI Poll: Economy Still Top Concern for Georgians, Support for NATO & EU Stable

Continued from page 1 goal to join the EU and 61 percent to join include at least 30 percent women, and NDI surveys public opinion to help included 3,141 completed interviews. The NATO. Exceptions remain in minority that the current composition has too few Georgian stakeholders diagnose and average margin of error is +/- 1,8 percent. Georgians are equally divided in their settlements in which less than half sup- women MPs, and approve of a manda- address issues of public concern by pro- NDI’s survey work is funded by the evaluation of the performance of local port these goals. Age is also a factor, with tory gender quota. They believe that viding accurate, unbiased and statisti- Swedish International Development government, and interaction with local support ratings more than 15 percent more women in parliament would have cally-sound data. This poll aims to cap- Cooperation Agency (Sida). government bodies is low, with only 14 higher among younger respondents than either a positive or neutral impact (83 ture the most relevant information to ENDNDI is an independent, non-profi t, percent of respondents reporting that older ones. percent) and only 8 percent state there foster the development of responsive nonpartisan organization working to they have interacted with the sakrebulo This poll examined issues related to would be a negative result from enhanced policies and governance. A wide range support and strengthen democratic insti- and 12 percent with the mayor’s offi ce. women’s political participation, and the representation. of leaders from across the political spec- tutions worldwide through citizen par- Those who have interacted, however, majority of Georgians believes that “Parties have dragged their feet on the trum have reported that the polls are ticipation, openness and accountability rate the experience favourably, saying women are as capable as men in deci- issue of women’s political participation, important to their work and encourage in government. that they were treated with respect, that sion making. However, they acknowledge as we see clearly from the composition of continued polling. The results refl ect CRRC-Georgia is a non-governmental, staff were competent, and in a majority that access, resources, time, and culture the candidate lists in the last election. The data collected from November 4 to non-profi t research organization with a of cases helped solve their problems. affect their ability to participate on equal Georgian people, however, are ahead of December 4 through face-to-face inter- mission to promote evidence based Support for the European Union (EU) terms with their male counterparts. The their leaders and are clearly in favor of views with a nationwide representative debates on policy issues by providing and NATO remain high, with 72 percent vast majority of Georgians (74 percent) more concrete measures to ensure more sample of Georgia’s adult population, reliable, up-to-date and accessible data of Georgians approving the country’s continue to believe that parliament should equal representation,” - Thornton says. excluding occupied territories that and analysis. GEORGIA TODAY JANUARY 17 - 19, 2017 NEWS 3 NGOs and Opposition Call on Energy Ministry to Disclose Details of New Deal with Gazprom

BY THEA MORRISON

on-Governmental Organ- izations (NGOs) and the parliamentary opposition of Georgia are openly against the new deal made Nby the Energy Ministry of Georgia and Russia’s energy company Gazprom, and is calling on the Energy Minister, Kakha Kaladze, to disclose all details of the agreement. 23 NGOs, united under the Coalition for Euro-Atlantic Georgia, released a statement last week, saying that the new transit terms with Gazprom endanger the country’s energy independence and security. “The new terms worsen the country’s energy security and the government’s arguments concerning the new agreement are not satisfactory,” the coalition stressed in its statement. The new deal means that Georgia, as a transit country for the transportation of Russian gas to Armenia, will from 2018 receive payment from Gazprom. However, under the previous agreement, which expired on December 31, 2016, Russia has been paying Georgia for gas transportation by supplying natural gas to the amount of 10% of the volume Gazprom. Source: independent.md of transported gas. The NGOs call on the authorities to ing the year to inquire into the possibil- Georgia’s parliamentary minority also in terms of energy security,” he said. Gazprom also commented on the deal, disclose the agreement details and hold ity of receiving additional gas from other disapproves of the deal, saying it is anti- The ruling party Georgian Dream (GD), saying the agreement was “profi table for a special parliamentary hearing. suppliers? state. They call on Kaladze to provide which had always been against monetary both sides.” They stressed the government should • Is the transit fee in line with the price detailed information at a special meeting compensation from Gazprom, now says “The Russian side guarantees to pay provide answers to the following ques- calculated under the requirements of at parliament. the deal is “optimal” and does not endan- for the transit of Russian gas through tions: the European Energy Community and Sergo Ratiani, member of the faction ger Georgia’s energy independence. Georgia to Armenia in 2017-2018 at a • What has changed since last year, has this price been approved by the European Georgia, believes the deal “Azerbaijan will be our top priority in volume of 2.0-2.2 billion cubic meters when the current position was unaccep- Georgian National Energy and Water contradicts national interests and is eco- terms of gas, followed by Russia. We did per year, as well as to supply Georgia table for the government? Supply Regulatory Commission? nomically unprofi table. not allow Russia to increase its share in with natural gas on fl exible terms at a • Why should seasonal shortage be met • Were the talks based on strategic “The deal reached with Gazprom is a Georgia’s gas supply. This is the most price lower by $30 per 1000 cubic meters by Russian gas? expert calculations and were interna- version profi table only for Russia…The optimal agreement at present,” majority than in 2016,” the Gazprom statement • What specifi c steps were taken dur- tional partners involved? agreement is anti-state and problematic member, Irakli Zarkua, said. reads. Georgia’s Opposition UNM Splits

in the past and would build a new future. BY THEA MORRISON As the anti-Saakashvili wing left the party, new leader of the UNM, Nika Melia, said the party was not weakened eorgia’s main opposition after the split, but strengthened. party, the United National “The National Movement is now free Movement (UNM), ofﬁ - of insularity, arrogance, nepotism, igno- cially divided after 38 heads rance… On January 20 the party will start of UNM municipal and a new stage. The UNM does not belong Gregional organizations, 21 MPs and a to Saakashvili or anyone else. It belongs number of the council members decided to the people,” said Melia. to leave the party on Thursday. Ex-President Saakashvili also com- In all, 59 members left the party on mented on the issue. He said Ugulava January 12. had criticized him more than “Georgia’s The decision was made following the informal ruler Bidzina Ivanishvili,” ex- inter-party confrontation about the Prime Minister and founder of the ruling January 20 party congress, which will party Georgian Dream. gather around 7000 delegates to decide “Losers’ governance is over. The party the fate of the party. is now more united and powerful than The UNM members were also in disa- it has been for the last 4 years, since greement about electing a new leader for control was regained by tens of thou- the party, which divided the party into two. sands of activists,” Saakashvili’s Facebook The group which left the party was for post reads. distancing itself from the founder and Political Analyst Gia Khukhashvili informal leader of the party, Georgia’s Photo source: Tabula believes that since the most prominent ex-president, Mikheil Saakashvili, who is United National Movement are going to however, the candidacies of Irakli Abe- “The party should elect a new leader. members had left the UNM, “there is no now a Ukrainian citizen with his own continue political activities in the party sadze and Otar Kakhidze are also being It would do no harm to Saakashvili’s political intellect left within the party.” opposition party there. European Georgia. However, the party considered. image, but he wants to keep this chair… “The split of the UNM does not change The group which remained in the party, name might be changed. Former Tbilisi Mayor, Gigi Ugulava, who So he is the one responsible for the split Georgia’s political climate, but changes says the election of a new party leader will Former members of the UNM will also was released from prison just days ago, of the party,” Ugulava said. many things for the party. The split is destroy the UNM and Saakashvili should maintain their fraction in parliament. also quit the UNM. He underlined that Another prominent UNM leader, Davit quite strange: The political elite are on remain as the informal head of the party. According to unconﬁ rmed information, the UNM does not belong to Saakashvili Bakradze, who also quit the party, said one side and the informal leader and his The political leaders who have left the the faction will be led by Sergo Ratiani, and he should no longer remain its leader. they had left the inter-party controversy followers on the other,” the expert said. GEORGIA TODAY 4 BUSINESS JANUARY 17 - 19, 2017 International Arbitration & the Globalization of Life Sciences

