Issue no: 1080/145 • • SEPTEMBER 4 - 6, 2018 • PUBLISHED TWICE WEEKLY PRICE: GEL 2.50

In this week’s issue...

Continued on page 4

MarketsAs of 31 Aug 2018

STOCKS Price w/w m/m BONDS Price w/w m/mBank of Georgia (BGEO LN) GBP 16.53 2,2% 9,4% GEOROG 04/21 103.06 (YTM 5.49%) +0,2% +1,3%Georgia Capital (CGEO LN) GBP 10.27 +0,6% +3,9% GEORG 04/21 105.42 (YTM 4.64%) +0,0% 1,4%GHG (GHG LN) GBP 2.30 7,6% 9,8% GRAIL 07/22 106.09 (YTM 5.95%) +0,2% 0,4%TBC Bank Group (TBCG LN) GBP 16.00 2,8% 9,0% GEBGG 07/23 98.82 (YTM 6.28%) 0,4% 1,3%

COMMODITIES Price w/w m/m CURRENCIES Price w/w m/mCrude Oil, Brent (US$/bbl) 77,42 +2,1% +4,3% GEL / USD 2,5734 0,0% +5,1%Gold Spot (US$/OZ) 1 203,62 0,1% 1,7% GEL / EUR 2,9838 0,3% +4,1%

GEL / GBP 3,3352 +0,8% +3,8%INDICES Price w/w m/m GEL / CHF 2,6491 +1,2% +7,3%FTSE 100 7 432,42 1,9% 4,1% GEL / RUB 0,0382 0,5% 2,6%FTSE 250 20 689,00 0,0% 0,9% GEL / TRY 0,3928 8,3% 21,2%DAX 12 364,06 0,2% 3,4% GEL / AZN 1,5161 0,1% +5,3%DOW JONES 25 964,82 +0,7% +2,2% GEL / AMD 0,0053 +3,9%NASDAQ 8 109,54 +2,1% +5,7% GEL / UAH 0,0912 1,2%MSCI EM EE 155,35 +2,2% 4,6% EUR / USD 0,8620 +0,2% +0,8%MSCI EM 1 055,96 +0,5% 2,9% GBP / USD 0,7716 0,8% +1,3%SP 500 2 901,52 +0,9% +3,0% CHF / USD 0,9689 1,5% 2,2%MSCI FM 2 647,24 1,0% 3,3% RUB / USD 67,4666 +0,6% +7,9%GT Index (GEL) 1 582,68 TRY / USD 6,5396 +8,9% +33,1%GT Index (USD) 1 208,13 AZN / USD 1,6958 +0,0% 0,1%

Prepared for Georgia Today Business by

FOCUS ON EU INTEGRATION

PAGE 2

EU Commissioner visits Georgia, opens Eastern Partnership School

NEWS PAGE 2

NEWS PAGE 3

BUSINESS PAGE 8

BUSINESS PAGE 6

BUSINESS PAGE 10

4th Tbilisoba Festival Held in Minsk

Georgia: The New Blockchain Giant

Georgia Chooses Film to Send to the Oscars

Huawei Overtakes Apple in Number of Smartphones Sold

€45 Million EU Macro-Financial Assistance Package Finalized

BY SAMANTHA GUTHRIE

On August 25, the municipality of Khulo in the Adjara region held Khulo Fest. The event was organ-ized by the Khulo local action group (LAG), in cooperation with

Khulo’s City Hall, with the support of the Euro-pean Union and Caritas Czech Republic in Georgia (CCRG).

On a warm Saturday afternoon, in front of the Khulo Drama Theater, members of the public gathered for an exhibition of local products for sale and sampling. The festival aimed to pro-mote local products and handicrafts such as paintings, souvenirs, decorative trinkets, hand-knit socks, and agricultural products. There was even a corn on the cob-eating contest.

A total of 19 local farmers and artisans had exhibits at the festival. Local tourism providers also offered attendees information on different regional sights and things to do in the area. The town’s main draw for tourists is its cable car. Due to the mountainous terrain, getting from one village to another can be a challenge by foot, car, or horse, so a cable car was installed

Khulo Fest Celebrates Local Production in Mountainous Adjara

by the Soviets to improve accessibility. The cable car connects Khulo with the village of Tago. Another interesting aspect of Khulo municipal-ity is that the majority of the population is Mus-lim, adopted during the Ottoman rule of the area in the 16th – 19th centuries. Beautiful 19th cen-tury mosques can be found tucked in the moun-tains and valleys of mountainous Adjara.

Khulo Fest was attended by tourists and local residents, along with representatives of the

Ministry of Agriculture of Adjara, UNDP, and local government representatives.

Visitors were treated to performances by local folk dancing groups: Argineti, Mermisi, Khikhani, Bermukha, Khomli, and Khulo, and musical enter-tainment from local bands Sound Lab, Groove-phonics, and DJ Chiki/Rezi. The other main entertainment was the stunning view of Argineti Mountain, serving as the backdrop for the festival.

