From the ISET Economist Blog (https://www.iset.ge/blog/?p=4633)
By Eric Livny
The “do no harm” (primum non nocere) principle is well known to students of medical schools. It is one of the most fundamental maxims in medicine, as formulated, for example, in the Epidemics book of the Hippocratic Collection:
“The physician must … have two special objects in view with regard to disease, namely, to do good or to do no harm“.
Doctors are taught that medical interventions are not risk-free. Thus, when facing a “problem” one should consider whether to use a particular procedure (e.g. surgery or chemical treatment) or do NOTHING.
Not surprisingly, this very principle has applications in many fields other than healthcare. And it is high time for this principle to be studied and applied in Georgian policymaking.
THE HARM OF OVERZEALOUS “HARMONIZATION”
Ever since signing the EU Association agreement in June 2014, Georgia has embarked on a spree of initiatives seeking to “harmonize” Georgia’s legislative and regulatory environment with EU’s acquis communautaire. The aim, so it appears, is to instantly transform Georgia into a European nation.
It all started on September 1, 2014, with the introduction of new VISA AND RESIDENCY REQUIREMENTS, modeled – so the Georgian public was told – after the best EU regulations, and intended to meet EU requirements as part of the visa liberalization process.
Within just a few months, several other pieces of legislation have been drafted and submitted to parliament (a few more may be in the pipeline without any knowledge on the part of relevant businesses and civil society stakeholders), allegedly as part of the harmonization effort.
- A new law onLABOR MIGRATION, submitted to the Georgian Parliament in early 2015, sought to prevent trafficking (a goal consistent with Georgia’s obligations under the visa liberalization plan), but also (Article 16) to restrict the ability of Georgian companies to hire badly needed international experts. Hard to imagine, but true! Thanks to a concerted communication effort by the Georgian business community, and goodwill on the part of the Ministry of Economy and Sustainable Development, Article 16 was swiftly removed from the draft law.
- Recent amendments to the Georgian law onBROADCASTING (Article 64 § 2) restrict sponsorships and limit advertising to 12 minutes per hour. The idea to reduce advertising time to somewhat more civilized levels is consistent with EU rules, yet Georgia seems to be in a particular hurry to tick off this harmonization box. Whereas the Association Agreement talks about gradual “approximation” over a period of 3-5 years, Georgian parliamentarians opted to dramatically accelerate the process by making these truly life-saving amendments effective almost immediately (as of April 1, 2015). Instead of creating harmony, this kind of fast-track overzealous approximation does not allow private broadcasters any time for adjustment, jeopardizing their ability to generate income, produce high quality content, and maintain independence. Unfortunately, suggestions by Rustavi 2 and other TV channels to stagger reductions in advertising time over several years have so far fallen on deaf ears.
- Yet another example of rushed legislation that appears to ignore the interests of businesses concerns the recent decision to increase EXCISE TAXES ON ALCOHOL AND TOBACCO as of January 1, 2015. The Government’s official aim was to increase budget revenues while harmonizing Georgia’s regulatory environment with that of the EU. Yet, the manner in which the whole process was rushed raises many questions. Georgian companies were not allowed any time to adjust their investment and production decisions, leaving them with excess capacity and losses. Furthermore, the level of excise taxes on alcohol was set at a level exceeding that of many European nations. This was decided without examining relevant demand elasticities, that is, the extent to which higher taxes will affect sales and budget revenues. In a country with rich traditions in home production of high quality alcoholic drinks (that are not subject to excise taxes), demand for alcohol is likely to be quite a bit more elastic than in most European nations. After all, Georgian consumers can switch to homemade wine or chacha, spelling doom for Georgian government’s plans to raise an extra 100mln GEL in excise tax revenue.
A COMMON PATTERN?
Taken alone, none of these legislative initiatives are particularly damaging for the Georgian economy. Georgian companies would have quickly acquired the ability to handle the extra layer of bureaucracy when bringing foreign experts and workers. Broadcasters will raise per minute prices for advertising and sponsorships, and advertising companies will learn to deliver their marketing messages in fewer seconds. Forced to pay higher excise taxes, Georgians will drink less beer and more wine. Breweries will adjust production volumes or export to Azerbaijan. The Association Agreement will be implemented ahead of schedule. At least on paper.
The problem with all these initiatives is that they represent a pattern of policymaking that is very different from the European ideal which Georgia is supposed to aspire to. And, taken together, they defeat the very purpose they are supposed to serve: bring Georgia into the European family of nations.
First and foremost, the manner in which these new regulation are enacted undermines Georgia’s reputation as a great place to do business. A key consideration for new investors is stability and predictability of the business environment. Countries may certainly change their internal regulations from time to time, but this should be done in coordination with the business community, while listening to companies and allowing them sufficient time to adjust.
