Disabled Demand More Attention from the State International Property Rights Expert on Georgian Plain by THEA MORRISON Packaging

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Issue no: 958/84 • JUNE 27 - 29, 2017 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue... FOCUS ON THE OVER-INDEBTEDNESS TRAP A look at Georgia's excess borrowing and the microﬁ nance institutions that are helping it happen PAGE 4

Construction of Shuakhevi Hydro Power Plant Completed NEWS PAGE 2 NRW.INVEST Explores Georgia’s Investment Potential PAGE 5 Disabled Demand More Attention from the State International Property Rights Expert on Georgian Plain BY THEA MORRISON Packaging

eople with disabilities held a protest rally PAGE 6 on Saturday asking for proper infrastructure in the streets and in public transport, as A Look at the Russian well as for more involvement in social processes and decision-making. Military Moves in Georgia’s PThe protesters gathered at Rustaveli Metro station and marched in the direction of the old Parliament Breakaway Territories building. The demonstrators claim that their rights are violated POLITICS PAGE 11 and ask for proper fulﬁ llment of the United Nations (UN) convention, ratiﬁ ed by the Georgian parliament in 2013. Young Georgian Students “We are protesting the violation of our rights…We are the most invisible community at present,” protester Participate in Active Giorgi Akhmeteli stated. The protesters also say that the life of disabled peo- Citizenship Summer Camp ple is even harder in villages and remote regions. Continued on page 2 Disabled people’s rally. Source: Auditorium 115 Facbook SOCIETY PAGE 11

Prepared for Georgia Today Business by Markets Asof23ͲJunͲ2017 STOCKS Price w/w m/m BONDS Price w/w m/m BGEOGroup(BGEOLN) GBP34.92 Ͳ3,8% Ͳ5,3% GEOROG04/21 105.42(YTM5.17%) Ͳ0,0% Ͳ GHG(GHGLN) GBP3.80 Ͳ3,7% +8,5% GEORG04/21 111.93(YTM3.49%) Ͳ0,2% +0,7% TBCBankGroup(TBCGLN) GBP16.68 Ͳ3,6% Ͳ0,4% GRAIL07/22 110.43(YTM5.36%) Ͳ0,3% Ͳ0,2% BGEOLN07/23 101.86(YTM5.63%) +0,1% +0,8% COMMODITIES Price w/w m/m CrudeOil,Brent(US$/bbl) 45,54 Ͳ3,9% Ͳ15,9% CURRENCIES Price w/w m/m GoldSpot(US$/OZ) 1256,71 +0,2% +0,4% GEL/USD 2,4088 Ͳ0,2% Ͳ0,0% GEL/EUR 2,6816 Ͳ0,7% Ͳ0,2% INDICES Price w/w m/m GEL/GBP 3,0627 Ͳ0,7% Ͳ1,8% FTSE100 7424,13 Ͳ0,5% Ͳ0,8% GEL/CHF 2,4845 +0,3% +0,5% FTSE250 19685,09 Ͳ0,7% Ͳ1,2% GEL/RUB 0,0405 Ͳ3,6% Ͳ4,9% DAX 12733,41 Ͳ0,2% +0,6% GEL/TRY 0,6868 Ͳ0,3% +2,1% DOWJONES 21394,76 +0,0% +2,2% GEL/AZN 1,4183 Ͳ0,9% Ͳ0,1% NASDAQ 6265,25 +1,8% +2,1% GEL/AMD 0,0050 ͲͲ MSCIEMEE 139,17 Ͳ0,5% Ͳ7,2% GEL/UAH 0,0926 Ͳ0,2% +1,1% MSCIEM 1011,67 +0,9% +0,7% EUR/USD 0,8933 +0,0% Ͳ0,1% SP500 2438,30 +0,2% +1,7% GBP/USD 0,7863 +0,5% +1,9% MICEX 1867,46 +2,4% Ͳ4,7% CHF/USD 0,9693 Ͳ0,4% Ͳ0,7% MSCIFM 2691,74 Ͳ1,0% +0,0% RUB/USD 59,4517 +3,2% +5,6% GTIndex(GEL) 1133,66 ͲͲTRY/USD 3,5093 +0,2% Ͳ1,8% GTIndex(USD) 922,38 Ͳ0,4% +0,6% AZN/USD 1,7000 +0,8% +0,9% GEORGIA TODAY 2 NEWS JUNE 27 - 29, 2017 Disabled Demand Zip-Line Attraction Brings More Extreme to Tbilisi More Attention weighing 25 to 120 kilograms, at any one BY THEA MORRISON from the State time and it takes as little as 30 seconds to slide down the wire. The organizers of new zip-line say that safety standards Continued from page 1 bilisi visitors and citizens are maximally ensured at the site. The movement of students - Audito- who love that rush of Giorgi Chogovadze, Head of Tourism rium 115 - also joined the rally. adrenaline can now enjoy Administration of the Ministry of Econ- “It is necessary to allocate funds in a fascinating view of the omy and Sustainable Development order to let the disabled move freely in city by taking the zip-line attended the opening ceremony of Zip- the streets, get education and fi nd work,” fromT Narikala Fortress down into the Line Narikala. said Levan Lortkipanidze, Auditorium Botanical Garden. "We are glad that new touristic infra- 115 member. The distance between the two points structure is opening in Georgia, espe- Improper living conditions of the dis- is 270 meters, the height is 30 meters cially considering that the number of abled were raised by the Public Defender and it has both slow and fast modes. tourists is increasing dynamically in the of Georgia, Ucha Nanuashvili, last week. The zip-line can serve three people, country," he said. During the presentation of his special Report on the Rights of Persons with Disabilities, Nanuashvili said that independent living for the disabled is not promoted in Georgia. Construction of Shuakhevi Hydro Power “We do not have an effective mecha- nism of implementation of the UN Con- vention. Georgia joined this convention but it is not being executed,” he said. He also spoke about systemic problems Plant Completed that signifi cantly hamper the inclusion of the disabled in society. way's Clean Energy Invest, Interna- BY THEA MORRISON “The main problem is that these people tional Finance Corporation (IFC), Asian are isolated from society. There are Development Bank (ADB) and the problems in terms of infrastructure, European Bank for Reconstruction and transport and access to the physical ne of the largest Hydro Development (EBRD) - contributed to environment and information,” the Power Plants (HPP) in the construction of the HPP. Ombudsman said. Georgia, the Shuakhevi Georgian Prime Minister, Giorgi Furthermore, Nanuashvili’s report says HPP, has reached com- Kvirikashvili, members of the cabinet that participation of persons with dis- pletion. It is expected to and representatives of the project abilities and their representative organ- Oproduce 450 gigawatt (GW) hours of partner and investor companies izations in the decision-making process power annually and reduce greenhouse attended the construction completion at various levels of government was low. gas emissions by more than 200,000 ceremony. Some barriers were also observed dur- tons per year. The PM said that Shuakhevi HPP will ing the voting process. Located in Georgia’s western Adjara employ 300 people and will contribute He negatively assessed the measures region, Shuakhevi HPP is the fi rst to motivating locals not to abandon taken by the State in terms of employ- hydropower project in Georgia certi- their native region and will assist the ment of persons with disabilities, adding fi ed by the United Nations Framework State in promoting development of that in 2016 the number of disabled peo- Convention on Climate Change for mountainous Adjara. Georgian PM said the HPP would contribute to Georgia's energy independence ple employed in the public sector was carbon emission reduction. “This project has already brought life of the local population”. Within the framework of the project, 52 while in private sector only 32 disabled The construction works of the HPP benefi ts to the local population in terms He went on to express hope that 730 citizens of Georgia were employed people were employed. were launched in 2013 and in total $416 of social projects, employment and Shuakhevi HPP will contribute to Geor- in construction. The Ombudsman called on the govern- million was invested in the project. compensation,” Kvirikashvili said. “This gia's energy independence and will be Shuaskevi HPP is the largest station ment to take proper measures in order Adjaristskali Georgia – a joint venture serves the economic development of an exemplary project for potential to have been constructed in Georgia to solve the problem. between India’s Tata Power and Nor- Adjara and will improve the quality of investors. in the last 50 years.

