DETAILS RELEASED OF GEORGIAN GOVERNMENT’S CAMPAIGN TO STRANGLE ANAKLIA PORT PROJECT

Published in Economics
Wednesday, 09 September 2020 15:40

Ruling Georgian Dream Party Reversed its Support for Vital Project,

Wiping Out Economic Benefits for Georgia

TBILISI, GEORGIA, 9 September, 2020 – The Anaklia Development Consortium (ADC), the company originally selected by the Government of Georgia to develop the strategic Anaklia Port Project, today shared additional details of the Government’s campaign, directed by the ruling Georgian Dream party, to undermine the project by dissuading potential project investors, lenders, contractors and suppliers from joining the project in order to kill it.

The following statement is issued on behalf of the ADC Supervisory Board:

All infrastructure projects of such scale require government support; namely the encouragement of lenders and investors, the assistance in permitting, regulatory approvals and a favorable tax regime, and providing any ancillary support; in this instance, the provision of land and the construction of road and rail infrastructure.  For a government to actually oppose an infrastructure project that it had itself approved is highly unusual in the global economy. 

“The Georgian Government’s campaign to strangle ADC’s ability to develop the Anaklia Port Project represents a self-inflicted wound for itself and considerable injury to Georgia’s economy and its role in the region.

“Taken together, the Georgian Government's specific actions are part of a deliberate and well-orchestrated campaign to destroy a project which the Government itself originally sponsored and endorsed, but subsequently chose to destroy as a result of what appear to be the political and economic self-interests of the Georgian Dream Party and its principals.

“The Government manufactured all sorts of excuses for not wanting to see various investors, lenders and partners involved in the project, but the Government really only had one purpose:  to choke the project to death by scaring away everybody who might have an interest in supporting it.

“Also, is it beyond coincidence that government ministers – including two Prime Ministers -- who voiced support for the project or otherwise expressed concern about the growing controversy with the project were tendering their resignations shortly after such comments were made?  

“The damage to Georgia caused by the Government goes well beyond the potential loss of the Anaklia Port and the associated Special Economic Zone.  The conduct of the Government is scaring away investors at a time when Georgia cannot afford to lose any more foreign investment.  According to the National Statistics Office of Georgia, the amount of foreign direct investment in Georgia has fallen from nearly US$  2 billion in 2017 to just over US$ 1.3 billion in 2019, and in the first quarter of 2020, stood at only US$ 171.8 million[1] - a catastrophic decrease even before the Covid crisis began to take effect.  As Retired U.S. Lt. Gen. Ben Hodges of the Center for European Policy Analysis said, ‘the government only has itself to blame.’[2]

Some examples of the Government’s efforts to strangle ADC and the Anaklia Port Project include:

November, 2017

  • Georgian Dream party leader Bidzina Ivanishvili requested to meet with ADC to discuss the Anaklia Port Project and asserted that the expansion of Poti Port could achieve the same objectives of the Anaklia Port at a far lower cost. 

June 2018

  • During a June 12 meeting of the Georgian Dream party, attended by more than 100 party officials, Party Leader Bidzina Ivanishvili personally blamed Prime Minister Giorgi Kvirikashvili for his actions in support of the Anaklia project and for having close ties to ADC investor Mamuka Khazaradze.  Mr. Kvirikashvili resigned the day after that meeting.

October 2018

  • In February 2019 ADC learned that during an October 2018 meeting with senior U.S. State Department officials in Tbilisi, Mr. Giorgi Gakharia  (then Minister of Interior) advised the U.S. officials that the Anaklia Port project was not in Georgia’s interests.

January 2019

  • SSA Marine, which was selected as the Anaklia Port operator and was a potential investor, alerted ADC of its concerns about what seemed to be the Government’s support of an expansion of the Poti Port.  (Following detailed studies sponsored by the Government back in 2013-14, it had been determined that Poti Port could never meet Georgia’s needs for a Deepwater Port, which is why the government itself selected Anaklia for development at that time.  The Government’s subsequent expressions of support for expansion at Poti was a clear signal to the lending and investment community that the Government was no longer supportive of Anaklia.)

February 2019

  • A sovereign European development bank advised ADC that it had decided against supporting the project because of the negative actions of the Georgian Government, and the possible shift of support to the Poti Port.

February 2019

  • Another sovereign European development bank advised ADC that it was withdrawing its support because one of its counterparts had just done so (above) due to the state’s apparent shift of support from Anaklia to Poti.

March 2019

  • It has been reported that Infrastructure Minister Maya Tskitishvili, in ministerial hearings before Parliament, undermined SSA Marine as a potential investor and as the port operator, claiming the company lacked experience and financial capacity.  These assertions were not true. In the process of her speech, the minister also breached legal obligations of confidentiality that were associated with the investment agreement.

