brexit and georgiageorgiatoday.ge/uploads/issues/fbfa9d17445e24636f0dd49784649470.pdfregarding the...

Georgia’s Location Both a Blessing and a Curse, Former US Ambassador Says

Georgia to Introduce Strict Smoking Laws from July 1, 2017

Issue no: 856/33

MarketsAs of 27 Jun 2016

STOCKS Price w/w m/m BONDS Price w/w m/mBank of Georgia (BGEO LN) GBP 24.5 1,7% 2,0% GEOROG 05/17 101.81 (YTM 4.75%) 0,2% 0,1%GHG (GHG LN) GBP 2.7525 3,3% +11,7% GEORG 04/21 109.96 (YTM 4.54%) 0,5% 0,6%TBC Bank (TBCB LI) US$ 12.6 3,1% +5,0% GRAIL 07/22 111.00 (YTM 5.58%) +0,5% +1,2%

GEBGG 07/17 103.75 (YTM 3.95%) 0,2% 0,2%COMMODITIES Price w/w m/mCrude Oil, Brent (US$/bbl) 48,41 1,5% 0,4% CURRENCIES Price w/w m/mGold Spot (US$/OZ) 1 315,75 +1,3% +7,2% GEL / USD 2,3100 +6,0% +7,7%

GEL / EUR 2,5455 +4,6% +6,2%INDICES Price w/w m/m GEL / GBP 3,1621 +1,1% +0,6%FTSE 100 6 138,69 +2,0% 1,3% GEL / CHF 2,3725 +4,5% +9,9%FTSE 250 16 088,05 2,0% 6,1% GEL / RUB 0,0356 +5,6% +9,9%DAX 9 557,16 0,8% 5,0% GEL / TRY 0,7889 +5,9% +8,4%DOW JONES 17 400,75 1,6% 1,7% GEL / AZN 1,4994 +4,8% +4,1%NASDAQ 4 707,98 1,9% 3,1% GEL / AMD 0,0049 +6,5% +8,9%MSCI EM EE 121,19 0,6% 0,6% GEL / UAH 0,0934 +6,6% +9,4%MSCI EM 805,87 0,0% +2,3% EUR / USD 0,9005 +1,5% +0,3%SP 500 2 037,41 1,6% 1,9% GBP / USD 0,7314 +5,0% +7,0%MICEX 1 884,41 +0,4% +0,0% CHF / USD 0,9720 +1,3% 2,2%MSCI FM 2 498,85 3,0% 0,2% RUB / USD 65,1206 +0,6% 1,7%GT Index (GEL) 842,35 +2,7% +5,7% TRY / USD 2,9279 +0,0% 0,6%GT Index (USD) 762,96 +0,3% +4,1% AZN / USD 1,5425 +1,3% +3,4%

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facebook.com/georgiatoday

• • JUNE 28 - 30, 2016 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue...

We Want to Take Our Countries Back, and We Will!

Continued on page 5

Tbilisi Airport to Get New Terminal in 2017

Georgian Foreign Minister Pays First Offi cial Visit to Liechtenstein

Prepared for Georgia Today Business by

Brexit and GeorgiaOP-ED BY LINCOLN MITCHELL

The Georgia Analysis is a twice monthly analysis of political and other major developments in Geor-gia. Lincoln Mitchell is a political development, research and strategic

consultant who has worked extensively in the post-Soviet space. He has agreed to share some of his analyses exclusively with GEORGIA TODAY.

Thursday’s vote in the UK, in which a slight majority voted for their country to leave the EU, will have substantial and immediate impacts on domestic politics in the UK as well as on the foreign policy, trade and economic future of that country.

FOCUS ON LOCATION

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GEORGIA TODAY JUNE 28 - 30, 20162 BUSINESS

Smoking will be restricted fully or partly in public places in Georgia from July 1, 2017. Photo: David Sillitoe / Guardian

BY TATIA MEGENEISHVILI

A new draft law that amends Georgia’s Tobacco Control will fully or partially restrict smoking in all public places from July 1, 2017.

According to the adopted amend-ments, a minimum of 50 percent of hotel rooms must be smoke-free, while cafes, bars, restaurants, casinos and beauty salons will be allowed to provide an absolute maximum of 20 percent of their total space to those who smoke. The area must also be isolated, enclosed and include either a window or an alternative form of ventilation.

From January 1, 2018, all offi ces, factories, warehouses, terminals and other similar buildings must also designate less than 20 percent of their total area for smoking.

Stadiums and other sports ven-ues will also be subject to a min-imum 50 percent ban on smoking. The new law also prohibits other forms of use or demonstration of tobacco- in mass media, print or electronic media, and in theater performances (unless the action takes place in open air and has no live broadcasting).

The new law will also strictly prohibit smok-ing on public transport, as well as tobacco adver-tisements and promotional campaigns that condone the use of tobacco or nicotine-related products.

Georgia to Introduce Strict Smoking Laws from July 1, 2017

Sites designated for the sale of tobacco products must also clearly display special health warnings regarding the risk of smoking and a special hot line number that people can call to quit their addiction to smoking. Health warnings must also cover 65 percent of the average cigarette packet.

The tobacco companies and their local distribu-tors will be required to provide carbon emission details at their expense.

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BY NICHOLAS WALLER

A new USD 25 million terminal will be constructed at Tbilisi’s Shota Rustaveli International Airport as part of a major expansion project slated for comple-tion in 2017, according to the airport’s

managing company TAV Georgia. "In 2015, we signed a new contract with TAV

Georgia, according to which the company made a commitment to begin constructing a new terminal capable of accommodating 2 million passengers per year. More than USD 25 million will be invested in the new terminal’s construction,” said Dimitry Kumsishvili, Georgia’s Minister of Economy and Sustainable Development, at the groundbreaking ceremony for the future terminal.

The new terminal will cover more than 12,000

Tbilisi Airport to Get New Terminal in 2017

square meters and have the capacity to receive 3.25 million passengers per year.

Roughly 500 people will be employed to build the terminal.

The airport is currently implementing a costly and time-consuming project that aims to lengthen the runway, which will allow the airport to accom-modate larger aircraft.

The project has provoked the ire of many Tbilisi residents and visitors to Georgia’s capital as the expansion is carried out during daylight hours, which forces the airport to be completely closed to air traffi c from early morning to late evening.

Planners of the project have faced heavy criticism for having scheduled the expansion during the height of the country’s tourism season as it sig-nifi cantly hinders the airport’s ability to accom-modate the fl ow of visitors.