GEORGIA TODAY 4 BUSINESS JUNE 27 - 29, 2017 THE ISET ECONOMIST A BLOG ABOUT ECONOMICS AND THE SOUTH CAUCAUS www.iset-pi.ge/blog

The ISET Policy Institute (ISET-PI, www.iset-pi.ge) is an independent think-tank associated with the International School of Economics at TSU (ISET). Our blog carries economic analysis of current events and policies in Georgia and the South Caucasus region ranging from agriculture, to economic growth, energy, labor markets and the nexus of economics, culture and religion. Thought-provoking and fun to read, our blog posts are written by international faculty teaching at ISET and recent graduates representing the new generation of Georgian, Azerbaijani and Armenian economists.

Graph 1: BORROWERS FROM COMMERCIAL BANKS PER 1000 ADULTS IN In Debt & Broke in Georgia GEORGIA

alarmingly high 2.4 million people by in the third quarter of 2016. BY DAVIT KESHELAVA the end of 2016. This recent worthening of the debt Based on these statistics, one can eas- burden is directly related to the sharp ily estimate that nearly 64% of the total depreciation of the Lari against the US n individual living in Kutaisi population, including juveniles and pen- Dollar and slowdown in economic growth. took a $1500 real estate sioners, have some kind of loan contract, And yet, despite the increasing burden secured loan from a micro- or several contracts, with fi nancial insti- of debt, households seem to be repaying fi nance institution in 2011 tutions, and if we exclude teenagers and their loans: both by IMF and NBG meas- and had to pay a $75 interest pensioners from the reference popula- ures, the non-performing loans of deposit- rateA for the following six months. The tion, this number will increase even taking institutions remain at a reason- purpose of taking this loan was to fi nance more. The average number of loan con- ably low level (it is widely recognized the treatment of her child. She was una- tracts per person in commercial banks that non-performing loans are much ble to cover monthly payments and pro- also seems to be quite high. higher in the case of microfi nance insti- longed the term to 10 months, but failed tutions, but it creates less problems in to cover these payments again and was INDEBTEDNESS ON A terms of fi nancial stability). Thus, the fi ned several times. In the end, the loan MACROECONOMIC LEVEL stability of deposit-taking fi nancial insti- was restructured and monthly interest Improved access to fi nance and the rap- tutions is not yet under threat. raised to $83, while the amount of total idly increasing number of adults with sale of the pledged real estate in case of 700,000 by the fi rst quarter of 2016 and loan nearly doubled to $2700. As a result, debt in different fi nancial institutions WHAT IS THE RISK OF a default. Since the collateral require- then reached a historical high of 1.1 mil- she was unable to pay that much money are refl ected in various macroeconomic OVER-INDEBTEDNESS? ments are very high relative to the value lion in the last quarter of the same year. and got an enforcement decision regard- indicators commonly employed to meas- Just because the non-performing loans of the loan, even if the MFI sells an Second, according to the Financial Access ing the auction sale of her property. ure the indebtedness of the population. ratio is low and stable, it doesn’t mean expropriated property at half price, they Survey (FAS) of the International Mon- For instance, the highest household debt that we have nothing to worry about. can still profi t from a loan project. etary Fund, Georgia was the third coun- EXCESS BORROWING to GDP ratio before the global fi nancial Elevated debt levels create the risk of Therefore, there is a strong issue of try by the number of borrowers from IN GEORGIA crisis of 2008 was below 15%, while this lower consumption and sluggish GDP moral hazard – MFIs are mainly ignor- microfi nance institutions per 1000 adults This is just one sad story of an individ- indicator reached a historic high of 35% growth that further increase the risk of ing the fi nancial health of borrowers in 2015, behind Bangladesh and Peru. ual entering the over-indebtedness trap, at the end of 2016. From this, we can over-indebtedness in the future. (they even give loans to people without Third, the amount of real estate and while we hear thousands of such stories conclude that debt accumulation in the In economic literature, over-indebted- a permanent income) and rely on the movable property taken into ownership nowadays in Georgia. It is widely recog- economy is increasing much faster than ness is defi ned as inability to meet a real estate provided as a collateral. Bear- by microfi nance institutions has been nized that the majority of the Georgian Gross Domestic Product. recurring expense associated with a ing in mind the much stricter