Strong Trade, Tourism, & Remittances Growth Drive Optimistic Forecast for 2017

Issue no: 988/99

MarketsAs of 06 Oct 2017

STOCKS Price w/w m/m BONDS Price w/w m/mBGEO Group (BGEO LN) GBP 33.71 +3,4% +1,3% GEOROG 04/21 106.33 (YTM 4.79%) +0,2% 0,2%GHG (GHG LN) GBP 2.95 15,2% GEORG 04/21 112.44 (YTM 3.10%) 0,0% 0,2%TBC Bank Group (TBCG LN) GBP 16.79 +1,1% +1,8% GRAIL 07/22 111.55 (YTM 4.99%) +0,0% +0,2%

BGEOLN 07/23 103.30 (YTM 5.33%) 0,1% 0,2%COMMODITIES Price w/w m/mCrude Oil, Brent (US$/bbl) 55,62 3,3% +2,6% CURRENCIES Price w/w m/mGold Spot (US$/OZ) 1 276,68 0,2% 4,3% GEL / USD 2,4737 +0,2% 0,1%

GEL / EUR 2,9018 0,6% 1,6%INDICES Price w/w m/m GEL / GBP 3,2321 2,3% +0,1%FTSE 100 7 522,87 +2,0% +2,3% GEL / CHF 2,5330 0,7% 2,0%FTSE 250 20 166,54 +1,5% +2,6% GEL / RUB 0,0425 0,9% 1,2%DAX 12 955,94 +1,0% +6,1% GEL / TRY 0,6845 1,2% 5,3%DOW JONES 22 773,67 +1,6% +4,4% GEL / AZN 1,4649 0,1% +0,6%NASDAQ 6 590,18 +1,5% +3,1% GEL / AMD 0,0052

MSCI EM EE 159,03 +0,1% +0,7% GEL / UAH 0,0925 0,3% 2,8%MSCI EM 1 103,12 +2,0% +1,8% EUR / USD 0,8525 +0,7% +1,6%SP 500 2 549,33 +1,2% +3,4% GBP / USD 0,7652 +2,5% 0,2%MICEX 2 093,86 +0,8% +3,9% CHF / USD 0,9797 +1,2% +2,4%MSCI FM 2 890,51 +1,2% +2,1% RUB / USD 58,1461 +1,0% +1,3%GT Index (GEL) 1 133,66 TRY / USD 3,6147 +1,4% +5,5%GT Index (USD) 922,38 AZN / USD 1,6990 +0,1% +0,0%

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• • OCTOBER 10 - 12, 2017 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue...

Prepared for Georgia Today Business by

NEWS PAGE 2

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FOCUS ON WINE & BRITAINAward-winning Georgian wine fi lm shown in London, the BGCC celebrates its 10th anniversary in Tbilisi, wine sales up and the Tbilisi Wine Fest upcoming PAGE 5,7,9

Georgia Hosts GUAM 20th Anniversary

Georgian Wine Festival 2017 – An Event You Can’t Miss!

Georgian Capital Celebrates Tbilisoba

Georgia Exports 63% More Wine in January-September

BY THEA MORRISON

The annual festival of Georgia’s capital ‘Tbilisoba’ was also marked in the Lithuanian capital of Vilnius on Sunday.

‘Tbilisoba in Vilnius 2017’ was celebrated in a ‘Georgian’ square, where a record number of traditional Georgian Khinkali were made with the participation of festival guests.

Members of the Lithuanian government, par-liament, diplomatic corps, media and Georgian diaspora were among the guests at the festival.

Georgian Ambassador to Lithuania Khatuna Salukvadze opened the event and awarded a number of festival guests with certifi cates nam-ing them Honorary Citizens of Tbilisi.

Within the event, the exhibition and sale of Georgian traditional handmade works was organized, and Georgian mineral and soft drinks

Photo source: Ministry of Foreign Affairs of Georgia

Vilnius & Kyiv Mark Tbilisi Day

were presented. Georgian enamel works were also exhibited and sold.

Tbilisoba was also marked in Kyiv at an event opened by the Ambassador Extraordinary and Plenipotentiary of Georgia to Ukraine, Gela Dumbadze, in the center of Kyiv.

The Georgian Embassy in Ukraine noted that within the frames of the event, the Ambassador visited the Ivane Kavaleridze Museum, where

the exhibition of modern Georgian artist David Avaliani was being shown.

Dumbadze also visited a wine exhibition organ-ized by Georgian wine companies, where all guests had the opportunity to taste Georgian wine and cuisine.

The event was wrapped up by a joint concert of Georgian musical ensemble Alilo and Ukrain-ian creative collective ‘Georgia’.

Photo: Georgian Ambassador to the UK Tamar Beruchashvili introducing an award-winning fi lm on Georgian wine last week

GEORGIA TODAY OCTOBER 10 - 12, 20172 NEWS

BY NINO GUGUNISHVILI

Lado Gurgenidze, Executive Chairman of Liberty Bank Georgia, has been appointed to the position of the Chair-man of the Supervisory Board

at 4Finance, a company which was estab-lished in 2008, and is considered to be one of Europe’s largest online and mobile consumer lending groups.

As the company’s website states, since its foundation, 4Finance has provided more than 15,000.000 single payments, lines of credit, and instalment loans over EUR 5 billion.

Gurgenidze served as a Prime Minister of Georgia in 2007-2008, and was an Executive Chairman of the Bank of Geor-gia from 2004 to 2007.

Lado Gurgenidze Becomes Chairman of Supervisory Board at 4Finance

BY THEA MORRISON

This weekend the Georgian capital Tbilisi united for the annual festival of Tbi-lisoba, which celebrates both the city and country’s

cultural and historical diversity.The two-day festival features a range

of entertainment, including open-air con-certs, traditional music and dance, cultural events and a lot of food and wine.

The main activities of the festival took place in the Old City, but smaller pock-ets of celebration could also be seen in numerous other districts of the city.

