Tag Archives: Georgia

Georgia’s car market suffers from poor economic climate and EEU tariffs

TBILISI, APRIL 8 2017 (The Conway Bulletin) — Tax increases on cars that are either more than 6-years-old or are right-hand drive, Eurasian Economic Union (EEU) tariffs and a regional economic downturn have combined to hit Georgia’s car market, once an important part of its economy.

Georgia became a hub for the import and export of used cars to the South Caucasus and Central Asia in the early 2000s, after the government simplified customs procedures and lowered tariffs. Kazakhstan, Azerbaijan and Armenia used to be the main importers of cars from Georgia. Nowadays, however, the once-booming used car market is shrivelling, limping through a painful decline.

Sales data from the Rustavi Auto market ‘Autopapa’, the biggest retailer of used cars in Georgia, which lies 25km south-east of Tbilisi, makes for grim reading. In 2013, almost 80,000 cars were exported. In 2016, around 16,000 were exported.

On a visit by a Conway Bulletin correspondent frustrated dealers were complaining that they were being driven out of business.

“I have been here since the opening of this market and it has never been this bad,” said Ioba. “I have 30 cars here. If the situation does not change, I will sell them and move on to another business.”

Others wistfully remembered a more prosperous age.

“I have around 15 cars now, but this business is just not working. Nobody wants old cars anymore. I will have to switch to new cars,” said Konstantin. “When the Kazakhs came here, not a single car went unsold. Those were golden times.”

The reference to Kazakhstan shows just how interdependent the economies of Central Asia and the South Caucasus are. The Kazakh economy is the biggest in the region but, like its neighbours, a downturn in the economy has pressured life- styles. Tariffs imposed by the EEU have also hurt the market. Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia are all EEU members.

Kakha Daushvili, executive director of the Association of Young Economist of Georgia said the EEU had helped undermined the car market but it wasn’t the only factor.

“This region was under serious crisis from 2014 up to present, I would say,” he said.

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(News report from Issue No. 324, published on April 13 2017)

Georgia sees no threat to bumper exports from EEU

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TBILISI, APRIL 8 2017 (The Conway Bulletin) — The Russia-led Eurasian Economic Union (EEU) trade bloc has not damaged Georgia’s exports, Mariam Gabunia, head of the department for foreign policy at the Georgian economy ministry, told The Conway Bulletin in an interview.

Instead she said that Georgia was on course for a bumper year with exports rising strongly after a dip last year linked to tough economic conditions in Russia, Central Asia and the South Caucasus.

Some analysts have said that the EEU, which is essentially a trade bloc including Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan, would hurt those who didn’t sign up — including Georgia. Ms Gabunia, though, waived aside this notion.

“In general, we do not see any negative impact on Georgia’s trade with regard to the EEU,” she said. “We are part of the CIS free trade agreement and Belarus and Kyrgyzstan are part of it. On top of that we have bilateral FTA (free trade agreements) with Russia, Armenia and Kazakhstan.”

Ms Gabunia’s comments are important because it is one of the first times that a senior official from a government outside the EEU has commented on whether the bloc has hit regional trade. Many businesses within the bloc have been complaining that the extra bureaucracy and the bias towards the larger members have created problems.

Georgia is, to a large extent, still reliant on trade with its former Soviet neighbours. One of the biggest boosts to its economy over the past few years was repairing relations with Russia. Last year it was Georgia’s biggest export market with $200m of sales.

And Ms Gabunia said that bilateral agreements made in the 1990s underpinned Georgia’s trade within the former Soviet Union, taking precedence over EEU rules.

“According to the legislation of the EEU the FTA that were concluded before the creation of the EEU will stay in force. and we had FTA with all these countries before the EEU was created,” she said.

This year has started strongly, mainly because of much improved macroeconomic conditions in Georgia and the rest of the region. Ms Gabunia said that trade relations with Russia had improved along with political relations.

“As far as concerns the other EEU members, the situation is improving,” she said.

“Exports to Belarus increased by 61% in the first two months of 2017, for example.”

According to Geostat, Georgia’s biggest exports are copper ore, ferroalloys, wine, medicines and cars.

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(News report from Issue No. 324, published on April 13 2017)

Azerbaijan BTC throughput falls

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APRIL 5 2017 (The Conway Bulletin) — Azerbaijan’s state oil and gas company Socar said that the amount of oil pumped through the Baku-Tbilisi-Ceyhan pipeline (BTC) had fallen by more than 11% in the first three months of the year, media reported. The fall is linked to a drop in oil being produced by fields in the region, a drop triggered by the collapse in oil prices from $110/barrel in mid-2014 to under $30/barrel in Jan. 2016 and around $50/barrel now. Azearbaijan has exported less oil via BTC and Kazakh producers have turned to the cheaper CPC pipeline that runs around the Caspian Sea to Novorossiya on Russia’s Black Sea coast.

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(News report from Issue No. 324, published on April 13 2017)f

Georgian president rows with ex-GD colleagues

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TBILISI, APRIL 7 2017 (The Conway Bulletin) — In his annual address to Parliament, Georgian President Giorgi Margvelashvili accused the ruling Georgian Dream party of hampering the democratic development of the country, reflecting the growing rift between the head of state and his former parliamentary colleagues.

Mr Margvelashvili main frustrations were the concentration of power in the hands of the ruling party, the lack of dialogue with the opposition and constitutional reforms which will turn the presidency into a token position.

Last year the Georgian Dream crushed its main rival, the United National Movement party of former president Mikheil Saakashvili in a parliamentary election. It won an outright majority but Mr Margvelashvili said that it had failed to achieve any lasting good despite its dominance.

“Last November, I addressed the newly elected parliament and said the formation of a constitutional majority raised the threat of concentration of power, but at the same time raised the prospect of bold reforms and initiatives,” he said. “What do we actually have five months later? The potential threat has become a serious problem, and the dynamics of reforms are not impressive.”

Mr Margvelashvili was elected president in 2013 as Georgian Dream’s candidate. However, his relationship with the ruling party has collapsed.

Ghia Nodia, professor of politics and director of the International School of Caucasus Studies in Ilia Chavchavadze State University in Tbilisi, said that the row between Mr Margvelashvili and Bidzina Ivanishvili, Georgia’s richest man and the power behind the Georgian Dream, had become a personal matter.

“The President is considered to be a traitor,” he said. “I don’t think the President wanted a conflict but to be loyal to Ivanishvili is a condition of the Georgian Dream coalition but Margvelashvili decided to be independent and to be a protector of the constitution.”

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(News report from Issue No. 324, published on April 13 2017)

Priest accuses Georgia of unfair trial

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APRIL 13 2017 (The Conway Bulletin) — Archpriest Giorgi Mamaladze, the priest waiting for his trial on charges of attempting to poison a senior member of Patriach Ilia II’s inner circle, has said that he is going to apply to the European Court for Human Rights against what he has said is an unfair process. Archpriest Mamaladze was arrested this year trying to board a flight to Germany with cyanide, a case that has captivated the Georgian public.

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(News report from Issue No. 324, published on April 13 2017)

Trail route from Azerbaijan and Georgia to Turkey to open in June

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MARCH 29 2017 (The Conway Bulletin) — The Baku-Tbilisi-Kars rail route, considered a vital piece of infrastructure linking the Caspian Sea to Europe, will officially opened in June, media reported by quoting Turkey’s minister of transport, Ahmet Arslan. The route has been severely delayed. It is primarily designed for goods transport but will also carry passenger sleeper trains.

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