Photo: European Union

Giorgi Margvelashvili, President of Georgia, on the left, and Johannes Hahn. Source: European Commission

GEORGIA TODAY SEPTEMBER 4 - 6, 20182

BY THEA MORRISON

The well-known Georgian festival Tbilisoba was cel-ebrated in the capital of Belarus, Minsk, hosting 70,000 people in the city

center. World-renowned Georgian jazz singer

Nino Katamadze showed off her talent, and legendary folk ensemble Erisioni performed Georgian songs and dances with the Voices of Georgia folk music band.

This year the much-loved festival lasted until midnight and spread along the Svisloch River and Zybitskaya Street.

The festival was organized under the auspices of the Minsk City Hall, the Georgian cultural society Mamuli, and the Borjomi trademark.

For the fi rst time, the Tour Bazaar

event was also held which informed visitors about Georgian tourist attrac-tions and offered tours to Georgia at a discount.

Among the most interesting features of the festival was tasting of traditional Georgian wine and food. The visitors had a chance to enjoy Georgian cuisine and learn more about the Georgian cul-ture.

This was the fourth Tbilisoba Festival held so far in Minsk and it was opened by Tbilisi Mayor Kakha Kaladze and Chairman of the Minsk City Executive Committee Andrei Shorez.

In his speech, the Mayor of Tbilisi thanked the Belarusian people for hold-ing the festival. According to him, Tbi-lisi and Minsk are friendly cities and this relationship can be advanced further in the future.

“I would also like to welcome the Georgian diaspora and wish them suc-cess. Your role is important in present-

NEWS

Tbilisoba 2018 in the center of Minsk

4th Tbilisoba Festival Held in Minsk

ing our country,” Kaladze said.Within the framework of his visit,

Kaladze, his Deputy Ilia Eloshvili and

Georgian Ambassador to Belarus, Valery Kvaratskhelia, held a meeting with Andrei Shorez. The sides discussed the

main issues of relations between the twin towns.

As the Tbilisi Mayor said at the meet-ing, Minsk and Tbilisi have enough resources to deepen friendly relations.

"It is very important for me that this visit has taken place. I am glad that the Georgian culture festival Tbilisoba 2018 was held in the capital of Belarus, host-ing so many people.

We had the opportunity to introduce our culture and country to the people living here. I appreciate the relations between our countries and peoples," said Kaladze.

The Tbilisi Mayor also visited public electronic transport company Belkom-munmash (Белкоммунмаш). Kaladze saw electric transport produced by the Belarussian Company and attended the presentation of the bus produced by company MAZ (МАЗ).

Georgian Days took place in Belarus on August 31-September 3.

BY THEA MORRISON

European Commissioner for Neighborhood Policy and Enlargement Negotiations Johannes Hahn is paying a visit to Georgia this week. Within

the framework of the visit, the European School for the Eastern Partnership is to be offi cially opened in Tbilisi.

The Ministry of Foreign Affairs (MFA) of Georgia notes it will be the fi rst such school to be established outside the EU. The school is for graduate school stu-dents from Eastern Partnership countries and offers internationally recognized

EU Commissioner Johannes Hahn Visits GeorgiaEuropean quality educational programs. After completion, students will receive an International Baccalaureate Diploma of European standards. According to the Georgian Foreign Minister David Zalka-lian, the visit of Johannes Hahn to Tbilisi is very important for Georgia as it will further advance the European integra-tion process.

Zalkaliani noted that the opening of the European School in Georgia is the fi rst achieved goal of the goals and objec-tives that were set at the Eastern Part-nership summit in Brussels, in Novem-ber of 2017, which points to the close and fruitful co-operation between Georgia and the European Union.

“It will be the fi rst such European

School outside the EU, where 16- and 17-year-old students from the Eastern Partnership countries will be awarded European Bachelor's Degree diplomas. This is yet another step towards achiev-ing closer integration between the EU, Georgia and the Eastern Partnership countries,” he explained.

In addition, the Minister said all impor-tant issues relating to co-operation with the European Union will be discussed within the framework of the visit.

Hahn arrives in Georgia on September 3, and on the 4th he will hold bilateral meetings with high-rank offi cials of Georgia. The European School for the Eastern Partnership will be offi cially launched on September 4.

GEORGIA TODAY SEPTEMBER 4 - 6, 2018 3NEWS

BY THEA MORRISON

Fitch Ratings Inc., one of the "Big Three credit rating agencies," has labeled Geor-gia at 'BB-'Outlook Positive.