The activities began at 12PM on Satur-day: pavilions representing the capitals twinned with Tbilisi set up in Europe Square, a fair and exhibition of classic and new cars on Metekhi Bridge, chil-dren’s culinary classes, archeology for

Georgian Capital Celebrates Tbilisoba

children and quizzes held in the New Tifl is-Agmashenebeli area, and a kite festival and master-classes in Rike Park.

There was a festival of Georgian wine, an exhibition of Georgian produce, and a costume performance with musicians and actors in New Tifl is, alongside a festival of sweets, master-classes from

famous chefs, a fruit festival and various concerts.

Georgian Prime Minister Giorgi Kviri-kashvili walked along the renovated Agmashenebeli Avenue congratulating city residents on the day.

The fi rst Tbilisoba festival was held in 1979.

BY NINO GUGUNISHVILI

The annual Tbilisoba cele-bration was rounded up with a massive concert and the traditional Honorary Tbilisi Citizens Awards on

Sunday evening. Lado Ataneli, world-renowned Geor-

gian opera singer, was fi rst to be awarded as an Honorary Citizen of Tbilisi, fol-lowed by writer and journalist Tamaz

Tbilisi’s Honorary Citizens Awarded at Close of Tbilisoba 2017Tkemaladze; Roman Shakarishvili, Georgian Neurologist; Alexander Metreveli, famous Georgian tennis player; Merab Tavadze, actor, founder of the Royal District Theater; Gulnara Chapidze, Doctor, founder of the Chap-idze Emergency Cardiology Center; Demiko Loladze, journalist; Eter Kemertelidze, chemist and scientist; Zaira Davarashvili, publicist, interpreter, professor; Vazha Durglishvili, composer; Zaza Pachulia, basketball player; Tamaz Kurashvili, jazz musician; and Johannes Hahn, European Neighborhood Policy

and Enlargement Negotiations Com-missioner.

“Tbilisoba is one of the most valued and important celebrations for us,” said Davit Narmania, Mayor of Tbilisi. “I’m sure each of you will remember these two days, and the last evening that brings to an end Tbilisoba 2017, where we award the honorary citizens of our city and our country, for all their outstand-ing work and dedication”.

When the concert came to a close, the Mayor gifted each honorary citizen a symbolic key to the city of Tbilisi.

GEORGIA TODAY OCTOBER 10 - 12, 20174 BUSINESS

10 Galaktion StreetTel: (995 32) 2 45 08 08

E-mail: info@peoplescafe.ge

BY DAVIT KESHELAVA & YASYA BABYCH

ISET-PI has updated its forecast of Georgia’s real GDP growth rate for the third and fourth quarters of 2017. Here are the highlights of this month’s release:

• Recently, Geostat published the pre-liminary estimate of real GDP growth for the second quarter of 2017, which now stands at 4.7%. This is 0.7 percent-age points above the previously estimated average growth rate for Q2. As a result, the real GDP growth for the fi rst half of 2017 reached 4.9%.

• The ISET-PI real GDP growth fore-cast for both the third and the fourth quarter of 2017 has been revised to 5.9%.

• Based on July data, we expect the annual growth in 2017 to reach 5.3%. The more optimistic forecast is consistent with evidence coming from international development institutions. For example, the Asian Development Bank (ADB)

Strong Trade, Tourism, & Remittances Growth Drive Optimistic Forecast for 2017

recently revised its expectations for real GDP growth in Georgia from 3.8% to 4.2% in 2017. According to the ADB’s updated report, Georgia is ahead of the majority of countries in the region, such as Armenia, Azerbaijan, Kazakhstan and Kyrgyzstan. Among the reasons behind the revision are the increased funding of infrastructure projects in Georgia, increased tourist fl ows, improved remit-tances, and export statistics.

We observe an upward revision of quar-terly GDP to 5.9% in both the third and the fourth quarters of the year. This has to do with the update of the Q2 growth estimates (from 4% to 4.7%) rather than any signifi cant changes in the model’s core explanatory variables. Yet, a few variables in the model did change sub-stantially, both in annual and monthly terms.

The most signifi cant changes were observed in national currency deposits in commercial banks.

The largest yearly increase was observed for the National Currency Time Depos-its with maturity of less than 3 months – a 79% increase relative to the same month of the previous year. The second largest yearly increase was experienced by the National Currency Demand Depos-its – a 49% increase year over year. Over-all, the National Currency Total Depos-its increased by more than 25% yearly. Accumulation of the national currency deposits further raises savings that will be transformed into investments and foster economic growth. Indeed, the National Currency Deposits related variables had a positive contribution on our GDP growth projection.

In contrast, foreign currency deposits in Georgian banks changed only mod-erately in yearly terms. For instance, Foreign Currency Total Deposits increased by only 6% y/y.

The Dollarization Ratio of total non-

bank deposits decreased by 3% in monthly, and 5% in yearly terms. According to our model, deposit dollarization had a small, but positive impact on real GDP growth.

Improvements in external trade statis-tics had a signifi cant positive effect on the GDP forecast.

In the fi rst two quarters of 2017, the economic activity of the region improved signifi cantly. The Armenian economy grew 5.5% in the second quarter of the

year. The Turkish economy grew more modestly, 1.3% in the second quarter. Azerbaijan was the only country among Georgia’s immediate neighbors that was still unable to overcome a painful reces-sion (see Figure 2).

The increased demand for Georgian goods and services dramatically boosted Georgia’s exports. In July, exports increased by 22% in yearly terms. The main contributors to the export increase

were: (re)export of motor cars (48% ); wine (38%); medicaments (105%); alco-holic beverages (52%); and, copper ores and concentrates (21%).

Imports to Georgia increased moder-ately, by 6% y/y, thus improving the trade balance by 0.6%. Other variables, repre-senting external sectors, were also on the rise. Remittances increased by 20% y/y, and the number of tourists (visitors who spent 24 hours or more in Georgia) increased by 32.9% y/y.

An improved trade balance, strong money infl ows, and an impressive increase in tourism in July all made a signifi cant positive contribution to the growth fore-cast.

Among the variables which dragged the growth forecast down were consumer and producer price increases. The July increase in the Consumer Price Index (CPI) amounted to 6% yearly, while the Producer Price Index (PPI) increased by 11%.

