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!
The 45th Apimondia Congress 2017, the most significant event in beekeeping worldwide, will take place from 29th of September to 4th of October, in Istanbul, Turkey. For the first time in Apimondia’s hundred years of history, Georgia will be at this world forum, represented by the Ajarian Beekeeping Business Association (ABBA), exhibiting the different types of honey of its members and promoting Georgian honey and beekeeping.
It now has become a tradition of Batumi’s Summer to hold the sweetest festival of the year. The annual Honey Festival was held for the third time on August 12th on Batumi Boulevard. Up to 40 beekeepers from across Georgia who once again presented their honey and by products for the festival visitors. Honey themed entertainment activities for children, including face-painting, games; live music from folk ensembles and rock band were laid on, keeping the celebration spirit all day.
“I’m participating in the festival for the third time, as it helped me to get income and find new clients for honey. I think it is very important event in promotion of the beekeeping sector in Ajara, which is one of the leading honey producer regions” – Revaz Katamadze, the beekeeper from Kobuleti Municipality.
On 18th of July, six Women’s Rooms (WRs) of Ajara region have expanded their linkages by signing a Memorandum of Understanding (MOU) with the Ministry of Health and Social Affairs of Ajara Autonomous Republic. The Ministry will use the Women’s Rooms to reach the rural population though disseminating information and organizing meeting on the health-care programs implemented by the Ministry via WRs.
Shuakhevi municipality will have a Rehabilitation Center for the People with Disabilities soon to serve people with the special needs living in Shuakhevi, Khulo and Keda municipalities. The Government of Ajara Autonomous Republic has recently supported and financed the initiative with 196 000 Gel for its construction works.
4 months ago the municipality displayed the idea, which has been floating for years, on EEG Event for fundraising. The Deputy Gamgebeli of Shuakhevi municipality, Rusudan Shavadze, trained on the project writing, transferred the idea to the real project and the municipality was able to start attracting the funds for the implementation. After the EEG, the Association For Each Otherconducted the survey on the people with disabilities in the municipalities (Khulo, Shuakhevi, Keda) with the involvement of the local people; the Adjaristskali Georgia LLC expressed interest to make the contribution to the project; other organizations, like USAID and Embassy of France also are ready to contribute with providing training for inclusive education specialists, who will teach in the center. The contribution from each side is under discussion and will be known within month.
On 7th of July, a Memorandum of Understanding (MOU) was signed between the Women’s Rooms and the Gender Equality Council of Supreme Council of Ajara Autonomous Republic. According to the MOU, the Council will work with municipalities through the WRs to raise public awareness of gender and increase women’s participation in the decision-making processes. The Gamgebelis and other municipality representatives attended the ceremony and supported the idea.
“The Women’s Rooms have become one of the main powers in ensuring gender equality in the municipalities. The MOU aims to continue and strengthen our cooperation with the WRs and fulfill the mission of increasing women’s participation in the public sector”- Nino Chkhetia, the Chairwoman of the Gender Equality Council.
On 16th of June, the premiere of Jara was held in Batumi for the local governmental and non-governmental sector, funded and organized by the Ministry of Education, Culture and Sport of Ajara Autonomous Republic. The decision-makers of the region attended the screening: the Chairman of the Ajara Autonomous Republic, the local Ministers of Agriculture, Education and Health; the Mayor of Batumi, the representatives of Department of Tourism and Resorts of Ajara, municipalities and international organizations.
The film was received with great interest and applauses. Two main actors of the movie, who are also local residents and beekeepers themselves, were gifted with the modern honey extractor by the Minister of Agriculture.