The agency says so far Georgia's econ-omy has been resilient against recent

regional volatility.“However, escalating negative developments in

Turkey and the risk of further US sanctions against Russia represent downside risks to Georgia's eco-nomic outlook. Russia and Turkey are Georgia's second- and third-largest trading partners, account-ing for 14.5% and 7.9% of total exports in 2017, respectively. Both countries are also important sources of remittances, foreign direct investment (FDI), and tourism revenues,” the agency stated.

According to the agency, estimates from national

Fitch Affi rms Georgia at 'BB-Outlook Positive'

statistics (GeoStat) show the economy to have grown 6.0% in real terms year-on-year, above Fitch's expectations.

“Growth was broad-based; led by domestic demand through a strong pick-up in investment activity and robust export growth. Fitch projects real GDP growth to average 4.8% in 2019-2020, compared with 3.5% across 'BB' category sovereigns. Risks are on the downside due to the less favorable exter-nal environment,” Fitch assessment reads.

For 2018 and 2019, Fitch is forecasting Georgia's general government fi scal defi cit to average 2.6% of GDP, down from 2.9% of GDP in 2017, and in line with the projected median defi cit of 'BB' peers.

“Developments in the banking sector remain stable, with the authorities making gradual progress towards meeting structural benchmarks set out under the IMF's EEF to strengthen the sector's fi nancial stabil-ity framework, and regulations on capital and liquid-ity requirements,” the agency reports.

BY SAMANTHA GUTHRIE

For the 2018 Academy Awards, also known as the Oscars, Georgia has selected the fi lm Namme as its submission to the Best Foreign Language Film category. The selection was made by a jury vote in

Tbilisi, beating out fi ve other fi lms.Apart from Namme, the short list included: Hori-

zon directed by Tinatin Kajrishvili, Khibula directed by George Ovashvili, Dede directed by Mariam Khatchvani, Ekvtime: Man of God directed by Nikoloz Khomasuridze, and Hamlet directed by Giorgi Megrelishvili.

Georgia Chooses Film to Send to the Oscars

Writer and director Zaza Khalvashi’s Namme premiered at the Tokyo International Film Festival and made its national debut last year at the Tbilisi International Film Festival. The fi lm follows the story of a young woman, Namme, in a Georgian high mountain village, tasked by her father to guard a healing spring. Confl ict arises when a hydro power plant is slated to be built nearby – refl ecting the current reality in several of Georgia’s mountain regions. Namme and her father clash when the spring suddenly dries up, and he insists that a sac-rifi ce must be made for the water to return.

The fi lm was a Georgian-Lithuanian co-produc-tion.

The trailer, with English subtitles, is available here.

BY SAMANTHA GUTHRIE

In the 2018 Senior European Judo Cup, held in Bratislava, Slovakia over the weekend, the fi nal men’s match in the U90 kg weight cat-egory pitted two Georgian judokas against each other. Beka Gviniashvili defeated coun-

tryman Avtandil Tchrikishvili; they were awarded gold and silver medals, respectively.

Georgians refer to Gviniashvili as “Tyson,” and the athlete “gave an exciting and convincing per-formance,” according to the European Judo Union (EJU). Gviniashvili is known for his style and con-trol. During his fi ghts, he “kept his opponents at

Georgians Take Home Judo Gold, Silver in European Cup

bay whilst at the same time he was able to set up his array of scoring techniques.”

Gviniasvhili fi rst beat British judoka James Reid, then Canada’s Mohab El Nahas. Tchrikishvili strug-gled a big against Russian Roman Dontsov, but came out on top in the end. The fi nal match was close, but Gviniashvili was eventually victorious through a “right sided maki-komi, scoring waza ari.”

The Georgian Judo Federation will soon choose which judoka to send to the World Championships in Baku at the end of the month. The front runners in the U90 kg category were Gviniashvili and Tch-rikishvili. After Sunday’s match, Gviniashvili com-mented that Bratislava was preparation for the World Championships.

Photo: European Judo Union

GEORGIA TODAY SEPTEMBER 4 - 6, 20184 NEWS

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The EU supports rural development in Georgia through its ENPARD program. Aiming to reduce rural poverty, ENPARD has been implemented since 2013, with a total budget of €179.5 million. The fi rst phase of ENPARD focused on develop-ing national agriculture potential, while the second and third phases focus on creating economic opportunities for the rural population that go beyond agricul-tural activities. Khulo Fest was organized in the framework of the EU funded pro-ject “Promotion of Rural Development

Continued from page 1

Khulo Fest Celebrates Local Production in Mountainous Adjaraand Diversifi cation in Khulo Municipal-ity” implemented by Caritas Czech Republic in Georgia (CCRG) in partner-ship with Croatian non-governmental organization HMRR and PMC Research Center, under the European Neighbor-hood Program for Agriculture and Rural Development (ENPARD).