echert is partnering with Georgia The life sciences industry is one of the most tional arbitration has historically been the desire Today on a regular section of the prominent examples. In fact, given the nature of to avoid domestic litigation in favour of resolv- paper which will provide updated life sciences transactions and the manner in ing disputes in a neutral and independent forum. information regarding signifi cant which the industry has developed over the past For life sciences companies doing business in legal changes and developments in two decades, it would be diffi cult to imagine an emerging markets, or other jurisdictions with DGeorgia. In particular, we highlight signifi cant industry better suited to international arbitra- substantially different legal systems and cul- issues which may impact businesses operating tion. tures, that in itself is often a crucial goal. Both in Georgia. This article from Erica Stein, Alex- inserts show how arbitration is well-suited to andre de Gramont and Jonathan Schur at Dechert THE GLOBALIZATION OF THE this task. was fi rst published in the November-December LIFE SCIENCES INDUSTRY The growth of international arbitration as a 2016 edition of CDR magazine http://www.cdr- Cycles of invention and development come and preferred means to resolve global life sciences news.com/categories/expert-views/6953-inter- go in the pharmaceutical industry but the past disputes can be seen in the statistics provided national-arbitration-and-the-globalisation-of- two decades have been remarkable in terms of Europe accounted for USD 362 billion of global by some leading international arbitration insti- life-sciences and looks at arbitration in the life growth in both traditional and new markets – value, representing an almost three-fold increase tutions. For example, the ICC International Court sciences sector. including emerging markets. since 2003, comprising approximately 38% of the of Arbitration recorded an average of 30 inter- The global life sciences industry, and the way A study of large pharmaceutical companies by total global value. national arbitration cases concerning health, in which its disputes are resolved, have evolved industry publication Drug Discovery Today Further illustrations of such growth and diver- pharmaceutical and body care matters submitted over the past two decades. Alexandre de Gra- reported that during the 1995 to 2005 period, sifi cation can be shown by the fact that of the annually between 2011 and 2015. mont, Jonathan Schur and Erica Stein of Dechert none of the companies listed had derived more 308 pharmaceutical companies with at least USD The International Centre for Dispute Resolu- summarise the current landscape for international than 20% of its revenues from emerging markets. 1 billion in revenue in 2015, 102 – nearly a third tion (ICDR) – the international arbitration wing arbitration in this sector. By contrast, during the following decade of 2005 – are now based outside the US, Canada and of the American Arbitration Association – reports Although a variety of disputes are resolved to 2015, most large pharmaceutical companies Europe. Countries such as Brazil, China, Japan, similar numbers over the same period. The Arbi- through international arbitration, a high percent- saw the size of their emerging market revenues India, Indonesia, Israel, Mexico, South Korea and tration and Mediation Centre of the World Intel- age of parties have traditionally come from a grow to at least 25%, with the fi gure as high as South Africa all have signifi cant pharmaceutical lectual Property Organization (WIPO) – reports relatively small number of industries, such as 35% for one major player (Sanofi of France). Bra- companies, with annual revenues exceeding or that approximately 15% of its current case load energy, construction and shipping. That is unsur- zil, Russia, and China have accounted for much, approaching USD 1 billion. involves the life sciences industry. Moreover, to prising, given that companies in those industries but certainly not all, of the emerging market Such trends are not restricted to ‘big pharma’ accommodate these market needs, the ICDR and have historically entered into commercial arrange- demand. – the mastodons of the industry. Specialty phar- WIPO now offer lists of life sciences experts to ments with international business partners, often In part, because of this demand, the market maceutical companies that focus on particular act as arbitrators, as do JAMS and the Interna- in the developing world, or in countries with value and geographic diversifi cation of the phar- niches or technologies adopt global strategies, tional Institute for Confl ict Prevention and Res- very different legal systems and cultures. maceutical industry have increased dramatically. often through licensing, co-development, co- olution. In such arrangements, each party typically According to industry reports, in 2003, the mar- promotion or distribution arrangements. wants to avoid litigating disputes in each other’s ket value of the global pharmaceutical industry Even biotech companies developing novel drugs CONCLUSION domestic courts, and so they agree to neutral was approximately USD 462 billion. Markets or drug development platforms, which lack the Of course, court litigation may be the only option and independent international arbitration. outside the United States and Europe accounted scale needed for late-stage development or world- in cases where there is no contractual relation- More recently, as other industries have become for around USD 133 billion, or about 29% of the wide commercialisation, seek both fi nancing and ship between the parties. Many such cases in the truly global (i.e. developing, producing and selling total. opportunities for collaboration world-wide. life sciences industry, as well as cases where the higher percentages of their products in global mar- By 2015, the market value of the global phar- According to industry data, from 2004 to 2015, parties have failed to include arbitration clauses kets), they also are turning to international arbitra- maceutical industry had more than doubled to the global biotechnology market more than tri- in their agreements, will continue to be heard in tion as their preferred method of dispute resolution. USD 951 billion. Markets outside the US and pled in size (from USD 114.1 billion to USD 357.9 domestic courts. But as in many other industries billion). In 2004, the United States and Europe for which international arbitration has long been represented about 76% of that market. In 2015, the preferred method of resolving cross-border that share had fallen to around 62% – meaning disputes, it is anticipated that an increasing per- that roughly 40% of global biotech fi rms are centage of such disputes in the life sciences located outside traditional markets. industry will be resolved through international arbitration. HOW LIFE SCIENCE DISPUTES ARISE Developing and bringing a product to market, KEEPING BUSINESS which requires clinical trials and regulatory RELATIONSHIPS ALIVE approvals, is time-consuming and expensive, One particular aspect of why international arbi- usually taking more than 10 years and hundreds tration is especially suited to the industry springs of millions of dollars in investment. Multiple from disputes having arisen between parties with parties with global footprints may become involved an ongoing business relationship that is impor- in the development process. Financing is sought tant to preserve. Managing a research programme from venture capital and strategic investors on mobilising specialised (and expensive) teams every continent. Once a product gets to market, and facilities is like operating a major airport, the supply and distribution chain typically con- and the consequences of a shutdown can be sists of multiple companies in multiple countries. catastrophic. Beyond the challenges