MARITIME ECONOMIES SPECIAL EDITION: GEORGIA

“Gorgania” i.e. Georgia on Fra Mauro map

Georgia is a country in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded to the west by the Black Sea, to the north by Russia, to the east by Azerbaijan, and to the south by Armenia and Turkey. The capital and largest city is Tbilisi. Georgia covers a territory of 69,700 square kilometres (26,911 sq mi), and its approximate population is about 3.718 million. Georgia is a unitary parliamentary republic, with the government elected through a representative democracy.

Etymology

Georgia” probably stems from the Persian designation of the Georgians – gurğān, in the 11th and 12th centuries adapted via Syriac gurz-ān / gurz-iyān and Arabic ĵurĵan / ĵurzan. Lore-based theories were given by the traveller Jacques de Vitry, who explained the name’s origin by the popularity of St. George amongst Georgians, while traveller Jean Chardin thought that “Georgia” came from Greek γεωργός (“tiller of the land”). As Prof. Alexander Mikaberidze adds, these century-old explanations for the word Georgia / Georgians are rejected by the scholarly community, who point to the Persian word gurğ / gurğān (“wolf”) as the root of the word.

Starting with the Persian word gurğ / gurğān, the word was later adopted in numerous other languages, including Slavic and West European languages. This term itself might have been established through the ancient Iranian appellation of the near-Caspian region, which was referred to as Gorgan (“land of the wolves”).The native name is Sakartvelo “land of Kartvelians”, derived from the core central Georgian region of Kartli, recorded from the 9th century, and in extended usage referring to the entire medieval Kingdom of Georgia by the 13th century. The self-designation used by ethnic Georgians is Kartvelebi (i.e. “Kartvelians”).

The medieval Georgian Chronicles present an eponymous ancestor of the Kartvelians, Kartlos, a great-grandson of Japheth. However, scholars agree that the word is derived from the Karts, the latter being one of the proto-Georgian tribes that emerged as a dominant group in ancient times.

The name Sakartvelo consists of two parts. Its root, kartvel-i, specifies an inhabitant of the core central-eastern Georgian region of Kartli, or Iberia as it is known in sources of the Eastern Roman Empire.

Ancient Greeks (Strabo, Herodotus, Plutarch, Homer, etc.) and Romans (Titus Livius, Tacitus, etc.) referred to early western Georgians as Colchians and eastern Georgians as Iberians (Iberoi in some Greek sources).

The Georgian circumfix sa-X-o is a standard geographic construction designating “the area where X dwell”, where X is an ethnonym.

Today the full, official name of the country is “Georgia”, as specified in the Georgian constitution which reads “Georgia is the name of the state of Georgia.” Before the 1995 constitution came into force the country’s name was the Republic of Georgia.

Svaneti defensive tower houses in Ushguli

 

Middle Ages up to early modern period

Located on the crossroads of protracted Roman – Persian wars, the early Georgian kingdoms disintegrated into various feudal regions by the early Middle Ages. This made it easy for the remaining Georgian realms to fall prey to the early Muslim conquests in the 7th century.

Kingdom (Empire) of Georgia in 1184–1230 at the peak of its might

 Bagratid Iberia

The extinction of the different Iberian royal dynasties, such as Guaramids and the Chosroids and also the Abbasid preoccupation with their own civil wars and conflict with the Byzantine Empire, led to the Bagrationi family’s growth in prominence. The head of the Bagrationi dynasty Ashot I of Iberia (r.813–826), who had migrated to the former southwestern territories of Iberia, came to rule over Tao-Klarjeti and restored the Principate of Iberia in 813. The sons and grandsons of Ashot I established three separate branches, frequently struggling with each other and with neighboring rulers. The Kartli line prevailed; in 888 Adarnase IV of Iberia (r.888–923) restored the indigenous royal authority dormant since 580. Despite the revitalization of the Iberian monarchy, remaining Georgian lands were divided among rival authorities, with Tbilisi remaining in Arab hands.

Kingdom of Abkhazia

An Arab incursion into western Georgia led by Marwan II, was repelled by Leon I (r.720–740) jointly with his Lazic and Iberian allies in 736. Leon I then married Mirian’s daughter, and a successor, Leon II exploited this dynastic union to acquire Lazica in the 770s. The successful defense against the Arabs, and new territorial gains, gave the Abkhazian princes enough power to claim more autonomy from the Byzantine Empire. Towards circa 778, Leon II (r.780–828) won his full independence with the help of the Khazars and was crowned as the king of Abkhazia. After obtaining independence for the state, the matter of church independence became the main problem. In the early 9th century the Abkhazian Church broke away from the Constantinople and recognized the authority of the Catholicate of Mtskheta; Georgian language replaced Greek as the language of literacy and culture.

The most prosperous period of the Abkhazian kingdom was between 850 and 950. A bitter civil war and feudal revolts which began under Demetrius III (r. 967–975) led the kingdom into complete anarchy under the unfortunate king Theodosius III the Blind (r. 975–978). A period of unrest ensued, which ended as Abkhazia and eastern Georgian states were unified under a single Georgian monarchy, ruled by King Bagrat III of Georgia (r. 975–1014), due largely to the diplomacy and conquests of his energetic foster-father David III of Tao (r. 966–1001).

United Georgian monarchy

The stage of feudalism’s development and struggle against common invaders as much as common belief of various Georgian states had an enormous importance for spiritual and political unification of Georgia feudal monarchy under the Bagrationi dynasty in 11th century. The Kingdom of Georgia reached its zenith in the 12th to early 13th centuries. This period during the reigns of David IV (r.1089–1125) and his granddaughter Tamar (r.1184–1213) has been widely termed as Georgia’s Golden Age or the Georgian Renaissance. This early Georgian renaissance, which preceded its Western European analogue, was characterized by impressive military victories, territorial expansion, and a cultural renaissance in architecture, literature, philosophy and the sciences.

The Golden age of Georgia justify a legacy of great cathedrals, romantic poetry and literature, and the epic poem The Knight in the Panther’s Skin, the latter which is considered a national epic. David suppressed dissent of feudal lords and centralized the power in his hands to effectively deal with foreign threats. In 1121, he decisively defeated much larger Turkish armies during the Battle of Didgori and liberated Tbilisi.

Queen Tamar of Georgia presided over the “Golden Age” of the medieval Georgian monarchy. Her position as the first woman to rule Georgia in her own right was empha-sized by the title “Mepe mepeta” (“King of Kings”).

The 29-year reign of Tamar, the first female ruler of Georgia, is considered the most successful in Georgian history. Tamar was given the title “king of kings” (mepe mepeta). She succeeded in neutralizing opposition and embarked on an energetic foreign policy aided by the downfall of the rival powers of the Seljuks and Byzantium. Supported by a powerful military élite, Tamar was able to build on the successes of her predecessors to consolidate an empire which dominated the Caucasus, and extended over large parts of present-day Azerbaijan, Armenia, and eastern Turkey as well as parts of northern Iran, until its collapse under the Mongol attacks within two decades after Tamar’s death in 1213.

The revival of the Kingdom of Georgia was set back after Tbilisi was captured and destroyed by the Khwarezmian leader Jalal ad-Din in 1226. The Mongols were expelled by George V of Georgia (r.1299–1302), son of Demetrius II of Georgia (r.1270–1289), who was named “Brilliant” for his role in restoring the country’s previous strength and Christian culture. George V was the last great king of the unified Georgian state. After his death, different local rulers fought for their independence from central Geo-rgian rule, until the total disintegration of the Kingdom in the 15th century. Georgia was further weakened by several disastrous invasions by Tamerlane. Invasions continued, giving the kingdom no time for restoration, with both Black and White sheep Turkomans constantly raiding its southern provinces.

Tripartite division

The Kingdom of Georgia collapsed into anarchy by 1466 and fragmented into three independent kingdoms and five semi-independent principalities. Neighboring large empires subsequently exploited the internal division of the weakened country, and beginning in the 16th century up to the late 18th century, Safavid Iran (and successive Iranian Afsharid and Qajar dynasties) and Ottoman Turkey subjugated the eastern and western regions of Georgia, respectively. The rulers of regions that remained partly autonomous organized rebellions on various occasions. However, subsequent Iranian and Ottoman invasions further weakened local kingdoms and regions. As a result of incessant Ottoman–Persian Wars and deportations, the population of Georgia dwindled to 250,000 inhabitants at the end of the 18th century.

Map of Georgian kingdoms and principalities, 1490 AD

Eastern Georgia (Safavid Georgia), composed of the regions of Kartli and Kakheti, had been under Iranian suzerainty since 1555 following the Peace of Amasya signed with neighbouring rivalling Ottoman Turkey. With the death of Nader Shah in 1747, both kingdoms broke free of Iranian control and were reunified through a personal union under the energetic king Heraclius II in 1762. Heraclius, who had risen to prominence through the Iranian ranks, was awarded the crown of Kartli by Nader himself in 1744 for his loyal service to him. Heraclius nevertheless stabilized Eastern Georgia to a degree
in the ensuing period and was able to guarantee its autonomy throughout the Iranian Zand period.

King George XII was the last king of Kartli and Kakheti, which was annexed by Russia in 1801.