Second, Georgian policymakers should learn to do much better homework before coming up with new laws and regulations. To do no harm, doctors may prescribe additional X-ray or blood tests. Policymakers can employ standard tools of applied economics analysis to simulate the impact of proposed regulations on tax revenues, GDP, income and investment levels, as well as evaluate associated corruption risks. While common in Europe, none of these tools are used in Georgia. Yet another good possibility is to move in small steps, conducting policy experiments and assessing their impact.
Third, unless dealing with urgent or complicated technical matters (such as Lari devaluation), Georgia’s policymaking process could benefit from greater participation by interested parties. Practically all EU approximation measures could and should be subjected to a lengthy and inclusive process of public consultations that would increase their chances to be politically accepted. In fact, such consultations are explicitly encouraged by the EU Association Agreement.
Last but not least, the hasty attempts to tick off boxes on EU harmonization may undermine the very process of Europeanization the Georgian government is trying to promote. The use of the Association Agreement as a smokescreen for passing dubious laws not only harms Georgia’s immediate economic interests, but also plays into the hands of those political forces that aspire to bring Georgia back into the Russian fold.
* * *
The other day, I heard Giorgi Kadagidze, the governor of the National Bank of Georgia, speaking about the need for Georgia to grow at a faster pace, and how faster growth is predicated on the government’s ability to implement painful and costly adjustments. The kind of “second-generation” structural reforms envisaged by governor Kadagidze would take time to implement. Until then, however, there are many things the Georgian government could STOP DOING. In this way the government would save taxpayers money, save itself the embarrassment of backtracking and apologizing, and save Georgian businesses the nervous energy and resources that could be put to more productive uses.
It is time for the Georgian policymakers to learn the Hippocratic principle: do no harm!
4 Beehives and their inhabitants from the high mountains of Ajara started their new life on the terrace of one of the largest Hotels in Batumi, Georgia, the Hilton Batumi, to produce honey for hotel guests. The General Manager of the Hilton, a keen birdwatcher and conservationist had the idea, seeking to showcase the beautiful countryside of Ajara and take this first step in illustrating the story of locally sourced food and the people who produce it.
By linking the hotel with the Ajara Beekeepers Business Association, the hives were installed. Urban beekeeping is increasingly popular in Europe as bee colonies decline and new ways are sought to develop a more ecologically sensitive lifestyle as urban centers grow. The Hilton also installed a honey showpiece at the breakfast buffet, of mounted honey comb, a large map of the 10 honey production gorges of mountainous Ajara and the indigenous flora on which the bees feed with the honey and comb sourced through honey producing company Matchakhela Ltd.
These initiatives which form a part of the ALCP programme’s work in the honey market system illustrate the great potential of the honey sector to feed into the promotion of Ajara as a great and varied tourist destination.
Income received from the Hotel hives will be donated to children in need in the rural municipalities.
News travels fast and perhaps other hotels may take up the initiative now it's been advertised through the Hilton chains newsletter.
Khelvachauri Women’s Room is taking its first steps in helping women access public resources voice their opinions and participate in local self-governance. The Women’s Room model that is being replicated in Ajara was first established in three municipalities of Kvemo Kartli from 2012 and subsequently in all municipalities of Kvemo Kartli and Samstkhe-Javakheti. The first opened in Batumi with the Association of Business Women of Ajara (ABWA) in the Ajara Chamber of Commerce and Industry (ACCI) was the first of all a new type of urban and business based women’s room, with the ideas of providing business trainings and an urban connection for the municipality based women’s rooms already opened in Keda, Shuakhevi, Khulo and Khelvachauri municipalities and soon to open in Kobuleti. The rooms are proving popular with these WR’s already providing more than 1200 services in three months.
The Women’s Rooms are a municipal service, a resource and consultancy space for facilitating open dialogue between local society and municipality officials, aiming at promoting women’s participation in the decision-making at the local level and increasing their access to municipal information and services including on health care and agricultural programmes. Women’s Rooms also offer a platform for trainings and meetings, supporting new initiatives and instilling women’s active participation. The space has been taken up quickly with the Association of Young Lawyers and the School of Democracy using the rooms to raise women’s awareness on human rights, economic and educational opportunities. Visitors can use library and internet for free. All of the Women’s Rooms in Ajara are easy to access on the first floor of municipality buildings and can be freely used by people with disabilities for meeting with Gamgebeli and other officials to speak about their issues. Gamgebelis hold weekly meetings with local citizens in the W’s Rs. A Free hotline number (Khulo 0 800 100 109; Shuakhevi 0 800 000 008; Keda 0 800 100 103; Khelvachauri 0 800 100 106) allows rural women to voice their issues in the Gamgeoba.
