Tag Archives: Georgia

Georgia agrees gas imports from Azerbaijan

JAN 3 (The Conway Bulletin) — Georgia will buy almost 100% of its gas supplies from Azerbaijan this year, officials told local media, completing a total switch from Russia-supplied gas. The announcement is, effectively, a continuation of a policy laid out in May last year when Georgia’s then-energy minister Kakha Kaladze said that Georgia would stop buying Russian gas. He had earlier switched the way that Georgia imported Russian gas from a barter deal to a paid-for deal.

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Tbilisi court sentences Saakashvili (in absentia)

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TBILISI, JAN 5 (The Conway Bulletin) — — A court in Tbilisi sentenced former Georgian president Mikheil Saakashvili to three years in prison, in absentia, for abusing his power and trying to cover up the 2006 murder of a banker.

The sentence will pile more pressure on the authorities in Ukraine where Saakashvili, who says that the charges are politically motivated, is leading demonstrations against Ukrainian President Petro Poroshenko.

Georgia wants Saakashvili extradited. He left Georgia in 2013 after the end of his 10 years term in power. A year earlier his party, the United National Movement party (UNM), had lost a bitter parliament election to rivals, the Georgian Dream. Since then, the Georgian Dream has accused various members of Saakashvili’s former government of abuse of power, corruption and murder. Georgia’s allies have warned the authorities not to use their powers to pursue vendettas.

A statement on the court’s website said: “The city court of Tbilisi has delivered a guilty verdict for abuse of power against Mikheil Saakashvili and given him four years in custody as punishment, reduced by one quarter within the framework of an amnesty law meaning that the final punishment will stand at three years in custody.”

Essentially the court said that Saakashvili was guilty of trying to cover up the 2006 murder of banker Sandro Girgvliani who was found dead shortly after arguing with a Georgian government official in a restaurant.

Saakashvili, whose stock has fallen both in Georgia where support for his UNM party has slumped, and overseas where his backers have been increasingly concerned about his erratic behaviour, replied on his Facebook page. He said that the Georgian prosecutor’s verdict was driven by Mr Poroshenko and his arch-enemy Russian President Vladimir Putin who want to see him in prison.

The 50-year-old Saakashvili had been the darling of the West when he led a peaceful revolution in Georgia in 2003, even persuading US President George W. Bush to visit in 2005. A reckless war with Russia in 2008 undermined his golden-boy aura, though.
ENDS

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

BGEO subsidiary agrees hotel deal

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JAN 2 (The Conway Bulletin) — m2, a subsidiary of BGEO, bought a 50% stake in what it described as a boutique hotel in Tbilisi for $4.1m (Jan. 2). The unnamed hotel is expected to be completed by the end of the first quarter of 2019 . BGEO is the investment arm of Bank of Georgia and is being spun off into a separate listing on the London Stock Exchange in 2018. Tourism in Georgia is booming. The sector is concentrated on Tbilisi and its rise has spurred a hotel-building boom.

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Currency market: Lari falls but finishes 2017 up

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JAN. 5 (The Conway Bulletin) — The Georgian lari yo-yoing showed no sign of stopping as it came off recent highs to fall 1.2% in the period from Dec. 22. On Dec. 22, the Georgian lari had been valued at 2.534/$1 compared to its current value of 2.589/1. It finished the year at 6.6% higher than its 2017 starting value.

The other big mover over the Christmas period was the Kyrgyz som. It rose 1.2% to 68.93/$1 and finished the year nearly 0.5% stronger against the US dollar.

Indeed only two currencies out of the eight in the Central Asia and the South Caucasus region were weaker on New Years eve 2017 then they were on the first trading day of the year.

The Uzbek authorities effectively devalued their soum currency in September when they released it from its various US dollar pegs. It immediately lost half its value to trade at around 8,100/$1 and has stayed there ever since.

The other losing currency of 2017 was the Tajik somoni. Pushed down by bad fundamentals and a failing banking system it finished the year 12% lower at 8.8277/$1.

ENDS
— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Middle East driving tourism boom in Georgia

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JAN 5 (The Conway Bulletin) — Tourism to Georgia boomed in 2017, the head of Georgia’s National Tourism Administration Giorgi Chogovadze told media. The growth in tourism has been one of the biggest drivers of the Georgian economy this year, analysts have said, and much of this tourism drive is coming from the Middle East. While Mr Chogovadze said that tourism numbers from Europe were up around a third, from Jordan, Saudi Arabia, Kuwait and Iran the numbers had more than doubled.

ENDS

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Comment: A quick look back at 2017

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>> The region’s economies and Uzbekistan’s regeneration under Mirziyoyev are the standout features of 2017, writes James Kilner

JAN 5 (The Conway Bulletin) — For Central Asia and the South Caucasus, 2017 was a year of recovery. There have been the usual rounds of elections, generally predictable and cementing the incumbent powers in Georgia, Armenia and Kyrgyzstan, but economics, and not politics, caught the eye and the bigger headlines in 2017.

The economic stupor that had hung over the region since oil prices collapsed in 2014 and Russia’s economy fell into a recession, was finally thrown off. If, at the start of the year, the green shoots of recovery looked tentative, by October they were coming out into full bloom.