 

In 1783, Russia and the eastern Georgian Kingdom of Kartli-Kakheti signed the Treaty of Georgievsk, by which Georgia abjured any dependence on Persia or another power, and made the kingdom a protectorate of Russia, which guaranteed Georgia’s territorial integrity and the continuation of its reigning Bagrationi dynasty in return for prerogatives in the conduct of Georgian foreign affairs. However, despite this commitment to defend Georgia, Russia rendered no assistance when the Iranians invaded in 1795, capturing and sacking Tbilisi while massacring its inhabitants, as the new heir to the throne sought to reassert Iranian hegemony over Georgia.  Despite a punitive campaign subsequently launched against Qajar Iran in 1796, this period culminated in the 1801 Russian violation of the Treaty of Georgievsk and annexation of eastern Georgia, followed by the abolition of the royal Bagrationi dynasty, as well as the autocephaly of the Georgian Orthodox Church. Pyotr Bagration, one of the descendants of the abolished house of Bagrationi, would later join the Russian army and rise to be a prominent general in the Napoleonic wars.

 

Georgia in the Russian Empire

On 22 December 1800, Tsar Paul I of Russia, at the alleged request of the Georgian King George XII, signed the proclamation on the incorporation of Georgia (Kartli – Kakheti) with-in the Russian Empire, which was finalized by a decree on 8 January 1801, and confirmed by Tsar Alexander I on 12 September 1801.  The Bagrationi royal family was deported from the kingdom. The Georgian envoy in Saint Petersburg reacted with a note of protest that was presented to the Russian vice-chancellor Prince Kurakin. In May 1801, under the oversight of General Carl Heinrich von Knorring, Imperial Russia transferred power in eastern Georgia to the government headed by General Ivan Petrovich Lazarev.

Pyotr Bagration, Georgian prince of the royal Bagrationi dynasty

The Georgian nobility did not accept the decree until 12 April 1802, when Knorring assembled the nobility at the Sioni Cathedral and forced them to take an oath on the Imperial Crown of Russia. Those who disagreed were temporarily arrested.

In the summer of 1805, Russian troops on the Askerani River near Zagam defeated the Iranian army during the 1804–13 Russo-Persian War and saved Tbilisi from reconquest now that it was officially part of the Imperial territories. Russian suzerainty over eastern Georgia was officially finalized with Iran in 1813 following the Treaty of Gulistan.

Following the annexation of eastern Georgia, the western Georgian kingdom of Imereti was annexed by Tsar Alexander I. The last Imeretian king and the last Georgian Bagrationi ruler, Solomon II, died in exile in 1815, after attempts to rally people against Russia and to enlist foreign support against the latter, had been in vain. From 1803 to 1878, as a result of numerous Russian wars now against Ottoman Turkey, several of Georgia’s previously lost territories – such as Adjara – were recovered, and also incorporated into the empire. The principality of Guria was abolished and incorporated into the Empire in 1829, while Svaneti was gradually annexed in 1858. Mingrelia, although a Russian protectorate since 1803, was not absorbed until 1867.

 

Declaration of independence

After the Russian Revolution of 1917, the Transcaucasian Democratic Federative Republic was established with Nikolay Chkheidze acting as its president. The federation consisted of three nations: Georgia, Armenia and Azerbaijan. As the Ottomans advanced into the Caucasian territories of the crumbling Russian Empire, Georgia declared independence on 26 May 1918. The Menshevik Social Democratic Party of Georgia won the parliamentary election and its leader, Noe Zhordania, became prime minister. Despite the Soviet takeover, Zhordania was recognized as the legitimate head of the Georgian Government by France, UK, Belgium, and Poland through the 1930s. The 1918 Georgian – Armenian War, which erupted over parts of disputed provinces between Armenia and Georgia populated mostly by Armenians, ended because of British intervention. In 1918–1919, Georgian general Giorgi Mazniashvili led an attack against the White Army led by Moiseev and Denikin in order to claim the Black Sea coastline from Tuapse to Sochi and Adler for the independent Georgia. The country’sindependence did not last long. Georgia was under British protection from 1918 to 1920.

Claimed or proposed boundaries of Georgia superimposed on its modern borders

 

Georgia in the Soviet Union

In February 1921, during the Russian Civil War, the Red Army advanced into Georgia and brought the local Bolsheviks to power. The Georgian army was defeated and the Social Democratic government fled the country. On 25 February 1921, the Red Army entered Tbilisi and established a government of workers’ and peasants’ soviets with Filipp Makharadze as acting head of state. Georgia was incorporated into the Transcaucasian Socialist Federative Soviet Republic, alongside Armenia and Azerbaijan, in 1921 which in 1922 would become a founding member of the Soviet Union. There remained significant opposition to the Bolsheviks in Georgia, which was unindustrialized and viewed as socially backward, and this culminated in the August Uprising of 1924. Soviet rule was firmly established only after the insurrection was swiftly defeated. Georgia would remain an unindustrialized periphery of the USSR until the first five-year plan when it would become a major center for textile goods. Later, in 1936, the TSFSR was dissolved and Georgia em-erged as a union republic: the Georgian Soviet Socialist Republic.

Joseph Stalin, an ethnic Georgian born Iosif Vissarionovich Jugashvili in Gori, was prominent among the Bolsheviks. Stalin was to rise to the highest position, leading the Soviet Union from the mid–1920s until his death on 5 March 1953. In June 1941, Germany invaded the Soviet Union on an immediate course towards Caucasian oil fields and munitions factories. They never reached Georgia, however, and almost 700,000 Georgians fought in the Red Army to repel the invaders and advance towards Berlin. Of them, an estimated 350,000 were killed. The Georgian uprising on Texel against the Germans was the last battle of the World War II in Europe. After Stalin’s death, Nikita Khrushchev became the leader of the Soviet Union and implemented a policy of de-Stalinization. This was nowhere else more publicly and violently opposed than in Georgia, where in 1956 riots broke out upon the release of Khruschev’s public denunciation of Stalin and led to the death of nearly 100 students. Throughout the remainder of the Soviet period, Georgia’s economy continued to grow and experience significant improvement, though it increasingly exhibited blatant corruption and alienation of the government from the people. With the beginning of perestroika in 1986, the Georgian Communist leadership proved so incapable of handling the changes that most Georgians, including rank and file Communists, concluded that the only way forward was a break from the existing Soviet system.

The 11th Red Army of the Russian SFSR holds a military parade, 25 February 1921 in Tbilisi

Anastas Mikoyan, Joseph Stalin and Sergo Ordzhonikidze in Tbilisi, 1925

Georgian Civil War and the War in Abkhazia in August–October 1993

Georgia after restoration of independence

On 9 April 1991, shortly before the collapse of the Soviet Union, the Supreme Council of Georgia declared independence after a referendum held on 31 March 1991. On 26 May 1991, Zviad Gamsakhurdia was elected as the first President of independent Georgia. Gamsa-khurdia stoked Georgian nationalism and vowed to assert Tbilisi’s authority over regions such as Abkhazia and South Ossetia that had been classified as autonomous oblasts under the Soviet Union. He was soon deposed in a bloody coup d’état, from 22 December 1991 to 6 January 1992. The coup was instigated by part of the National Guards and a paramilitary organization called “Mkhedrioni” (“horsemen”). The country became embroiled in a bitter civil war, which lasted until nearly 1995. Eduard Shevardnadze (Soviet Minister of Foreign Affairs from 1985 to 1991) returned to Georgia in 1992 and joined the leaders of the coup—Tengiz Kitovani and Jaba Ioseliani—to head a triumvirate called “The State Council”. Simmering disputes within two regions of Georgia, Abkhazia and South Ossetia, between local separatists and the majority Georgian populations, erupted into widespread inter-ethnic violence and wars.Supported by Russia, Abkhazia and South Ossetia achieved de facto independence from Georgia, with Georgia retaining control only in small areas of the disputed territories. In 1995, Shevardnadze was officially elected as president of Georgia.

The Rose Revolution, 2003

 

Georgian President Salome Zourabichvili meeting with Marina Carobbio Guscetti, President of the Swiss National Council, in Tbilisi 

Georgian parliament building in Kutaisi

During the War in Abkhazia (1992–1993), roughly 230,000 to 250,000 Georgians were expelled from Abkhazia by Abkhaz separatists and North Caucasian volunteers (including Chechens). Around 23,000 Georgians fled South Ossetia as well, and many Ossetian families were forced to abandon their homes in the Borjomi region and moved to Russia.

In 2003, Shevardnadze (who won re-election in 2000) was deposed by the Rose Revolution, after Georgian opposition and international monitors asserted that 2 November parliamentary elections were marred by fraud. The revolution was led by Mikheil Saakashvili, Zurab Zhvania and Nino Burjanadze, former members and leaders of Shevardnadze’s ruling party. Mikheil Saakashvili was elected as President of Georgia in 2004. Following the Rose Revolution, a series of reforms were launched to strengthen the country’s military and economic capabilities. The new government’s efforts to reassert Georgian authority in the southwestern autonomous republic of Ajaria led to a major crisis early in 2004. Success in Ajaria encouraged Saakashvili to intensify his efforts, but without success, in breakaway South Ossetia.

These events, along with accusations of Georgian involvement in the Second Chechen War, resulted in a severe deterioration of relations with Russia, fuelled also by Russia’s open assistance and support to the two secessionist areas. Despite these increasingly difficult relations, in May 2005 Georgia and Russia reached a bilateral agreement by which Russian military bases (dating back to the Soviet era) in Batumi and Akhalkalaki were withdrawn. Russia withdrew all personnel and equipment from these sites by December 2007 while failing to withdraw from the Gudauta base in Abkhazia, which it was required to vacate after the adoption of the Adapted Conventional Armed Forces in Europe Treaty during the 1999 Istanbul summit.