loan stand- increasing rapidly in recent years. For population has debt with fi nancial insti- Even more alarmingly, household debt contracted fi nancial commitment (this ards in commercial banks, the MFI type instance, the value of repossessed real tutions, including commercial banks, to households’ disposable income ratio inability must be persistent to exclude of credit is mainly taken by poor and estate was 1.6 million GEL in the fi rst microfi nances and various private lend- skyrocketed to 200%. Such a high ratio one-off occurrences like forgetfulness). unemployed people. They are the ones quarter of 2012, then it increased to 6 ers. According to the recent Financial is rare in the world. For example, there Society with excess borrowing is prone most vulnerable to over-indebtedness million GEL in the fi rst quarter of 2015 Access Survey (FAS) proposed by the were only 5 countries among OECD to over-indebtedness when 'risky life trap (Economic Policy Research Center and skyrocketed to a historically high 14 International Monetary Fund (IMF), nations in 2015 that had a ratio higher events' take place. For example, a sud- (EPAC) – Management of nonperform- million GEL in the fi rst quarter of 2017 Georgia is among countries that has an than Georgia – Switzerland (211%), Aus- den job loss (quite relevant when eco- ing loans in Georgia, 2014). (see graph). Therefore, despite the fact excessively high number of borrowers tralia (212%), Norway (222%), Netherland nomic growth has slowed down), a busi- These fi ndings perfectly agree with the that MFIs are, for the most part, not from commercial banks. It turned out (277%) and Denmark (292%). The same ness failure, illness and emergency empirical data. First, the number of loan deposit-taking institutions, we should that the number of borrowers per 1000 measure was relatively low (commonly surgery treatment (despite a universal contracts with microfi nance institutions remember that behind these “impres- adults has already reached 680 people less than 100%) for less developed coun- insurance system, patients still need to has been increasing dramatically in the sive” numbers, there are stories of poor which is the second highest rate in the tries. share expenses) and sharp currency past several years. For example, in the and vulnerable people whose fi nances world (FAS 2015). It is notable that the No doubt, debt to disposable income depreciation (especially for countries fi rst quarter of 2013, there were 400,000 collapsed under burden of expensive number of borrowers was increasing is a very simple measure, and policy with a huge currency mismatch). loan contracts with microfi nance insti- loans and who lost the only property steadily until 2015, when the recent eco- makers should be cautious when inter- Furthermore, over-indebtedness might tutions, while this measure increased to they owned. nomic slowdown forced commercial preting it. For example, this ratio com- be caused by irrational borrowing by indi- banks to be a little more careful while pares the stock of debt to the fl ow of viduals which come from poor fi nancial giving out loans to individuals (see Graph disposable income and a person – it management skills of the population and 1). doesn’t mean that a person is required aggressive marketing by lenders, which In addition, according to the CEO of to pay off their loan in a single year. endangers the least educated and the least ‘Credit Info Georgia’, Aleksandre Gomi- Moreover, debt to disposable income well-off groups of the population. ashvili, there has been a rapid expansion ratio measures the debt of people who of registered loan contracts in recent borrowed money relative to the income MICROFINANCE INSTITUTIONS three years. On December 31, 2014, the streams of people who may or may not AND LOST PROPERTY number of loan contracts registered have borrowed. Going back to the story at the beginning, (containing individuals and legal enti- To better see the dynamics of debt over-indebtedness is especially painful ties) in the system was 8.5 million. This burden, one could look at the ratio of when people lose their property. In this number fi rst increased to 12.5 million by household debt service and principal respect, the lending practices of micro- the end of 2015 and then soared to the payments to income. It is not surprising fi nance institutions (MFIs) call for fur- record high of 18.2 million by the end of that the average debt burden of Georgia ther scrutiny. 2016. Furthermore, the number of indi- was relatively low in 2012 and its growth It is widely accepted that most MFIs viduals that borrowed money based on accelerated only from the beginning of get their high profi t from charging high these loan contracts amounted to an 2015, reaching the peak value of 24.6% interest rates and from repossession and

