From the ISET Economist news (http://www.iset.ge/news/?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!
The Georgian documentary Jara was named as the Best Feature Film at the Wolves Independent International Film Festival 2018. Nature, heritage, environment, history, culture, ethnography, adventure, wildlife, indigenous cultures and social issues are the main themes of the festival which takes place in Lithuania.
It is the second award for Jara following Golden Green Award 2018 at the Deauville Green Awards International Film Festival, for the best production in the category of Sustainable Agriculture
Jara was premiered by EcoFilms in Tbilisi in 2017. The main backer of Jara was the Swiss Agency for Development and Cooperation (SDC) through the Mercy Corps Georgia implemented Alliances Caucasus Programme (ALCP) within a consortium of public bodies and conservation organizations including World Wildlife Fund and Caucasus Nature Fund.
The annual Honey Festival was opened for the fourth time on August 11th on Batumi Boulevard and closed on August 12th in Batumi Botanical Garden. Up to 45 beekeepers from across Georgia once again presented their honey and by products for the festival visitors. Honey themed activities were held for children’s entertainment; visitors could see the ancient beehive at the special corner for jara beekeepers from Ajara and could taste different kind of honey from different parts of Georgia. Batumi Botanical Garden promoted Goderdzi Alpine Garden; live music kept the celebration spirit all day.
“Beekeeping is our family business. We started participating in the festival from the very beginning and it became a tradition. Each year we promote our products and each year we find new clients. This annual festival helps us to make our products more visible and popular” - Shorena Kezheradze, Khelvachauri municipality, Ajara.
The Georgian documentary Jara has just won the Golden Green Award 2018 at the Deauville Green Awards International Film Festival, for the best production in the category of Sustainable Agriculture, the International jury selected the finalists in fourteen categories from four hundred and fifteen films produced worldwide. Jara was screened during the festival in Deauville in the presence of the professionals and the press.
The Deauville Green Awards is one of the most prestigious festivals in Green Film Production worldwide launched in 2012. For the last seven years, the festival’s mission has been to enhance information films, spots and documentaries on sustainability, eco-innovations and social responsibility. Furthering public understanding and education. Each year the festival draws five hundred films from five continents, with four hundred professionals of film in attendance.
On Saturday, June 9 representatives of the ALCP team (www.alcp.ge) and a wool processor Tamar Tsikarishvili from Akhaltsikhe, Georgia attended the Sheep
Shearing Festival after being invited by SDC sister project SDA Armenia which took place in Syunik Animal Market, Syunik region. The festival aimed to promote sheep, local produce, traditions and culture of Syunik and Vayots Dzor regions (Please see the Link).
The festival included guest sheep shearer Danny Wilson from Great Britain who conducted master classes for festival participants and visitors.
Knowledge is a power and the ALCP is committed to facilitating high quality agri information transfer to rural farmers strengthening the field of journalism in Georgia and Armenia.
On 25th-29th of April an international agricultural journalist was commissioned to deliver trainings to 11 Armenian TV and press journalists and 2 heads of the Department of Journalism of Armenian universities in the Caucasus International University in Tbilisi.
Follow the link of Imedi TV news on the event.
On April 16th-20th, 2018 the Alliances Caucasus Programme (www.alcp.ge) funded by the Swiss Agency for Development and Cooperation SDC and implemented by Mercy Corps in Georgia, hosted a study tour from the Arab Women’s Enterprise Fund (AWEF). The tour included Jordan Municipality Mayors, WEE coordinators and representatives from the Ministry of Agriculture of Jordan to share ALCP’s experience on Women Economic Empowerment integration through M4P approach and best practices used.