Women’s Room coordinators and municipal Gender Advisors, were trained on the importance of women involvement in decision-making using guidelines on The Application and Implementation of the Law on Gender Equality of Georgia by local self-government bodies to increase women’s participation in the community meetings, that was resulted in significant increase from 3% (2014) to 33% (2016) of women’s participation in these meetings.
To find out more about W’s Rs ongoing activities, visit Ajara (Batumi,Khulo, Shuakhevi, Keda, Khelvachauri), Kvemo Kartli (Dmanisi, Tsalka, Tetritskaro, Rustavi,Marneuli, Aspindza) and Samtskhe Javakheti (Akhaltsikhe,Adigeni, Borjomi ) W’s Rs Facebook pages.
Posted by Helen Bradbury: Team Leader, Alliances Lesser Caucasus Programme
ALCP has been featured on BEAM Exchange. See the story below.
Rural farmers can only grow their income when they have access to the drugs and veterinary services to keep their animals healthy and growing too. Alliances has partnered with a national veterinary inputs supply company to improve access to drugs, information and vet services for poor farmers in rural Georgia. There are strong signs competitors are seeking to replicate the model, which is also scaling up nationally and in neighbouring countries.
The challenge
Over 2 million people in rural Georgia rely on subsistence farming, typically owning less than one hectare of land. SDC has been funding a series of programmes in Southern Georgia since 2008 to improve the livelihoods of livestock farmers.
During initial surveys, Alliances learned that less than 10 per cent of farmers were accessing veterinary drugs or services in their community, in rural vet pharmacies mainly self-stocked from trips to Tbilisi. Others bought drugs when travelling to the capital. In the rural vet pharmacies a limited range of often improperly stored drugs were sold at high prices due to the resultant transaction costs. Local advice was minimal, unavailable or out of date. This had led to a lack of farmer trust in local veterinary products and services and unwillingness to invest.
Suppliers had failed to grasp the market potential of developing rural distribution, lacking both the information and capital to do so. The uncertainty about whether farmers would buy their products meant the perceived risk held suppliers back from making the first move.
Name: Natural Produktsia Ltd
Place: Dioknisi Village, Khulo Municipality
Type of business: Cheese Factory
Product: Imeruli Cheese
Suppliers: about 450 women from 13 villages of Khulo
Current production per day: 5 tons of milk (700 kg of cheese)
The Problem
The 450 women now selling milk directly to the milk collectors of the Natural Produktsia Ltd Factory in Dioknisi, Khulo used to make cheese from their milk. Women are responsible for milking the household cattle and making the cheese, butter, sour cream and cottage cheese which is then sold as an important part of the family’s livelihood.
Selling these products however is hard and uncertain. The journey by marshutka to Batumi Agrarian Market can take up to 4 hours on bad roads. It is taken to the market by husbands or other male family members or sent with the driver and met by a relative who then tries to sell it. There is no guarantee of a sale and often the family is forced to accept a low price from the market vendors rather than take it home again.
“Women in Georgia – Tradition and Contemporaneity” is a short documentary film prepared by ‘Netgazeti’ (online newspaper) about women living in Ghordjomi Community (Khulo Municipality, Ajara). Ghordjomi is one of the largest Muslim communities in Ajara and is known for its early marriage traditions, and other strict rules and attitudes towards women. The film describes the harsh daily routine of the women starting from 6 am in the morning with taking care of the cattle, children, household and the restrictions they face in daily life.
The ALCP AJ programme’s Focus Group Survey and Gender Analysis captured these issues and also noted the consequent effect on the participation of women in the decision-making processes at the community and local governmental levels which is chronically low.
By Helen Bradbury: Team Leader, Alliances Lesser Caucasus Programme
We are in an interesting conundrum. Gender in most places has been written-in to law. Bar a few notable exceptions, every country in the world, has varying degrees of success in applying universal suffrage. Fifty countries are signed up to the CEDAW convention (the UN’s Convention on the Elimination of all forms of Discrimination Against Women). On the CEDAW world map of Discrepant Government Behaviour Concerning Women, the countries shaded dark green which denotes ‘virtually no enforcement of laws consonant with CEDAW or such laws do not even exist’, are where you expect them to be and in fact they are relatively few. It is the next two categories which disturb, covering the vast majority of the globe, the mid and lighter green, where laws are partly or fully consonant with CEDAW but there is little effective enforcement or spotty enforcement of them and the issue is low priority or hit and miss. After the gains, the laws and ratifications of the last centuries it seems that we must tread very carefully indeed for we must counteract indifference, in which inertia and inactivity stop us moving forward.