Tel: (995 32) 2 45 08 08 10 Galaktion Street E-mail: [email protected] GEORGIA TODAY JUNE 27 - 29, 2017 BUSINESS 5 Czech Defense Minister Visits Georgia for Defense Industry Presentation Munich University & Kutaisi BY DAVID MONGAZON University City Become Partners

he Czech Ministry of founder of the ruling Georgian Dream BY THEA MORRISON Defense Martin Stropnicky party. visited Georgia alongside Cartu Fund has allocated EUR 1 billion a number of Czech defense for the project. company representatives, eorgian Prime Minister, The complex, which will be able to Tto present the country’s top weaponry, Giorgi Kvirikashvili said cater for 60,000 students, will be a typ- vehicles and aircrafts in the Czech that Munich Technical ical university-type campus with several Embassy on June 23, before Georgian University and Kutaisi university buildings, accommodation Army offi cials. University Complex have blocks, and other learning facilities all In a brief introduction, Stropnicky Gsigned a memorandum which makes in one place - the fi rst of its kind in underlined the full support of his coun- Munich Technical University the partner Georgia. try to Georgia’s territorial integrity claims leading fi rm created in 1934 which deals trucks in order to meet the expectations of the project. University City will be spread over 140 and assured that the Czech Republic was with aerospace, security technologies of the armed forces. “Kutaisi University City is a historic Hectares of land in the outskirts of Kutaisi, ready to help its Caucasian partner, which and equipment. Omnipol presented two The Czech Minister also took the project that will have a huge impact on west Georgia, in the middle of a forest was one of the reasons for the meeting. of its subsidiaries. One of them is ERA, opportunity to unveil a statue of Vaclav Georgia's development,” the PM stated which also features a lake. The presentation consisted of six com- a company owned entirely by Ominpol Havel, located in a park of the same name at the cabinet session on Thursday. It will take several years to completely panies showcasing their activities and which developed passive surveillance in the neighborhood of Saburtalo-Vake, “Munich Technical University is one build the university complex but the fi rst different products, fi rstly introduced by systems and air traffi c management solu- by sculptor Jumber Jikia. Stropnicky of the world's highest-rated educational round of students is expected to be able Jiri Rezac, Vice-President for Coopera- tions called VERA-NG. RAMET came mentioned his honor to be in Georgia institutions and signing a memorandum to start at University City from late 2019. tion and Commercial Policy of the DSIA, next, providing SDD, a long-range pas- and noted that he “had to travel from with it is a very important step, which The project was initially announced in the Czech Defense and Security Indus- sive reconnaissance system. Then AERO [his] country to Tbilisi to fi nd a statue once again proves that Georgia has huge September 2016 by the Prime Minister try Association. This organization, estab- Vodochody, historically the largest air- of Vaclav Havel, because there are none potential to become an international of Georgia and envisions the creation of lished in 1997, gathers more than 100 craft training developer in the world, in Prague”. regional education center,” the PM added. a regional education and research hub member-organizations. Its tasks are to presented the L-39NG (Next Generation), President Margvelashivili commended Kvirikashvili also said that Georgia has by building the largest, most modern represent this cluster towards national a trainer and light attack aircraft dating the great statesman: “The life of Vaclav become popular not only among the university complex not only in Georgia, and international institutions, as well as back to 2015 and replacing the Cold War- Havel is proof that politics is not a dirty neighboring countries but also with but the whole Caucasus region. to the media. era L-39. thing”. Vaclav Havel was an intellectual European states. Rezac insisted on the fact that the Czech VOP CZ, presented its armed vehicles who served as fi rst President of the mod- “Kutaisi University will be one of the defense industry obtained very good and services to repair and modernize ern Czech Republic after the fall of the most important educational institutions results over the few last years, rising military equipment. The largest company communist regime. He played a signifi - in Europe,” he claimed. from EUR 200 million of exportations in the fi eld of training and simulations , cant role in the political dissidence lead- The fi rst University City will be com- in 2010 to more than EUR one billion VR Group, was also present. The last ing to the democratic transition. During pletely fi nanced by the Cartu Fund, a today, which shows, according to him, company to present was Tatra, a com- the inauguration, Martin Stropnicky charity fund established and fi nanced the quality of Czech produce. pany dating back to 1850 which provides concluded, “we owe him a lot, we even by Bidzina Ivanishvili, a Georgian bil- The fi rst company was Omnipol, a civil trucks as well as heavy-duty off-road owe him a statue”. lionair, former Prime Minister and GEORGIA TODAY 6 BUSINESS JUNE 27 - 29, 2017 International Property Rights Expert on Georgian Plain Packaging