arising from globalisa- There are no time-outs in a clinical trial, as tion, the contractual arrangements used in life patients need to be treated and data collected, sciences transactions are unusually complex. and a delay or cessation can compromise pro- They mix issues of contract law, intellectual grammes that cost hundreds of millions of dol- property law, administrative law, product liabil- lars. A pharmaceutical product for which there ity law, antitrust and competition law, anti-cor- is a medical need must be offered for sale, even ruption law, privacy and data protection, and if there is a dispute pending, failing which the niche issues in employment and corporate law. regulatory and reputational consequences can They are generally long, complex, and heavily be signifi cant. Furthermore, although the indus- negotiated by specialists for whom it is a stand- try is large, it is also small in the sense that most ard practice to spend a day in a conference room participants know one another and tend to have on the defi nition of the relevant product, two multiple relationships over long periods. days to debate what development efforts should As a result, when a dispute arises there is a lot be considered ‘commercially reasonable’, or a to be lost beyond the immediate damage at issue. week to hammer out a termination clause. The fact that international arbitration is a con- The industry has also seen a high number of sensual process, combined with its relative infor- mergers and acquisitions in recent years, creat- mality, often means it is more conducive to pre- ing issues as to the impact of changes in control serving a business relationship than litigation. and changing scientifi c and commercial priori- The parties can recognise the ancillary risks ties. These agreements are often entered into associated with their dispute and work to mini- between companies of different nationalities, mise those risks, thereby keeping their relation- and increasingly include international arbitra- ship as productive as possible. tion clauses. As if this were not complicated enough, what actually happens during a complex, ADVANTAGES FOR LIFE decade-long development programme is almost SCIENCES LAWYERS never what the lawyers were told to expect at There are many advantages and features of inter- the outset. national arbitration especially suited to global life sciences disputes. They include: THE RISE OF INTERNATIONAL Confi dentiality: Unlike court proceedings, which ARBITRATION TO RESOLVE are largely open to the public, international arbi- LIFE SCIENCES DISPUTES tration is usually confi dential (if the parties so Given the profi le of the life sciences industry, it elect and/or if the chosen rules so provide). For is not surprising that companies are increasingly an industry that depends so heavily on intellec- choosing international arbitration to resolve their tual property, including proprietary contract global disputes. Its advantages are particularly provisions and negotiating practices, confi den- well-suited to global life sciences disputes. tiality can be essential. The principal motivation underlying interna- Continued on page 5 GEORGIA TODAY JANUARY 17 - 19, 2017 BUSINESS 5 Chinese Company International Arbitration to Buy 5 Million & the Globalization of Bottles of Wine from Shilda Life Sciences Continued from page 4 with dispute review boards to minimise companies in structuring mergers and disruptions to ongoing projects. acquisitions, divestitures, licensing and Arbitrators with subject matter or Fast and effi cient resolution of dis- distribution arrangements, joint ven- technical expertise: The parties can putes: Although international arbitra- tures, and cooperative development select arbitrators who have particular tion has come under criticism in recent and marketing relationships. experience with a given subject mat- years for its lack of speed and cost- Erica Stein is a special counsel in the ter, technology or industry. Given the effi ciency, there is no question that it Brussels offi ce of Dechert. She focuses extraordinary complexity of many life provides a faster and more effi cient her practice on international arbitra- sciences disputes – not to mention the dispute resolution process than much tion, including both commercial and complexity of the industry itself – that litigation – where, in some jurisdic- investment arbitration matters. Her feature can provide huge advantages tions, it can take over a decade to work touches upon numerous industry over having disputes decided by a judge resolve even mid-size disputes. sectors, including life sciences, energy with no particular expertise or experi- Ease of enforcement: Treaties like and telecommunications. ence in the matter or even, in some the New York Convention, which pro- jurisdictions, by a jury. vide for the recognition and enforce- * * * There are also practices in many life ment of arbitral awards, have typically Note: This article does not constitute sciences agreements, be they product made it easier (and in some instances, legal advice. You are responsible for acquisitions, research collaborations, far easier) to enforce arbitral awards consulting with your own professional or licenses, that take time and experi- abroad than domestic court judgments. legal advisors concerning specifi c cir- ence to master, and for which a trained The importance of ease of enforcement cumstances for your business. eye is particularly valuable, as one must in high-risk jurisdictions cannot be Dechert Georgia is the Tbilisi branch understand not only what is there, but understated. of Dechert LLP, a global specialist law what should be there. Alexandre de Gramont is a partner fi rm that focuses on core transactional Procedures designed for the dispute in the Washington, DC, offi ce of Dechert. and litigation practices, providing in question: Another advantage is the He has extensive experience in inter- world-class services to major corpora- contract for fi ve million This, the company asserts, speaks to ability of the parties to tailor proce- national arbitration and litigation. He tions, fi nancial institutions and private bottles of wine was signed growing interest among Chinese con- dures for the specifi c dispute at hand. focuses his practice on international funds worldwide. With more than 900 last week by the Georgian sumers in Georgian wine. Shilda and For example, many disputes in the life commercial arbitration and investment Lawyers in our global practice groups producer Shilda and the Shanghai Stsifan Trading signed the sciences industry arise when the prod- arbitration matters across a broad range working in 27 offi ces across Europe, Chinese importer Shangha agreement on January 11. The Geor- uct is still under development – when of industries, including life sciences, the CIS, Asia, the Middle East and the StsifanA Trading. gian Ambassador to the Peoples’ time and resources are especially crit- energy and natural resources, and United States, Dechert has the resources Shilda, founded by Mikheil and Natia Republic of China and a representa- ical. The parties can design procedures fi nancial services, arising from nearly to deliver seamless, high quality legal ChKhartishvili, is advertising this deal tive of the Georgian-Chinese Friend- for such disputes that will enable them every corner of the globe. services to clients worldwide. For more as unprecedented, and amounting to ship Association of The Georgian to resolve disputes with particular Jonathan Schur is a partner in the information, please visit www.dechert. nearly the entire quantity of wine exported Trade-Industry Chamber attended the speed and effi ciency, similar to what New York offi ce of Dechert. He advises com or contact Nicola Mariani at nicola. from Georgia to China in 2016 as a whole. signing. the construction industry has done pharmaceutical and medical device [email protected].