The runway’s expansion works are to conclude on July 1.

GEORGIA TODAY JUNE 28 - 30, 2016 3BUSINESS

BY MERI TALIASHVILI & TAMAR SVANIDZE

In the framework of the Georgian government program ‘Produce in Georgia,’ top Hollywood produc-ers, who have worked on such famous fi lms as The Hangover,

Transformers, Captain America, The Town, Sicario, and Mission: Impossible, visited Georgia to discover its potential fi lm locations.

During a week the group visited Geor-gia’s most popular and ancient sites including Tbilisi, Rustavi, Kakheti, Mtskheta, the remote mountainous Kaz-begi and Mestia, cave-city Uplistsikhe, Tsqaltubo, Zugdidi, and Black Sea resort town, Anaklia.

Additionally, American fi lmmakers met their Georgian counterparts and various production company representatives to share their experiences, as well as to learn about Georgian cinema and the existing infrastructure, which offers an excellent opportunity for Georgia to become the Eastern European center for fi lm sets.

“The world is only now starting to appreciate what Georgia has to offer, and bringing a delegation of top location scouts from Hollywood was a very smart move,” American fi lmmaker Thomas Burns told GEORGIA TODAY. “The team behind the ‘Film in Georgia’ cam-paign has done a phenomenal job attract-ing the attention of foreign studios.”

Enticing Hollywood to Film in Georgia

Burns, who trained over a decade in Hollywood on feature fi lms, television and commercials and who opened his own post-production studio Spectra Post in Tbilisi in December (see Georgia Today interview with him, April 7, 2016) accom-panied the Hollywood delegation to advise American producers on what they can expect in Georgia and how to make the most of their shooting schedule here.

“Foreign productions will use Georgian crews and equipment in their projects and this is an incredible opportunity for Georgian fi lmmakers to receive training, expand their networks, and stay current with the latest work practices. While fi lmmaking has existed in Georgia for 100 years, Georgia is only now emerging as a 21st-century fi lm industry, and that’s exactly what is necessary to support robust development in this sector. Film-making in Georgia can’t exist on state subsidies alone––there must be private investment,” Burns said.

Interest in the Film in Georgia program is high and the Enterprise Development Agency, which is carrying out the pro-gram, has seen three applications already submitted. As a result, 5,700.000 million GEL is set to be spent in Georgia.

The Hollywood delegation was hosted by the Enterprise Development Agency and the Georgian National Film Center. On their return to the US, the experts will offer location recommendations to other US fi lm directors and producers.

Georgia started cooperating with the US fi lm industry earlier this year after two Georgian agencies travelled to the

US and presented the new government-funded ‘Film in Georgia’ program, to encourage foreign fi lm-makers in an attempt to attract small and big budget fi lm producers to the country.

The program offers benefi ts to local and foreign companies who want to use Georgia as a production site for their fi lms. The Georgian Government hopes that by introducing a cash rebate mech-

anism, major international fi lm compa-nies will be enticed to move their on-location operations to Georgia if they are guaranteed a 25 percent reimburse-ment on their overall costs.


THE ISET ECONOMISTA 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 economicgrowth, 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.

Donald Trump and Boris Johnson have more in common than just hairstyle. Source: Wikimedia/Commons

BY ERIC LIVNY

For the likes of Boris Johnson, currently UK’s most popular politician and a leading fi gure of the Brexit revolt, “The Euro-pean Union has become too

remote, too opaque and not accountable enough to the people it is meant to serve.” But how about the UK itself? How close are 10 Downing Street or Westminster to the working class folks of England’s industrial north? How representative is Britain’s Eton-educated ‘political class’ of the people they are meant to serve? And if Boris Johnson is lauding the Brit-ish people for deciding to take control of their own future, why not let the Scot-tish people do the same?

Consider also this statement from Mr. Johnson: “There is simply no need in the 21st century to be part of a federal sys-tem of government based in Brussels that is imitated nowhere else on Earth”. Nowhere else? How about the federal system of government based in Wash-ington DC? Haven’t we heard enough in recent months about “Washington poli-ticians” not listening and being out of touch, failing to protect people’s jobs or health, building bridges to nowhere, lying about WMD as a pretext for funding CIA


covert operations and wars abroad? The truth is that Brexit, and Trump,

and Bernie Sanders are symptoms of something more systematic than a bunch of nostalgic traditionalists in British “rural areas and market towns” forming a "Stop the world, I want to get off" movement, as Robin Oakley wrote in his CNN column last week. What we are facing today – in Europe and the US – is a twin crisis of the “nation-state” and of democracy in a globalizing world.

CITIZENS OF THE WORLD UNITE!Much of the Brexit rhetoric was about regaining control over national borders and reigning in migration from the Mid-dle East and Africa. But the terms “nation” and “national,” given their genetic con-notation, are becoming less and less convincing in the 21st century. Belgium, Spain and Switzerland may be extreme examples, but most European “nations” of today have their genetic roots in hun-dreds of tribes that once roamed across Eurasia. Moreover, white Europe is no longer all that white, having seriously compromised its racial purity through past colonial adventures and depend-ence on migrant workers.

Even less convincing is the notion of “national borders” given our collective realization of their totally arbitrary nature. The elimination of (artifi cial) political

barriers to the movement of people and goods was probably one of the most welcome features of Pax Europaea. But, (colonial) borders are being increasingly questioned everywhere else, in the Mid-dle East, Asia and Africa, destabilizing existing political regimes and unleashing waves of migration across borders.

Having emerged in the 19th century, nation-states served a purpose – help-ing break the old royal and imperial order and providing an alternative nar-rative around which to organize soci-eties and deliver law and order. Yet, being programmed to claim exclusive ancestral rights to territory and pursue ruthless linguistic and cultural homog-enization, nation-states inevitably clashed with their own societies and each other, producing two world wars, innumerous attempts at ethnic cleans-ing, genocide, and hitherto unprece-dented bloodshed.

Starting with the League of Nations, the 20th century has seen several efforts to establish regional and global frame-works to resolve confl icts and promote cooperation among nation-states. Spear-headed by regional powers, multilateral organizations, philanthropists and cor-porations, these efforts rest on the prem-ise that the nation-state has become TOO SMALL to handle any of the global chal-lenges facing humanity in the 21st cen-tury - from war and confl ict to climate change, to disease control, to innovation, to effective taxation (as vividly illustrated by the Panama papers), to business development and global migration.