numerous articles to ensure IP rights from distinguishing their goods. Such INTERVIEW BY MAKA LOMADZE are protected and that state regulations a decision would signifi cantly weaken do not in themselves become barriers IP laws and open the door for govern- to trade, this includes, for example: ments to deny trademark owners the orenzo Montanari, Director Article 15: identifi es trademarks as ability to use their marks without jus- of the Property Rights Alli- protectable subject matter tifi cation. Already in Australia there ance at ‘Americans for Tax Article 16: confers the exclusive right are movements to plain package sodas, Reforms,’ was in Georgia of trademark owners to prevent all alcohol, and other products. Trade- recently on a visit that coin- third parties not having the owner’s marks of the world’s largest companies cidedL with the Georgian parliament’s consent from using their trademark or are worth billions of dollars, including amendments to the law on Tobacco similar signs which are identical in the tobacco brands, encouraging competi- aging policies. States, the smoking rate has decreased Control, which includes packaging. course of trade. tion in the marketplace and allowing consistently without plain packaging. According to the new regulations, Article 20: protects the use of a trade- for the creation of millions of jobs. DOES PLAIN PACKAGING Instead of decreasing the smoking rate, from 2018 it will be illegal to use a logo marks from being unjustifi ably encum- TRIPS-Plus trade agreements explicitly HAVE ANY POSITIVE EFFECTS? plain packaging will invite the govern- and trademark on packages of tobacco bered in the course of trade…in a man- state the right to use trademarks. On The plain packaging measures do not ment to intervene in the economy based products. Conferences ‘Free Market ner detrimental to its capability to average, across the world, every coun- work to reduce smoking. In Australia, on political whims. However, even if Road’ were held in Tbilisi and Batumi, distinguish the goods or services of try with stronger IP protections accord- there is no noticeable drop in the smok- plain packaging reduced the smoking organized by the New Economic School one undertaking from those of other ing to the International Property Rights ing rate since plain packaging was rate, we would still be against because as a part of the campaign Coalition for undertakings. Index (IPRI) has much higher per enacted. Several econometric studies of its violation of IP. Economic Growth that is being held In addition: countries challenging capita income and rates of entrepre- have examined the smoking rate and in Europe under the leadership of the Australia’s plain packaging law at the neurship. Georgia should strengthen found no attribution to plain packag- DID YOU MEET WITH Australian Economics Center. WTO have argued it violates these IP protection, not weaken it. ing. Instead, the Australian National ANY GEORGIAN MPS OR GEORGIA TODAY met with Mon- articles: TRIPS Articles 1.1, 2.1, 3.1, 15, Drug Household Survey (NDHS) POLITICIANS TO SHARE YOUR tanari to talk property security issues 15.1, 15.4, 16, 16.1, 16.3, 20, 1, 27; Techni- HOW CAN THESE ARTICLES recorded an increase in daily smoking RECOMMENDATIONS? WAS in Georgia and worldwide. cal Barriers to Trade (TBT): Art. 2.1 DAMAGE THE OVERALL for 12-17 year-olds from 2.5% in 2010 ANYTHING SIGNED AS A PRE- and 2.2; and GATT 1994: Art. I, III:4 INTELLECTUAL RIGHTS to 3.4% in 2013 (one year after the CONDITION THAT THEY WILL WHAT DOES ‘VIOLATION The WTO panel has yet to make a PICTURE IN GEORGIA? implementation of plain packaging). TAKE THE REMARKS OF THE OF INTELLECTUAL PROPERTY decision. Any ruling that accepts any The Georgia plain packaging policy Studies conducted to prove plain pack- PROPERTY RIGHTS ALLIANCE RIGHTS’ MEAN? of the above changes would dramati- might affect the IP system in Georgia, aging would be effective were too INTO CONSIDERATION? The world standard for IP law is found cally upset the international IP legal especially considering its already low sanitized from real world variables. We did not specifi cally set up any meet- in the WTO TRIPS (World Trade framework. If the panel rules in favor score. According to our IPRI, Georgia’s They measured aversion to pictures ings with MPs. Our conferences were Organization’s Trade Related Aspects of Australia, these should be consid- score is tied with Portugal as the best and colors, but didn’t allow for choice open to everyone who cares about of Intellectual Property Rights) agree- ered loopholes to be fi lled rather than in the world for Registering Property, of substitutes or variable prices. Stud- property rights. That said, we certainly ment which is designed “to reduce an invitation for governments to enact with a score of 10, but it is not perform- ies after the plain packaging has been hope that MPs will consider the impor- distortions and impediment to inter- plain packaging. For instance, according well in IP Protection, with a score enacted show smokers dislike the pic- tance of protecting IP. I’m happy to national trade… and to ensure that ing to Australia (and perhaps if the of 2.4. I hope the Georgian government tures, but still continue to smoke. These share with everyone our international measures and procedures to enforce WTO panel rules in favor of plain will not support the fi nal implementa- amendments are not about reducing coalition letter against any type of plain intellectual property rights do not packaging) there is no right to use tion of this detrimental policy against the rate of smoking in Georgia. There packaging, supported by 47 interna- themselves become barriers to legiti- trademarks in the TRIPS agreement IP. Last but not least, European Union are other ways to reduce the smoking tional organizations, addressed to Dr. mate trade,” as noted in the preamble. and that removing trademarks would countries such as Germany are against rate, such as education campaigns. In Margaret Chan Fung Fu-Chun, the for- In fact, the TRIPS agreement contains not unjustifi ably encumber companies the implementation of any plain pack- other countries, such as the United mer WHO Director General.

GEORGIA TODAY 8 BUSINESS JUNE 27 - 29, 2017 From the Caspian Sea to the Persian Gulf?