ENPARD conducts several rural devel-opment projects in Georgia. Its projects aim at four main target areas – improv-ing the effi ciency of institutions involved in agriculture, strengthening coopera-tion amongst small farmers, improving access to capacity building opportuni-

ties for small farmers, and improving employment and living conditions in rural areas. Major projects supported by ENPARD include developing the Strategy of Agricultural Development in Georgia 2015-2020, training over 400 Ministry of Agriculture employees, the adoption of the Law of Georgia on Agri-cultural Cooperatives, establishing 59 consultation and information centers throughout the country, developing the Rural Development Strategy of Georgia 2017-2020 and Action Plans for 2017 and 2018-2020, and forming LAGs in various municipalities.

BY THEA MORRISON

Construction of the 14 kilo-meter-long Shorapani-Arg-veta section of Georgia's Rikoti highway in the west of the country is to be

fi nanced by Japan with $343 million. The relevant agreement will be signed

during the visit of the Minister of Foreign Affairs of Japan Taro Kono to Tbilisi.

The Japanese Foreign Minister will

Japan to Allocate $343 Million for Georgia’s Rikoti Highway

hold meetings with the President of Georgia, Prime Minister and Minister of Foreign Affairs.

Minister Cono is also expected to honor the memory of the heroes who died for the unity of Georgia.

“In accordance with this agreement, the Japanese government will allocate 38.735,000,000 Japanese Yen ($343 mil-lion) for Japan's International Coopera-tion Agency (JICA) to construct the 14.7 km long Shorapani-Argveta section of the highway,” Georgia’s Foreign Ministry reports. Photo source: 1TV

BY SAMANTHA GUTHRIE

Prime Minister Mamuka Bakhtadze visited the north-ern region of Racha and spoke to the public at a Mariamoba event last week

in Ambrolauri. He announced his desire to transform the region into a major tourist destination with year-round appeal.

“Our aim is to turn Racha into a four-season destination,” said Bakhtadze, “Our goal should be to at least triple the number of tourists and visitors in this region of the country.” He pledged

Bakhtadze Prioritizes Transforming Racha into Tourist Paradise

increased investment to improve infra-structure and support local businesses, including guest houses.

Bakhtadze visited a market, organized as part of the day’s event, that had many ‘Produce in Georgia’ products on dis-play. "It brings us great joy that these programs resulted in an excellent out-come in Ambrolauri,” he praised.

Another major plan to develop Racha’s tourist potential is the plan to expand the small airport in Ambrolauri. “21 infrastructure projects are being imple-mented, out of which 18 are close to completion. It is essential to maintain momentum in the construction and rehabilitation of rural roads,” the Prime Minister said confi rmed.

He explained that currently, only 10-15% of the full potential of this "beautiful region” is being tapped. “The next stage will of course involve the rehabilitation and development of very important tourism sites in Shovi and other desti-nations” said Bakhtadze.

Bakhtadze also announced plans to construct a new football stadium in Ambrolauri, the administrative capital of Racha, that meets FIFA standards. The stadium will have artifi cial turf and seating for 500 fans. The 1.5 million GEL stadium is scheduled to open in 2019. The Prime Minister mentioned that other sporting facilities are also in the works for 2019 and 2020, but did not give further details.Photo: Sputnik Georgia

YO

GEORGIA TODAY SEPTEMBER 4 - 6, 20186 BUSINESS

BY SHAWN WAYNE

In today’s global cryptocurrency mining industry, China’s Bitcoin network comput-ing power takes the lead, easily accounting for half the total. However, with cryptocur-rency mining gradually attracting the atten-

tion of other countries, China is starting to face challenges from international forces. Nonetheless, as the mining competition gets fi ercer, the future direction of cryptocurrency mining becomes more uncertain, resulting in the following question: Where is the next breakthrough in global mining development?

All the answers are expected to be announced by the top experts of the cryptocurrency mining indus-try in Tbilisi. That, in itself, might be an answer already.

Emercoin announced in early August the suc-cessful implementation of its open-source “Trusted Diploma” blockchain platform by the Tbilisi Busi-ness & Technology University (BTU). As block-chain grows beyond conventional fi nancial tech-nology (fi ntech), to empower other industries with new levels of security and immutability, the unique collaboration between Emercoin and BTU marks a new phase in the technology’s expansion. Emer-coin is a blockchain platform opened in 2013 and used by companies such as Coca-Cola and Micro-soft. Currently in use by BTU, the “Trusted Diploma” platform uses blockchain to provide the education sector with verifi able diplomas and other certifi -cates on an encrypted and secure app. The app ensures that the competencies of all graduates are easily and clearly verifi ed.

The collaboration of the education sector and a cryptocurrency company aims to help schools, businesses, and graduates validate the online accu-racy and authenticity of education credentials. This ground-breaking blockchain system enables admin-istrators to store and share verifi able diplomas and other education certifi cates on an encrypted and secure app.

“Much like the little check mark on Twitter or Facebook profi les, companies like LinkedIn or Indeed.com could use this to validate the data rep-resented on profi les, ensuring that data is tamper-proof and accurate,” said Emercoin advisor Bill Tai.