At the same time, and rather paradox-ically, nation-states have become TOO BIG to be able to accommodate demands for cultural and economic autonomy

coming from regional groups, ethnic and religious minorities. Such local groups increasingly fi nd themselves outnum-bered and “not listened to” within exist-ing nation-states, providing a strong impetus for independence movements, separatism, civil wars and frozen con-fl icts, and (mostly) unrecognized states.

The sovereign nation-state paradigm is not yet dead, yet all signs point to the fact that it is living its last days. On the one hand, nation-states face ever increas-ing pressures to succumb to externally imposed rules of the games (fi nancial, economic, environmental, etc.). On the other, they are strained (and, literally, torn apart) by internal demands for greater linguistic, cultural and economic autonomy, federalization and outright secession.

Perhaps one of the greatest political challenges of the 21st century will be to engineer a smooth transition from the old system of fully sovereign nation-states (already proven to be ineffective) to a new political order allowing to maximize local freedoms subject to global constraints – related to e.g. wealth and income inequality gaps (the engine of mass migration), energy security and environmental degradation.

And while the institutional intricacies of the emerging new political order are yet to be worked out, it is clear that it will draw its legitimacy from the ability to solve problems, not (imagined) com-mon ancestry or God’s mandate.

IVOTE AND IDECIDE DEMOCRACY? As much as Brexit can be understood as an expression of voter anger against the EU bureaucracy, it was also an exercise

in direct democracy, a revolt against patronizing ‘experts’, traditional politi-cal parties, and, generally, Britain’s social and economic elites.

The ‘anti-establishment’ and ‘anti-system’ sentiment is not confi ned to British politics. As argued by Elizabeth Drew in The Trumping of American Politics, “revulsion at government and traditional politicians” is a central theme of contemporary US politics, hitting the ongoing presidential contest “like a tor-nado”.

This revulsion is very much evident in developed democracies, where political parties and professional politicians appear to represent nobody but themselves, creating demand for outsiders, such as Donald Trump and Bernie Sanders, who are ready to take on Washington (and London, and Brussels).

The institutional machinery of repre-sentative democracy, once perceived to represent and refl ect, now comes to be seen as standing in the way of, and dis-torting, the popular view (or views). Even in established electoral systems that have been designed to prevent the emergence of new parties (such as the US and UK), individual politicians fi nd it profi table to directly appeal to the party base, actively ignoring the estab-lished “elites”.

In new democracies, such as those in Eastern Europe, political parties have become a joke, and parliaments are the least trusted public institutions. Ad hoc parties come and go, change names and ideology, morph into ever shifting polit-ical alliances, not living long enough to develop a bureaucratic apparatus, mem-bership, etc. etc.

Continued on page 7


Similarly, the EU could fi nd itself in greater turmoil if other countries seek to follow Britain’s lead and try to exit the EU.

Brexit also has many implications and raises numerous challenges for Georgia, making it necessary for Georgia’s lead-ership to think about their foreign policy in a very different light today. The most obvious way that Brexit will effect Geor-gia is that it raises the possibility that Georgia may be moving closer than ever to the EU at a time when the EU may be breaking apart. In this scenario, Georgia could fi nally achieve a longstanding and extremely important foreign policy goal only to fi nd out that the prize itself is hollow. Even if this is not the case, and that an EU without the UK is able to move forward smoothly, there remains a possibility that the Georgian people will see the EU as a less dependable or valuable foreign policy goal and there-fore the thus far reasonably resilient pro-European consensus in Georgia could be undermined.

There are, of course, other challenges Brexit will raise for Georgia. The vote in the UK may be met with dismay in Brussels, Tbilisi, elsewhere in Europe as well as in Washington, but the view

from Moscow is different. Russia’s Pres-ident Vladimir Putin will almost certainly see Brexit as good for Russia and perhaps a harbinger of further problems with, or departures from, the EU. This is likely to lead Moscow to continue its policy of involving itself in European politics, primarily by supporting far right politi-cal parties who, not coincidentally, are in most cases hostile to the EU but friendly to Russia. A Russia that is suf-fi ciently emboldened by this victory that it will involve itself more in European politics and push more aggressively against western powers is precisely what Georgia does not need, but that is pre-cisely what the voters of the UK have given Tbilisi.

Less dramatically, another result of the Brexit vote will, at the very least, mean that the UK, one of Georgia’s staunchest supporters and advocates, will need to focus much of its attention on the fallout from Thursday’s vote. Things like nego-tiating trade and other agreements with the EU and other countries and deter-mining, with regards to both big picture questions and specifi c issues related to countries such as Georgia, what their role in the world will be moving forward are among the issues that will consume the British political class in the next few months, and probably years.

The sentiment that appeared to provide the foundation for the electoral support for the Brexit is one that is also not good for Georgia. While there were many positions that drove the Brexit victory, nationalism, opposition to immigration, and a desire to be less involved with the rest of the world were among the most signifi cant. These opinions are on the rise, and the voices that have always supported these views are getting louder, throughout Europe and the US.

The most extreme expression of this

may be the energy and passion among a segment of the American population that has contributed to the rise of Don-ald Trump as a political force. Trump’s appeal is drawn in substantial part from his celebrity personality, proud ignorance on any of the major issues facing the US or the world and ability to contradict himself with righteous pride, but he has also campaigned on racist and nativist themes that have resonated well. It is unfair to tar all of the Brexit voters with the Trump brush, but the two are related. The latter believe the US can wall itself off from Mexico and symbolically the rest of the world, while the former just voted, in a political sense, for the UK to turn the water surrounding their coun-try into a moat to keep the rest of the world out.

While Trump may be an American original, there are voters throughout Europe who share the hostility to immi-gration and suspicion of the outside world that contributed to the Brexit vic-tory. It is also worth noting that Georgia is not immune to these types of political movements either. Georgian political parties that have expressed a preference for what they see as traditional Georgian values, a strong identity with the Geor-gian Orthodox Church and a wariness of further integration into the West are products of the same economic uncer-tainty and political frustration that fueled the successful Brexit effort. It may be that there are no countries in Europe where these voters can form a majority in the near future, but they will, at the very least, begin to make more demands on policy makers and vote for those politicians and parties who share these views.

All of that is bad for Georgia. A Europe, and for that matter US, where interna-tionalist policies and a welcoming

approach to immigrants are being chal-lenged is one that creates many problems for Georgia. This is particularly true given that Georgia is well along on what has proven to be an agonizingly frustrat-ing and slow path to visa liberalization with Europe. The arguments that Geor-gia has made to western powers regard-ing why further integration of Georgia into western institutions is good for Europe and the US will not even be lis-tened to if voters in those countries are loudly demanding a different path. This has not yet come to pass, but represents perhaps the worst outcome for Georgia.