WWelcomeelcome ttoo IIndianndian PPunjabiunjabi RestaurantRestaurant SSanjhaanjha ChulhaChulha 1

BBollywoodollywood inin TbilisiTbilisi sponsoredsponsored byby SanjhaSanjha ChulhaChulha 1 FForor tticketsickets ccallall ++995995 559696 0033 1133 1133

Mobile +995 596 56 13 13 Phone +995-322-95-96-14 Skype: SANJHA CHULHA Facebook: sanjha chulha indian restaurant mail: [email protected] Website: Sanjhachulha.ge Agmashenebeli Avenue 130, Tbilisi 0112 Georgia Delivery service are available GEORGIA TODAY 6 BUSINESS JANUARY 17 - 19, 2017

The Galt & Taggart Research team comprises Georgian and Azerbaijani ﬁ nance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and ﬁ xed income corporate research. For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at [email protected]. Tourism Market Watch

branded hotels features almost 3,400 is a new hotel concept by RHG, target- FOR GEORGIA TODAY BY additional rooms in Tbilisi and over 1,600 ing millennials through art, music, and KAKHABER SAMKURASHVILI in Batumi. Overall, there are almost fashion. There are currently only two 10,000 new hotel rooms, branded and Radisson Red hotels in the world – in non-branded, in the 2017-2019 pipeline Brussels and Minneapolis. ector research is one of the of new accommodation units. Adjara Hospitality Group (AHG) con- key directions of Galt & Tag- Leading global hotel brands display tinues to introduce innovative concepts gart Research. We currently continued interest in the Georgian mar- on the Georgian hospitality market. The provide coverage of Energy, ket. On December 19, 2016, Hilton group has announced plans to construct Healthcare, Tourism, Agricul- announced the signing of a management an airport in Stepantsminda, in close Sture, Wine, and Real Estate sectors in agreement with Granat LLC for its fl ag- proximity to its Rooms Hotel Kazbegi. Georgia. As part of our tourism sector ship Hilton Hotels & Resorts brand hotel As of December 2016, the company already coverage, we produce a monthly Tour- in Tbilisi. The investment is estimated operates the fi rst air taxi in Georgia with ism Market Watch, adapted here for at US$ 50.0mn, with the 206-room hotel its 5-seater Beechcraft airplane. AHG also Georgia Today’s readers. Previous reports set to open in early 2019. In its press announced plans to expand its presence on the sector can be found on Galt & release, Hilton cites “Tbilisi's diverse on the Georgian accommodation market Taggart’s website - gtresearch.ge. economy - with substantial international with the introduction of its own new The accommodation industry in Geor- infrastructure investment, a burgeoning 5-star hotel brand, Aviator, in 2017. The gia continued rapid growth in 2016. The events calendar and leisure growth” as new hotel will be located near Rooms While the top four source markets number of overnight visitors (‘tourist’ number of accommodation units at end- the reasons to introduce its fl agship Hotel Tbilisi and Intercontinental Hotel, accounted for 83.6% of international category) was up 14.8% y/y and accounted 2016 is up 19.7% y/y, with bed capacity brand to the Georgian capital. Hilton is which is set to open by end-2017. This arrivals in 2016, secondary source mar- for 36.6% of total international arrivals. up 11.1% y/y to over 57,000. Hotels account already present on the Georgian market, move follows AHG’s entry in the low- kets also posted robust performances. Same-day arrivals posted modest growth for 63.9% of beds, followed by family with Hilton Batumi, while Hilton Garden price segment of the accommodation Ukraine, the 5th largest source market, of 5.1% y/y, while the number of transit hotels (16.8%) and guesthouses (13.1%). Inn Tbilisi Chavchavadze is currently market with its introduction of Fabrika. posted a 21.9% y/y increase in 2016. The visitors declined 15.8% y/y in December International branded hotels comprise under construction and set to open in Fabrika is a Soviet sewing factory con- number of Iranian visitors is up almost 2016. The number of tourist arrivals is 11.4% of total room supply in Georgia. 2018. On December 14, 2016, Rezidor verted into a multifunctional cultural 5.9x to 148,000, while the number of up 19.0% y/y to 2.7mn in 2016, compared The highest concentration of interna- Hotel Group (RHG) announced plans space targeting young visitors. It features Israeli visitors during the same period to 2.3mn in 2015. The number of same- tional brands is observed in Tbilisi (22.3% to open a 100-room Radisson Red in 49 hotel rooms and a 335-bed hostel, which is up 1.6x to over 92,000 visitors. day visitors is up 4.4% y/y, while the of total room supply) and Adjara (15.7%). Tbilisi in mid-2019, with LLC Commerce increased the number of hostel beds in The tourist category continues to drive number of transit visitors is down 5.7% The 2017-2019 pipeline of international Group as its local partner. Radisson Red Tbilisi by 26.2%. AHG is also expanding arrival growth in December 2016. The y/y in 2016. its Rooms Hotel chain with a Rooms Hotel Batumi, set to open in 2017.

INTERNATIONAL ARRIVALS TO GEORGIA The number of international arrivals was up 4.3% y/y to 0.49mn in December 2016. Out of the top fi ve source markets, there was growth from Armenia (+9.5% y/y), Azerbaijan (+3.9% y/y), and Ukraine (+14.0% y/y), while arrivals were down from Russia (-2.3% y/y) and Turkey (-16.7% y/y). Arrivals from the EU were up 28.6% y/y to over 13,400 visitors. The number of international arrivals was up 7.6% y/y to 6.35mn visitors in 2016. The number of visitors increased from all major countries except for Tur- key (-9.9% y/y) in 2016. Russia and Ukraine posted double-digit growth rates, while Azerbaijan (+9.3% y/y) was the single largest contributor to overall growth. Travel infl ows were up 11.7% y/y to US$ 1.68bn in 9M16. Based on our estimates, travel infl ows will reach approximately US$ 2.1bn in FY16.