 

Government and politics

Georgia is a representative de-mocratic parliamentary republic, with the President as the head of state, and Prime Minister as the head of government. The executive branch of power is made up of the Cabinet of Georgia. The Cabinet is composed of ministers, headed by the Prime Minister, and appointed by the President.

Salome Zurabishvili is the current President of Georgia after winning 59.52% of the vote in the 2018 Georgian presidential election. Since 2019, Giorgi Gakharia has been the Prime Minister of Georgia.

Legislative authority is vested in the Parliament of Georgia. It is unicameral and has 150 members, known as deputies, of whom 73 are elected by plurality to represent single – member districts, and 77 are chosen to represent parties by proportional representation. Members of parliament are elected for four-year terms. On 26 May 2012, Saakashvili inaugurated a new Parliament building in the western city of Kutaisi, in an effort to decentralise power and shift some political control closer to Abkhazia. The elections in October 2012 resulted in the victory for the opposition “Georgian Dream – Democratic Georgia” coalition, which President Saakashvili acknowledged on the following day. Different opinions exist regarding the degree of political freedom in Georgia. Saakashvili believed in 2008 that the country is “on the road to becoming a European democracy.” Freedom House lists Georgia as a partly free country. In preparation for 2012 parliamentary elections, Parliament adopted a new electoral code on 27 December 2011 that incorporated many recommendations from non-governmental organizations (NGOs) and the Venice Commission. However, the new code failed to address the Venice Commission’s primary recommendation to strengthen the equality of the vote by reconstituting single-mandate election districts to be comparable in size.

On 28 December, Parliament amended the Law on Political Unions to regulate campaign and political party financing. Local and international observers raised concerns about several amendments, including the vagueness of the criteria for determining political bribery and which individuals and organizations would be subject to the law. As of March 2012, Parliament was discussing further amendments to address these concerns.

 

Economy

The Georgian Railways represent a vital artery linking the Black Sea and Caspian Sea – the shortest route between Europe and Central Asia. Archaeological research demonstrates that Georgia has been involved in commerce with many lands and empires since ancient times, largely due its location on the Black Sea and later on the historical Silk Road. Gold, silver, copper and iron have been mined in the Caucasus Mountains. Georgian wine making is a very old tradition and a key branch of the country’s economy. The country has sizable hydropower resources. Throughout Georgia’s modern history agriculture and tourism have been principal economic sectors, because of the country’s climate and topography. For much of the 20th century, Georgia’s economy was within the Soviet model of command economy. Since the fall of the USSR in 1991, Georgia embarked on a major structural reform designed to transition to a free market economy. As with all other post-Soviet states, Georgia faced a severe economic collapse. The civil war and military conflicts in South Ossetia and Abkhazia aggravated the crisis. The agriculture and industry output diminished. By 1994 the gross domestic product had shrunk to a quarter of that of 1989. The first financial help from the West came in 1995, when the World Bank and International Monetary Fund granted Georgia a credit of US$206 million and Germany granted DM 50 million.

The Georgian Railways represent a vital artery linking the Black Sea and Caspian Sea – the shortest route between Europe and Central Asia.

The production of wine is a traditional component of the Georgian economy.

Since the early 21st century visible positive developments have been observed in the economy of Georgia. In 2007, Georgia’s real GDP growth rate reached 12 percent, making Georgia one of the fastest-growing economies in Eastern Europe. The World Bank dubbed Georgia “the number one economic reformer in the world” because it has in one year improved from rank 112th to 18th in terms of ease of doing business. Georgia improved its position to 6th in World Bank’s Doing Business report 2019. The country has a high unemployment rate of 12.6% and has fairly low median income compared to European countries. The 2006 ban on imports of Georgian wine to Russia, one of Georgia’s biggest trading partners, and break of financial links was described by the IMF Mission as an “external shock”. In addition, Russia increased the price of gas for Georgia. Around the same time, the National Bank of Georgia stated that ongoing inflation in the country was mainly triggered by external reasons, including Russia’s economic embargo. The Georgian authorities expected that the current account deficit due to the embargo in 2007 would be financed by “higher foreign exchange proceeds generated by the large inflow of foreign direct investment” and an increase in tourist revenues. The country has also maintained a solid credit in international market securities. Georgia is becoming more integrated into the global trading network: its 2015 imports and exports account for 50% and 21% of GDP respectively.Georgia’s main imports are fuels, vehicles, machinery and parts, grain and other foods, pharmaceuticals. Main exports are vehicles, ferro-alloys, fertilizers, nuts, scrap metal, gold, copper ores. Georgia is developing into an international transport corridor through Batumi and Poti ports, Baku–Tbilisi–Kars Railway line, an oil pipeline from Baku through Tbilisi to Ceyhan, the Baku–Tbilisi–Ceyhan pipeline (BTC) and a parallel gas pipeline, the South Caucasus Pipeline. Since coming to power the Saakashvili administration accomplished a series of reforms aimed at improving tax collection. Among other things a flat income tax was introduced in 2004. As a result, budget revenues have increased fourfold and a once large budget deficit has turned into a surplus. As of 2001, 54 percent of the population lived below the national poverty line but by 2006 poverty decreased to 34 percent, by 2015 it is 10.1 percent. In 2015, the average monthly income of a household was 1,022.3₾ (about $426). 2015 calculations place Georgia’s nominal GDP at US$13.98 billion. Georgia’s economy is becoming more devoted to services (as of 2016, representing 68.3 percent of GDP), moving away from the agricultural sector (9.2 percent). In regards to telecommunication infrastructure, Georgia is ranked the last among its bordering neighbors in the World Economic Forum’s Network Readiness Index (NRI) – an indicator for determining the development level of a country’s information and communication
technologies. Georgia ranked number 58 overall in the 2016 NRI ranking, up from 60 in 2015.

A green directional sign on the ს 1 motorway denoting it as such

 

Transportation

Today transport in Georgia is provided by rail, road, ferry, and air. Total length of roads excluding occupied territories is 20,553 kilometers and railways – 1,576 km. Positioned in the Caucasus and on the coast of the Black Sea, Georgia is a key country through which energy imports to the European Union from neighbouring Azerbaijan pass. Traditionally, the country was located on an important north–south trade route between European Russia and the Near East and Turkey. In recent years Georgia has invested large amounts of money in the modernization of its transport networks. The construction of new highways has been prioritized and, as such, major cities like Tbilisi have seen the quality of their roads improve dramatically; despite this however, the quality of inter-city routes remains poor and to date only one motorway-standard road has been constructed – the 1. The Georgian railways represent an important transport artery for the Caucasus, as they make up the largest proportion of a route linking the Black and Caspian Seas. In turn, this has allowed them to benefit in recent years from increased energy exports from neighbouring Azerbaijan to the European Union, Ukraine, and Turkey.  Passenger services are operated by the state-owned Georgian Railway whilst freight operations are carried out by a number of licensed operators. Since 2004 the Georgian Railways have been undergoing a rolling program of fleet-renewal and managerial restructuring which is aimed at making the service provided more efficient and comfortable for passengers. Infrastructural development has also been high on the agenda for the railways, with the key Tbilisi railway junction expected to undergo major reorganisation in the near future.

Port of Batumi

Additional projects also include the construction of the economically important Kars–Tbilisi–Baku railway, which was opened on 30 October 2017 and connects much of the Caucasus with Turkey by standard gauge railway.

Air and maritime transport is developing in Georgia, with the former mainly used by passengers and the latter for transport of freight. Georgia currently has four international airports, the largest of which is by far Tbilisi International Airport, hub for Georgian Airways, which offers connections to many large European cities. Other airports in the country are largely underdeveloped or lack scheduled traffic, although, as of late, efforts have been made to solve both these problems.

There are a number of seaports along Georgia’s Black Sea coast, the largest and most busy of which is the Port of Batumi; whilst the town is itself a seaside resort, the port is a major cargo terminal in the Caucasus and is often used by neighbouring Azerbaijan as a transit point for making energy deliveries to Europe. Scheduled and chartered passenger ferry services link Georgia with Bulgaria, Romania, Turkey and Ukraine.

 

Ms. Tamara Ioseliani, Director, Maritime Transport Agency of Georgia, Ministry of Economy and Sustainable

Development of Georgia

The vision of Georgia government is to Promote Georgia as favorable investment destination, including for maritime businesses. Establishment of Georgia International Maritime Forum in 2016 serves this very purpose. GIMF reflects the world maritime initiatives and promotes Georgia as a maritime nation throughout the globe and boosts common values Georgia shares with international maritime community. The Forum is not simply a biennial event but it’s an ongoing project, with an objective to bring together high-level officials and industry representatives from different regions and countries.Georgia is certainly rising to new prominence in the maritime world, located at the maritime crossroad in the corridor of what is viewed as the New Silk Road between China and the west.

Business and tax environment in Georgia is considered to be one of the best in the world rankings. Since 2017, corporate profit tax on reinvested profit is 0% and social security contribution is only 2%. Georgia’s stripped-down and streamlined tax scheme has produced the third-lowest overall tax rates in the world. Georgia has been successful in reforms and is quickly becoming intertwined in global value chains.