While much can be made of voter sen-timents, Putin’s machinations, and chang-ing attitudes in Europe and the US, it is also true that while the EU without the UK is not going to automatically col-lapse, it will be signifi cantly weaker. The UK has been one of the biggest, most prosperous and most militarily powerful states within the EU. In the probable case that Brexit is neither a fatal blow to, nor the beginning of the end for, the EU, the EU is still smaller, weaker and poorer without the UK. Therefore, the political entity that for over a decade has represented the sum of Georgia’s political and symbolic aspirations is not as powerful as it was even a week ago.

Brexit’s impact on the EU will not, unless the dissolution of the EU occurs more quickly and decisively than most expect, force Georgia to immediately rethink its goals of further integration into western institutions, but it is a clear indicator both that there is now a strong political barrier to joining those institu-tions and that membership in the EU is less valuable than it once was. This puts Georgia, once again, in the position of both having to continue to pursue these goals while also further exploring, in the longer run, what further deterioration

Brexit and Georgia

Continued from page 1

of the EU would mean for Georgia. Addi-tionally, Georgia will, almost immediately, need to have signifi cant discussions regarding trade and immigration with a longstanding ally, the UK, whose voters have just sent messages that cannot be pleasing for leaders in Georgia. Georgia is not alone in this as Ukraine, Moldova and other countries now face these chal-lenges as well.

There was no good time for Brexit, but this vote coming only a few weeks before the Warsaw NATO summit is particularly problematic for Georgia. Warsaw was already shaping up to be another sum-mit from which Georgia would return not empty-handed, but also not with a MAP. The Georgian government should already have been trying to determine both what they would get from NATO as well as how to present it to the Geor-gian people as a reason to remain stead-fast in their commitment to NATO. Now, that summit will occur in the shadow of Brexit, meaning that NATO may too begin to look inward more as the politi-cal sentiments behind Brexit, and kindred movements in other countries, begin to spill over into the reality of defense and security. This is unlikely to be a climate in which further expansion of NATO will get a particularly sympathetic hear-ing.

After Brexit, the Georgian government now faces the parallel tasks of maintain-ing a solid relationship with a UK that is no longer in Europe, reinforcing a domestic consensus for membership in an EU that may be perceived as fraying, and trying to make the most of a NATO summit where Georgia has now been pushed further from the top of the agenda. This must be done in the context of a Russian regime that may see itself as having achieved a major political victory in Europe and is perhaps preparing to seek more victories. This would be a daunting task for any government, one that is made even more complex by an election that is now less than four months away.

To read more analyses from Lincoln Mitchell, visit his site: lincolnmitchell.com


BY TAMAR SVANIDZE

A new USD 120 million high standard cement factory is to be built in Georgia’s western town of Senaki in Samegrelo region, the press

offi ce of the Georgian Prime Minister has announced.

PM Giorgi Kvirikashvili launched con-struction of the Georgian-Chinese joint investment project on June 25.

The facility, which covers 20 hectares of land in Senaki, western Georgia will produce 900,000 tonnes of clinker and 1.5 million tonnes of high quality cement annually.

An agreement on undertaking invest-ments and launching “The Black Sea Cement, Ltd” was signed by the Asian-African Business Management company Hualing Group and a Georgian construc-

New $120 Million Cement Factory Under Construction in Western Georgia

tion company this April.Kvirikashvili emphasized that the mod-

ern enterprise will boost Georgia’s economy.

“This is a great example of partnership between Georgia and China,” Kvirikash-vili said during the launching ceremony of the construction.

“Several hundred local residents will be employed here and income produced by this venture will be very important in terms of contributing to the state budget,” he emphasized.

According to the Prime Minister, more than 500 local residents will be employed at the factory. He highlighted that the project will be based on principles of high effi ciency, safety, environmental protec-tion, and recycling and reuse of waste.

The factory will be equipped with spe-cial noise reduction mechanisms which will minimize the level of noise and protect the local residents from produc-tion-related disturbance.

Gazprom Confi dent in Future Export of 165 billion M3 Gas Abroad

BY DIMITRI DOLABERIDZE

Gazprom has announced it intends to export at least 165 billion cubic meters of gas abroad in 2016, accord-ing to deputy chairman of

the company, Alexander Medvedev. In 2015, Gazprom increased its gas

exports to non-CIS countries to 159.4 billion cubic meters, which is 8% more than the previous year. Supply growth contributed to the reduction of its own production volumes in Europe, accord-ing to Chairman of the Board of Gazprom, Alexey Miller. “The increase of gas supply is a clear confi rmation of the need to build gas pipeline ‘Nord

Stream-2,’ through which Russian gas will pass via the Baltic Sea directly to Germany, the UK, Netherlands, France, Denmark and other countries, bypass-ing Ukraine.”

Nord Stream-2 will be an international collaboration between six major energy companies – PJSC Gazprom, the German companies Uniper and BASF SE/Win-tershall Holding GmbH, the AngloDutch Royal Dutch Shell Plc, the Austrian OMV AG and the French Engie S.A.

“Europe’s gas production is declining and its import needs rising, so Nord Stream-2 is in its best interests,” Shell CEO, Ben van Beurden, said June 7. “We believe Nord Stream-2 is a good project, as it provides infrastructure for import-ing much-needed gas to the EU and Rus-sia is a major gas supplier to the EU.”

Russian gas is currently supplied to Europe through the OPAL pipeline, which is the challenger of gas pipeline ‘Nord Stream-1.’ The OPAL natural gas pipeline, with a capacity is 36 bln cubic meters, is a land extension of the offshore Nord Stream pipeline.

However, the European Commission has put a limitation on Gazprom to use just 50% of its capacity: Gazprom (50%), Uni-per (10%), Royal Dutch Shell (10%), OMV (10%), ENGIE (10%), Wintershall (10%).

"We are seeing the fi rst successes of the long-suffering threads of the OPAL gas pipeline, the decision on which was taken four years ago. Now the German regulator has sent a corresponding request to the European Commission. We expect a positive decision in the very near future," said Gazprom’s Medvedev.



Clearly, the migration debate has sharp-ened the differences in the political preferences between the ‘simple folks’ (who don’t see the benefi ts of globaliza-tion), and national political establish-ments and pundits (who claim to care about the ‘long term’ and the ‘big picture’ but fail to get their views across). Yet, the migration debate alone will not be able to explain the drawn out process of erosion in people’s trust of conventional democratic politics, political parties and professional politicians.