April 2019

  • SSA Marine advised ADC that it was suspending its activities related to the Anaklia Port project.

April 2019

  • Mr. Giorgi Kobulia, Minister of Economy and Sustainable Development, told “Forbes Week” that the negative public discussions and media reports of the Anaklia project were having a negative impact on the business climate within Georgia.  He subsequently resigned within days of the interview.

May 2019

  • A major U.S. private equity firm which was in advanced negotiations with ADC to join the project revealed to ADC that Government officials warned the firm to stay away from the project.

June 2019

  • Prime Minister Mamuka Bakhtadze, in a trade visit to the U.S., met separately with SSA Marine, the leadership of the U.S. private equity firm that were interested in investing in the project, and with U.S. Secretary of State Mike Pompeo in Washington, D.C.  Secretary Pompeo expressed support for the Anaklia project with the prime minister standing next to him, saying it would “strengthen Georgia’s ties with free economies and not allow Georgia to be under the economic influence of Russia or China.”  Upon his return to Georgia, Mr. Bakhtadze resigned, and this again put the project in unchartered waters.

September 2019

  • At a meeting in Tbilisi, a large Hong Kong-based private equity group with significant Central Asian transportation synergies that was considering joining the project was told bluntly by Infrastructure Minister Tskitishvili that the Government did not desire their participation in the project.  At this same meeting Ms. Tskitishvili reaffirmed the Government’s seeming opposition to SSA Marine’s involvement in the project.

September 2019

  • Giorgi Volski, Vice Speaker of Parliament, falsely claimed that the Hong Kong private equity group mentioned above is a “Russian” company,  with the intention either of disparaging it or sowing further confusion about the government's position in respect of the project.

September 2019

  • In a meeting between Prime Minister Gakharia and an Anaklia Supervisory Board member, Mr. Gakharia stated that “things had to get quiet” before he could reassure the major potential U.S. investor of the state’s support for the Anaklia Project, which the board member understood to be a condition that ADC and Mr. Khazaradze stop criticizing the government publicly on its opposition to the Anaklia Project, and the government would stop criticizing ADC.  
  • Also, the Supervisory Board was promised a letter of support to a U.S. investor from the highest levels of the Government, but this never materialized, even though ADC did comply with the Government’s request.

September 2019

  • A delegation from the U.S. (in Tbilisi to participate in the 5th annual Tbilisi International Conference sponsored by the McCain Institute) met with new Prime Minister Giorgi Gakharia, and subsequently with Mamuka Khazaradze.  Representatives of the delegation told Mr. Khazaradze that Prime Minister Gakharia told them the Anaklia project was not commercially viable when this was patently not the case.

October 2019:

  • Fadi Asly, chairman of the International Chamber of Commerce in Georgia, is quoted in the media saying, “No one will invest in Anaklia project as long as Bidzina Ivanishvili wants to destroy it.”

Taken together, these are only a selection of the instances where the Government of Georgia actively undermined the project in an effort to prevent ADC from developing the project.  ADC intends to present evidence during the upcoming arbitration proceedings to demonstrate the degree to which the Government took such steps.

Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com

 

Read 100 times

Related items

  • GEORGIAN GOVERNMENT RESPONSIBLE FOR ENVIRONMENTAL AND HEALTH RISKS AT ANAKLIA PORT SITE

    Government Has Neglected Management of Site After Unlawfully Seizing The Property

    TBILISI, GEORGIA, 15 October, 2020 – Residents of Anaklia and the surrounding area face health and environmental risks due to the Georgian Government’s neglect of the site intended for the now-suspended Anaklia Deepwater Sea Port, according to the Anaklia Development Consortium (ADC), the company originally selected by the Government of Georgia to develop the strategic Anaklia Port Project.

    As part of its project development efforts, ADC prepared a  comprehensive Environmental and Social Impact Assessment (ESIA) in accordance with policies of the International Financial Institutions (EBRD, ADB, AIIB, OPIC), which included rigorous environmental and social protection steps that satisfied not only all Georgian legal requirements, but also best international standards.

    In 2018 ADC carried out considerable site preparation work, including a 110-hectare area where soil was removed and cleared of waste, including old structures. ADC received all necessary permits and authorizations from the Government prior to commencing this work.

    Even though it was becoming apparent in 2019 that the Government was actively trying to prevent the Anaklia Project from proceeding, ADC  persevered in making every effort to continue project construction while protecting the environment from dust emissions.  In fact, ADC had prepared for Government approval a thorough plan for managing this issue, with the cost to be carried by ADC.