Georgia is also offering maritime tax incentive scheme for Shipowner and Shipmanagement Companies which entails almost tax-free regime on their services, the scheme came into force on October 8 this year, and the experience of Greek specialists was very fruitful and valuable to us.

Georgia enjoys free trade agreements with major economies and emerging market.

The Association Agreement with EU was signed and ratified in 2014, including the Deep and Comprehensive Free Trade Agreement (DCFTA). In 2016, Georgia signed an FTA with EFTA countries, which includes markets of Iceland, Liechtenstein, Norway and Switzerland.

Since then, Georgia has concluded a free trade agreement with the People’s Republic of China (including Hong Kong). With previously existing FTAs with CIS and neighboring countries (Turkey, Azerbaijan and Armenia), Georgia now provides customs duty-free access to a market of 2.3 billion people.

General Schemes of Preference for Georgia with the U.S., Canada and Japan have also been applied for, with the result being lower tariffs on 3,400 goods exported from Georgia.

Georgia appreciates and does not miss the chance to present the country at the largest exhibition of the shipping industry – POSIDONIA. We believe that this is one of the best platforms for the world to get acquainted with the Georgian maritime industry. Georgia was represented at the POSIDONIA 2018 National Pavilion and aroused significant interest in various circles of maritime businesses.

Georgia and Greece have many years of successful experience in cooperation in the field of seafarers’ employment. It should be noted that all 13 crewing companies recognized by the Georgian Maritime Transport Agency are actively cooperating with Greek ship-owners and their success is noticeable from year to year.

Their active and tireless work during the World Pandemic is especially important: according to the statistics of 2020, 2 Greek companies are among the 5 largest employers of Georgian seafarers.

1st place is taken by ELVICTOR, 4th place – QUEENSWAY SERVICES LTD., and emerging employer Oceangold Tankers Inc. It should be noted that thanks to the professionalism, diligence, cooperation and special skills of both companies, we were able to overcome the challenges created by the pandemic and obtain significant employment rates for Georgian seafarers. Since the outbreak of pandemic, Georgia together with international and partners and shipowner companies successfully facilitated more then 10 000 seafarers’ rotation to and from their respective ships.

When we talk about employment, the contribution of Greek companies to the employment of Georgian cadets and their subsequent formation into professionals must be mentioned separately.

Since 2016, the employment rate of Georgian cadets has increased significantly. Which is the result of combined efforts from the Government of Georgia and the private sector. Government since 2019 also provides financial support to cadetship programmes for Batumi State Maritime Academy.

It should be noted that at the annual forum of the Academic Advisory Committee for Seafarers Education and Training System set up by the initiative of the Maritime Transport Agency of Georgia, employers, maritime educational institutions and the government institutions come together to share their experience and success stories in order to improve the system and the quality of Georgian seafarers.

Currently Georgian seafarers training and certification system has the high reputation among international players, which is reflected in growing number of countries recognizing Georgian seafarers’ certificates, which includes almost all EU countries, all major flag States, Greece, U.K., Australia, etc.

In terms of maritime education, it is also important to note that the Batumi State Maritime Academy has a close cooperation with AEGEAN University of Greece.

Government of Georgia further continues to support the maritime sector, especially within the policy of post pandemic eco-nomic recovery, where maritime transport sector plays the key role.

Digitalization of the public services, including ports and logistic sector has become priority for the government of Georgia. MTA has been working closely with international partners and international finance institutions such as US Government, EBRD, Korea Exim on establishing Maritime Single Window and Port Community System in Georgian ports, those systems will help to improve  management and automation of port and logistics processes, including simplifying and standardizing port entry and exit permits and procedural documentation and for the implementation period MTA relies on the EU long term partners to share their experience including relevant  authorities form Greece, where Hellenic NSW has been implemented  successfully.

Maritime/Marine related vocational education is another area for future cooperation between Greece and Georgia. Government of Georgia has been investing in the development of the VET in Georgia. With the government funding and with the assistance of private sector, as well as international and regional partner, in 2020 Poti Maritime Training Centre opened in west part of Georgia, which is very active region in terms of maritime/marine related activities. Centre has capacity of training 1000 maritime professional per annum, though COVID- 19 has imposed some challenges on vocational education worldwide, sharing experience and future plans on how to overcome those challenges would be mutually beneficial for Greek and Georgian parties.

 

David Dondua – Ambassador of Georgia to the Hellenic Republic

Georgia’s strategic location at the crossroads between Europe and Asia gives the country many advantages for import and export activities, international business, foreign business investments etc.

Georgia’s economic policy is oriented on free, fair, inclusive and sustainable development, resulting in effective public services; open and fair competition on the market; proper protection of property and intellectual rights and freedom of access to free judiciary.

With a range of FTAs, Georgia has customs tax-free access to 2.3 billion market, including the EU and China. Besides these, country enjoys double taxation avoidance with 56 countries including Greece.

The predictability of political and investment climate is ensured by the Association Agreement with EU. We provide investors with young, skilled and competitively priced labor force. Georgia is the one of the least tax burden countries in the world with simple and service-oriented procedures. Through anti-corruption legislation, effective law enforcement and free access to online registries our economy promotes transparency and reduces bureaucratic burden.

Georgia ranks 7th out of 190 countries, on the ‘Ease of Doing Business’ criteria, according World Bank 2020 report. WB’s Enterprise Surveys listed Georgia among top 10 least corrupted countries from 144 and gave exceptional recognition in the improvement of the Corruption Freedom Index globally.

Country offers attractive investment opportunities in different sectors. For Greek investors of particular importance is tourism, hospitality and real estate industry, as well as energy sector and particularly renewable sources. At the same time, the government aims also to further strengthen transit function of the country and form logistical hub in the region. Georgia has four seaports, three international airports, as well as rapidly improving road and rail network.

Georgian government offers number of support mechanisms to companies, which are interested to invest in Georgia.

The state agency Enterprise Georgia provides full support to businesses at various stages of operation from market entry stage to investment aftercare.

The state-owned Partnership Fund provides equity financing to financially viable projects in order to decrease country risks for foreign investors and acts as a Sleeping Partner with a predetermined, clear exit strategy.

Despite the negative impact of Covid-19 pandemic on Georgia’s economy, positive trend of International Institutions ratings continues:

• Fitch Rating justify the sovereign credit rating for Georgia unchanged at “BB”.

• Moody Investors Service affirmed Georgia’s Ba2 rating with stable outlook;

• Standard and Poor’s rating is BB “Stable”;

• Heritage Foundation puts Georgia on 12th place out of 180 countries worldwide and 6th in the Europe, in “Index of Economic Freedom 2020”.

 

Capt. Dimitris Kalosakas Group Training Director Elvictor Group (Cyprus)

If I were ever asked to briefly describe Georgian Seafarers, I would use two words – “Professional Seamanship”. If I were to delve further in their character, the description would be much more colorful.

They area nation of religious people, holding family, friends and community above all else. They are a nation of strong, hard-working individuals who are straightforward, frank and open-hearted.

They are hospitable and as friendly as one can get. However, as public display of emotions is generally frowned upon, adding a certain solemnity to their demeanor, they are quite a modest and reserved nation.

It takes a significant amount of time to get to know them. Albeit, this journey of familiarization with their ways and personas is well worth it. Personal experience allows me to declare with great pride that the Georgians I have met and worked with are some of the most dependable people I have come across in my entire professional and everyday life.

During the era of the Soviet Union, Georgians were the backbone of the Soviet crew pool when it came to tankers. As such, while conducting a market research for new nationalities that would benefit and reinforce its existing pool of seafarers, we at Elvictor Group noticed many important traits we sought in our own seafarers.

The experience of the past eight years stands as a testament to the veracity of our assumptions. Georgian seafarers are not only adaptable when it comes to changing vessel types, but they are also extremely cooperative with other nationalities, ensuring the harmonic operation of the vessel. I vividly remember asking a 2nd Officer in one of our Principals’ vessels if they have a problem with any other nationality.

His response was brief and to the point: “There are no nationalities at sea. We are all brothers for our beloved sea is a cruel mistress”.

Recapitalizing on the subject of Georgia being an ex-Soviet Satellite State, we recognized the immense effort they have put in modernizing their seafarers and increasing their capabilities. One of the major problems in ex-Soviet States is the grasp of the English Language and the competency level at which it is exercised.

For the younger generation of Georgian seafarers, it has almost become a non-existent one. For that, it is only right that I profess the grand contribution of the Georgian Government, exercised via the MTA (Maritime Transportation Agency), who has invested heavily in providing the best education and re-education to potential or existing Georgian seafarers.

A great example of the results of such investments is the Batumi State Maritime Academy.

The number of Georgian seafarers that make up the entire pool of the Georgian State is a bit over 12,000 seafarers 2,335 Management Level, 2,073 Operational Level, 7,728 Supporting Le-vel and more than 900 cadets. As a country of roughly 3.8 million people, Georgia has a significant percentage of its population turning to the sea for employment, with that number constantly rising.

What I believe should also be highlighted is the level of participation in forums and organizations that Georgian seafarers show. This is a direct result of a highly effective Maritime Strategy employed by the Maritime Academies, promoting Cadetship programs to mo-tivate an ever-increasing portion of the Georgian youth to follow a path that will lead to a successful career at sea. This, in turn, will secure the future primacy of Georgian seafarers in terms of highly sought-after quality crew for any vessel type.