Emercoin and BTU are addressing a complicated social issue together, in both developed and devel-oping countries. Due to widespread corruption and manipulation, online displays of education credentials are increasingly viewed as unreliable. Some graduates also face diffi culty obtaining their records from colleges or school systems that have closed or otherwise refuse to recognize their legit-imate credentials. This problem was cited as a global crisis in a 2016 report to UNESCO and the Council for Higher Education Accreditation.

Through secure, distributed blockchain services, Emercoin has managed to come up with a solution to this problem which graduates and companies suffer from.

Georgia: The New Blockchain Giant

“Trusted Diploma will help us combat growing levels of manipulation and corruption and ensure that the education credentials we see online are valid,” said Kostiantyn Bigus, Emercoin Managing Partner. “We urge everyone to join our effort, which will improve professional services and protect people from dangerous fraud in the health care, legal, real estate, and other sectors.”

The BTU, which opened in 2016, offers students innovative new approaches to learning, and by partnering with Emercoin, they made this platform possible and simultaneously boosted the blockchain industry in Tbilisi.

“We are very happy to work with the innovative Emercoin team on this crucially important project. The Trusted Diploma platform will help our school build a secure and immutable database of educa-tion certifi cates, which will help our graduates as they pursue successful careers,” said Mikheil Batiashvili, the BTU university rector and Minister of Education, Science, Culture and Sports of Geor-gia.

Tourism and wine have been shaping Georgia of late, as it will going forward. And yet, the country has been noticed for more than just its beauty and culture, which is why the 2018 World Digital Min-ing Summit will be held in Tbilisi, taking place September 21 - 23. This summit has invited over a 100 top experts from more than 30 countries, includ-ing blockchain giant China, the United States, the United Kingdom and others from Europe. The big-gest leaders of the global mining industry will gather to explore the development of cryptocur-rency mining, including both the challenges and opportunities in the industry.

This summit is proof of the growth Georgia has experienced as it becomes a regional leader in the use of blockchain technology. The world’s fi rst cryptocurrency terminal was born in Tbilisi and after this summit, many people will be considering Tbilisi as the next possible blockchain giant in the years to come. Many people will also be staying in Tbilisi after the summit to attend the NEO Hack-athon+, taking place a few days later, from Septem-ber 28-30.

Spotcoin announced that it has partnered with the Georgian American University (GAU) and GEOLAB to focus on blockchain projects in the public sector, as well as the Georgian National Agency for Public Registry (NAPR) and Georgia’s Innovation and Technology Agency (GITA).

NAPR is seeking potential blockchain technology solutions to streamline government with a focus on real estate transactions. The potential stream-lined solutions need to address fi nancial concerns, reduce wrongful manipulation/fraud, and increase trust in the process. NEO Hackathon+ will explore solutions to provide NAPR with process automa-tion that uses blockchain hashing and timestamp-ing.

Focus on Georgia is constant, with current issues regarding territory disputes, NATO membership, tourism and investment; however, September is going to mark a new focus point in Georgia; the potential of its becoming a new blockchain giant.

GEORGIA TODAY SEPTEMBER 4 - 6, 2018 7BUSINESS

BY THEA MORRISON

The Insurance Supervision Service reports that in Quarter 2, 2018, the net profi t of insurance companies operat-ing in Georgia doubled and amounted to GEL 16,34 million, while in Q1 2018

it was GEL 7,57 million.Increase in net profi t was also observed through-

out the year, with the data of Q2 2018 exceeding the data of the same period of 2017 by GEL 13,91 million.

In the fi rst six months of 2018, the amount of bonuses attracted by the sector, assets and equity of insurance companies also increased.

Insurance bonuses attracted by insurance com-panies in Q2 2018 amounted to GEL 295.28 million from direct insurance activities. In Q1 2018, it was GEL 164,39 million.

According to Q2 data, the assets of insurance companies are GEL 699,37 million and their equity

Photo source: thecheaperinsurance.com

Profi t of Insurance Companies in Georgia Doubled in Q2 2018

is GEL 180,69 million.In January-June, the companies attracted most

insurance bonuses from medical insurance.Land transport insurance (GEL 45,36 million),

property insurance (GEL 41,16 million), life insur-ance (GEL 19,01 million) and civil liability insurance (GEL 12,86 mln) were also among the top fi ve insur-ance packages picked by customers.

In addition, according to the offi cial data of the Insurance Supervision Service, in Q2 2018, 5.9% of the registered vehicles in the country were insured, while in Q1, 5.5% of vehicles were insured.

Specifi cally, in Q2, 76,207 policies were issued for land transport insurance (except for railway trans-port), which is 16,439 policies more than those issued in the same period of 2017.