Democracy draws its inspiration from ancient Roman and Greek texts, which present it as a system of government “for the people and by the people”. While democracy may be unattainable in its pure idealistic form, recent advances in communication technology make it much easier for the ‘simple folks’ to shop for information and actively engage in pol-icy debates way beyond occasional vot-ing. In other words, technology enables more direct forms of democracy and of democratic participation in state affairs.

On the one hand, modern technology allows people to communicate with each other, fi nd support for their ideas or interests, and get organized. In this way, it greatly reduces the role of intermedi-aries (professional politicians) in the

political process, enabling people to “take their countries back”, not only from Brussels and Washington, but from the political establishment as such.

Naturally, the political class comes under the fi ercest attack in the EU and US context where ‘democratic’ decision-making appears to be particularly far removed from individuals and commu-nities, however, this is just the beginning. I believe that similar demands for auton-omy and more direct democracy will be raised within existing nation-states. And, very importantly, this trend is irrevers-ible.

On the other hand, advances in tech-nology greatly reduce the role of party organization in the political competition process. It no longer takes a massive grassroots machinery and party bureau-cracy to start a new political movement and win votes. All it takes is a message, one impressive speaker, Facebook and Twitter accounts, a good crowdfunding platform, and a skilled campaign man-ager. Well, almost.

Not all of this is good news. With the fi xed cost of establishing a new party going down over time, the political mar-ket will see a lot more entry and cut-throat competition, resulting in the ‘simplifi cation’ of political messages (xenophobic walls and borders, jobs, free healthcare and education for all).

Indeed, there is a danger that repre-sentative democracies, with their ability to fi lter, 'check and balance', will give way to illiberal direct democracies, sup-pressing minorities, building walls, etc. This danger is real and a lot of thought should go into developing a proper insti-tutional response, as discussed, for instance, in Kenneth Rogoff’s Britain’s Democratic Failure.

* * *While working on this article, I wrote

to my former teacher, Ronald Beiner, whose Democratic Theory class I took back in 1991. This is what he wrote in response:

“It's been a very bad week for those who complacently assume that things will necessarily get better if elites are humbled and direct-democracy energies get liberated. There's no guarantee that populist politics won't infl ict atrocious things on the world, as they have in the past. Right now, things are looking pretty scary: Trumpism, Brexitism, the resur-gence of the radical Right in Continen-tal Europe. We have to have our eyes open to all those real dangers and think hard & seriously about effective institu-tional responses. I'm not sure what those might be, but I suspect that at the moment the political classes in Western democ-racies are also scratching their heads trying to fi gure it all out.”

Continued from page 4

BY NICHOLAS WALLER

Azerbaijan’s interior ministry has charged the former chair-man of the state-owned International Bank of Azer-baijan (IBA), Jahangir Haji-

yev, with embezzlement after an investi-gation concluded that he illegally transferred up to EUR 125 million into bogus bank accounts set up for himself and his family members over a 14 year period.

According to the investigation’s fi nd-ings, IBA – Azerbaijan’s largest bank – had suffered through years of mismanagement during Hajiyev’s 2001-2015 tenure. The bank’s assets quickly turned to junk after the national currency – the Manat – was devalued in February 2015 on the back of falling energy prices.

The Azeri government forced Hajiyev out shortly after the devaluation and began an inquiry into the bank’s insolvent loans. The APA news agency reported that many of the loans were handed out to some of Azerbaijan’s most prominent

Azeri Former Bank Exec Charged with Embezzling €125mln

businessmen, including Nizami Piriyev, the founder and former owner of state-owned energy giant SOCAR’s subsidiary Azmeco.

Following Hajiyev’s ouster, the Azeri government’s internal audit of IBA found that up to EUR 5.9 billion in bank assets were made up of non-performing loans. The fi ndings led to a subsequent purge of IBA’s executives and upper echelon management at its Georgian, Russian and Emirati branches, and the State was forced to inject EUR 1.8 billion into the bank, bne IntelliNews reported on June 24.

The report also claimed that Baku plans to privatize IBA once its balance sheets are clear.

The State’s investigation into Hajiyev’s activities while at the helm of IBA found that he abused his offi cial powers by opening bank accounts for himself, his family members (including his wife Zamira Hajiyeva) and other associates with the purpose of transferring vast sums of money to the fake accounts.

Zamira Hajiyeva is also facing embez-zlement charges, though she has report-edly fl ed the country.


The Georgian Foreign Minister reaffi rmed his readiness to host Liechtenstein’s business delegation in Tbilisi

Georgian Foreign Minister Pays First Offi cial Visit to LiechtensteinPREPARED BY KATIE RUTH DAVIES

The Minister of Foreign Affairs of Georgia, Mikheil Janelidze paid an offi cial visit to the Principality of Liechtenstein where he held

meetings with the Minister of Foreign Affairs, Justice and Culture of the Prin-cipality of Liechtenstein, Aurelia Frick, and the Hereditary Prince of Liechten-stein with governing powers, Alois. This is the fi rst offi cial visit to the Principal-ity of Liechtenstein from Georgia.

During the meetings held in Vaduz, the sides discussed various areas of bilateral relations highlighting the great potential

of co-operation in economy, tourism, regional development and education.

The Georgian Foreign Minister pro-vided his colleague with information regarding the priority areas of the Four-Point Reform Plan initiated by the Prime Minister, and Georgia’s short-term objec-tives in this direction. Frick expressed her interest in sharing Liechtenstein’s experience with Georgia in many areas, including education, vocational training, and regional development. Liechten-stein’s Minister of Foreign Affairs, Justice and Culture highly appreciated the already implemented and ongoing reforms in Georgia, especially the introduction of electronic services – an innovative tool offered to the citizens of Georgia.

The sides underlined the importance of economic co-operation, stating the belief that the Free Trade Agreement between Georgia and the European Free Trade Association due to be signed dur-ing the Georgian Prime Minister’s forth-coming visit to the Swiss Confederation will serve as an essential pre-requisite for the further deepening of this co-operation. The Georgian Foreign Min-ister reaffi rmed his readiness to host Liechtenstein’s business delegation in Tbilisi.

The Georgian delegation expressed its gratitude for Liechtenstein’s support for the sovereignty and territorial integrity of Georgia. Both sides reaffi rmed the increasing level of positive co-operation within international multilateral formats.