Our forecasting model is based on the Leading Economic Indicator (LEI) meth-odology, developed by the New Economic School, Moscow, Russia. We constructed a dynamic model of the Georgian econ-omy, which assumes that all economic variables, including the GDP itself, are driven by a small number of factors that can be extracted from the data well before the GDP growth estimates are published. For each quarter, ISET-PI produces fi ve consecutive monthly forecasts (or “vin-tages”), which increase in precision as time goes on. Our fi rst forecast (1st vin-tage) is available about fi ve months before the end of the quarter in question. The last forecast (5th vintage) is published in the fi rst month of the next quarter.

1 The average growth forecast for the Central Asian region amounted to 3.3%. Source: https://www.adb.org/data/cen-tral-asia-economy#tabs-0-0

Source: Trading EconomicsThe increased demand for Georgian goods and services dramatically boosted Georgia’s exports

GEORGIA TODAY OCTOBER 10 - 12, 2017 5BUSINESS

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BY THEA MORRISON

Georgian wine export in the period of January-Septem-ber 2017 increased by 63% compared to the same period of 2016.

The data released by the National Wine Agency (NWA) reads that 52.7 million bottles of wine were exported from Georgia in the given period.

Moreover, in the same period, $116 million worth of wine was exported, 55% more than in Jan-Sept last year.

“Export growth is remarkable in the countries of the European Union, Asia, USA and others, a direct result of the coordinated work and well-planned marketing activity of the National Wine Agency and wine sector,” stated the

Georgia Exports 63% More Wine in January-September

Head of the NWA, Giorgi Samanishvili.He noted that, in particular, export

has grown in the following countries:China - 44% growth, Russia - 95%,

Ukraine - 54%, Poland - 14%, Latvia - 36%, Belarus - 34%, USA - 81%, Germany - 28%, Israel - 305%, Mongolia - 182%, France - 321%, Azerbaijan - 102%.

The top importers of Georgian wine are Russia, China, Ukraine, Poland, and Kazakhstan.

In addition, during the nine-month period, 11,354,403 bottles of brandy were exported to 22 countries, 89% more than in 2016. January-July brandy exports this year amounted to $25 mil-lion, which is 84% higher than the earnings for 2016.

On the whole, export income for alco-holic drinks this January-July amounted to $194 million, or a growth of 54% com-pared to the same period in 2016.

REVIEW BY ROBERT EDGAR, LONDON

This fi lm is a small song to say I love my country - Nana Jorjadze told us in the Q&A after the screening of her multiple award-winning

fi lm The Prime Meridian of Wine at the European Bank for Reconstruction and Development (EBRD), her slightly bro-ken English serendipitously allowing for this pertinent choice of words. The fi lm is a celebration of Georgian wine, tradi-tion, music and culture, aspects which all cohere in the Georgian mind to create a strong sense of national identity.

The event was organized by the Embassy of Georgia to the United Kingdom and formed part of its broad program of pro-moting cultural exchange between the two countries. In a brief welcoming speech, HE Tamar Beruchashvili thanked the EBRD for their help in galvanizing the Georgian economy and described the wine as “the real Excellency” before the fi lm was screened in front of one of the largest audiences in the Bank’s his-tory.

The Prime Meridian of Wine follows a young vintner, initially dissatisfi ed with life in Georgia, who travels to England and France but whose discoveries lead him back to his home, the birthplace of wine. It charts a fascinating 8000-year unbroken tradition of Georgian winemak-ing and features contributions from

The Prime Meridian of Wine at EBRD HQ

notable fi gures like Debra Meiburg, Hugh Johnson, and Steven Spurrier – one of the fi rst to import Georgian wine to the UK. It’s an entertaining fi lm that explains the process of winemaking in the coun-try and details the large variety of grapes and types of vine to be found in the various regions of Georgia. Its real strength, however, lies in showing just how interconnected wine, music, and religion are in the Georgian culture: there are instances of Qvevri (the large clay vessels used for storage and fermenta-tion) being used as sarcophagi for vini-culturists; specifi c polyphonic chants developed as a way to ennoble the wine; and even the church’s iconography, like the grapevine cross.

For me, the most striking part of the

fi lm was footage of the protagonist mak-ing wine, interspersed with archive shots from what looked like the early 20th Century. There are one or two cosmetic differences, but the actual method, from harvesting the grape to burying the Qvevri, has remained the same for mil-lennia, one of the reasons for its listing by UNESCO among the Intangible Cul-tural Heritage of Humanity.

Wine exports took a hit in 2006 with Russia’s embargo, but instead of crip-pling the industry it has learned to look to other markets such as China, Europe, and the UK, the latter being one of the fastest growing. Clearly, the event was intended to arouse interest in the indus-try and Georgian culture in general. After the screening, we heard briefl y about

UK demand for Georgian wine from Steven Spurrier, before Jorjadze and the fi lm’s producer / president of the Geor-gian Sommelier Association, Shalva Khetsuriani, elaborated on some of the fi lm’s themes.

“The UK market has to understand Georgian wine for it to sell,” was the takeaway argument of the evening. With the redoubtable work by the Embassy going into its promotion, compelling

fi lms like The Prime Meridian of Wine, and recent effective marketing drives, I’ll be very surprised not to see a few more bottles of Mukuzani on the shelves of my local shop in the near future.

The event’s partners and sponsors were the EBRD, the Georgian Sommelier Association & the National Wine Agency of Georgia, Wine Cellar Khetsuriani, GWS, Chateau Mukhrani, Shilda and Georgian Valleys.

GEORGIA TODAY OCTOBER 10 - 12, 20176

Ukraine, Bangladesh, Cambodia, Ethiopia, Sin-gapore and Georgia. She is the author of the fi rst Georgian handmade limited-edition photo book “My Place”. The book is in the personal collec-tions of several museums, including the Metro-politan Museum in New York.

Since 2016, she has successfully cooperated with the UNFPA Georgia Country Offi ce on dif-ferent social projects.