ROUTING FLIGHT NUMBER WEEK DAYS DEPARTURE ARRIVAL TK 387 05.50 07.25 TBILISI - TK 385 11.45 13.25 ISTANBUL ATATURK AIRPORT TK 383 18.10 20.00 EVERYDAY TK 386 01.40 04.55 ISTANBUL ATATURK AIRPORT - TK 384 07.30 10.50 TBILISI TK 382 13.55 17.15 TBILISI - TK 381 07.40 09.00 ISTANBUL SABIHA GOKCEN AIRPORT EVERYDAY ISTANBUL SABIHA GOKCEN AIRPORT - TK 380 20.45 00.10+1 TBILISI BATUMI - ISTANBUL TK 393 17.50 19.10 EVERYDAY ISTANBUL - BATUMI TK 392 13.55 16.55 Tel: (995 32) 2 45 08 08 10 Galaktion Street E-mail: [email protected]

TIFLIS KIS TARIFESI 7.5x6cm ING.indd 1 02/11/16 15:23 GEORGIA TODAY JANUARY 17 - 19, 2017 BUSINESS 7 National Bank Green Bond Market in Georgia of Georgia to Reform Securities – a Growing Opportunity Settlement

vides investors with an attractive invest- System OP-ED BY JAN VAN BILSEN, ment proposition as well as an oppor- IFC REGIONAL MANAGER FOR tunity to support environmentally sound THE SOUTH CAUCASUS BY NINO GUGUNISHVILI projects. The potential of these bonds is enor- mous. A study released in November limate change is a threat to 2016 by IFC, a member of the World Bank he National Bank of Geor- development in our lifetime. Group, shows that the historic global gia and the Georgian Stock Studies show that poor agreement on climate change adopted Exchange are to begin people are more vulnerable in Paris last year helped open up nearly reforming the Georgian in the face of climate change, $23 trillion in opportunities for climate- securities settlement sys- asC it would likely spark higher agricul- smart investments in emerging markets Ttem. The upcoming reform aims to renew tural prices and could threaten food between now and 2030. The study found the securities settlement system to include security in poorer regions. Climate change sectors like renewable energy, urban the Georgian central securities deposi- will also magnify many threats to health, transport, and sustainable construction tory within. as poor people are more susceptible to especially promising. The recent initiative is part of the climate-related diseases. Green bonds could have a signifi cant capital market development strategy Therefore, without more action to impact here in Georgia. The country has jointly set by the National Bank and the reduce extreme poverty, provide access a very energy-intensive economy, using Government of Georgia in 2016. Upon to basic services, and build resilience, much more power than similar-sized fi nalization of the project, any securities global warming could push an additional European Union states. Green bonds including commercial banks, to fi nance scale solar power facility. That does not settlement in the country will be avail- 100 million people into poverty by 2030. could help change that by channeling sustainable projects across several sec- require state subsidies and will meet the able through a united system. In addi- While there are many ways we can reduce investments into climate-smart projects. tors. energy needs of 164,000 people, while tion, the Georgian Stock Exchange will our carbon footprint, fi nding the fund- According to estimates, Georgia could In December 2016, IFC hosted a semi- creating jobs and reducing dependency acquire a new trade platform from the ing for that is often challenging, espe- support about $1 billion in investments nar in Tbilisi, Georgia, on the state of on polluting diesel generators. In India, Montran Corporation, an American cially for governments with already in projects like those through 2020. the green bond market. Around 25 par- another green bond is helping a company company whose systems are used in 30 pinched budgets. That's in part because the government ticipants, including representatives of recycle e-waste from computers, dis- countries around the world. To help address the challenge, new and of Georgia is committed to developing the National Bank of Georgia, the Geor- carded mobile phones and other elec- The securities settlement system has innovative fi nancing solutions need to the renewable energy sector and improv- gian Stock Exchange and commercial tronics that can be harmful to the envi- operated in the Bank of Georgia since be developed. One increasingly popular ing energy effi ciency. The National fi nancial institutions, discussed current ronment and to peoples’ health. 2010, fi nanced by USAID and incorpo- tool is the green bond, which marshals Energy-Effi ciency Action Plan is cur- market conditions and opportunities for Investing in climate business through rating two components. The second funds from private issuers, including rently being developed, and the energy climate fi nancing. The event highlighted green bonds offers advantages for issu- component, RTGS, with which bank commercial banks, to fi nance sustainable sector has been shaped by a series of that there is potential for green bonds, ers, including a positive image as well transactions are made in Georgian Lari, projects. reforms undertaken in recent years. especially given a recent push by the as the strong appetite from investors, will also be upgraded. Green bonds aim to tap into the $80 Financing has been identifi ed as one of government to bolster the renewable which helps secure a good pricing for The project of renewal of the securi- trillion bond market. They are fi xed- the key mechanisms needed to support energy sector and to encourage energy the debt. But partnership and coordi- ties settlement system will be realized income, liquid fi nancial instruments, and further development of energy effi ciency effi ciency. nated action between government and through cooperation with ECB, EBRD the funds that green bonds raise are and renewable energy in Georgia. Green Examples of successful green bonds business is needed, and by working and Clearstream. The fi rst phase of the dedicated exclusively to projects that bonds offer an innovative solution, bring- are abound. In Mexico, a series of bonds together we can make it work for eve- project will be complete by the end of help combat climate change. This pro- ing needed resources for private issuers, are fi nancing the construction of a large- ryone’s benefi t. 2017. GEORGIA TODAY 8 BUSINESS JANUARY 17 - 19, 2017

Budget Rent-a-Car Enhancing Innovation & Efﬁ ciency

Budget Georgia will extend the operating leasing a-Car fl eet and making sure that the holding cost BY NINO GUGUNISHVILI WHAT SERVICES DO YOU OFFER AND WHAT DO YOU model for a one-year term and use this for shorter is covered. We will also establish novel mobility THINK ARE THE BENEFITS? periods, too, by utilizing the fl exibility of our Rent- services. Budget Rent-a-Car is the smart car rental choice tokoc Georgia LLC is the holder of for value-conscious customers, offering a simple, the master franchise of Budget Rent- effi cient rental process and delivering high value a-Car in Georgia. The company is a to the savviest of frequent renters. We offer a care- 100% subsidiary of Otokoc Automo- free, confi dent experience to the casual renter every tive Turkey which is the 31st largest time. What’s more,Budget Georgia aims to be the companyO of Turkey with USD 1.9 billion sales rev- fi rst and most innovative player in car rental in enues. Otokoc holds the licensee rights of Avis and Georgia. It will target the leisure and business seg- Budget not only in Turkey, but also represents Avis ments and offer online solutions as well as stations. in Kazakhstan, Azerbaijan, Northern Iraq and It will create a competitive advantage in its posi- Budget in Georgia and Hungary. Avis Budget Group tioning by enhancing innovation and effi ciency. is a US company with USD 8.5 billion sales revenues The company will become a signifi cant player of operating in 180 countries with 11.000 sales offi ces. the mobility market. Otokoc Turkey manages a car fl eet of 40,000 cars. GEORGIA TODAY met Berat Ecemis, Country WHAT DISTINGUISHES BUDGET Manager of Budget Rent-a-Car, to fi nd out more. RENT-A-CAR FROM OTHER COMPANIES ON THE MARKET? WHEN AND HOW DID YOU START Budget Georgia will stand out with its brand-new OPERATING IN GEORGIA? car fl eet, robust fi nancial position, and strong inter- The company was founded in January 2016 and national experience, corporate structure and focus Otokoc Georgia started active operations in Geor- on a still untapped operational leasing market. gia in September 2016. The company is currently We aim to place ourselves among the top 3 in based in Tbilisi with one downtown offi ce in Rose Rent-a-Car. Our company will leverage Rent-a-Car Revolution Square and the other in the Shota as the primary growth engine for Budget by going Rustaveli Tbilisi International Airport. after a greater market share and strengthen its long-term rental position. It will tap under-pene- trated market segments – international companies, small and medium sized enterprises and retail customers. We will also pioneer in 360 degree Mobility. It will earn fi rst-mover advantages by establishing novel mobility services in Georgia. We aim to achieve operational excellence, and lead corporate effi ciency and bottom line results by focusing on fl eet management and technology.