The sides spoke about the need to hold regular consultations between Georgia and Liechtenstein and the importance of exchanging high-level visits. Mikheil

Janelidze invited Minister Frick for an offi cial visit to Georgia.

As part of his visit to Vaduz, Mikheil Janelidze met the Governing Prince of Liechtenstein, Alois. Both expressed their readiness to contribute to the devel-opment of relations between Georgia and Liechtenstein.

Diplomatic relations between Georgia and Liechtenstein were established in 1992. In 2015, the Government of Georgia and the Government of the Principality of Liechtenstein signed a Convention for the avoidance of double taxation and the prevention of fi scal evasion with respect to taxes on income and on cap-ital.

The fi rst offi cial visit to the Principality of Liechtenstein from Georgia

Mikheil Janelidze, Minister of Foreign Affairs of Georgia, meets Aurelia Frick, Minister of Foreign Affairs, Justice and Culture of the Principality of Liechtenstein


RETAIL FPI | Georgian Consumers Outsmarting Supermarket Managers?S

easons change, and so do Geor-gian food prices. In the second week of June, Georgia’s major food retail networks (Carre-four, Goodwill, Fresco and

SPAR) lowered their prices by an aver-age of 3.9% y/y and 1.8% m/m. Compared to the end of May, prices moved the most for the following food items: eggplant (-21%), pasta (-10.3%) and coffee (-5.7%); wheat fl our (+11%), buckwheat (+10.5%) and garlic (+6.8%).

THE LAW OF ONE PRICE … WHAT LAW?

Why should exactly the same product sell at dramatically different prices in different shops? It shouldn’t. At least that’s what the economics “law of one

price” says. The reality – in Georgia and elsewhere – is, of course, different. Very different. Let’s take a quick look at some of the most common grocery items sold in major Tbilisi supermarkets:

As is easy to see, there is very little difference in the prices of some items, say, Koda and Dila eggs, which sell at 30-32 tetri. Yet, how come one super-market is offering exactly the same 1kg package of Makfa fl our for 1.55 GEL while another is pricing it at 2.05GEL (a difference of more than 32%)? Makfa fl our may be an extreme case, but there are signifi cant differ-ences, well above 10%, in the prices of most grocery items.

One possible explanation is that super-market managers don’t know what they

are doing and base their pricing deci-sions on greed rather than calculation. Greed, however, may be a poor guide for profi t-making. Once bitten, consum-ers may get twice shy about shopping at greedy outlets. With competition among Georgian supermarket chains increasing all the time, greed and stupidity will be quickly punished.

Another possibility is that some super-market chains are better than others in securing low prices from their local and international suppliers. For instance, this is the reputation of the largest US retailer, Wal-Mart. If this is the case in Georgia, we should observe some supermarkets being consistently cheaper than others in most food categories.

Finally, supermarket managers may be very smart guys who know how to lure consumers into their establishments.

One common trick is to use so-called “loss leaders” – the term for goods adver-tised or sold at or below cost price. As explained on thekrazycouponlady.com, “the objective behind having a few of these for a sale period is to “lead” cus-tomers into the store with the premise that, once inside the store, the customers will also purchase full-priced items, mak-ing up for the profi t loss.”

It is indeed quite common for shoppers to succumb to the impulse and fi ll up their shopping carts once they get into a store. But smart shoppers – hopefully, there are some of them in Georgia – can do much better!!! Why not hunt for “loss leaders” and stockpile items that are sold at rock bottom sale prices? Outsmart supermarket managers, buy cheap and avoid paying the full price every time you run out of a product!


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

E-mail: [email protected]

BY DIMITRI DOLABERIDZE

On 27 June, 2016, in Bern (Switzerland), during a meeting of the ministers of the European Free Trade Association, Georgia signed a Memorandum with the European Free Trade Association

(EFTA) for future collaboration. Present were the Prime Minister of Georgia,

Giorgi Kvirikashvili, together with Vice-Premier Dimitry Kumsishvili and other Georgian repre-sentatives.

The EFTA consists of four member states- Swit-

Georgia Signs Free Trade Agreement with EFTA Member States

zerland, Lichtenshtein, Norway and Iceland. Through this Agreement, Georgia will be able to

send Georgian-made products to EFTA’s market with an expected 14 mln GEL profi t. The Agree-ment covers the following fi elds: goods trade, ser-vice trade, sanitary and phytosanitary measures; technical barriers in trade; regulations, trade facil-itation and customs cooperation; investments; intellectual property rights; government procure-ment; competition; trade protection measures, and sustainable development.

The talks between the parties began in September 2015 with negotiations successfully completed on 26 February, 2016. The agreement has entered into force upon signing by all parties.

Prime Minister of Georgia, Giorgi Kvirikashvili signed a Memorandum with the European Free Trade Association (EFTA) for future collaboration in Bern, Switzerland

BY NICHOLAS WALLER

Georgia’s Economy and Sustainable Development Minister, Dimitry Kum-sishvili, on Monday said the sudden precipitous drop of the value of the Georgian Lari against the US dollar

can be traced to the UK’s decision to withdraw formally from the European Union.

In a referendum held on June 23, 52 percent of voters in the United Kingdom opted to end their formal membership in the EU and sent shockwaves around the world as the future of the EU and UK, itself, came into question.

With UK voters opting to be the fi rst to seek a formal divorce with the EU, Britain’s exit – or Brexit – from the European Union has sparked widespread panic on the world’s fi nancial markets. Several of the world’s national currencies have gone into a tailspin as the value of the Euro slid against the Dollar, and the British Pound hit a 30-year low against the greenback.

The Georgian National Bank set Monday’s Lari exchange rate against the Dollar at 2.2941 GEL/USD 1, a sharp 2 percent drop from Friday’s clos-ing rate.

"This is most likely a one-off that is directly con-nected to the UK’s decision to quit the European

Georgian Econ Minister Blames Brexit for Lari’s Sudden Decline

Union. This caused the Euro and Pound to weaken signifi cantly and the Dollar to rise. Of course, this immediately affects our currency," Kumsishvili said in a televised interview with Georgian news agency Rustavi-2.

The Lari had been experiencing a rebound in recent months after hitting an all-time low of 2.4998 on February 13. As recently as June 9, the Lari had strengthened by 15 percent to 2.1196 against the Dollar, its highest rate in nearly 18 months.

Georgia’s National Bank maintains a policy of sharply appreciating the Lari by occasionally pur-chasing foreign currency at auctions. From March-June, the bank bought more than USD 298 million at 11 auctions.