we need to weigh everything before building this BY DIMITRI DOLABERIDZE channel. And, of course, Iran needs to obtain the consent of all countries of the Caspian basin before construction. I grew up in Baku on the Caspian ran is trying to "reanimate" an old project: coast, and I would like this pearl of nature to con- the construction of a navigable canal nearly tinue to please our descendants, and not be turned 700 km long which will connect the Cas- into a gutter”. pian Sea with the Persian Gulf. It will take Political Scientist Ilgar Velizadeh notes that it about $10 billion to start the project but pay was in Tehran in November 2003 that the Frame- backI is expected within the fi rst fi ve years of work Convention for the Protection of the Marine operation. This project is also interesting for Rus- Environment of the Caspian Sea (the "Tehran sia, since the new way to the Indian Ocean will Convention") was signed. Among the priority be half as short as the route through the Turkish areas of the document is the topic of cooperation straits and the Suez Canal and will become an between states in developing coordinated meas- alternative to the existing route through the Bos- ures to mitigate the consequences of fl uctuations porus-Dardanelles- Suez Canal and the Red Sea. in the level of the Caspian Sea. "I do not think that “The project of the Caspian-Persian Gulf navi- Tehran will depart from its practice of carefully gation channel was developed by Russian engi- weighing all the pros and cons, nor will it make neers in 1889-1892,” says Candidate of Economic an irresponsible decision," the expert said. Sciences, Alexei Chichkin, on the website of the Iranian Ecologist Professor Ismail Kakhrom is Military Industrial Courier. "The appearance of skeptical about the project. “One gram of water the project was facilitated by the collective refusal of the Caspian Sea contains 13 grams of salt. The of Britain, France, Austria-Hungary and Germany use of such water for agricultural purposes is to support the Russian proposals of 1878 concern- impossible, and desalting it is unprofi table,” he ing conferring control of the Bosporus and Dar- says, adding that there is no land suitable for agri- danelles to St. Petersburg and allowing the deploy- culture in the Iranian province of Simnan and the ment there of its military bases. The fact is that central regions as the soil there is predominantly over half the volume of Russia's foreign trade was sandy and clay-based. carried out this way. And it is through it that the Chichkin argues that “the Caspian-Persian Gulf invaders supported by Turkey repeatedly pene- shipping canal, which runs all over Iran, is able trated the Black Sea and, accordingly, the shores to provide the shortest access to the Indian Ocean of the empire”. basin from the North Atlantic, the Baltic, the Black In 1908, negotiations were suspended: among Sea-Azov, the Danube and the Volga-Caspian other things, the pressure on Tehran from Istan- basins. This route is necessary for Iran not only bul and London contributed to this. Then the First as a transport corridor, but also as a source of World War broke out. fresh water supply to the central arid regions of Under Stalin and later, both sides made several the country". attempts to reanimate the project, but the imple- The length of the navigable route under the pro- mentation of the plans was always hampered by ject will be about 700 km, including along the one thing or another. In addition, the United States riverbeds of northwestern and southwestern Iran, and NATO have created obstacles to the construc- including the international channel of the Shatt tion. The West has never been happy about the al-Arab river (about 450 km) bordering Iraq. The possible appearance of such a channel and is still new channel could provide both Russia and Iran not happy with it. It was no accident that in 1997, with transit revenues of $ 1.2-1.4 billion and $1.4- the anti-Iranian sanctions of the United States 1.7 billion, respectively. spread to this project. Azerbaijan believes that the idea of the proposed Since the recent development of troubled rela- channel is technically unworkable. Expert in the tions with Turkey, Russia is interested in a water fi eld of water management, Ibrahim Mamedzadeh, alternative to the Turkish straits. And now with asserts that the use of the Shatt al-Arab river in the lifting of sanctions, Iran can fully return to the the project is very doubtful. “This river is far from old project. All it needs is investment, and this, being a navigable artery like the other rivers men- experts say, is where the latest problems begin. tioned in the project”. Colonel Oleg Antipov in 2012 told IA ‘REX’ that As for Russian politicians and experts, they have the topic of the channel is very interesting for not yet commented on the possible "resuscitation" Russia and Iran, as well as for the region as a of the channel. In principle, the authorities' silence whole, including India, China, Pakistan and oth- is understandable: in these times of low oil prices ers. However, he pointed out that in addition to and sanctions, the budget has become idle, and US pressure, one should also remember ecology: the country's economy is going through bad times. "...we must remember the environment. After In such conditions, large investments for Moscow all, the Caspian Sea is below sea level and is nec- are hardly likely. In addition, no matter how "tempt- essarily littered with its own types of algae and ing" is would be to bypass Ankara, investors will fi sh. Sturgeon and beluga will become extinct and not see quick payback. We must also remember traditional Russian black caviar will be unavail- the pressure of the West, which has long objected able to please us even on our biggest holidays. So, to such a project. GEORGIA TODAY JUNE 27 - 29, 2017 BUSINESS 9 NRW.INVEST Explores Georgia’s Investment Potential of cooperation and possible participation from BY NINO GUGUNISHVILI Germany.