In 2016, the number of Georgian seafarers that embarked onboard international vessels was 2,202. In 2019, that number rose half fold, reaching a promising 3,446, indicating an approximate average rise of 19% per year from the original number of 2016.

Even in our most conservative estimations, we believe that this number will double in the following years.

Elvictor Group is proud to claim a bit over a fourth of the number of seafarers mentioned for 2019 and has been actively encouraging their promotion for employment when a chance presents itself to do so.

Further vindication of our choice was the handling of the pandemic situation. Georgian seafarers were the least problematic to employ and successfully relieve existing crew, even in their entirety, of vessels that had borne the brunt of the pandemic. This flexibility, combined with their pragmatic professionalism, will surely see many a nationality being replaced by a highly skilled, and rising in volume, pool of Georgian seafarers.

As such, capitalizing on all the above, Elvictor Group is bound to increase the Georgian portion of its seafarer pool, having signed agreements with various Maritime Academies for Cadetship programs, facilitating the evolution of the careers of young and promising, aspiring seafarers.

The future looks bright for Georgian seafarers and Elvictor Group is honored to play a role in realizing it.

Elvictor Group is a company that is majority owned by the Galanakis family, and its founder and current Chairman, Stavros C. Gala-nakis, built the company based on values of family and community.

He, along with myself and the rest of the management of Elvictor Group, are honored to have found a place in the hearts of Georgian seafarer families and we would like them to know that the feeling is mutual.

Georgia is a seafaring nation and it has shown that it knows fully that if you respect the sea and its way of life, the sea will reward you.

 

Statement of Mr. Konstantinos Galanakis, CEO of ELVICTOR GROUP

Georgia is the newest, but certainly one of the most satisfying chapters in Elvictor Group’s long history. Rarely in our history has a venture into unknown waters yielded such magnificent results.

Back in 2013, while exploring the Georgian market, I met the current Director of our Georgia office, Mr. Soso Chkhaidze.

A man of integrity and a knowledge of his country and his niche within the maritime industry, which is unparalleled in most other individuals I have come across. Having impressed me, I discussed with our management team the possibility of taking on Georgian crew and introducing it to our clientele, and as such, we started enlisting Georgian seafarers the same year.

Thus, started a really beneficial relationship between Elvictor Group and the Georgian pool of Seafarers. We started with manning four bulk carriers, and were quite impressed by the appraisals we received from our clients, talking about, and I quote: “Seafarers with great work ethic, knowledgeable and skilled, adaptable and co-operative”.

Suffice to say that we were all pleasantly surprised and focused on expanding our partnership and our reach with Georgian seafarers. We realized that most seafarers, due to their traditional orientation towards wet cargo handling from the era of the Soviet Union, were tanker specialists. By further promoting them to even more of our clients, in combination with a fruitful cooperation with the Maritime Transportation Agency and the Batumi State Maritime Academy, we also helped a number of aspiring seafarers to get placements where they could evolve and build a successful career in.

This, and our esteemed Direc-tor Soso, are the main reasons for our current primacy in the Georgian pool of seafarers, despite our relatively short presence in Georgia.

Georgian seafarers have shown to be loyal, hard-working, multi-lingual individuals. They are highly adaptable and cooperative with any nationality they have been placed with and abstain from consuming alcohol while at work.

Our clients are more than happy, having stated that their Georgian crew has been well worth their allocated money, proving their trust in them every single time.

Taking all the aforementioned into account, and speaking specifically from a personal standpoint, I would like to thank the Georgian seafarers for putting their trust in us and also for proving that our trust in them was well placed.

ELVICTOR: Number 1 out of the top 5 Manning Agents in Georgia

Attached is a brief statistical feedback from the meeting of 4th Annual Academic Advisory Committee (AAC) Meeting / On-line Forum organized by MTA, Batumi, Georgia. We are proud to be the first company, in volume of seafarers, in Georgia.                       We are also proud of and would like to thank our most esteemed colleagues in Georgia for their ethics, skills and professionalism.  Today they have made the Elvictor Family Proud  of  their  achievements.

To all of you, seafarers and onshore personnel, take care in these dire times and let this stand as a testament that even a global pandemic cannot stop you from achieving excellence and setting an example that others will want to follow or even surpass.

GEORGIA: BLUE ECONOMY IN THE MARINE SECTOR

Dali Sekhniashvili,
(Prof. Dr., Georgian Technical University, Faculty of Engineering Economics, Media Technologies and Social Sciences, Tbilisi, Georgia)

 

Nicholas Kathijotes,
(Prof. Dr., University of Nicosia, Faculty of Engineering, POB 24005 Nicosia, Cyprus CY1700)

Abstract:

 In today’s economy, people all over the world rely on ships to transport the commodities, fuel, goods and products that they depend on. Maritime transport is the backbone of international trade and global markets for national economic growth, something which is discussed and elaborated for the country of Georgia. Ships today are more technically advanced, more sophisticated, safer and more environment- friendly than ever before; and, they have never carried so much cargo and never been more efficient than they are today. Seas are some of the most productive ecosystems on the planet, providing an array of services that support economic growth. Services, including protection from natural hazards, weather regulation, shoreline stabilization, fisheries, energy from wind, waves and offshore oil, sea bound trade, tourism and many others, are a considerable part of nationwide economic activities. Maritime activity can both drive and support a growing economy. And this can be achieved in several ways in the Country of Georgia thus, by improving the existing marine infrastructure, and promoting marine activities in general, even fisheries and maritime tourism. This paper supplies valuable suggestions and measures for improving the marine sector of Georgia, always adapted to the blue economy principles. This paper examines the “Blue Economy” principles in Georgia from the evolutionary governance perspective. The authors will observe governing practices in the coastal and marine realm that differ from governance on land and make conclusions on whether the shift from government to governance took place in the marine sector of Georgia and whether the governance practice is capable of adapting to new evolutions. The paper provides an analysis on whether there was an institutional change in the marine sector of Georgia and whether the nature of marine and coastal resources was taken into consideration in the process of institutional change. The authors will also analyze the evolutionary character of the governing practices in the Georgian marine sector from the EGT standpoint. The paper elaborates on a marine evolutionary governance theory that allows for multiple realities and rationalities and allows seeing marine governance as radically evolutionary as driven by actions and ideas.

 

Keywords: Blue economy; marine sector; Black sea; sea transport; evolutionary governance theory.

 

INTRODUCTION

Global Guide of “Blue
Economy” Initiatives

About a century ago the academician V. Vernadsky (Vernadsky V.I., 1945) put forward the concept on inevitability formation of the noosfera, and by the end of the twentieth century, the basic principles of these relations were established at the UN Conference in Rio de Janeiro (Brazil) (UN Conference, 1992).

All States participating in the forum took over The National level implementation of the obligation to provide an articulate ideas.

Twenty years later, Rio de Janeiro (Brazil) was considered to be a key instrument of sustainable development at the Rio + 20 Conference in 2012 as a “green economy”. The “green economy” was defined as the lowest use of carbon, the efficient use of resources and the economy of social engagement.

 Accordingly, “green economy” is a system of economic activity related to the production, distribution and con-sumption of goods that improves human well-being and social justice, which, in turn, is a result of the reduction of environmental and ecological risks.

The concept of “green economy” implies ecologically pure energy production, efficient use of resources, and reduction of waste and implementation of biodiversity measures.

The concept of a blue economy came out of the 2012 Rio+20 Conference and emphasizes conservation and sustainable management, ba-sed on the premise that healthy ocean ecosystems are more productive and form a vital basis for sustainable ocean-based economies (UN DESA, 2014).

What is the situation now? Of course, many things have changed in the world. Many countries have adopted the Law on Sustainable Development and are realizing its realization in the field of activity. Some countries even have basic laws on sustainable development.  Such countries are characterized by the low-quality level of life of the population and after the implementation of hunger, poverty, and equal rights programs they will be expected to be able to formulate the goals of sustainable development and develop different programs for their implementation.

 Implementation of sustainable development principles will, of course, reduce the consumption and waste of natural resources, but unfortunately it cannot exclude the environmental impact of the environment.

From this perspective, the question arises naturally: what will happen in the future?

Which way of development should go to mankind?

Challenges in the sustainable use of marine resources – such as the impacts of climate change in the form of rising sea levels, increased frequency and severity of extreme weather events, and rising temperatures are going to have direct and indirect impacts on oceans-related sectors, such as fisheries, aquaculture, and tourism, and on maritime transport infrastructure, such as ports, with broader implications for international trade and for the development prospects of the most vulnerable nations, in particular Georgia.

The reasonable management of maritime resources and the ecological improvement of the seas is a way to sustainable future, which cannot be achieved without joint efforts.The maritime sector is of critical significance to any economy.

THE BLUE ECONOMY PERSPECTIVE FOR GEORGIA

Georgia and the Black Sea

Georgia is a maritime country. It is surrounded by the Black Sea from the West. The length of the coastline of Georgia is 315 km.

The Black Sea is neighbouring Georgia with quite a few rivers Rioni, Bzipi, Kodori, Enguri, Chorokhi and many small rivers. An average of 48.0 km3 of water is flowing into the Black Sea from our country’s territory, and rivers cover approximately 28 million saplings.

Winter on the Black Sea coast of Georgia is soft and warm. The average temperature in January is 4-70 and in July 22-230. The precipitation is abundant at all times of year. The southern part namely Colchis is especially wet with a lot of rain.

