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.
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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!
On March 16th, 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 eighteen Swiss Ambassadors and Mission Directors of Development Cooperation of Switzerland from Azerbaijan, Moldova, Ukraine, Tajikistan, Kyrgyzstan, Kazakhstan as well as representatives of the Federal Department of Foreign Affairs’ headquarters in Bern. The visit was part of a regional seminar hosted by the Swiss Ambassador to Georgia and Head of Mission Olivier Burki, Regional Director of the Swiss Cooperation Office in Georgia.
'This forum is the first steps where women economic empowerment starts from. The Ajara Chamber of Commerce and Industry (ACCI) is ready to support women entrepreneurs and startups. Through the Women’s Room of ACCI we will help them in preparing Business Plans, liaising new business contacts and follow up their way of achieving success in businesses’ - Tamaz Shavadze, Chairman of ACCI.
The National Women Business Forum for 300 participants including 180 women entrepreneurs from all regions of Georgia as well as public, private and civil sector organizations concerned with women’s entrepreneurship was held in Batumi on International Women’s Day, March 8, 2018.
Management of Animal Movement Route (AMR) and Bio Security Points (BSPs) were the main topics discussed at the ALCP’s 9th Advisory Committee meeting on January 31st, 2018.
The Minister of Agriculture highlighted the importance of AMR and its Bio Security Points, their importance in underpinning animal healthcare and livestock export and the need for continued efforts to ensure progress in his opening speech.
‘Despite the positive dynamics there are still challenges and the governmental, non-governmental and private sectors should consolidate to overcome them’ - stated Mr. Davitashvili.
Existing gaps in management as well as the positive impact of BSPs were highlighted at the meeting. A short film: What shepherds think about the BSP’s available at ALCP/Videos allowed shepherds views to be presented in full.
All participants debated responsibility for managing the AMR and its infrastructure. Land overlaps, lack of resting areas, watering points at the Route, issues of concern for decades - were also discussed.
‘I think inclusion of self-governments in provision of BSPs’ operation is quite possible, local residents can be hired there and I’m ready to discuss this issue with the heads of local municipalities of Kvemo Kartli” - Grigol Nemsadze - The State Representative-Governor of KK Region.
As a result of this meeting the Regional Government of Kvemo Kartli and the Ministry of Economy have agreed to work together for final resolution of contested land on the route. Existing infrastructural gaps at BSP’s will be also solved in time for spring season, stated the Head of the NFA. With regards to BSP’s management and its future ownership the issue is clearly on the table for further facilitation and discussion with all interested parties to find the best solution and develop pertinent strategy going forward.
On December 5th the National Geographic Magazine Georgia presented its latest edition which features an article on Jara honey, at the National Museum of Georgia. About hundred guests tasted Jara honey and watched a special screening of the Jara movie, which had originally inspired the Georgian National Geographic to do the Georgian bee and honey story.
‘We were thinking about doing an article on Georgian Bees and honey, but we were not certain what direction to choose. One day, I got a call from Nika Tsiklauri, who invited me to the Jara premiere and while watching this truly fairytale, – I discovered the storyline we had been looking for’. – Natia Khuluzauri, Editor in Chief of the National Geographic Magazine Georgia.
The movie Director, Nika Tsiklauri, did a photo session of the Jara hives in Ajara. The magazine story writer, Irakli Pipia, enthusiastically worked on the topic and in addition came across documentation that showed that the Caucasian Gray Bees had been exported to the USA from Georgia atthe end of the 19th century.
‘This was a discovery none of us expected. Who knew that the Caucasian Bee had travelled so far? So, both authors, Nika and Irakli, did a great job and we have this beautiful elaborated story covering practically all aspects related to the Caucasian Gray Bee and honey they make’ – says Natia.
The event opened an exhibition of photos, Jara hives and beekeeping artifacts from Ajara. The Ajarian Beekeepers Business Association gave attendees a unique opportunity to taste recently harvested Jara wild honey from its members and personally explore traditional Jara hives and beekeeping handicrafts.
Photo Source: The National Geographic Georgia
A new Bio Security Point (BSP) has been opened by the Minister of Agriculture of Georgia on in Kakheti, Telavi municipality. It is the fifth point now open on the
Animal Movement Route along with the BSP’s in Marneuli, Rustavi, Dedoplistskaro and Signagi municipalities and the third point built by the government in addition to the two points built under the ALCP as part of the activities agreed between the government and the project.
‘We are conducting complex works for supporting sheep and cattle sector development and one of the most important components of this work are identification ®istration of official Animal Movement Route and a proper management of it. We now have five BSP and this helps us to manage the movement of the livestock and their health control’ Mr. Davitashvili stated.
Georgia and the Georgian honey were successfully and widely promoted at the 45th Apimondia Congress in Istanbul, Turkey, by the Ajarian Beekeeping Business Association (ABBA). The Jara honey along with Chestnut and Acacia honey were the most popular among the honey importers from all over the world. Markets for Georgian honey seems diverse based on the high interest from countries such as France, Germany, Kuwait, Iran, Turkey and India among others. More to be found in the TV slot prepared by Ajara TV