    The Government unlawfully seized possession of the site in February 2020 following its wrongful termination of the investment agreement with ADC.  Because of this expropriation, ADC was prohibited from further access to the site and thus was never able to carry out the plan it had designed.  Sole responsibility for managing the property transferred to the Government.

    However, left barren, the site is now generating considerable volumes of dust, causing damage to the environment as well as threatening nearby residents with potentially serious respiratory health problems.  Even though the Government understood the steps it should take to manage these environmental and health risks, it took no action, leading to the situation which exists today.

    “The Government of Georgia has been acting recklessly and irresponsibly by unlawfully terminating the investment agreement and ignoring the very real health and environmental problems it created when it failed to follow the plans that ADC had proposed for managing  this site or taking any other remediation actions,” according to a statement from ADC.  “The Government is putting peoples’ health at risk and harming the environment by allowing this site to deteriorate.  ADC calls upon the Government to act immediately in the interest of the people of the region. By neglecting to manage this property and failing to assume responsibility for the health and environmental harm it is creating, it would appear the Government has no interest in any future development of a modern port at Anaklia, belying the many promises it has made. The Government is walking away from its responsibilities.”

    Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com

  • Anaklia Development Consortium Statement Regarding Government’s Own Admission That Any New Port Tender will Likely Fail

    TBILISI, GEORGIA, 8 October, 2020 – The Anaklia Development Consortium (ADC), the company originally
    selected by the Government of Georgia to develop the strategic Anaklia Port Project, today issued the
    following statement regarding the 2021 State Budget: 

    “In the proposed 2021 State Budget, the Georgian Government admits that a new port tender is unlikely  to succeed. This is because no credible investor is likely to participate in circumstances where arbitration  claims are ongoing about the Government's treatment of ADC and international investor Mr. Bob Meijer.  Hidden on pages 517‐5181 of the proposed budget is the following passage regarding the intended new  tender for an Anaklia Port Project:  “შესაძლო  რისკები  ‐  არსებულ მოცემულობის ფარგლებში,  შესაძლო საარბიტრაჟო დავის გამო, შესაძლებელია ვერ შეირჩეს მაღალირეპუტაციისა და გამოცდილების ინვესტორი. ასევე სხვა გაუთვალისწინებელი გარემოებები”  (“Potential  risks – as  it  currently  stands,  due  to  the  potential  arbitration  dispute,  an  investor  of  high  reputation and experience may not be selected. Also, other unforeseen circumstances.”)  This  declaration  acknowledged  that  the  existing  arbitration  is  a  substantial  obstacle for  the  Georgian  Government’s plans and any hoped‐for deep‐water port project at Anaklia.  As the arbitration arises out  of  the government’s own misconduct, it has only itself  to blame for undermining  this vital project for  Georgia’s future growth and development.  1 The full set of documents submitted by the Government to the Parliament of Georgia together with the draft  Law on 2021 State Budget are available at:   http://parliament.ge/ge/ajax/downloadFile/142460/07‐2.525_ბიუჯეტი_2021_    Anaklia Development Consortium  6 Marjanishvili Street  Tbilisi 0102, Georgia  +995 32 2 95 99 10  This email address is being protected from spambots. You need JavaScript enabled to view it.   http:/anakliadevelopment.com  2 By  its  own admission  the Government  does  not  believe any  legitimate  bidders will emerge for a  port  project at Anaklia, condemning any hope that Georgia will see the jobs and economic growth that would  come with  such  a  strategic  project.  All  the  blame for  this  situation  rests  at  the feet  of  the  Georgian  Government.  Not only will Georgia not see a new port project at Anaklia any time into the future,  the likely outcome is  negative  decisions  by  respected  international  arbitration  tribunals  against  the  Government,  thereby  creating the obligation to pay substantial damages and also creating economic risk for the country given  the damage the government will have caused to Georgia’s standing with international investors.  The investors of the Anaklia Development Consortium remain ready to restart this project, inviting new  investors and partners so that Georgia can realize the riches this project offers.  All that is necessary is for  Georgian Dream and this Government to put aside personal interests and act in the best interest of the  people of Georgia.”  Further details of the Anaklia Port project and ADC can be found at http://anakliadevelopment.com 

  • Statement by Georgian Prime Minister Giorgi Gakharia

    Another military confrontation between Azerbaijan and Armenia has created a grave situation. There are heavy casualties and, unfortunately, the cessation of hostilities and the resumption of dialogue has not been possible thus far.

    We all understand that further escalation of the situation will have an extremely negative impact on the security of the entire region. We once again call on the OSCE Minsk Group co-chairs and international actors to make the most of the available opportunities to end the escalation and resume dialogue. As you know, our country has good neighborly relations with both countries, Azerbaijan and Armenia.