WHERE: Giorgi Leonidze State Museum of Georgian Literature, 8 Gia Chanturia Str., Tbilisi WHEN: Octo-ber 11 - 15

BUSINESS

Within the framework of the Georgian Hotels’ Regional Network Development Project “12 hotels in 12 regions” by

been opened in Kutaisi under the Best Western International brand.

The hotel accommodates 45 guest rooms, including 40 standard rooms and 5 suites. The hotel was designed taking into consideration special conditions and safety for guests with disabilities.

Three mobile conference halls are available with a total capacity of about 100 persons.

and a grill-bar menu in the roof top restaurant with panoramic views over the city.

The International Hotels Management Company “T3 Hospitality Management,” providing the hotel management, has 20 years’ experience in hotel management in different countries globally.

Address: 11 Grishashvili Str., 4600, Kutaisi, GeorgiaTEL 219 71 00 info@bwkutaisi.com

FIRST BRAND HOTEL IN KUTAISI UNDER BEST WESTERN INTERNATIONAL

PASHA Bank Supports First ‘CEO Lunch Tbilisi’ by Caspian Energy

Bank Georgia with a special certifi cate for join-ing and supporting the event that will serve the development of Georgia-Azerbaijan trade and economic ties.

The PM also thanked the organizers. “This will boost the birth of new business initiatives and expand contacts not only between businessmen of Georgia and Azerbaijan, but also representa-tives of other countries,” he said, adding that the Government of Georgia spares no effort to facil-itate the attraction of investments into the coun-try and Georgia is always open for Azerbaijani entrepreneurs. “I expect Georgian businessmen to expand their activities in Azerbaijan,” he said.

According to First Deputy Chairman and Chief Executive Offi cer of the Caspian European Club and Caspian American Club, Telman Aliyev, ‘CEO Lunch’ is a very benefi cial tool for networking and is hosted with the aim to create opportuni-ties for CEOs to communicate in an informal environment and establish new contacts.

The next ‘CEO Lunch Tbilisi’ is scheduled for October 27. The following meetings will be held on the last Fridays of every month.

On 11 October, at 7PM, the Giorgi Leonidze State Museum of Geor-gian Literature will celebrate the International Day of the Girl Child by opening Dina Oganova’s Photo

Exhibition ‘Girls from the Future’. The photo project is supported by the United Nations Pop-ulation Fund (UNFPA) Georgia Country Offi ce within the frameworks of UN Joint Program for Gender Equality funded by the Government of Sweden.

Through pictures and quotes, Oganova’s photo project shares the stories of adolescent girls (aged 10-16) from different parts of Georgia. The pro-ject promotes the idea that realizing the full potential of girls, creating equal opportunities and offering an enabling environment for them, as well as encouraging their access to education and healthcare, plays crucial role in the advance-ment and development of the country. “Every girl should be given the opportunity to complete her education and make informed decisions about their own life and health,” they say.

The photo project is part of the broader advo-cacy work led by the UNFPA Georgia Country Offi ce for preventing the harmful practices of Early/Child Marriage and supporting the repro-ductive health and rights of adolescents and young people.

Dina Oganova is a young Georgian freelance documentary photographer working in Georgia and other coutries on long term projects. She is a laureate of prestigious awards and was selected among the 30 best women photographers under the age of 30. Her long-term projects: “I Am Georgia”, “My Place” and “Frozen Waves” were exhibited in France, Italy, Spain, USA, Poland, Germany, Turkey, Sweden, Denmark, Lithuania,

‘Girls from the Future’ Photo Exhibition Dedicated to the International Day of the Girl Child

On September 29, the Caspian Euro-pean Club and the Caspian Amer-ican Club hosted the fi rst CEO Lunch Tbilisi within the framework of the offi cial ceremony marking

the resumption of activities of Caspian Energy Georgia. The event involves a series of meetings for CEOs of Georgia and Azeri companies and is supported by PASHA Bank.

The Prime Minister of Georgia, Giorgi Kviri-kashvili, First Vice Prime Minister, Minister of Finance of Georgia Dimitry Kumsishvili, Minis-ter of Economy and Sustainable Development of Georgia Giorgi Gakharia and Ambassador Extraor-dinary and Plenipotentiary of the Republic of Azerbaijan to Georgia Dursun Hasanov attended the CEO Lunch as honorary guests.

Shahin Mammadov, Chairman of the Board of Directors and Chief Executive Offi cer of PASHA Bank Georgia gave a presentation about the Bank’s activities and its fi nancial highlights. He empha-sized the signifi cance of the project with regards to bringing together business circles from these two countries. Kvirikashvili awarded PASHA

GEORGIA TODAY OCTOBER 10 - 12, 2017 7BUSINESS

The Georgian Wine Festival 2017 on October 15 will be packed full of activities: learn about the history of wine through tasting and

check out the modern technologies of the industry. Publishing house Palitra L will present various books about wine and the VR House company will guide you through Georgian winemaking with virtual reality glasses. And this year’s novelty: a wine fountain, something never before seen in Georgia!

The 2017 festival has been joined by Art Shock Company, a team composed of pantomime and drama actors, while folk ensembles Herios Quartet and Sameba will entertain guests in equal measure.

Children have not been forgotten and will have trained employees of Biblus Gallery keeping their hands and minds busy while you enjoy the wine!

For shopping lovers, and for those who are already getting started on their Christmas lists, there’ll be Georgian handmade accessories and crafts cor-ners at the Festival.

The Georgian Wine Festival 2017 will be held on Chardin Square and is organ-

Georgian Wine Festival 2017 – An Event You Can’t Miss!

ized by online wine store allwine.ge and the Maidan Group. At the event, which will be open to guests from 12PM to 7PM, small, medium and large produc-ers will present their wines and will compete to get the title of Best Wine-maker. 40 types of wine tasting and exhibition-sales are planned. What’s more, unique makes of cheese, the best churchkhelas and dry fruits, honey, and Georgian bread will be on display to taste and buy.