The waves have great significance because of the waves of great waves and shore of the waves within Georgia. The most frequently up to 1 m, and rarely 5-6 m high waves. The height of the waves at the foothills and shore protective walls reach 10 m during a special storm, and the height of the spine is 20-30 m.

Sea level with the shores of the country is experiencing seasonal fluctuations during the year. The maximum level is in July, and minimum – in October. Depression (amplitude approximately 20 cm) is due to the change in surface runoff, precipitation and evaporation year. (Trapaidze V.2012)

The importance of the Black Sea for Georgia is priceless. It represents the most important resource potential, recreational zones and the main arteries of foreign relations.

The future of the Black Sea will depend on the economic, social and political independence of the country. The geopolitical location of the country is transit freight, especially the general cargo of the countries of the Transcaucasia (Armenia, Azerbaijan), Central Asia (Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan) and Kazakhstan, as well as Iran, Afghanistan and some other states. Using it to happen –

The closest way to Western countries and among them. Importance of the Black Sea is exemplary in export and import of Georgia, transportation of passengers, fish recuperation.

Warm climate, good beaches, long season bathing, high sea sea water, unique landscape diversity of coastal areas, some mineral springs with medicinal properties, and other best conditions for relaxation and a range of diseases.

“Blue Growth” potentials in Georgia

1.Land

Nowadays, maritime industry is recognized as a significant part of the economy. And as everyone is striving for economic growth, a new magic word has been created: blue growth. (European Commission, COM (2012) 494 final). Indeed, the seas and oceans have the potential to be  a  major  source  of  new  jobs  and  growth.  According to  the  European Commission, the EU’s blue economy represents 5.4 million jobs and a gross value added of just under € 500 billion per year. (Ibid., p. 2.)

The Blue Economy espouses: “improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities” and it endorses the same principles of low carbon, resource efficiency and social inclusion, but it is grounded in a developing world context and fashioned to reflect the circumstances and needs of countries whose future resource base is marine (UNEP, 2013, p. 3).

The aim of Blue Economy model is to shift society from scarcity to abundance –based on what we have, and to start tackling issues that cause environmental and related problems through new and novel ways. (Kathijotes, Sekhniashvili, 2017)

Historically, economic activity has been managed on a sectoral basis in Georgia, with only limited coordination between ministries, regulatory bodies and industry when overseeing, among other things, overlap of property rights (particularly licences for the exploration of extractive materials), shipping routes and fishing grounds. Governing a sustainable marine economy will be far more complex.

Ecosystem-based management in which both the economy and ecosystems thrive, and its most important implementing tool, marine spatial planning (MSP), requires a set of integrated governance and supporting conditions to be present.

These include good laws and regulations, strong institutions and interministerial co- operation, inclusive decisionmaking processes involving all stakeholders (including business), evidence – based support, For Georgia this will be a considerable challenge.

Creating a blue economy in the Georgia will require major investments of capital and political will and take decades to complete. Defining the blue economy, then articulating how to piece together the enabling legal, governance, investment and financing arrangements – and implementing these – will be a major challenge.

Georgia’s maritime ports are not only important for our country but also for other Transcaucasia and Central Asian countries as it is the most favorable and shortest route to the Eurasian corridor in Georgia. The latter are distinguished with oil supplies, cotton, wool, meat, etc. At the same time, these states are distinguished by the stable growth of revenue, which is accompanied by a high demand for high-tech goods, which is being delivered from the West, and the most naturally short walks on the territory of Georgia. The process of establishing the country as a key transit region is implemented.

In the event of an appropriate political climate, it is possible to put Iran on the agenda of Georgia’s transit route, which will further boost the importance of Georgia’s maritime ports.

A specific expression of interest in the Caucasus region is the EU-known TRACECA project that connects Central Asia and the Danube basin countries.

This transport-communication corridor of Europe-Asia will pass through one of the many branches of our country, which will guarantee stability and economic growth. That’s why the future perspective is reliable.

Georgia’s transport infrastructure is unimaginable without development of marine ports. At the same time, development of ports should be proportionate to other transport infrastructure of Georgia. An intensive work is underway for the sharp increase of its capacity on the East- West highway of Georgia’s road; similar works are carried out on the Georgian Railway.

Therefore, it is necessary to develop a scientifically justified program for the development of marine infrastructure in Georgia.

Georgia’s economy is still in a “developing” stage. The share of domestic product volume is still very low, but the natural resources of Georgia, the education and professionalism of the population, the country’s aspiration – engage in the world economic processes, promotes rapid development of the economy in the future.

Naturally, in this case the demand for transportation will be increased from the country’s economy, including the first of the maritime traffic.

2. Sea

According to FAO, there are 26,000 river basins in Georgia and 54,88 km of total length –  860 lake and 12 water reservoirs, with a total area of 277 square kilometers. The fish species are rich in the Black Sea (52 species of fish), as well as Georgia’s internal waters (rivers, lakes, water reservoirs and water reservoirs), where 71 species of fish are based on Fish base, one of the largest fish in the fish. (FAO, 2016)

The Black Sea’s ecosystems and natural resources form a unique asset for the region’s countries and territories, and that understanding and measuring the economic activity that is tied to this “natural capital” asset is essential for sustainably growing the region’s economies.

For now, the region’s sea economy is not well measured or well understood. This consists almost entirely of market-based activities, since the non-market values of many ecosystem services are not easily valued monetarily.

Tourism and Transport – This is the main economic benefit received from the sea in Georgia. According to the first data of the National Statistics Office of Georgia in 2016, fisheries share of the country’s gross domestic product is only 0.03% or 11.4 million GEL. (National Statistics Office of Georgia, 2016)

The World Bank increased its active investment portfolio in projects aiming to increase the ocean’s natural capital to some US$6.4 billion by 2015, with support for sustainable fisheries and aquaculture rising from practically zero in 2004 to almost US$1 billion by 2015. Still, much remains to be done.

In 2016 UN Secretary General Ban Ki-Moon underlined the continuing threat with a warning that “the oceans’ carrying capacity is near or at its limit” and that “urgent action on a global scale” is needed to protect them. (United Nations, 2016)

What is the situation in Georgia? The main law of state policy implementation in the field of water resources protection and use is the Law of Georgia on Water. Consequently, in the Georgian law for improvement of water quality management, “water on water” periodically changes in certain normative acts in the legislation.

Within the framework of the European Neighborhood Policy, the Government of Georgia has taken responsibility for environmental protection, including the Georgian legislation in the water sector to meet EU requirements. The national program for harmonization with the European Union legislation of the Georgian legislation provides the specific directives of the European Union in the water sector, which are considered to be prioritized.

The need for transformation in the field of water is determined by:

• Most of the legal norms of the Georgian law on “Water on Water”, adopted on 16 October 1997, are the only nominal nature of the main legislative act in the water sector.

• The Law of Georgia on Water Mainly regulates the aspects related to surface waters and actually leaves groundwater (groundwater) resources and coastal waters without regulation

• From the adoption of the Law of Georgia on Water, since 1997, there has been no consistent review of the norms defined by the law in the adjoining sectors of the law (especially in legislation and maritime legislation in the field of land use).
• Acting on water in the water sector is not actually regulated by water management resources, as well as issues related to ownership, use and disposal of water bodies.

• The improvement of water in the sphere of water can only be achieved through deliberate and consistent reform. Such reform should cover all aspects of water resources protection and rational (sustainable) use – strategic, legal, normative, technical, institutional, administrative and financial.

• In addition, the reform should be based on a methodological approach to the modern internationally recognized and internationally recognized requirements in the developed world, which have been found in modern principles and approaches to integrated water management.

• The main task of the draft law is to establish legal basis for the implementation of integrated water management system.

• Integrated water management principles are most comprehensive and consistently reflected in EU water legislation.

The main provisions of the new draft law on Water Resources Management are:

• Water bodies and their associated rights

• Water Categories and their legal status provisions

Water protection requirements for water infrastructures and projects and exploitation

• Planning and management of water resources management and planning (planning and management system)

• Special water use rule (permit system).

Integrated management of water catchment basins and integrating watershed basins and integration of this system in the spatial-territorial planning system Since 2008, Georgia and other two South Caucasus countries – Azerbaijan and Armenia have been involved in the European Project for Trans-boundary Management of the River Mtkvari River Basin Management (Trans-boundary River – Mtkvari River Management), the main part of which is already completed (currently the second phase Going on) and which is the project of the European Union Under the leadership of the Geneva International Group and the three countries are engaged in cooperation with eco-experts.

For the adoption of legislation in the management of water resources in accordance with the Association Agreement with the European Union, the deadline is 4 years, which expires in September 2018.

The use of water resources in Georgia (irrigation, energy, water supply, industry, etc.) are regulated by relevant departmental structures that do not contribute to the rational use of water resources and the development of a single strategic plan of such use. Despite the abundance of the common water resources of Georgia, the modern state of Georgia dictates a new revision of water relations and water policy. Strict control of the use of water resources is necessary and the flow of water to be handled.

There are issues that do not clearly represent the competence of any agency and the management needs interconnection coordination. Therefore, in January 2017, the Intergovernmental Working Group on Maritime Issues was set up by the Government of Georgia for the purpose of determining the unified policy of the Government of Georgia in the maritime governance, the convergence of EU integrated maritime policies and the improvement of maritime governance in the country. The goal of the working group is to share the experiences of the EU, its member states and the Black Sea countries in the national policy. Namely: improvement of water quality of river water through pollution control; Balance between environmental and customer demands through regulation of  water resources; Ensure effective protection of the population and property from floods and mudflows; Maintenance of fish species and promoting their reproduction in rivers and other water reservoirs; Surface water bodies and adjacent terrestrial amenities and development of recreational potential; Protection of wildlife, valves and archaeological sites related to  shallow water bodies.