WHAT ARE THE MAJOR FIELDS OF RW.INVEST, the state-owned eco- OPERATION OF NRW.INVEST? nomic development agency of North We are a state-owned economic development cor- Rhine-Westphalia (NRW), conducts poration of our state NRW. Our company was international marketing for the NRW founded in 1960. We have a long tradition and in region, considered to be Germany’s the past decades we supported economic develop- NNo.1 investment location. ment, structural exchange and investments from NRW Invest, headquartered in Düsseldorf and abroad. We provide consultancy and expertise to having subsidiaries in the USA and Japan, and foreign investors on how they can start their busi- branch offi ces across China, Korea, India, Turkey, ness in Germany, how to fi nd the right partners, Poland, Russia and Israel, brings foreign direct and answer different questions. We serve investors investment to the NRW region. as a one-stop agency. We offer investor-related NRW.INVEST provides services and expertise services directly in the target countries where we to companies both from Germany and abroad, while have our subsidiaries. Currently, we’re focusing on closely collaborating with the local and regional digitalization and start-ups. In North Rhine-West- development agencies, ministries, associations, phalia the density of industry is very high, up to chambers of commerce and other business-related 28 percent, and we’re an ideal location for digi- organizations. talization of manufacturing processes in different GEORGIA TODAY met with Ms. Petra Wassner, sectors of industry and logistic chains. We’re look- NRW. INVEST CEO, and Elena Matekina, Head of ing for investors who fi t in this value chain, as well Unit, during their very fi rst visit to Tbilisi, Georgia, as for start-ups. As a service agency, we collect as they explore Georgia’s investment potential and information and develop concepts for investment possibilities of partnerships and cooperation with projects. Our mission is to create a communication the business sector in their country. platform for organizations and institutions. Source: © NRW.INVEST WHY DID YOU DECIDE TO WHICH INDUSTRIES ARE YOU COME TO GEORGIA? FOCUSING MORE ON IN GEORGIA? WHY DO YOU THINK DIGITALIZATION CAN YOU SHARE SOME OF YOUR We’d been planning a visit to Georgia because it’s This is our fi rst visit. We know that agriculture is IS IMPORTANT TODAY? IMPRESSIONS OF GEORGIA SO FAR? one of the strategic countries in the Caucasus one of the dominating industries in Georgia; how- Digitalization will change our factories and cities We are very impressed by the country, its country- region. We started with Ukraine, Azerbaijan and ever it wasn’t our sole focus. We see a big potential in a disruptive way. To support start-ups, our NRW side, its excellent food. now Georgia. One of our main reasons for coming for cooperation in the future, for joint projects. Our government started an initiative to build Digital Tbilisi is a fantastic city! We’re so impressed of the was to see what could be of interest for business fi rst visit is to give us an impression how we could Hubs with ecosystems, co-working spaces, incuba- spirit we found here, a spirit of creating for the relations between our two states. The second rea- connect logistics and service providers in NRW and tors and accelerators. future. son is to see how the infrastructure will be devel- Georgia. For us, it is important to bring international oped concerning the One Belt and One Road partners together. German companies have good (OBOR) strategy initiated by the Chinese govern- opportunities to assemble or manufacture in Geor- ment. We see a huge impact on all these countries gia. For NRW, Georgia could be of interest because that are connected via the New Silk Road. of its strategic location in the Caucasus area. North Rhine-Westphalia is not only the economic powerhouse of Germany, we’re also a top logistics THE NRW REGION IS THE NUMBER hub in Europe. For example, we have Duisburg ONE FOREIGN DIRECT INVESTMENT with the biggest inland port DUISPORT world- LOCATION IN GERMANY. HOW? wide, with a harbor that has industrial and com- 25 percent of all the foreign companies are located mercial sites for logistics and other manufactur- in our state - companies with more than fi fty per- ing issues; three of the seven trains coming from cent of foreign capital: one third of all the foreign China to Europe end there and from there, goods direct investments in Germany are concentrated can be distributed by train or by ship. That’s why in our region. How did we achieve it? We attracted we’re so interested in the OBOR and also in the foreign companies and supported them in devel- countries that are on the New Silk Road or nearby, oping a business community in NRW. For example, since we know that there are main routes and side the Japanese Business Community, with around routes, too, which will be developed. We think 600 companies, also has a business club, the Japa- NRW is an ideal partner. The new city and port nese Chamber of Commerce, a kindergarten and to be built in Anaklia are very interesting in terms schools for the families of the managers.

Duisburger Hafen Source: © Duisburger Hafen AG GEORGIA TODAY 10 BUSINESS JUNE 27 - 29, 2017 Elle Magazine Showcases Georgian Fashion

The article goes on to highlight a number of other BY TAMZIN WHITEWOOD current important names within the Georgian fashion industry. “Designers like Mariam Gvasalia and Ani Datuk- emna Gvasalia, the famous Georgian ishvili are looking to expand beyond the conﬁ nes fashion designer, has really made it of the country to pave their own ways on an inter- big time within the world of fashion. national platform. And with their raw designs, Earlier this month, he won the Inter- creative spirit, and passionate voices, they're mak- national Award at the world-famous ing themselves heard” - the article goes on to say. DCFDA Awards. Elle.com used this news to create Some of these talented designers have showcased an article on Georgian fashion and to showcase their clothes both at Tbilisi Fashion Week, and for just how much the country has moved towards Elle magazine itself, with photos taken around becoming one of the main players of international Tbilisi showing the distinct style of clothes and fashion. picturesque views on the capital. "I could never do this job without such a fascina- “Here, we celebrate the beauty of Georgia's cap- tion of how clothes can change us and how we can ital, Tbilisi, a city ﬂ ush with experimental fashion, use them as powerful tools of communication and arresting street style, complicated history, and gor- self-expression," the Balenciaga and Vetements geous landscapes, by photographing Georgian designer said upon accepting the award. "My hope models wearing Georgian designers at some of is that we can continue to move fashion forward by Georgia's most famous landmarks,” – the article acknowledging the importance of the human factor". says.

New Drinks Factory in Guria to Use Local Production expanded to 500 hectares. He added that it is very BY THEA MORRISON important that the company is oriented to the use of local raw material. “Georgian production will be sold on many for- new modern standard factory was eign markets. I want to congratulate and thank opened in Guria, western Georgia, on everyone who contributed to this very strategic Sunday. project. I am very pleased that high standards are EUR 40 million was invested in the being employed in terms of protecting the environ- non-alcoholic beverage factory in the ment as well,” he added. Avillage of Nabeghlavi. The project was implemented with Austrian and The newly opened enterprise, owned by company Swiss partners with the support of European Bank Healthy Water, along with the largest producer of for Reconstruction and Development (EBRD). juices and non-alcoholic beverages in Europe – Rauch, produces a variety of juice, lemonade and other non-alcoholic beverages. Production will also be exported. Georgian Prime Minister, Giorgi Kvirikashvili, and representatives of the legislative and executive authorities, the local authorities and the ambas- sadors of Austria and Switzerland, attended the opening ceremony. Kvirikashvili congratulated the company Healthy Water and all its employees on its 20-year anniver- sary and noted he was pleased that such a modern and high quality enterprise was being opened in Georgia. The PM noted that it will be a complex with more than 70 hectares of orchards, which will later be GEORGIA TODAY JUNE 27 - 29, 2017 POLITICS 11 A Look at the Russian Military Moves in Georgia’s Breakaway Territories