WHAT CHALLENGES DO YOU FACE DOING BUSINESS IN GEORGIA? The challenging factor in Georgia is its still unregu- lated car market for the import of used cars. 0% VAT for new car sales lies ahead of the development of operational leasing, while the latter offers all kind of services related to everyday vehicle operations up to 48 months. In operational leasing, there is no need to tie up the capital of the leasee in the vehicles and the funds saved can be used for its core business. Vehicles are not part of the balance sheet. Any cost for tires, insurance, tax, repair and maintenance and replacement of the vehicles is incurred by the leasor.

ARE THERE ANY NEW SERVICES YOU PLAN TO INTRODUCE AND IMPLEMENT IN THE NEAREST FUTURE? GEORGIA TODAY JANUARY 17 - 19, 2017 BUSINESS 9 Reduced Gas in Ukraine Leaves Chilly Locals Turning to Firewood

end of the winter. That severe frosts would limit BY DIMITRI DOLABERIDZE gas supplies was already calculated in early autumn,” Kapitonov said. To fi ght the cold, Ukrainians are having to turn eduction of gas supply has been noted to fi rewood, choosing this over the alternative- in a number of regions in Ukraine, renewing deals with Russian giant "Gazprom". Coal explained by supplier Naftogaz as being is not an option- buying supplies from Donbas is associated with the accumulated debt impossible, and attempts so far to fi nd an alterna- of consumers. tive supplier at a reasonable price have failed. RHowever, given that the measures were taken Dmitry Marunich, director of the Institute of during the cold season, it is suspected that the real Energy Research, in an interview with a Ukrainian reason lies in the gas having been deliberately TV channel, said that in the cold period after new reduced. year, Ukraine has managed to avoid rolling black- “We’re talking about a reduced gas supply, rather outs only because of its coal reserves. than termination,” said Ivan Kapitonov, a senior "If the frosts repeat at a temperature below -10 fellow at the Institute of Economics, Associate -15 degrees, problems can be expected again in the Professor. “It can be assumed that the pipes are third week of January. And these problems are not frozen as the risk of the pipes bursting would likely to affect gas transit to Europe, because, as it risk multibillion-dollar losses”. has been said, there is a minimum necessary amount "Clearly, these measures are due to lack of gas, of gas in the pipes to fulfi ll needs," Marunich warned. and the debtors in this situation just happened to At the beginning of the heating season Ukraine, be non-payers. In the past, the calculation was accumulated 14.6 billion cubic meters of gas. How- carefully planned, while today it seems that the ever, November gas consumption increased by 17% truth is a struggle to keep enough gas to last to the over the same period in 2015. New Airport Terminal Opened in Ambrolauri, Racha