Only 14,9% of the Georgian population uses health insurance; however, the number of policies has increased by 12,741 in a year. In particular, in Q2 2018, 554,338 policies of medical insurance were issued in the country. In the same quarter of 2017, 541,597 health policies were issued and 535,809 in Q2 2016.

BY DIMITRI DOLABERIDZE

By the end of 2018, JSC "Cherkasy Bus" will supply 40 city low-fl oor buses (A092N6) to the Adjaran municipality of Batumi, having won a tender to do so, reports Interfax-Ukraine with refer-

ence to the message of the Mayor of Batumi.The fi rst 15 buses of Isuzu Ataman have already

been delivered and presented and will be appear-ing on the streets of the city from this week. The remainder will be delivered by the end of the year.

The buses, based on Japanese ISUZU units, are designed for 60 people, and come equipped with a GPS system, air-conditioning and are adapted for people with disabilities.

According to the report, the purchase of buses is fi nanced by the European Bank for Development and Reconstruction with low interest rates.

The cost of the contract was not disclosed, but according to media reports, in the summer of 2017, the government of Georgia and the EBRD agreed to provide a loan of €5.5 million to fi nance the renovation of the bus fl eet in Batumi, which in 2019

Ukrainian Factory Wins Tender for Supply of Buses for Batumi

also plans to purchase city electric buses.Cherkasy Bus was, until 2011, part of the corpora-

tion Bogdan, which in late 2008 won a tender for the delivery of 83 city buses of small class Bogdan A092 to Batumi. That year, 190 buses were deliv-ered to Georgia, including 40 buses A092 and 150 buses of the middle class.

In 2011, Zeta's closed-end venture investment fund, managed by Assy Life Asset Management (Easy Life, Kyiv), became the new owner of the factory, and the company registered the trade mark of the bus - Ataman.

According to the association "Ukrautoprom", in January-July of this year, the plant produced 250 buses - 35% more than in the same period of 2017 (total in Ukraine for seven months 461 buses produced).

BY DIMITRI DOLABERIDZE

Uzbekistan is interested in actively using and increasing the volume of transportation of its foreign trade cargoes via the Baku-Tbilisi-Kars (BTC) railroad, Uzbek Ambassador

to Azerbaijan Sherzod Fayziyev told Trend.“The wide use of the Transcaucasian transport

corridor for the transportation of increasing volumes of export-import cargoes meets the interests of our

Uzbekistan Interested in Cargo Transportation by "Baku-Tbilisi-Kars" Railroad

states,” he said. “The BTC railway corridor intro-duced in October 2017, as well as the creation of infrastructure at the Baku International Sea Trade Port under construction in the Alat settlement, will realize the huge transit, transport and communica-tion potential of our countries and regions.”

“In turn, we hope that Azerbaijan is also inter-ested in using the potential of Uzbekistan, located in the heart of Central Asia and having enormous economic and strategic capabilities. The Free Eco-nomic Zone of Navoi also creates a good basis for deepening cooperation in the transport and com-munication sphere,” Fayziyev noted.

GEORGIA TODAY SEPTEMBER 4 - 6, 20188 BUSINESSBUSINESS

ADVERTORIAL

The International Data Corporation (IDC) published the business success of the fi rst half of 2018, accord-ing to which HUAWEI’s global supply of smartphones has grown signifi cantly to more than 95 million.

According to IDC data, HUAWEI has overtaken Apple in the number of smartphones sold in the second quarter and has achieved second position. In the past three months, HUAWEI has sold 54.2 million smartphones, which accounts for 15.8% of the company's market share. As for Apple's April-June period, the smartphones sold amounted to 41.3 million.

According to the report, Samsung takes fi rst place with an amount of 71.5 million smartphones sold, taking up 20.9% of the market share. "The growth of HUAWEI's market share is impres-sive and highlights its desire to make a place for itself in the markets where the brand is not so well known,” said IDC Pro-gram Vice President Ryan Reight. “Samsung, Huawei and Apple are considered to be competitors, which in my opinion, will not change.”

“The last six months have been successful for HUAWEI CBG, with growth of business observed in every market. The main reason for our success is the company's dedication to innova-tion and most importantly, the loyalty of our consumers. HUA-WEI's focus is on improving the products,” said Richard Yoo, Executive Director of HUAWEI's consumer business group.

HUAWEI products and services are available in more than 170 countries and are used by a third of the world's population. According to 2015 data, the smartphone market is the third larg-est in the world. 16 Research and Development Centers operate in the US, Germany, Sweden, Russia, India and China. HUAWEI Consumer BG is one of the three business units in Huawei, one of the main destinations for smartphones, personal computers, tablets and smart services. HUAWEI's global network is based on 20 years’ experience in telecommunications and produces innovative technologies for consumers worldwide.