cation line less than a couple of kilom- there are some crucial differences: unlike BY EMIL AVDALIANI eters to the north. The Georgians call it For most of the boundary line, the Enguri River forms the South Ossetia, Abkhazia is in a much the “borderization” and it is managed boundary between Samegrelo (Georgia) and Abkhazia. more comfortable geographic position. Source: wherearth.blogspot.com jointly by Russian troops and separatists Where South Ossetia lacks natural bar- ver the past decade, the from South Ossetia. Turn north, and it riers to defend it, Abkhazia, by contrast, Russian Army has repeat- becomes easier to notice the artifi cial has the buffer of the Enguri River. To edly carried out maneuvers fences or concrete barriers on your way. the east there is the Kodori Gorge – a on Georgia’s breakaway For the Russians, the demarcation line narrow passage which serves as a natu- territories of Abkhazia and in South Ossetia poses a signifi cant chal- ral division line between the breakaway SouthO Ossetia (Samachablo). Quite often, lenge as there are few geographic bar- territory and the rest of Georgia. Thence the exercises involve widespread use of riers the Russians could rely on to build comes the diffi culty to prevail militarily unmanned aerial vehicles (UAV) and a veritable defensive line. The fences in over Abkhazia which, like South Ossetia, other military arms. fact zigzag across low mountainous area hosts approximately 5,000 Russian troops. For example, the latest military exer- and small rivers, making it uncomfort- Another consequence of the different cises, which were held in South Ossetia, able to defend from a purely military geography is the fact that the Russians ended on June 17 with the involvement posture. From time to time, it is reported are not moving the demarcation line in of the locally stationed 58th Army of the that the Russian troops have moved the Abkhazia deeper into Georgia, as there Russian Armed Forces. The exercises demarcation line southward. Moreover, is simply no need. included 3,000 servicemen which is more much of the boundary is actually with- From the Russian perspective, Abkha- than half the approximately 5,000 Rus- out a fence. zia and South Ossetia are of more or less sian troops nominally thought to be Although the border’s movement might similar military importance. However, stationed throughout South Ossetia. The seem uncontrollable, one explanation the defense strategy differs as it depends Russians are no less active in Abkhazia. behind it could be the geography of the sian military units in South Ossetia are would leave the region defenseless. The on the geography of the entities. South Military exercises there are quite com- territory: small hills, open valleys, etc. only several hundred meters from the Russians did this in 2008, during the Ossetia is more diffi cult to defend from mon, but the geography of the breakaway No veritable military infrastructure can highway. Indeed, the Russians see that Russo-Georgian war, while they occu- the geographic point of view, while Abk- entities pose different challenges both be found along the demarcation lines. by cutting the highway, they will be able pied Gori, a city in central Georgia on hazia has rivers, seas and gorges. Despite to Moscow and Tbilisi. Thus, the Russians are moving south- to paralyze the entire South Caucasus. the east-west highway. The country was this, however, for the Russians, South But let’s return to South Ossetia. As ward to fi nd a defensible territory. How- Furthermore, another threat which the paralyzed, as was the entire region. Ossetia could at times be more interest- you drive along the major east-west ever, a much more important factor could Russians are posing is their artillery’s Moving westward to the second break- ing as it enables Moscow to impose itself highway about 80 kilometers (50 miles) be at play: bringing it closer to the main proximity to strategic pipelines and rail- away territory of Abkhazia, we see sim- on the east-west highway with the poten- north of Tbilisi, which connects Azer- east-west highway (Baku–Tbilisi–Kutaisi– ways that carry oil, natural gas and goods ilar processes of intensifi ed militarization tial to throw the region into transporta- baijan with the Black Sea ports of Batumi Poti). from Azerbaijan and the Caspian Sea to of the region, with constant military tion and energy disarray as happened in and Poti, at some points there is a demar- In some places, it is said that the Rus- Europe. Cutting this communication line exercises, troops movements, etc. But 2008.

SOCIETY Young Georgian Students Participate in Active Citizenship Summer Camp

Civic Education is relatively new in The association has over the years Azerbaijani language schools. It also Georgia, and has been strongly sup- trained more than 500 teachers in this grants small-amount funding to selected ported by PH International in the con- new subject and accompanies nowadays projects for community development text of the Momavlis Taoba Program, 480 schools across Georgia, particularly and works with the Ministry of Educa- funded by USAID, the United States by furnishing them with textbooks free tion and Science to raise awareness on Agency for International Development. of charge, including Armenian and this issue. children on a wide range of subjects. BY DAVID MONGAZON They were often accompanied by local authorities but managed the projects by their own means. rom June 19 to 22, 80 young The summer camp organized by PH Georgians and 11 teachers par- International is a further step for the ticipated in a summer camp children to exchange with like-minded organized by PH International. students from throughout Georgia about The meeting took place in the their successes and the challenges they resortF of Bakuriani and gathered kids faced. The youth also participated in from the eleven regions of Georgia in different workshops and activities such order to share their projects and the as sketches, again with sensitization experiences they had regarding civic purposes. education. The main goal of the camp was to The children had been selected for encourage their initiatives and help them their motivation in the projects they car- become active citizens, even if they ried out in their schools as part of the seemed already very engaged in this civic courses they attend. These projects sense, training them in communication deal for the most part directly with the and leadership. Several exterior speak- problems Georgia faces nowadays, at a ers also came to the camp and raised the national level as well as speciﬁ c local curiosity of the students, including a problems. It implied in particular com- Georgian activist who raised the issue munity improvement such as internet of early marriage, a businessman who and software education for older people, taught them how to build a career, and cleaning and the arrangement of public three journalists who talked about their spaces, or sensitization activities to other jobs.

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