Allwine.ge is launching another big project in the framework of the festival, which aims at promoting Georgian wine. "10 Wines You Must Taste in Your Life-time!" will see 40 participants present-ing one white and one red wine for a public vote on the basis of blind tasting. Voting will be run online at the second stage and a team of qualifi ed somme-liers will reveal the 10 best wines as chosen by customers.

The General Sponsor of the Georgian Wine Festival 2017 is Halyk Bank Geor-gia. Partners of the event are: the Som-melier Association of Georgia and National Tourism Awards "Welcome to Georgia".

GEORGIA TODAY OCTOBER 10 - 12, 20178 BUSINESS

The International Court opens investigation into 'War Crimes' in Georgia Crisis of 2008. Photo source: http://s.newsweek.com

BY MATE FOLDI

The International Criminal Court (ICC) is an interna-tional tribunal and inter-governmental organization committed to the investiga-

tion and, where warranted, trial of the most serious crimes: genocide, crimes against humanity and war crimes. Based in The Hague, in The Netherlands, the Court was founded on July 17, 1998, upon the adoption and creation of the Rome Statue, with the Statute taking effect upon its ratifi cation by 60 states on July 1, 2002, marking the offi cial establish-ment of the ICC.

Today, the court has 124 State Parties, with Georgia having joined in 2003. While the Court has no retroactive juris-diction (it only deals with crimes com-mitted on or after the aforementioned date), it is a permanent establishment whose actions, prosecutions and inves-tigations are independent: it is immune from any political infl uence or interfer-ence, nor can it be subject to a special mandate from the UN. Moreover, the ICC is willing and able to try and/or investigate any individual, no matter their rank, role, or status : national amnes-ties or immunities cannot be invoked to block the Court’s jurisdiction. However, the Rome Statute does curtail the extent of the ICC’s jurisdiction in that it only has a mandate for crimes that were com-mitted on the territory of a State Party, committed by nationals of a State Party, or referred to the Court by the United Nations Security Council (UNSC). It is defi nitely no coincidence that the United States, Russia, China, India, Israel, and Saudi Arabia, amongst others, have not ratifi ed the Statute.

On October 3, representatives of the Court addressed members of the media in an informative session at Tbilisi’s Marriott Hotel. Among those present was the ICC’s Registrar, Herman von Hebel. The Registry was in Georgia for discussions on establishing a country offi ce in Tbilisi and appointing a repre-sentative thereof. The talks are at an advanced stage, with the opening of the offi ce scheduled for early 2018. Its will be to establish a fl ow of constant com-munication between Tbilisi and the Registry in the Hague. While it will ini-tially start as small offi ce, it has the potential to grow, its scaling up and down depending on the level of activities and the fi nancial means that the court has available.

This represents an important develop-ment as the Registry fulfi ls a number of crucial roles within the ICC. Along with providing daily services to the judges, it is responsible for the public information and outreach of the court in its totality. Moreover, the procuring and facilitation

Where the Pen is Not Always Mightier than the Sword: The ICC

of any order of the judges, and anything that the defense councils needs for pro-ceedings, is also the responsibility of their offi ce. Furthermore, the Registry is in charge of the logistical and practi-cal support of the court in its totality. Perhaps of more relevance to Georgia, and the ongoing investigations of the ICC into the alleged war crimes and crimes against humanity committed dur-ing the 2008 war, is the Registry’s respon-sibility for witnesses. Witnesses are entitled to support and protection before, during, and after any investigations and trials that take place in which the wit-nesses have provided testimony. This is a crucial role of the Registry as, without witnesses, no trails can take place. Indeed, the Registry is by defi nition neutral: providing services for all parties in the proceedings, ensuring that the proceed-ings can take place in a fair and effi cient matter, and supporting the prosecutor and defendants.

Phakiso Mochochoko, Director of the Jurisdiction, Complementarity and Coop-eration Division of the Offi ce of the Prosecutor, was also present at the Octo-ber 3 session. The Prosecutor’s Offi ce is sometimes described as the engine and driving force of the Court. It is the part that gets the wagon rolling, so to speak, with its main function being to investi-gate the aforementioned gravest of crimes. The Offi ce is independent, impartial, and does not take instructions from any-one. It respects the rights of the accused, namely that they are innocent until proven guilty beyond any reasonable doubt, and the decisions made by the Offi ce are done so on the basis of law and evidence. It is evidence, and only evidence, that drives the investigations of the Offi ce; no political or other con-siderations are taken into account to infl uence its activities. A case stands or falls based on the collected evidence; only once there is suffi cient evidence in both quality and quantity will proceed-ings start. The focus falls upon those individuals that bear the greatest of responsibility, and if the evidence con-clusively identifi es one as the culprit, then no matter their rank (President, minister, oligarch, etc.), the Offi ce will move Heaven and Earth to ensure that due justice is served. There is no time limit for evidence collection: it continues until the individual’s guilt is either proven or cleared beyond any form of doubt.

The Prosecutor’s Offi ce is in the midst of conducting numerous investigations

in Georgia: their work has been ongoing since the end of January 2016, and will not be affected by the opening of the Offi ce of the Registry at the start of next year. Concerning the roles of all three parties in the 2008 war, “the ICC inves-tigations focus on alleged crimes com-mitted in the context of an international armed confl ict between 1 July and 10 October 2008 in and around South Osse-tia, including crimes against humanity: murder, forcible transfer of population and persecution; and war crimes: attacks against the civilian population, willful killing, intentionally directing attacks against peacekeepers, destruction of property and pillaging.” Moreover, if there is a connection to crimes commit-ted after this temporal fi eld, then they can be investigated, too.

Indeed, despite a refusal to cooperate from both Russia and South Ossetia, investigations in Georgia, with the full cooperation of the government, are in full swing. Representatives of the Pros-ecutor’s Offi ce are commuting between Georgia and The Hague roughly every month, as the highly confi dential pro-ceedings and evidence procuration take place. Everything has to be done in the utmost secrecy to ensure that witnesses are protected and the investigation is not sabotaged by any of the belligerent parties. As mentioned before, there is

no time limit for evidence collection, the Court will continue its work as long as is necessary to build a solid case: at the end of the day, the Georgian case, along with all concurrent investigations, is about justice, irrespective of who and where the victims are.