capacity to accommodate the L 410 aircraft with BY NINO GUGUNISHVILI 15 to 20 seats. The terminal itself can accommodate up to 50 passengers with the possibility of future expansion. acha, a mountainous region in north- The construction and opening of the airport ter- west Georgia, now has its own airport. minal in Racha is expected to bring new life and Offi cially opened on January 14, the possibilities to the Racha - Lechkhumi region, as fi rst passenger to fl y into the new ter- a part of the government’s Four Point Plan which minal in Ambrolauri was Georgian entails infrastructure, local business, and tourism RPrime Minister Giorgi Kvirikashvili. The Ambrolauri development throughout the country. The govern- runway was fi rst opened in October last year. ment’s Four Point Plan also aims at supporting the Ambrolauri airport is set to receive twice-weekly growth of family-type guesthouses and hotels, while fl ights on its 30-meter runway a micro grants program is available to assist small- strip, which has the scale entrepreneurs to successfully run their family-owned farms. Built according to international standards, the new airport in Ambrolauri is expected to encourage more tourists to visit the region, thus creating additional employment opportunities and sources of income for the locals. GEORGIA TODAY 10 BUSINESS JANUARY 17 - 19, 2017 WEG: Georgia Losing in Gazprom Deal of the previous agreement and receive WEG is concerned by the secrecy sur- interests and holds many economic, vital for future democratic development BY KATIE RUTH DAVIES 10% of gas from transit. Further, the rounding the deal. The Ministry claimed energy or political and military lever- and energy security,” WEG says, adding Ministry of Energy indicates that this that the transit fee is a “commercial ages against Georgia (Enguri HPP and that the country’s needs an energy secu- was not a free choice and negotiation secret” yet the negotiating parties were electricity consumption of Abkhazia, rity strategy which will defi ne sector he Government of Georgia outcomes were forced by Russia.” not full-fl edged commercial agents and dependence on electricity import, own- development and guide the actions of accepted the Gazprom WEG experts say that although the the price remains "secret" only to the ership of energy assets etc.),” the WEG policy makers. “The existing practice of Export Deal to shift to mon- monetary settlement for transit is more Georgian population while, WEG says, site claims. non-transparent governance in the energy etary payment for Russia in line with international practice and it is very likely that all other interested WEG concludes that the negotiations sector does not allow the full defense of -Armenia gas transit. With WTO rules, the new transit conditions stakeholders will easily access this infor- with Gazprom Export go well beyond national interests and needs to be changed Tthis agreement, Georgia loses the ben- are signifi cantly worsened with respect mation from their own sources. the energy framework and need to be through reforms.” efi ts of receiving in kind gas materials to previous ones, both in economic and WEG points out that the Transit fee discussed in the context of National and becomes more sensitive to gas price energy security terms. was not set by the regulator (GNERC); Security. “The involvement of the Min- Note: North-south gas transit does not fall volatility, claims independent think-tank “Negotiations with Gazprom Export it was negotiated by the Ministry of istry of Foreign Affairs, National Security under the regulation of Energy Community World Experience for Georgia (WEG). were conducted one-on-one, behind Energy of Georgia and most probably Council and other security stakeholders, accession process for Georgia, according to It is clear, they say, that according to closed doors, without proper risk analy- does not refl ect all previous and future as well as international organizations the membership protocol, gas transit agree- the new terms of monetary compensa- sis, negotiation strategy, scenarios anal- costs related to transit. and partner countries, is crucial but was ments are exempt from the requirements of tion, Georgia will receive less value than yses and involvement of international “The negotiated Gas purchase price not considered in the recent negotia- EU directives (Derogation). it could get from natural gas according or local experts, international political for Georgia ($185 per 1,000 cubic meters) tions,” WEG states. to the previous agreement. allies or general public. These circum- is political,” says WEG. “It is higher They consider it equally important to World Experience for Georgia (WEG) is an “Georgia will be receiving gas from stances raise doubt as to whether the than the price for Armenia ($165 consider political preparation, use expert independent, non-profi t think tank dedicated Russia for $185 per 1,000 cubic meters country’s interests were fully defended USD/1000m3) and even for Germany knowledge and a systematic approach to strengthening Georgia’s energy security but this refers only to the so called ‘social’ and the best possible outcome was ($160 USD/1000m3). In addition, the to ensure transparency and public involve- and economic sustainability, supporting and sector and only in case of defi cit. There achieved,” WEG says. “Considering the purchase agreement is not signed with ment in order to reduce risks and protect challenging Georgian decision-makers at all is no expectation of competition with existing non-transparent environment, a fi xed volume of gas, which strength- the best interests of the country. levels to make informed decisions based on SOCAR in the ‘commercial’ sector,” the it is important to understand how and ens SOCAR’s monopoly power (espe- “The existing non-transparent and accurate analysis and knowledge, and pro- WEG site reads. “It’s a two-year long why it was possible to maintain the exist- cially in 'Commercial' sector) even non-competitive environment in the gas viding a platform for engaging partners, deal and in 2017 the in-kind payment ing deal in the last year; what was the further, while Russia is being treated as market contradicts the interests of the stakeholders and citizens in the country’s will be maintained partially, for 1bcm. convincing argument that made Russia a common trade partner in negotiations, country and consumers. Gas market policy-making in the debate about the future However, it is unlikely that Georgia will agree to favorable conditions for Geor- despite the fact that it explicitly violates reform and introduction of transparent of the country in its path to Euro-Atlantic inte- ever return to the terms and conditions gia, and what has changed now?” international law, has obvious political regulations and healthy competition is gration.

RENT YOUR DREAM APARTMENT IN TSKNETI

Very cosy one bedroom 75 sq.m apartment in Tbilisi area with spectacular view over the mountains. Located in Tskneti, a prestigious, quiet, green and safe neighborhood 15 minutes drive from the city center. The bright and sunny apartment is newly furnished and comes with a fully equipped kitchen and bathroom. Comfortable and stylish living-room, cozy bedroom with closet and king-sized bed. 20 sq.m terrace overlook- ing the mountains. Relax while enjoying the view and unwind with a glass of wine on the balcony as you watch the sun set. Parking & WiFi available. If you are looking for the perfect place to live, this is the apartment for you! Only long-term residents should apply. Ideally suited for a couple or single. For more information contact: + 995 595279997 GEORGIA TODAY JANUARY 17 - 19, 2017 POLITICS 11 End of Days: What Empowers ISIS?

BY ZURAB KHUTSIANIDZE

espite being one of the best-fi nanced terrorist organizations in the world, the Islamic State is unable to sus- tain itself solely on behalf of its oil revenues and the ransoms received throughD hostages. Their tactics of self-maintenance have previously been demonstrated, through the centralization of water, fl our and hydrocar- bon resources in the areas the jihadists advanced. Yet, one of the key instruments for their profi t- able expansion remained concealed in the Islamic eschatology. The vast majority of Muslims around the world think that the end of the days is either here, or will be here soon. According to a survey conducted in 2012 by the Pew Research Center, in most countries surveyed in the Middle East, North Africa, South Asia and Southeast Asia, half or more people believed they would witness the return of the Mahdi (The Guided One). The apocalyptic narrative suggests Mahdi’s appearance being directly linked to the preced- ing large-scale sectarian war, preparing the Mus- lim community for the second coming of Jesus. It is important to acknowledge that the early Islamic apocalyptic prophecies arose from the sectarian confl icts in the early Islamic world waged in Iraq and the Levant. Therefore, the

prophecies resonate powerfully in contemporary the Mahdi will eventually show up. Such ‘signs’ sectarian civil wars. of the incoming fi nal battle have largely sup- Narratives of the coming fi nal battle were already ported the spread of Jihadi-Salafi st ideology being hijacked as early as the 1980s, when Abdul- across the globe. lah Azzam, the founder of modern jihadism, The capture of Dabiq- a Syrian farmland 6 kil- encouraged all Muslims to take part in the jihad ometres away from the Turkish border, should in Afghanistan. The Islamic State, however, began also be understood as an important milestone to promote the apocalyptic traditions using liter- supporting the jihadists. Prophet Muhammad is alist approach- through actions as well as words. believed to have said that the “last hour will not The Islamic State initially intended to manipulate come until the Muslims vanquish the Romans at the Muslims into infl aming rivalry between the Dabiq”. two major sects, as it would have been considered The occupation of Dabiq enabled the Islamic as a sign that the fi nal days had arrived. The lit- State to boast its success and the importance of eralist approach of the Daesh has also been dem- the location for the fi nal battle to come. Later, onstrated by their interest in Syria and Kobane in its declared intentions to conquer Constantino- particular, as the eschatological literature refers ple (Istanbul) supported their claims of closely to the crisis in Syria and the massacre of Kurds. following the prophecy. Furthermore, the Islamic The Islamic state has used the prophetical pre- State eagerly awaited the arrival of the enemy dictions to attract more members. In an interview army in Dabiq in order to defeat them and initi- with Reuters, a Sunni Muslim stated: ate countdown to the apocalypse. “If you think all these mujahideen came from As expected, the capture of the town inspired across the world to fi ght Assad, you are mistaken. many Islamic State supporters to become directly They are all here as promised by the Prophet. involved in the fi nal battle; however, their enthu- This is the war he promised- it is the Grand Bat- siasm did not last long. The town of Dabiq was tle”. recaptured by the Syrian rebels in October 2016, ISIS has also emphasized the appearance of the following other major losses of the Islamic State. pro-Assad Hezbollah militia- whose fl ag is yel- Despite this, the Daesh will eventually try to low. The Islamic eschatology prognosticated that advance in Dabiq again and again, as devotion when the fi ghters with yellow fl ags fi ght anti- to the apocalyptic narratives has come to be an Shi’ites in Damascus and Iranian forces join them, integral part of the ISIS modus operandi.