Due to the current market instability and the volatile fl uctuation in the Lari rate, Kumsishvili advised the public to keep a close eye on the exchange and buy and sell foreign currency only when necessary.


Zurab Zhvania Georgian School of Public Administration Raising Civil Servant Competencies

BY TATIA MEGENEISHVILI

On June 25 yet another fi ve star hotel joined the ranks of luxury accommodation possibilities in Georgia. Castello Mare, located just

17 kilometers away from Batumi city, was opened on the Black Sea coast, in Tsikh-isdziri village.

The complex, which consists of a hotel and wellness resort, is a USD 25 million investment project.

The hotel, which has a conference hall, tennis court, billiards, bowling and div-ing school also offers something extra special to its guests- a trip directly down to the beach on modern elevators.

There are 90 rooms of eight different categories available, all of which boast a sea view. Also available on the complex is a spa center, recreational zone with sports hall, a Jacuzzi, indoor and outdoor

Castello Mare Hotel Opens in Adjara Region

pools, several types of sauna, cosmetic rooms, and a beauty salon with about 100 fi tness and therapeutic procedures.

Prime Minister of Georgia, Giorgi Kvirikashvili, attended the opening cer-emony. In his speech Kvirikashvili under-lined that the USD 25 million project will support the development of tourism in the region and create much-needed working places.

"This is a beautiful and absolutely unique resort and recreational complex. The building perfectly fi ts into this beau-tiful and historic area, just like a chame-leon. This is a complex which gives even more value to an already beautiful land-scape,” said Kvirikashvili.

He went on to underline that the inves-tor Soso Orjonikidze, a Georgian born businessman, gained his capital aboard.

“However, he decided to invest the money he earned in his home country. Besides this USD 25 million hotel, he has ambitious plans for developing the adjoining area as well,” the PM stated.

Civil servants are trained at the School within the framework of the Public Administration Program through spe-cially designed educational programs. The School regularly carries out studies to better understand the needs of civil servants with the intention of imple-menting new programs for their further development.

Civil servants are trained within the frame of two programs: ‘Public Admin-istration’ and ‘State Language Training Program.’ The School focuses particu-larly on the representatives of ethnic minorities and supports their civic inte-gration through educational programs.

In parallel with the above programs in Kutaisi, a State Language Program is implemented in the eight regional cent-ers of the School (in Dmanisi, Akhal-kalaki, Ninotsminda, Tsalka, Bolnisi, Marneuli, Gardabani, Lambalo-Sagarejo municipality) for ethnic minorities. The aim of the State Language Program is to

train students in the basics of the State language, enabling them to write, read, prepare short messages, and create let-ters and documents in Georgian.

The School’s strategic development document was elaborated in 2014 by the Ministry of Education and Science of Georgia. Structural changes were under-taken, and educational programs were updated to better fi t the requirements and to meet the challenge of constantly having to re-train civil servants.

The Zurab Zhvania School of Public Administration cooperates with other state and educational institutions that carry out various kinds of training and practical programs for professional development, raising qualifi cations, pro-viding practical skills necessary for career development and theoretical knowledge, overcoming defi cit of qualifi ed employ-ees and ensuring integration into the state system in ethnically mixed and high mountainous regions of Georgia.

BY MAKHO JIGHAURISHVILI

The Zurab Zhvania Georgian School of Public Adminis-tration hosted a media tour in Kutaisi at which the rep-resentatives of central and

regional media were able to familiarize themselves with the school’s activities, core competences and ongoing processes. Director of the school, Ketevan Jakeli, and other representatives of the school shared the school’s recent accomplish-ments with the audience.

The LEPL Zurab Zhvania School of Public Administration, operating under the Ministry of Education and Science of Georgia, was founded on June 10, 2005, on the basis of Presidential Decree N 476. The School aims to raise the pro-fessional level and qualifi cation of civil servants employed in the public sector.


Contact: www.edelbrand.ge

Phone: 599 461908

BY ZVIAD ADZINBAIA

The US-Georgia Strategic Partnership Commission's (SPC) Democracy and Governance Working Group reviewed progress following their November 2015 meeting in Washington DC.

Following the meeting on June 21 in Tbilisi, the parties released a joint statement affi rming the importance of strong, depoliticized government institutions and transparent and accountable gov-ernance. “The United States commended the pro-gress made by Georgia in furthering its reform agenda.” The sides agreed that an open, pluralistic, and peaceful political environment is essential to Georgia's goal to make the October parliamentary elections a showcase of Georgia’s democratic pro-gress.

In addition, the ways of ensuring a level and com-petitive playing fi eld for political parties and can-didates through principled leadership and improve-ments to election administration, as well as a free and open media environment, were included in the discussion agenda. The US welcomed “the leadership of Prime Minister Kvirikashvili in dis-couraging political violence and intimidation.” The sides highlighted the crucial importance of the Prime Minister’s statement calling for the adoption of a code of conduct among political parties to ensure a free, fair and stable electoral environment.

Among the other political and civic matters, the sides acknowledged the importance of a strong and independent judiciary. The US commended Geor-gia’s ongoing justice sector reforms, particularly of the Chief Prosecutor's Offi ce. “The United States encouraged Georgia to continue its work in these key areas, and to go deeper and broader both in law and in practice to strengthen checks and balances, including at the Ministry of Internal Affairs.”

Furthermore, the American side praised Georgia’s implementation of voluntary interviewing of wit-

SPC meeting at MFA Georgia, June 21, 2015

US-Georgia SPC Encourages Georgia’s Democratic Progress

nesses urging its rapid expansion to all criminal cases. The issue of implementation of additional reforms that “will further strengthen Georgia’s democracy and contribute to Georgia's achieve-ment of its European and Euro-Atlantic integration goals” was emphasized.

The US working group welcomed Georgia's efforts to improve the capacity and reduce the politiciza-tion of Georgia's public servants through legisla-tion that will take effect in January 2017. The Work-ing Group also praised the great strides Georgia has made in addressing the issue of traffi cking in persons.

The Georgian delegation was led by co-chairs First Deputy Foreign Minister, David Zalkaliani, and First Deputy Minister of Justice, Alexander Baramidze. It also included a broad interagency delegation. The US delegation was led by Deputy Assistant Secretary of State for European and Eurasian Affairs, Bridget Brink; USAID Assistant Administrator for Europe and Eurasia, Thomas O. Melia; Deputy Assistant Secretary of State for Democracy, Human Rights and Labor, Rob Ber-schinski; Coordinator of US Assistance to Europe and Eurasia, Alina Romanowski; and Department of Justice Offi ce of Overseas Prosecutorial Devel-opment Assistance and Training (OPDAT) Regional Director for Eurasia, Catherine Newcombe.