Any work of the Prosecutor’s Offi ce requires the cooperation of all parties involved to ensure the fairest outcome, even though the investigations them-selves are conducted exclusively by the Offi ce itself. As Mochochoko highlighted, it would be in the interests of both the Russians and the South Ossetians to cooperate with the Court, for the latter can only work with the evidence at their disposal, and without the former’s input, valuable evidence that may be able to prove innocence has the potential to be lost. Yet herein lies the caveat and Achil-les heel of the International Criminal Court: without a police force or army of its own, it can only issue but not enforce any arrest warrant that it hands out for any individuals that are from non-State Party nations. Moreover, only those countries that have ratifi ed the Rome Statute have an obligation to arrest and extradite any individual(s) which are summoned to trial and/or by the Court.

It is said that the pen is mightier than the sword, but in the case of the Inter-national Criminal Court, the opposite

seems to be true: it is the very limitations of its Rome Statute that prevent it from applying justice on a universal scale. Or perhaps, the old maxim has indeed proven true once more, for it is no accident that the Statute was written in this way, and that great powers like Russia, the United States, and China (all with permanent seats and veto capabilities on the UNSC), amongst other nations like Saudi Arabia, Turkey, and Israel, have refused to ratify it, allowing them to act with impunity, outside its jurisdiction. While the work of the the ICC may very well be impar-tial and free from political manipulations, given the realities that be, one could be forgiven for giving credence to the accu-sations of the Court being but a puppet of the great powers, created with specifi c handicaps to further the latter’s freedoms in the international arena.

On the subject of these shortcomings and limitations of the ICC, Mochochoko told GEORGIA TODAY:

“Ideally, we are seeking universality, which means that everybody in the world should be part of the ICC and the Rome Statute. Unfortunately, that is not the case. Joining the ICC Statute is a volun-tary and sovereign act of any state; no one can be forced into doing so. What we are doing at the court is proving our credibility by working hard, by showing through the cases that we are independ-ent and impartial, and not in any way politically motivated. Hopefully, this will persuade other countries to join the ICC and see value in it. For now, we have to work with what we have. There are many cases being brought to the ICC, the UNSC one of them. We have no infl uence over the Security Council, over who it refers or does not refer: that is purely their prerogative. Are they political in doing that? Yes they are, but as soon as the matter comes to the ICC, it becomes a judicial process. Irrespective of how a matter comes to the ICC, it is treated in the same way, going through the same legal process, tests, and criteria. The Statute as it is now is what it is. It is not for the Court but for the State Parties to change that: the Rome Statute is an instrument and document of the State Parties themselves. If the State Parties want to change the way of the referral to UNSC, it is only for them to do. Is it an ideal situation? Maybe not, with the benefi t of hindsight. Initially, when that power was given to the UNSC, it was really to try and cater to situations where crimes could be investigated in countries that were not State Parties. Is it still a good thing to give the UNSC that power ? Is it a good thing not to give the UNSC any role in Court proceedings ? These are matters that the States themselves have to look into and decide on”.

What we are doing at the court is proving our credibility by working hard; by showing through the cases that we are independent and impartial

GEORGIA TODAY OCTOBER 10 - 12, 2017 9BUSINESS

BY KATIE RUTH DAVIES

This year marks the 25th anni-versary since the re-estab-lishment of diplomatic rela-tions between the United Kingdom and Georgia. This

year is doubly remarkable for the British-Georgian Chamber of Commerce (BGCC) as it also marks the 10th anniversary since the establishment of the Chamber in London.

In connection with these signifi cant events, the BGCC held a reception sponsored by the BGCC’s new member, Regus Georgia.

“In 2007, we had our opening,” BGCC founder Mako Abashidze told the guests. “Since then, there have been more than 80 events in Tbilisi and London and 12 press tours, the fi rst of which was in September 2008 when a group of British journalists were brought to Georgia to cover the post-war events. The BGCC has also organized a number of cultural events, taking to London Georgian dance ensembles, musicians and artists. We work very closely with both embassies and I offer my thanks to them for their support”.

Abashidze also thanked the Georgian Tourism Administration and National Wine Agency for their joint initiatives promoting Georgian wine in the UK, one of the results of which was to have Georgian wine as a permanent offering at The Ritz Hotel in London.

“I also want to thank Georgian Airlines for opening direct fl ights between Tbi-lisi and London this year,” she said. “It makes a huge difference to business and tourism connections. And I thank our

BGCC Celebrates 10th Anniversary in Tbilisi

hosts, Regus. The Regus in Georgia is not just another offi ce building but is a statement and a clear sign that Georgia is becoming part of a big network of global businesses”.

Honorable guests from Great Britain and Georgia, including British Ambas-sador to Georgia, H.E. Justin McKenzie Smith, and representatives of BP, PwC, The Biltmore, Georgian Airways and Wedgwood enjoyed drinks and a buffet at the event in the presence of Lord Cromwell, Member of the British Parlia-ment, Honorary Chairman of the BGCC Board of Directors, who himself was present at the BGCC’s fi rst opening.

“Cast your mind back over 10 years,” Lord Cromwell told the audience. “There have been a number of interesting events, both on the world economy and, more locally, some challenges to overcome, and it’s a credit to the Chamber that they have continued through this whole period; in particular, a credit to all the members. 10 years ago, before my fi rst trip to Geor-gia, I told people where I was going and they thought my destination was a state in the US. When I told them it was a country in the Caucasus, they thought it was a part of Russia and I, of course, corrected them. Before I came this time, 10 years later, when I told two of our

offi ce ladies where I was going, the immediate reaction from one was, ‘Oh, I know Georgia- my brother was there doing business just last week.’ That is how far Georgia has come in 10 years. Georgia has really established itself as a hub for business, looking to Europe, to the Middle East- the whole region. Stability is one of many assets it has and is a great reason alone for companies and investors to come and do business here,” Lord Cromwell concluded.