Most countries were posting decent economic growth figures and double-digit inflation, a real worry, has been neatly sidestepped.

Special mention here must go to Georgia which has posted exceptionally strong economic results, pushed on by a spurt in tourism and investment.

There have been some serious economic exceptions, though. Azerbaijan’s economy still shrunk and its banking sector looked as shaky as ever. International Bank of Azerbaijan defaulted on its debt repayments and several smaller banks have had their licenses revoked. Tajikistan also looks increasingly fragile and Turkmenistan, while the information stream coming out of the country is as beguiling as ever, looks like it may have been holed below the waterline. Watch out, in 2018, for a serious fracture in Turkmenistan.

As well as a recovery period for the region’s economies, 2017 was also a year of recovery for Uzbekistan’s political structures and their relationships with society. This will go down as the year that Uzbek President Shavkat Mirziyoyev made it clear that he was determined to pursue a reformist agenda after taking over from the authoritarian and brutal Islam Karimov in September 2016.

He devalued the official exchange rate of the Uzbek soum, took thousands of people off blacklists linked to Islamic extremists, reigned in the power of the secret service, encouraged traders to export to neighbouring countries and signed deals with the rest of the region over borders and commerce that his predecessor had spurned.

There is still much to do in Uzbekistan, and some people grumble about the lack of genuine democratic values and the slow pace of human rights progress, but Pres. Mirziyoyev is laying the foundation for a better future for Uzbeks.

If the Conway Bulletin had a ‘Person of the Year’ prize, Mirziyoyev would be a worthy winner.
>> Next week – the first in a 2-part series on what to look out for in 2018

ENDS

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Praise for Georgia’s Central Bank stress tests

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DEC. 26 (The Conway Bulletin) — The Basel Committee on Banking Supervision praised Georgia’s Central Bank for bringing in best-practice stress tests for its banks. The Georgian economy, and in particular its finance sector, has weathered a regional economic downturn since 2014 better than its neighbours. Analysts have said that the stress tests that the Georgian Central Bank has imposed are far more effective than other banking tests in the region.

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Georgia to raise electricity prices

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TBILISI, JAN 1 (The Conway Bulletin) — Electricity prices, a touchy issue in the South Caucasus, are due to rise again in Georgia, media reported.

The Georgian National Energy and Water Supply Regulation Commission (GNERC) approved the rise, asked for by power supply companies Telasi and EnergoPro Georgia, because of the cost of infrastructure upgrades.

The rise will be the second increase in electricity prices in Georgia in the past 2-1/2 years. One of the election promises of the ruling Georgian Dream coalition government in 2012, when it was voted into power, was to cut electricity prices.

From the start of the year, Tbilisi residents will now pay 1.56 tetris more per unit of electricity. In August 2015 the price was increased by 3 tetris.

In 2015, proposed electricity price rises in neighbouring Armenia triggered street protests that lasted weeks until the rises were dropped.

ENDS

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

BGEO signs $11.6m contract to build shopping mall in Tbilisi

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DEC. 28 (The Conway Bulletin) — BGEO, part of the Bank of Georgia group that is listed on the London Stock Exchange, said that its real estate unit m2 had signed an $11.6m contract to build the shell of a new shopping mall in Tbilisi (Dec. 28). This is the first major third-party contract for m2 since BGEO bought it in June. Bank of Georgia is spinning off BGEO into a separate company with a separate London stock listing in 2018.

— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin

Comment — Bugs are destroying Georgia’s harvest

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SEPT. 24 (The Bulletin) — Farming in Samegrelo, Western Georgia, in the last months has been ravaged by a new pest, the brown marmorated stink bug.

The bug attacks hazelnut and fruit trees, feeding off their leaves. Precise numbers are not yet in, but many farmers report that they lost their entire crop. One hazelnut factory in Zugdidi says that while last year they processed 300 tonness of hazelnut per month, they are now down to 50 tonness. Many people have said more than 60% of the harvest has been lost.

The loss is likely to have grave consequences. One farmer reported that his neighbours would struggle to buy food, as their only major source of income had been wiped out. Thousands of families in Samegrelo are affected. Hazelnut, too, previously was Georgia’s largest agricultural export. One Georgian businessman said Georgia will export $66m of hazelnut this year compared with $166m in the bumper year of 2016. Corn has been hit, too.

The mood in Samegrelo is grim.

People are protesting. Farmers and opposition activists say that they had warned since April, but that the government only started spraying program on June 21, after most experts had concluded that this year’s crop was lost.

The crisis has showcased the structural weaknesses of the Georgian Dream government — the reaction was sluggish. The spraying was haphazard, and in part done before rainy days, which washed out the pesticide, a mistake they could have avoided by consulting a specialised forecast, according to an expatriate agronomist. In this context, too, local protesters say that it does not help that the 6,000 employees of the Ministry of Agriculture primarily are rural activists of the Georgian Dream. The ministry has not proven to be an apparatus that can conduct an effective containment campaign.

The bug is reported to have crept in from Sochi, as an invasive species that came with building materials for the 2014 Winter Olympics and people on social networks now are discussing the arrival of the bug in Tbilisi.

If the government does not stem its advance in the next year, the consequences could be severe.

>>Paul Scott is a pseudonym for a Georgia and South Caucasus analyst

ENDS

— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.