The Strategic Partnership Commission is the primary mechanism for organizing and prioritiz-ing the broad and deepening cooperation between the United States and Georgia. The Commission includes four bilateral working groups on priority areas identifi ed in the Charter on Strategic Part-nership: democracy and governance; defense and security; economics, trade, and energy; and people-to-people and cultural exchanges.

On November 2, 2015, a plenary session within the framework of the US-Georgia Strategic Part-nership Charter was held in Washington DC.

View the full text of the statement: http://www.state.gov/r/pa/prs/ps/2016/06/258986.htm


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BY IA MEURMISHVILI FOR VOICE OF AMERICA GEORGIAN SERVICE

Former U.S. Ambassador to Georgia, Kenneth Yalowitz, sat down with us to talk Geor-gia’s foreign policy and the challenges ahead. While the

former diplomat urges the West to send strong signals to Georgia, implying that it is not forgotten, he admits that the Georgian government also needs to take some measures itself.

YOU CLAIM THAT GEORGIA HAS A DIFFICULT PREDICAMENT DUE TO ITS LOCATION AT A STRATEGIC CROSSROADS. WHAT MAKES THIS LOCATION DIFFICULT? If you look back at the history, all three South Caucasus countries were parts of something else, except for a brief period before the Soviet Union, until 1991. The reality today is that these are three small countries. Russia is a declining power, but it is still a major country; Turkey is a very important country; and, obviously, Iran is an important country. Georgia is perched right in the center of that. This location is a blessing because of it being a strategic crossroads between east-west and north-south, but it’s also a bit of a curse, because it has always been an object of invasions.

The situation today is the most con-cerning, particularly regarding Russia- since the war in 2008 and the occupation of Abkhazia and South Ossetia. What Georgia has done since 2008 is very important and very logical. While keep-

Georgia’s Location Both a Blessing and a Curse, Former US Ambassador Says“Georgia is doing everything that any foreign policy specialist would recommend”

ing their principal part of the foreign policy to the West, the new government is trying to improve the relationship with Russia where possible. It’s a delicate bal-ance that Georgia is trying to keep – to be sure that nobody else recognizes Abkhazia and South Ossetia and at the same time trying to deal with the Rus-sians without giving up on their princi-pal position on Abkhazia and South Ossetia.

CONSIDERING THE DIFFICULTIES YOU JUST DESCRIBED, DO YOU THINK GEORGIA IS A GOOD NEIGHBOR? Yes, I do. First of all, Georgia talks with both Armenia and Azerbaijan. Georgia also has a very good relationship with Turkey. Turkey has been a very big sup-porter of Georgia since its independence. Further, Georgia has a good relationship with Iran. As long as that stays within the boundaries we have all set in terms of dealing with Iran, I think that it’s very much a relationship to be welcomed. Georgia also has good relations with Ukraine, also very important, because both countries are dealing with diffi cult issues because of Russia. The Russian relationship is very diffi cult. I think that’s where the United States and the EU come in. Georgia has very solid people conducting its foreign policy and they realize that to balance a great power to the north you need good relations with the European Union and with the United States. When you look at Georgian for-eign policy right now, Georgia is doing everything that any foreign policy spe-cialist would recommend.

BY BECOMING A PART OF

THE WEST, GEORGIA MAY COMPROMISE OR WEAKEN EUROPEAN SECURITY. IN YOUR OPINION, DOES THIS ARGUMENT HAVE ANY MERIT? I don’t think so. Georgia has been prom-ised membership [to NATO]. It's not a question of if, it's a question of when. When Georgia becomes a member of NATO, it will be decided by all member states that Georgia is a plus and can contribute to the overall security of the region.

I wouldn’t hold up hopes that this is going to happen immediately. If a MAP is not given to Georgia, which seems likely at this point, there should be a very strong expression of support for Georgia. I think this is very important.

There’s a lot of Russian-inspired prop-aganda that the West does not like Geor-gia, and the West will never make a home for Georgia. This is false. I think I can understand why people in Georgia may be wondering something along the lines of ‘what do you really think of us?’ This is why I believe that at the summit there should offer a very strong signal of sup-port. I also argue that the Secretary of State and other leading fi gures should visit Georgia soon!

These kinds of things will underscore that this is a valued relationship and valued friendship and that we appreci-ate the military support Georgia gives

to what we do in Afghanistan and Iraq. Georgia deserves acknowledgment for what it's doing.

YOU ARGUE THAT THE WESTERN GOVERNMENTS SHOULD SHOW SUPPORT FOR GEORGIA AND SIGNAL TO TBILISI THAT IT IS NOT FORGOTTEN. WHAT DO YOU THINK THE GEORGIAN GOVERNMENT SHOULD DO TO SOLICIT SUCH SUPPORT FROM THE WEST? When I was an ambassador to Georgia, there was a tendency by some to blame Russians for everything that went wrong. I’d agree with some of that, but I would also say that in the end, the Georgians are the ones who need to make correc-tions, build solid state institutions, get rid of corruption.

There is a lot the Georgian government and the people can do. First and most important is the October parliamentary elections. The fact that Georgia had two very good elections is terrifi c, but what everyone wants to see is that it can now have elections without there being a question about how open, free and fair the elections were.

Another thing is the military modern-ization. I know that Georgia is purchas-ing an air defense system from France. Developing and improving defense capa-bilities is excellent, and also very impor-tant. However, I still hear that from the stand point of modernization and organ-ization of the Georgian military, there is still a lot that needs to be done in terms of being interoperable with NATO. Hope-fully, having the NATO training center will help in this regard.

The third issue is the economy. Geor-gia – statistically – is not a rich country. Prime Minister Kvirikashvili has a num-ber of ideas to stimulate economic growth. That is absolutely crucial along with all these other things. Georgia must have a strong functioning economy. The best way Georgia is going to attract Abkhazia and South Ossetia back is not through military means but through the strength of its economy. Going through with the EU Association Agreement is vital. There’s going to be short term pain; adjustments that may hurt some indus-tries. But every country that has joined the European Union has benefi ted. There may be a hard transition but Georgia will ultimately benefi t from it greatly.

Former U.S. Ambassador to Georgia, Kenneth Yalowitz

brexit and georgiageorgiatoday.ge/uploads/issues/fbfa9d17445e24636f0dd49784649470.pdfregarding the...

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