International organizations have a great role in improving marine environmental management. Over the years several regional projects have been implemented with the participation of the EU, UNDP, Black Sea Commission and other donors and partners. The ongoing projects are particularly promising for the project “Improvement of the Black Sea Environmental Monitoring” (EMBLAS) with the EU funded and supported UNDP project.

Within the framework of the project, in the years 2016 and 2017, leading experts from Georgia, Ukraine and EU countries have conducted joint research on the Black Sea, which will give Black Sea countries more information about the situation in the sea.

As for the prospects of development of “Blue Economy” in Georgia, the European Commission plans to set up a “Blue Economy Facility” mechanism for the Black Sea countries.

In our view, it is important that regional cooperation be developed in specific areas such as:

• Encourage an integrated approach to maritime issues, especially supporting the development of inter-sectored initiatives;

• Planning of sustainable use of sea resources;
• Integrated Coastal Zone Management in accordance with ecosystem approaches;

• Encourage innovations in marine industry;

• Identify areas of interest in the Black Sea issues in the region in the context of EU Integrated Maritime Policy.

ISSUES OF CONCERN FOR THE IMPLEMENTATION OF “BLUE ECONOMY” IN GEORGIA

 Issue 1.

About 70-80% of cargo handled in Georgian ports is transit purpose. At the same time, Azerbaijan uses only 40% of freight turnover through Georgia and only 20% of cargo turnover for the Middle East countries will be transported through Georgia ports.

Oil and oil products – 50-60%, bulk cargoes – 10-15%, chemical and mineral fertilizers – 10- 15%, metals (including scrap) – 10%, other cargo – 5-10 %. The reasons that hinder transit cargoes in Georgia, we have been divided into internal and external factors.

External reasons include:

• Changing the conjuncture of the international market of transit transportation (increasing the share of the volume of container transportation, reduction of the volume of metal (scrap metal), etc.);
• Increasing international competition on the level of state and redirecting transit freight forwards to its competitive (mostly Russian) routes;

• Compliance with the National Transportation System and Transportation Service to develop a faster rate of trans-port infrastructure on international standards and competitive routes;

The internal factors include:

• Relatively low rates of development of Georgia’s transport system;
• Low quality of transportation in the country. Low speed of transit transportation, technically obsolete rolling stock;

• Physical deprivation of basic capital, physical expenses of market infrastructure of transport infrastructure;

• The value of the border and customs service value at the border points of the country and the duration of service, the valuables on the border;

• The complexity of transit cargo procedure, the level of reliability of transit cargo losses;

• Inadequate activity of the country in relation to the international conventions of transit burden;

• Political and economic stability.

• Stability of the regulatory documents regulating traffic movement, mobility and traffic turnover compliance with Western standards;

• Flexible tariff policy and changes in competitive routes Most of the listed internal factors have a systemic character.

The problem is that the ports are only one component of transit cargo service, along with the railway transports of the Georgian Railways and Motor Transport, Customs and Border Points, Roads and their bandwidth.

Effective ports in this cycle cannot fully achieve the final result, so the solution of the problem requires a complex approach and activation of the state transport policy, which should ensure coordinated and coordinated work of all participants in the transport chain. In this regard, it is necessary to implement a common tariff policy and regulate them in common interests. A similar approach is a competitive transit route (Gula A2005).

The activities of the harbors’ potential are directly related to the opportunities and prospects of development of the railway and motor roads, improvement of the socio-economic situation of the regions and the whole country, development of the transport and communication system of the state.

In the existing and perspective ports of Georgia, as the key points of the transport corridor, it is expedient to create free economic zones as they fully acquire the functions of “logistics- centers”, or distribution companies.

Appropriate regulatory fra-mework in post ports are currently established functions greatly expanded and they become not only a means of transport and the collecting-distribution centers, but also manufactured goods and other products of the commodity kind of employer- packing and distribution enterprises, processed goods production and distribution centers.

Taking into account the geographical location and transit function of Georgia as a whole, it is quite attractive to create a powerful terminal network of logistics centers not only in the coastal zone. From this point of view, the complexes in the free economic zones of Georgia (including ports) will have the opportunity to attract more commercially more profitable activities by attracting additional labor resources. This is a significant reserve for the Black Sea coastal regions and for the social and economic development of the country as a whole.

Depending on the value of ports for Georgia, the government offers different attractive conditions for private owners, including creation of free economic zones in the port, but these projects have not yet achieved the desired results. There are frequent cases of selling rights. For example, 80% of Poti Port shares were purchased from Arabian “Rakia” by Danish subsidiary “Maersk” subsi-diary “Epibe Terminals” in 2011. It plans to invest 50 million in the current year, which is very little for the development of the port. (Poti New Port Project, 2010).

In the Caspian states, the production of carbon raw materials is being forced by the Georgian maritime ports, and the transport infrastructure to increase their capacity and ensure high competitiveness. Neighboring states are resorting to similar measures.

The reconstruction and expansion works in Rize and Khopi ports are going on in Turkey. It is planned to increase capacity of these ports up to 150 million tons annually. Such tasks are facing the Black Sea Russia and Ukraine ports. At the same time, it is planned to work on modernization of the Turkey-Iran railway, through which it will be able to increase the volume of cargo shipments several times in this direction.

Georgia’s transport system is also prepared to counter all the above mentioned, along with Azerbaijan’s transport system. Azerbaijan is intensively pursuing the reconstruction and modernization of the railway, as well as the “fast railway” project implemented in Georgia as well. The Black Sea ports and terminals are developing, but the latter is still insufficient.

Georgia needs to focus on logistical approaches. Georgian maritime ports, railways and partially automated transport are composed of a single logistic chain, and logistical function is the most crucial information provision, ie the existence of a single database. There is no such information base today. Therefore, one of the tasks is to organize the Georgian logistics center.

Georgia’s economic development forecasts, the volumes of carbon raw materials from the Caspian States, are compelled to increase port capacity. Accents should be made to build new capacities on the modernization of the original.

For the development of the marine infrastructure of Georgia, the state, along with other economic measures, is advisable to take part in the creation of a naval fleet. The maritime states in the world do not have their own maritime fleet (it doesn’t mean here military ships, marine ports, bars and other sailing boats), so the state may acquire some ships. Despite the fact that the acquisition of marine vessels is associated with significant investment (the average waterfront cost is 80-100 million USD), it is highly profitable to purchase due to their high cost. Marine vessels are distinguished with high incomes, according to profitability, and their consumption time is durable.

Therefore, in our view, it is necessary to develop complex transportation of the Georgian transport system so that all types of transport – marine, rail, pipeline and pipeline – will be proportionally developed and it is important that the Georgian marine ports to become logistical chain organizers;

The marine ports of Georgia are distinguished by the lack of works, one of the main directions of the reduction is the method of planning craft processing in the harbors on the basis of linear modeling. This method of straightforward planning enables us to achieve the optimal utilization of cargo processing, to minimize the cost of cargo processing and determine the number of free time of berths, during which the harbors can be processed by other cargoes or other types of work.

Marine ports and terminals are required to provide comprehensive service of railway, motor and pipeline transportation.

Consequently, the possible volume of cargo handling in ports and terminals should exceed the total capacity of the listed species of transport.

Issue 2.

Fish trading is one of the most important sectors of the economy of Georgia. For the import of fish products from other countries, Georgia spent 35.4 million US dollars last year and export of the same products amounted to US $ 11.2 million. Last year, Georgia exported 9.5 million tons of fish (foam). From 2010 till now fish is taken from Georgia, mainly in Turkey, Azerbaijan and Armenia. (National Statistics office of Georgia, 2017)

Today, 96% of the fish consumed in our country are imported, while the remaining 4% are local production. The state is obliged to elaborate the regulations that cherish the farmer. Many agro-credit or other kind of assistance is provided in this field, but we do not have any results because the assistance was inappropriate.

Specialists estimate that Georgia’s geographical location and rich resources of water are a good condition for the development of fishing industry in the country, but the country has no strategy in this regard.

The five companies are: Iceberg 2 (24%), “Geoffice Company” (19.174%), “Paliastom 2004” (5.055%), “Mdm” (25% ), “Sea Products” (26.771%). They have the right to bring 20 vessels on the Black Sea, some of which are owned by these companies, and some are the ships that have been rented from the Turkish fleet.

Additionally, another 33 Georgian seiner is carrying Evachera in the Black Sea. Georgian license holder companies are obliged to provide them equal to 12% of the unused resources within the existing license. (Prangishvili I., 2017)

The EU is the largest trader of fishery and aquaculture products worldwide. According to the European Commission’s 2016 report, EU consumers have spent 54 billion euros in 2015 to buy fishing and aquaculture products.

As for the consumption of fats in the EU, the import of all categories of Anchos (including foams) 30,000 tons of EUR 188 million in 2015 was carried out.

The EU market will be opened for the Black Sea fish in 2017. It enables the DCFTA with the EU to agree on all types of customs fees for goods exported from Georgia to over seven thousand goods.