Huawei Overtakes Apple in Number of Smartphones Sold

BY ANTOINE DEWAEST

The Russian Federation plans to overcome the new US sanctions by increas-ing its holding of gold. According to offi cial data,

Russia Copes with US Sanctions by Buying Goldits support of Ukrainian separatists and the Crimea annexation. Recently, new pressures were raised by the United States which put tariffs on imports of steel and aluminum from Russia. The value of the Russian Ruble plummeted from 55 per dollar (€48) in February to 70 (€60) after the US announced the new sanctions.

The Russian central bank sold 84% of its ownership of US government debt. Now, it only represents 17% of the central bank’s reserves. According to Russia’s Finance Minister, Anton Siluanov, Russia will keep on this momentum in response to the sanc-tions. “In fact, the dollar, which is con-sidered to be the international currency,

is becoming a risky tool for payments," Siluanov noted.

This dual strategy is aimed at insu-lating the Russian economy, in particu-lar from the dollar value.

Russia is one of the largest gold hold-ing countries, just before China, accord-ing to the World Gold Council. The USA remains the largest.

Image source: Andrzej Barabasz

the Russian central bank bought 29 additional tons of gold.

Previously, the central bank increased its gold reserve by 20 tons in May, and 17 tons in June. All in all, compared to January 2016, the holding increased by 37%.

Russia has been dealing with eco-nomic sanctions since 2015, related to

GEORGIA TODAY SEPTEMBER 4 - 6, 201810 BUSINESS

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BY SAMANTHA GUTHRIE

On Friday, the European Union concluded the €45 million macro-fi nancial assistance (MFA) pack-age that was fi rst offered

to Georgia in April of this year. Geor-gia and the EU have now signed a Memorandum of Understanding for the package, which is designed to help Georgia meet part of its external fi nanc-ing needs and support internal struc-tural reforms.

A press release from the Delegation of the European Union to Georgia explained the rationale of the agree-ment, saying that although the country “has made signifi cant progress,” Geor-gia still faces regional risks to its eco-nomic health and stability, likely refer-ring to Russian aggression, and risks posed by “its own economic imbalances.”

“Georgia has shown strong and last-ing commitment to economic reform, which the EU has consistently sup-ported and fostered,” said Pierre Mos-covici, Commissioner for Economic and Financial Affairs, Taxation and Customs. “This agreement includes policy measures that will help make the Georgian economy more resilient, with stronger and more inclusive growth for the benefi t of its citizens.”

MFA is a crisis response instrument available to countries in the EU neigh-borhood, and is designed to comple-

€45 Million EU Macro-Financial Assistance Package Finalized

Photo: European Union

ment International Monetary Fund (IMF) assistance programs. Georgia has previously received two MFA pack-ages since the 2008 Georgia-Russia War, each worth €46 million, disbursed between 2009 and 2017. The third MFA package was proposed in September 2017, and adopted by the European Parliament and the Council in April 2018.

Representatives of the IMF completed their most recent visit last week, prais-ing Georgia’s commitment to economic reform and revising GDP growth pre-dictions upward to 5.5% for 2018.

The funding is divided into two por-tions – €10 million in grant money, and €35 million in medium-term loans, with unspecifi ed “favorable fi nancing con-ditions.” It will be distributed in two tranches. Georgia’s fi rst EU MFA pack-age was 100% grant based, and the second was 50% grants and 50% medium-term loans.

Disbursements of funds will be con-ditional, tied to Georgia’s continued adherence to its IMF program and the implementation of specifi c policies jointly agreed on by Georgia and the EU, enumerated in the Memorandum of Understanding. Disbursements are also dependent on Georgia’s continued respect of “effective democratic mech-anisms, including a multi-party parlia-mentary system, the rule of law, and guaranteeing the respect for human rights.”

The EU aims to help Georgia lay the groundwork for sustainable and inclu-

sive economic growth – a key priority of both Georgia and the EU – by sup-porting the government reform agenda. The policy conditions outlined in the Memorandum of Understanding build on Georgia’s EU Association Agree-ment, elaborating from existing gov-ernment reform plans. Their goal is “to strengthen the Georgian economy in the areas of public fi nance manage-

ment, the fi nancial sector, social and labor market policies, and the business environment.”

The Parliament of Georgia is expected to ratify the Memorandum of Under-standing in the coming weeks.

Responding to the most recent eco-nomic projections, Deputy Minister of Economy and Sustainable Develop Ekaterine Mikabadze emphasized the

importance of Georgia's economic growth being sustainable and resilient to the complicated economic situation in the region.

“The reforms carried out by the gov-ernment are due to the reduction of external vulnerability and higher inclu-sive growth in the country, which is the basis for the sustainable economic growth of Georgia,” said Mikabadze.