British Ambassador Smith closed the welcoming speeches with a poignant message on British-Georgian relations. “Over the last 24 hours alone, we’ve had

a visit by the British Prime Minister’s Trade Envoy for Georgia, we had a recep-tion at the Embassy for a specialized British company that is connected with the healthcare sector, and we’ve been preparing for the UK-Georgia Business Forum at Mansion House in London in two weeks’ time,” he said. “I truly feel that the development of business rela-tionships is starting to take on a life of its own. That doesn’t happen by itself: it takes time, patience, and it is thanks to the BGCC and Mako Abashidze that we have got to this point through some diffi cult years. I can say I’m optimistic and confi dent about our shared future”.

GEORGIA TODAY OCTOBER 10 - 12, 201710 BUSINESS

BY NINO GUGUNISHVILI

The European Union’s Political and Security Committee (PSC) Ambas-sadors from 28 EU member state countries came on a two-day visit to Georgia last week.

At a meeting with Walter Stevens, Chairman of the PSC, the Minister of Foreign Affairs of Georgia, Vice Premier Mikheil Janelidze, underlined the importance of the visit to Georgia, stating that the country is a close partner of the EU, and that the visit of the PSC Ambassadors is “another clear example of the EU’s support to Georgia”.

“We’re paying a great deal of importance to this visit, as we know that Georgia is our closest part-ner in the region,” Stevens stated, according to the ministry.

He is said to have further noted the positive

EU’s PSC Ambassadors Visit Georgia

dynamics of the Georgia-EU relationship, under-lining the success Georgia has achieved in the pro-cess of implementing reforms.

“I would like to highlight the considerable efforts Georgia has made in carrying out reforms in all directions, as well as in the process of Association Agreement implementation,” the PSC Chairman said, adding that he’s delighted with the visa liber-alization, for which a number of reforms have had to be implemented.

During their visit, the ambassadors learned more about said reforms as well as the current security issues. They also visited the occupation line and the EUMM mission in Georgia.

“It is crucial to stand by Georgia and defend its territorial unity and sovereignty,” Steven is said to have stated of their visit to the occupation line.

The ambassadors also met the President of Geor-gia, Prime Minister of Georgia, Deputy Chair of the Georgian Parliament, the Minister of Defense and various civil society members.

BY DIMITRI DOLABERIDZE

The offi cial representative of the Euro-pean Commission Anna-Kaisa Itkonen has said the construction of the Nord Stream-2 gas pipeline contradicts the principles of the Energy Union cre-

ated by the European Union."If Nord Stream-2 is implemented, it must be in

full compliance with international and European norms. We have repeatedly voiced our position on the project and we believe that it does not comply with the principles of the Energy Union," she said.

Yet, she added, the situation can “still be corrected if we sit down at the negotiating table”.

What she did not say was at what stage of devel-opment the discussion in the EU Council is of the requested mandate by the European Commission to negotiate with Russia on the implementation of the project. She merely noted that the issue is “within the competence of the EU Council” to solve.

The legal service of the EU Council recently con-

Nord Stream-2 Non-Compliant with Energy Union?

cluded that the EC's claims about the construction of Nord Stream-2 gas are legally null and void, since the project does not contradict EU legislation. Moreover, it was concluded that, on the contrary, the new gas pipeline could reduce the risks that may arise in the event of another "gas war" between Russia and Ukraine. However, some EU countries say that the fi ndings of the legal services of the EU Council are the result of payment from Russia’s Gazprom.

There are also rumors that countries dissatisfi ed with the Nord Stream 2 project are to initiate a change in the EU legislation; more precisely, they want to amend the Third Energy Package so that it becomes possible not to discuss the terms of gas supplies with Gazprom at all. Currently, the project is fully consistent with this notorious "package".

For changes to the EU law to be made, however, it is necessary for all countries to vote unanimously in favor. The construction of the Nord Stream-2 gas pipeline is actively supported by Germany, which can veto the initiative of European bureau-crats. Germany, which has not offered any sympa-thy for Russia, fi rmly believes that the project is economic, not political.

BY THEA MORRISON

The Georgian Electronic Music Festi-val (GEM Fest) might not be funded from the state budget next year.

The information was released by the Minister of Economy of Georgia

Giorgi Gakharia, who believes that it would be a "bad idea" to fi nance the festival in future.

“Tourism support will continue in 2018, but my position is that the electronic music festival GEM Fest should not be state-funded again," Gakharia said.

He added that the project Check in Georgia will most likely continue, but there will be serious discussion as to its effectiveness.

"The participation of the private sector has sig-nifi cantly increased in this project. Our task is simple: to reduce state funding and increase the participation of the private sector in this and other similar programs," he said.

Giorgi Sigua, the founder and the organizer of GEM Fest, claims the event is sure to take place in 2018, but with less funding.

“It is up to the State to fi nance our project or not. GEM Fest was created with private invest-ment in 2015 and no state co-fi nancing was had at that time. We, like many other projects, received

State May Not Finance GEM Fest 2018 state funding only after the Check in Georgia Pro-

ject was launched in 2016,” he stated.Sigua added that if state funding is removed from

the picture, a smaller event will be organized than this year, which will last for 4-5 days instead of one month.

“GEM Fest will be planned and held regardless, whether we receive state funding or not,” he emphasized.

The month-long electronic music festival was held for the third time in Georgia from July 14 to August 14 in Georgia’s Black Sea town of Anaklia.

Despite the large number of world-famous art-ists and DJs, this year the festival experienced numerous problems, including the death of a 22-year old girl and poisoning of more than 20 others, allegedly due to psychoactive drug ‘Bio’ or Gamma-Hydroxybutyrate (GHB), which has been seen increasingly throughout Georgia of late.

Another problem was alleged fi nancial violations during the festival, for which the Investigative Department of the Ministry of Finance of Georgia launched an investigation in August.

Due to these fi nancial issues, around 300 employ-ees of the festival complained they had not received their salaries.

Sigua denied the allegations of embezzlement of festival funds, adding all employees would get paid.

He said he brought over 500 artists to perform at the festival, assuring media that the allocated state funds had been used to pay them as agreed with the State.