Fish firms in Georgia are preparing fish flour and small quantities of fish oil for export. One of the major obstacles to their activities is the Georgian harbors, which require infrastructural changes for unloading large amounts of freight. 10-15 tons of fish must be downloaded within 3-4 hours to avoid damaging. There are about 50 people working there, but there is no place.

The Ministry of Environment Protection of Georgia issued a new license to the firms licensing firms last year – employing local staff in the fishing process.

From next year, each license holder must ensure that at least 30% of fishermen employed in the fishing process in 2018-2019 are citizens of Georgia with relevant education, 2019-2023 years of such staff should be no less than 50% and 2023 – not less than 80%.

That is why it is important to invest in human resources to increase the value of the seafarers’ quality certificates in Georgia on the international labor market. In this regard, Georgia is implementing bilateral cooperation projects with various leading maritime states around the world.

For the fermentation season, the amount of fish caught on the vessels will be recorded in the electronic journal, which connects to the Internet base and will be reflected there. Until now the fishing data on the ship was fixed on the sheet.

The electronic system will simplify the case. Let’s say, on the ship has a 2000 tone ceiling, the government will know every day how much it is approaching the ceiling. Violations are still under control on the ship.

Issue 3.

Aquaculture is a great issue of concern in Georgia. The fish species are rich in the Black Sea (52 species of fish), as well as Georgia’s internal waters (rivers, lakes, water reservoirs and water reservoirs), where 71 species of fish are based on fishbase, one of the largest fish base in fish.

For the development of acquaculture, the Ministry of Agriculture has started since 2015 studying the country’s potential. The document, together with the description of all the reservoirs and the river, would have provided opportunities for the development of aquaculture before the end of the year. However, the work has not yet been completed.

The Ministry does not have exact statistics on how many fish farms are there in Georgia. There are more than 400 fish species in the country, and if we look for small individual entrepreneurs, this number may increase to 800. According to FAO, UN Food and Agriculture Organization, fish farms in Georgia are in poor condition – there is a lack of finances and management skills.

Local fishermen have difficulty in getting rid of spawning and fishing rules, which often lead to lipstick. Problems related to fish-keeping rules have demonstrated that it is necessary to provide them with agrarian expansion and offer innovations.

Issue 4.

In order to eradicate crisis in separate sectors of economy, the role of state regulation of economy is the greatest. The Government of Georgia, using the most widely recognized state regulation system, does not use most mechanisms in practice.

So far, macroeconomic governance of Georgia is not characterized by efficiency. Without it, it is impossible to create a successful enterprise and business environment. If the results of the functioning of specific enterprises are largely determined by the enterprise managers and local factors, when it comes to economic collapse or the falling economy of one of its branches or regions, this indicates no effectiveness on management at the level of macroeconomics. One of the major findings of the macroeconomic problem is determined by the applicable tax legislation and the tax environment established on its base.

The tax system of Georgia may be characterized as a disproportionate, non – referenced, strict system, as it does not imply the taxation of the tax rates depending on the sectors and sectors of the economy. Improvement of the tax environment will make the investment environment even more attractive. The volume of attracted investments in maritime infrastructure will also increase.

Because of losing confidence, foreign currency demand is higher than the interbank currency exchange rate. This gives the basis for large-scale speculation, which reduces the currency reserves of the state and has been badly affected by the lending of enterprises. Consequently, these processes affect Georgia’s maritime economy. The Georgian navy counted 85 ships after the collapse of the Soviet Union.

Most of them were intended for transportation of dry cargoes, but it included passenger lanes and tankers. The instability of money in Georgia and the unacceptable investment environment along with subjective factors led to the gradual alienation of the Georgian navy abroad and finally disappeared. At present no structure in the country and its jurisdiction does not have a marine vessel.

Moreover, none of the ships are flying in the world waters in Georgia’s flag.

Securities exchanges do not cite firms in the maritime infrastructure of Georgia, which negatively affect their financial support.

In the case of normal operation of the stock exchange, it is one of the main sources of lending and efficient enterprises.

The amounts sold by the value of the shares sold to industrial enterprises, which are essentially the development perspectives, are due to the existence of the market on the grounds that monetary funds will be used to replenish the main capital resumption.

The essential attribute of the market infrastructure, which has a significant role in development of marine infrastructure, is labor exchanges. In Georgia such exchanges are functional, but their authority is very low in the population and job seekers.

The commercial banks will provide loans for most of the short-term operations with greater guarantees, so the companies will not be able to provide banking services, especially long- term credit financing, and thus they are binding on the financial capabilities of their founders.

This will negatively affect their entrepreneurial activity.

The financial market of Georgia is one of the most risky markets in the world, therefore credits issued by the existing commercial banks are characterized by high interest rates.

This prevents industrial enterprises in efficient way. The role of the state is great in improving the financial-credit system. It can and should achieve the universal system of the system.

Policy priorities and actions needed for moving Georgia into a blue economy

Transitioning to a blue economy in the Georgia will require policies that treat the Black sea as a unique “development space,” shaped by its ecology. Such polices would be developed through marine spatial planning that generates maps to categorize sea area for particular uses. One barrier to development of blue economy policies is the fragmented nature of governance in the Georgia.

The current state of play in the Georgia suggests a number of interrelated priorities for policies that could carry the country toward a blue economy:

Develop and strengthen regional and national policies to better integrate the governance framework for the Black Sea. Clear, coordinated mechanisms for integrated coastal management, implemented across relevant sectors such as fisheries, tourism, transport, energy, and environment will be essential to resolve these conflicts.

With regard to tools, coastal and marine special planning is particularly important for establishing geographical zones of sea uses within a given area and for protecting ecosystems.

Implement policies for a healthy, resilient, and productive marine environment in Georgia.

Policies should explicitly reflect the principle that both the general economy and the livelihood of coastal communities depend on the health of the sea. For Black Sea countries, associated biodiversity is of particular importance to tourism and fisheries.

Provide education and raise awareness about the blue economy. Many Black Sea states have chronic gaps in the skills of marine research, planning, and decision making. Professional training programs will need to shift gears to meet this demand. In the population at large, basic education about the sea’s role in future prosperity will raise awareness and create political will for the needed change.

In addition, the recently launched Erasmus+ programme for 2016 includes several initiatives of interest to Blue Economy stakeholders.

For instance, Sector Skills Alliances aim to create European partnerships between industry, vocational and educational training institutes and regulatory bodies to define skills needs in a specific sector and to design and implement new curricula accordingly.

Other Knowledge Alliances target higher education and aim to boost the relationship between industry and universities.

Ensure maritime surveillance, monitoring, and enforcement. In many countries, illegal fishing by neighboring states is a key concern. Black Sea states need enhanced capabilities for identifying threats to their maritime space in a timely manner. They will achieve these by sharing and integrating intelligence, surveillance, and navigation systems into a common operating picture. Regional cooperation on these issues will optimize limited resources.

Build the infrastructure for a blue economy. Improved coastal and port infrastructure is a critical asset for economic growth and development in Black Sea states, especially, in Georgia.

Once constructed, it must be protected, notably from flooding and sea surges, given its frequent siting near sea level. Fortifying these assets can be expensive; a more affordable approach often involves restoring natural barriers to reduce the hazards of flooding and erosion.

CONCLUDING REMARKS

Urgent support needed towards research and development for the implementation of a blue economy. At present, Georgia suffers from a general lacking of data related to its water resources including seas. Black Sea states would do well to buttress their own data collection and also to access the hydrographic/bathymetric surveys, biological samplings, and environmental characterizations conducted by the numerous international research vessels that cross Black Sea.

Support business development and sustainable finance. Georgia needs policies to promote investment in existing blue economy enterprises and in new ones. In the Georgia the greatest potential for value addition and job creation may be in small- and medium-sized enterprises within the blue economy value chains. Finance for start-up, capacity growth, and technology development will be crucial for these firms.

Based on the existing scarce data and on our study of the situation regarding blue governance of marine sector in Georgia, we think, that Georgia should build its interventions on three pillars:

1. Governance:

Reform policies, build public sector capacity, align economic interests with long-term sustainability, and promote conditions that encourage business growth in a sustainable seafood sector.

Public-private dialogue, sta-keholder inclusion and strategic partnerships with donors, technical expertise, the private sector and clients help shape the fisheries agenda and position fisheries as central to today’s development challenges – poverty alleviation, climate change, and food security.

2. Science and data:

Generate state-of-the art scientific knowledge to inform sustainable fisheries and aquaculture policy and investment. Predictive analytics, technical assistance and financing to leverage investment in fisheries

3. Markets and finance:

Reduce waste, improve fish value chains, increase market access, and drive new investment opportunities in sustainably managed fisheries and aquaculture through innovative financing mechanisms. This brings together public and commercial finance, philanthropic capital and private equity to invest cooperatively in projects that create jobs, grow local economies and generate positive social impacts to scale up sustainable solutions in the fisheries sector.

Proposed approach to begin the transition toward a Georgian Blue Economy: improve the statistical and methodological base for measuring the scale and performance of the marine economy; establish natural capital accounts for the black sea at the national and regional levels; create and expand integrated approaches to black sea governance; apply marine spatial planning at the scale of exclusive economic zones; invest in restoration and maintenance of the function and integrity of critical marine ecosystems; build and strengthen the institutional and human capacity to act; advance key infrastructure investments, continue to enhance knowledge of the black sea; expand maritime domain awareness of the black sea; track key indicators of the transition to a blue economy.