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The fi rst goal of all successive Chinese dynasties throughout the centuries was to gain and maintain control of the heartland (Han), the core of which consists of major Chinese rivers, is

abundant with productive lands and is full of peo-ple. A further logical step is maintenance of infl u-ence over the buffer zones which surround the Han core and consist of mountainous regions to the west, desert lands to the north-west and impreg-nable forests to the south. The third major imper-ative was historically to protect China’s coastline from foreign powers. However, since this threat was quite rare in the ancient and medieval periods of Chinese history, the country did not see any need to develop powerful naval capabilities. The Yangtze and Yellow rivers, with surrounding fertile lands, produced enough to feed large numbers of population living in the Han core and as such, in an age without transcontinental trade routes and the only way to connect with the Middle East and Europe being the famous Silk Road, the geographic boundaries (mountains, jungles, deserts and the sea) from all sides made China essentially a closed country with self-suffi cient economic means.

In other words, where previously China’s insu-larity was a geopolitical advantage rather than a signifi cant constraint, from the late 20th century this was no longer the case. With international trade routes and various supply chains, China has to be open and, in many cases, rely upon raw mate-rials brought from abroad via sea routes. Thence comes China’s fourth geopolitical imperative: pro-tection of international trade lines and resource hubs. This will only be viable through two options: fi nding alternative land routes such as One Belt, One Road or by building a powerful military fl eet capable of securing various resources and global supply chains across the Asia Pacifi c and elsewhere.

Building a powerful navy will mean collusion with the United States, whose world primacy rests upon domination of sea lines and relevant security alli-ances in Europe and Asia-Pacifi c. Any diminution of the US sea power will have a direct impact on the world order, considering the importance which Washington attaches to developments in foreign powers’ naval capabilities. Chinese naval technol-ogy may still be substantially behind current US capabilities. Indeed, the US has 11 aircraft carriers, while the Chinese only one (which still lacks an aircraft wing capable of operating off a carrier deck). However, the trends indicate that China has been making signifi cant progress in the last several dec-ades, as the country is rapidly developing new destroyers, amphibs, stealth fi ghters and long-range weapons. This could potentially expand expedition-ary military operations around the globe.

China continues to construct an array of offensive and defensive capabilities to enable the PLA to gain maritime superiority within the fi rst island chain in Asia pacifi c. Those are the islands which

China's Grand Strategyrun from the Kurils, through Taiwan, to Borneo, roughly encompassing the Yellow Sea, East China Sea, and South China Sea.

China’s broad range of anti-ship cruise missiles (ASCMs) and launch platforms, as well as subma-rine launched torpedoes and naval mines, allow the People’s Liberation Army Navy (PLAN) to cre-ate a lethal threat against enemies approaching Chinese waters and operating areas.

The PLAN continues to develop into a global force, gradually extending its operational reach beyond East Asia and the Indo-Pacifi c into a sus-tained ability to operate at increasingly longer ranges. The PLAN’s latest naval platforms enable combat operations beyond the reach of China’s land-based defenses.

Furthermore, the PLAN now has a sizable force of high-capability logistical replenishment ships to support long-distance, long-duration deploy-ments, including two new ships being built spe-cifi cally to support aircraft carrier operations. The expansion of naval operations beyond China’s immediate region will also facilitate non-war uses of military force.

The PLAN’s force structure continues to evolve, incorporating more platforms with the versatility for both offshore and long-distance power projec-tion. China is engaged in series production of the LUYANG III-class DDG, the JIANGKAI II-class FFG, and the JIANGDAO-class FFL.

Even on the aircraft level, despite its numerical weaknesses, China continues to learn lessons from operating its only Ukraine-produced aircraft car-rier, Liaoning. The Chinese fi rst domestically pro-duced aircraft carrier, launched in 2017, will be commissioned in 2019 (according to various sources this will be a multi-carrier force). China’s next generation of carriers will probably have greater endurance and be capable of launching more var-ied types of fi xed-wing aircraft than Liaoning. There also comes PLAN Aviation’s progress on improv-ing capabilities to conduct offensive and defensive offshore operations such as strike, air and missile defense, strategic mobility, and early warning and reconnaissance missions.

Overall, for the moment, the PLAN’s ability to perform missions beyond the fi rst island chain is modest. What is important here is that the PLAN’s ability is constantly growing as it gains more expe-rience operating in distant waters and acquires larger and more advanced technologies. The US will remain a dominant force in the coming dec-ades, but Chinese successes cannot be underesti-mated.

Chinese naval successes, refl ected in the recent congressional report, add to growing American fears that China might become a global competi-tor. Indeed, from the US perspective, what the Chinese are doing in Eurasia through its pivotal One Belt, One Road initiative, and various moves to infl uence Tajikistan, Afghanistan and Pakistan, is geopolitically important. From the US perspec-tive, the Chinese are doing exactly what the Amer-icans have been opposed to – solidifying one-coun-try rule in Eurasia.

PLAN Marines of the 1st Marine Brigade and members of the USMC fi re the Type 95 Assault Rifl e during an exchange exercise. By Lance Cpl. Jeremy J. Harper