PUBLISHER & GM Journalists: Photographer: ADDRESS Reproducing material, photos George Sharashidze Tony Hanmer, Irakli Dolidze 1 Melikishvili Str. and advertisements without Zaza Jgarkava, Tbilisi, 0179, Georgia prior editorial permission is COMMERCIAL Maka Bibilashvili, Layout: strictly forbidden. DEPARTMENT Karen Tovmasyan, Misha Mchedlishvili Tel.: +995 32 229 59 19 The author is responsible for Commercial Director: Dimitri Dolaberidze, E: [email protected] all material. Rights of authors Iva Merabishvili Maka Lomadze, Webmaster: F: GeorgiaToday are preserved. The newspaper Marketing Manager: Tim Ogden, Joseph Larsen, Sergey Gevenov is registered in Mtatsminda Mako Burduli Vazha Tavberidze, ADVERTISING & district court. Nugzar B. Ruhadze, Circulation Managers: SUBSCRIPTION EDITORIAL DEPARTMENT: Nino Gugunishvili, David Kerdikashvili, +995 595 279997 GEORGIA TODAY Editor-In-Chief: Thea Morrison, David Djandjgava E-mail: marketing@ Reg. # 06/4-309 Katie Ruth Davies Natia Liparteliani georgiatoday.ge GEORGIA TODAY 12 SOCIETY JANUARY 17 - 19, 2017 A Second Chance for Back to School

Newly Equipped Disability Friendly School & New Gov’t ‘Healthy Youth’ Initiative

Alexander Jejelava, and other govern- even so, physical activity and exercise BY THEA MORRISON ment offi cials. are gaining in popularity again. That is The PM noted that the new school why we want to offer each school and building was the most modern educational each child a fi rm base of opportunity in sandre Jejelava, Minister of Education and upils of Tbilisi Public School facility in Georgia: “For a civilized society, terms of physical activity,” the PM said. BY NINO GUGUNISHVILI Science and hopes to identify children 103 are to continue their stud- it is necessary to fi ll social gaps and give The Education Minister noted that the who are not currently attending school, ies this term in a new building everyone the chance to gain knowledge aim of the new initiative was a healthy and to reach out to those who, due to fam- equipped with modern facil- and integrate into society,” he said. generation. he Ministry of Education ily circumstances, are in danger of not ities and adapted for the Kvirikashvili went on to announce a “We are going to involve youth in more and Science has announced fi nishing all nine obligatory grades. disabled.P new initiative of the government – pop- sports activities. We are sure that chil- a new program in which Young adults who have already left The new building was constructed on ularization of an active lifestyle, which dren want to develop in this direction," both youth and adults who school before completing their nine years the area of the original school, which means that Education and Sports Min- said Jejelava. have been unable to receive will have specially-designed programs was demolished 3 years ago, on Meskheti istries will offer special programs to The Education Reform is one of the Ta secondary education, for whatever enabling them to pursue professional Street, Isani district. students in order to promote a healthy top priorities of the government’s Four reason, will now have a second chance education. Programs for integrating The opening ceremony was attended lifestyle among youth. Point Plan. Moreover, Georgia’s Presi- to fi nish their studies. homeless children into the education by the Prime Minister of Georgia, Giorgi “Our children are very actively involved dent, Giorgi Margvelashvili, declared The program was introduced by Alek- system are also to be catered for. Kvirikashvili, the Education Minister, in the use of modern technologies but 2017 as the Year of Education. Human Rights Watch Includes Georgia in Its 2017 World Report

committed by law enforcement offi cials. BY THEA MORRISON In particular, the report relates that in July, the Georgian Young Lawyers’ Asso- ciation (GYLA), a leading human rights uman Rights Watch group, published a report analyzing 22 (HRW), an American- cases they litigated in the past two years founded international concerning alleged torture and ill-treat- NGO that conducts ment by law enforcement offi cials. research and advocacy on The suicide of 22-year-old Demur Stu- Hhuman rights, has published its World rua in August was also included. The Report 2017, subtitled “Demagogues young man left behind a note accusing Threaten Human Rights.” Key events a local policeman of coercing him to from Georgia’s last year are mentioned inform on local cannabis growers. within. HRW says that several criminal cases The October 8th parliamentary elec- against former offi cials have raised ques- tions, the state security service’s unfet- tions about selective justice and politi- tered access to telecom operators’ net- cally motivated prosecution here. The works, associated fears of a compromised issue of whether marriage ought to be right to privacy, the persisting lack of legally defi ned as the union between a accountability concerning alleged abuses man and a woman, raised by the GD and committed by law enforcement agencies, blocked by President Margvelashvili, the restriction of media freedoms, and However, they also noted procedural Constitutional Court of Georgia ruled box” surveillance devices in telecom- made the list as well, as did the Rustavi the rights of LGBT people were high- violations during the vote count in almost as unconstitutional legislation that allows munications service providers’ networks. 2 TV dispute, which is currently being lighted by HRW as the main events of one-third of all polling stations and vio- state security services to have direct, The court found this system allows mass considered by the Grand Chamber of 2016 in Georgia. lent altercations in four. unrestricted access to telecom operators’ collection of personal information in the Supreme Court. The report says that The NGO reports that parliamentary “Local monitoring groups highlighted networks to monitor communications, real time without effective oversight. this last dispute has “raised concerns elections in Georgia, in which the ruling some cases of vote-buying, alleged polit- and ordered the authorities to reform The leakage of a number of private con- about ongoing government interference party Georgian Dream (GD) won an ical intimidation, and campaigning by surveillance regulations by March 2017. versations and videos, a top issue in the with media.” overwhelming victory, were assessed by unauthorized persons, but found these Legislation adopted in 2014 had imposed lead-up to the elections, found a place in In the 687-page World Report, its 27th international observers as being “com- had no effect on the overall outcome,” restrictions on surveillance operations the report, which also takes Georgia to edition, Human Rights Watch reviews petitive, well-administered and (gener- the report reads. by law enforcement, but left in place the task for not having an independent, effec- human rights practices in more than 90 ally respectful of) fundamental freedoms.” The report also says that in April the security agencies’ operation of “black tive mechanism for investigating crimes countries.