GEORGIA TODAY OCTOBER 10 - 12, 2017 11POLITICS

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BY THEA MORRISON

The Georgian capital of Tbilisi is host-ing foreign Ministers of the Organiza-tion for Democracy and Economic Development (GUAM) member states Georgia, Ukraine, Azerbaijan and

Moldova regarding the 20th anniversary of the regional organization.

The importance of GUAM and the results of the ministerial meeting were reported by the Georgian Foreign Minister Mikheil Janelidze at a joint press conference.

He stated that during the past 20 years, GUAM has managed to transform itself into a “powerful political actor in the international arena”.

“GUAM was established by friendly states that have joint interests and a vision for more stability and development. Since its establishment 20 years ago, GUAM has managed to develop political, sec-toral and inter-parliamentary co-operation,” said Janelidze.

He thanked his Azerbaijani, Moldovan and Ukrain-ian counterparts and the GUAM Secretary General for coming to Tbilisi to mark the 20th anniversary of the establishment of the organization.

Janelidze expressed hope that, through joint efforts, the existing co-operation will enhance not only the GUAM member states but also the GUAM partner states as well.

The Minister also highlighted the importance of the Joint Communique signed by the GUAM for-

Georgia Hosts GUAM 20th Anniversary

eign ministers.“This Document is proof of the unanimous will

of the four countries to achieve greater results, through joint efforts, to the common benefi t of their people,” he added.

The ministers of GUAM were also hosted by the Prime Minister of Georgia, Giorgi Kvirikashvili.

The sides once again underlined the willingness of member states to take active steps to strengthen peace, stability, cooperation and economic devel-opment in the region.

Afterwards, the ministers met Georgian President Giorgi Margvelashvili.

This year, Georgia is holding the GUAM Chair-manship. The Georgian Foreign Ministry reports that the priority of Georgia's chairmanship is to provide dynamic and productive cooperation between Georgia, Ukraine, Azerbaijan and Mol-dova.

OP-ED BY EMIL AVDALIANI

Thinking about Georgia and its position in the regional order we often hear how vulnerable the country is and how weak at times the European Union (EU) seems to be in its confrontation

with Russia. However, I wanted to look at the EU and fi nd some positive trends and as I will argue below, the EU has in fact gained the upper hand in its battle with Moscow over the former Soviet space.

The Russia-West confrontation has, over the last several years, reached its highest point since the collapse of the Soviet Union in 1991. Contrary to the much-purported opinion that Russia has been successful in projecting its infl uence across the former Soviet Union, I have argued on a number of occasions that in fact Russian infl uence has sig-nifi cantly receded on the Eurasian continent. US pressure is important here, as are internal economic problems in Russia. But if we look more closely, we can see that it has been the European Union which undermined Russian cultural, political and economic infl uence in east Europe and the former Soviet Union, not vice-versa.

Russia was weak in the wake of the Soviet col-lapse, true. But Russia has become strong since Putin came to power in the early 2000s and, con-trary to logic, Moscow has lost infl uence in Mol-dova (at least partly), Ukraine and Georgia and is losing economic preponderance in Central Asia. The answer might lie in Europe which, for the fi rst time in its history, is experiencing what might effectively be called a unifi ed Europe, as it has never been so united and unanimous in its internal as well as foreign policy actions.

Indeed, history proves that it is not about a strong or weak Russia. The latter it has been several times- even weaker than the current Russian Federation. Take the example of the early XVII century when Moscow was occupied by the Poles and saw utter political chaos inside the country culminating in a change in the ruling dynasty. A century later, Russia was confronted by powerful Swedish mon-arch Charles XII, and in the early XIX century, by French Emperor Napoleon I. There are other exam-ples such as the Crimean War and the coalition of European states against the Russian Empire under Nicholas I, or even Adolf Hitler’s ambitious mili-tary campaign “Barbarossa” in 1941.

But each time Russia managed to come out vic-torious and expand its territories, whether into eastern Europe or the Caucasus. The reason for this was Russia’s military assertiveness, but it also could be explained by the lack of unity among

The EU is Beating Back Russia

European states in that period. Both Napoleon and Hitler lost their empires in Russia, but if we look closer, it can also be seen that they were focused on dominating Europe, causing grievances and political opposition among its states and leaders, only cutting loose when they began experiencing military troubles in Russia. The same could be said of Charles XII and others, with Europeans of the time forced by politicians to live in either French, German or Swedish-dominated Europe.

After each victory, Russia expanded itself and if we look at by how much territory and when the Russians managed to incorporate strategically important lands, one constant is there: European disunity and constant wars among European states which allowed the Romanovs or, later, the Soviets to move forward into eastern Europe. The 30 Years’ War, 7 Years’ war, French Revolutionary wars, Napoleon’s campaigns, etc. – all distracted Europeans from what was going on at the fringes of the continent where Russia was meticulously working on incorporating modern Ukrainian, Belarussian, Baltic and South Caucasian states or principalities.

This largely shaped Russia’s grand strategy towards Europe: to divide European states and support the weakest. However, this was not done to uphold the European balance of power, as the British Empire had been doing throughout centuries, but to pro-tract European confl ict as long as possible. Stalin, for example, was very eager in 1940 to have Ger-many fi ght France for years and entered the war only when the two powers were much exhausted.

A DIFFERENT EUROPEOne can only wonder at how much Europe has

changed in the course of a century. There is now no open antagonism among European states and most are united within the European Union. The EU, despite some diffi culties, still retains a com-mon defensive, economic and foreign policy agenda. Take an example of how the EU pressures Russia and how Moscow, in comparison with previous centuries, has consistently failed to drive a wedge among the European states.

I mentioned Napoleon and Hitler and their Paris or Berlin-centered European orders where almost everyone was forced to submit to their infl uence. Nowadays, the EU is a different order where east-ern European countries aspire to join the grouping: it is this unity which has much undermined the Russian strategy.

In other words, if we look at the map of the last 25 years one can easily notice how far a united Europe has gone in limiting Russia’s infl uence. And this creates a fundamental problem for Moscow as the Kremlin currently does not see any viable option to improve its geopolitical position.