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!
Manana Dumbadze was one of fifteen guesthouse owners from Keda, Shuakhevi and Khulo invited to attend an educational seminar hosted by the Goderdzi Alpine Garden (GAG) on September 18th on how biodiversity, conversation and Jara beekeeping can be used for business promotion and attracting more tourists.
‘The seminar was interesting and will motivate me to generate new ideas. I am arranging a garden in front of my house and I received information about plants. The GAG promised to help me to do it. I have beehives but I’m thinking of switching to Jara beekeeping, because it will be more interesting to our visitors, as it carries a traditional value.’ Manana Dumbadze, a guesthouse owner.
The seminar participants agreed on further coordination and information dissemination among others.
‘I am planning to have a Jara apiary from the next year. I will also include the GAG on our tour. I have a small cottage on the Goderdzi Pass, and I am planning to have visitors there.’ Nodar Shervashidze, a guesthouse owner.
Representatives of the Batumi Botanical Garden (BBG) and specialists from the BBG’s Local Flora and Conservation Department will continue educational seminars for teachers and school students in the upcoming year. The GAG is developing its role in wild flora conservation and eco-education with seminars and a beekeeping area, aiming to publicize the value conservation and traditional Jara beekeeping can have for sustainable local development and teach people interested in taking it up.
Officially opened in July, 2020, the GAG has already attracted sixteen thousand visitors since the opening, making it the prominent tourist destination in mountainous Ajara.
Emili is a young girl who has become an internet sensation in Georgia. Her YouTube channels Emili TV and Emili Family TV reach 708,000 subscribers. She regularly shares educational and entertainment content, including films about products she likes, many parents and their children watch her shows and follow her recommendations. Through ALCP facilitation, she (and her production team) decided to ‘investigate’ the Georgian Milk Mark.
The Georgian Milk Mark (GMM) films (on Emili TV and Emili Family TV) have reached 360,000 views just in two weeks.
Traditional Jara beekeeping has reached a new audience through a report on Al Jazeera English and its Youtube Channel, with an audience of forty million in Gulf States alone. The report was developed in Ajara with assistance of the Jara Beekeepers Association (JBA), telling stories of female and male Jara beekeepers, emphasizing commercialization and future opportunities for Jara honey.
The Prime Minister of Georgia, the Chairman of the Ajara Autonomous Republic, the Mayor of Tbilisi City, and other government officials visited the Agro-Keda factory in Keda to see the honey production and packaging process, along with other Nena production. The honey showcase, Jara hive, different types of Nena produced honey for tasting, and honey catalogues were their favorites. The Prime Minister asked questions related to honey export and took the catalogues to find more details about honey.
Located in Khulo, Ajara at 2000m above sea level, the Goderdzi Alpine Garden is now open. On Thursday, two hundred guests from government, municipal agencies, non-governmental and international organizations, travel agencies, scientists and botanists attended the opening ceremony.
Huge government support was there.
‘Opening of this natural monument will help Khulo municipality with further growth. We are working on the development of the local infrastructure. Those works together are increasing income for locals. My Special thanks to the Swiss Development and Cooperation Agency, Adjaristskalli LLC, and other organizations for making this project happen.’ – Tornike Rijvadze, the Chairman of the Ajara Autonomous Republic.
The Swiss Ambassador highlighted how natural treasure can positively impact local habitants, the means of quality-oriented tourism.
‘From the very beginning, we acknowledged the importance of the Goderdzi Alpine Garden not only for the region but also for Georgia at large. It is the initiative where eco-friendly tourism and agriculture are forcing each other for the benefit of rural settlers of the mountainous Ajara. It is also helping market with locally produced cheese, wild Jara honey and other local product.’ – Patric Franzen, Ambassador Extraordinary and Plenipotentiary of Switzerland to Georgia.
The Goderdzi Alpine Garden is an example of public-private cooperation.
‘Important thing about this is the sharing. We had a vision, we went to the Batumi Botanical Garden and shared this vision of taking this beauty and using it in the countryside so that all the people living here can also enjoy this vision. The opening of this garden is a symbol of positivity in a very negative time globally, a symbol of people getting together for something good.’ – Helen Bradbury, the ALCP Team Leader.
The main backer of the Goderdzi Alpine Garden is the Swiss Agency for Development and Cooperation (SDC) through the Mercy Corps Georgia implemented Alliances Caucasus Programme (ALCP). The project is supported by the Hydropower Company Adjaristskali and the Government of Ajara Autonomous Republic. The garden is being developed with the backstopping of Munich and Lautaret Botanic Gardens.
Follow the links on the opening of the Goderdzi Alpine Garden: Ajara TV, Imedi TV, Ajara Government FB, Ajara Tourism Department FB.
Last week, Tsivis Kveli Ltd in Kakheti distributed 250 kg different types of GMM cheese through the distribution company Georgian Imports in hypermarkets and cafés throughout Chicago. The dairy is now planning the next export in a few weeks.