    Historically, our Azerbaijani and Armenian citizens living in Georgia have always played a great role in the development and strengthening of our country, as well as the entire region. At the same time, their peaceful coexistence is a good example demonstrating that Georgians, Armenians, and Azerbaijanis have the potential to turn the entire South Caucasus into an area of peace and development.

    It is our common interest for peace to be established in the region as quickly as possible. Georgia is ready to facilitate this process in any way, including by hosting a meeting of representatives of the sides of the conflict in Tbilisi for the purpose of holding a dialogue.

    Press Service of the Government Administration

  • Georgian PM Gakharia and European Commissioner Varhelyi Sign Financing Agreements Worth 129 Million EUR for COVID Recovery

    Georgian Prime Minister Giorgi Gakharia held a meeting with European Commissioner for Neighborhood and Enlargement Oliver Varhelyi in Brussels.

    The meeting focused on the challenges posed by the global COVID-19 pandemic. The importance of the assistance provided by the European Union to Georgia was stressed.

    The head of the Government of Georgia and European Commissioner Varhelyi signed two financing agreements with a total budget of 129 million EUR, which aim to improve the socioeconomic situation in Georgia as a result of the spread of the coronavirus. Giorgi Gakharia stated that the signing of the COVID-19 Resilience Contract and the Integrated Territorial Development documents within the framework of the visit is yet another confirmation of the special partnership between Tbilisi and Brussels.

    The European commissioner emphasized the strengthening of transport and communication links, economic recovery, and development. The Prime Minister paid special attention to the importance of developing physical transport and communication links with the European Union in political and economic, as well as security directions, noting that the majority of the population of Georgia supports Georgia's European and Euro-Atlantic integration. Georgia's important role in the wider Black Sea Region was also stressed.
    During the meeting, the Prime Minister spoke about Georgia's reforms and democratic development in accordance with European standards, in terms of which the country is a regional leader. Giorgi Gakharia underscored the recently implemented electoral reform, as a result of which the country has moved to a new stage of democratic development.

    The parties discussed the difficult situation and instances of violation of human rights in the occupied territories of Georgia.
    While discussing the occupation, the Prime Minister noted that 20 percent of not just the country's territories, but also its development and opportunities are under occupation. Giorgi Gakharia thanked the European Union for its strong support for the country's territorial integrity and sovereignty.
    The discussion also touched on the importance of implementing new initiatives within the framework of the Eastern Partnership and focusing more on bilateral relations with the associated partners. It was noted that Georgia is a leader country in the Eastern Partnership.
    The Prime Minister also underscored the progress made by the state in terms of the reform of civil service, stating that a politically neutral civil service has been established in the country and that corresponding steps have been taken at the legislative level as well, which is one of the key components of good governance.

    The meeting, which was held at the European Commission, was attended by Georgian Foreign Affairs Minister Davit Zalkaliani, Head of Georgian Mission to the European Union and Ambassador of Georgia to the Kingdom of Belgium and Luxembourg Nata Sabanadze, and Head of Government Administration Natia Mezvrishvili.

    Press Center of the Government of Georgia

  • ANAKLIA DEVELOPMENT CONSORTIUM AND PRINCIPAL INTERNATIONAL INVESTOR FILE ARBITRATION CLAIMS AGAINST GEORGIA

    Claims Seek Substantial Damages Caused by Government’s Campaign to Undermine Port Project
    that would have created Economic Prosperity for Georgia
    TBILISI, GEORGIA, 30 July, 2020 – The Anaklia Development Consortium (ADC) and Mr. Bob Meijer, one of its
    principal investors, on 29 July filed separate arbitration claims against Georgia in relation to their rights in the
    Anaklia Port Project. Together the two claims seek to recover the value of ADC's and Mr. Meijer’s rights in the
    Project. The value of those rights is substantial, in excess of US$ 1.0 billion, representing ADC's and Mr. Meijer's
    losses directly resulting from the Georgian Government’s campaign to undermine the Anaklia Port Project.
    ADC was awarded the Anaklia Port Project in 2016. The Project (together with an associated Special Economic
    Zone) is intended to make Georgia a strategic hub for regional trade between Asia and Europe, creating
    thousands of jobs and generating substantial taxes and revenue for the government, and revitalize the Georgian
    economy at a time when the nation most needs an economic boost. There is no other port facility or location
    along the Black Sea in Georgia other than Anaklia that is capable of fulfilling the economic promise of a worldclass deep water port.
    The Anaklia Development Consortium, which was established to develop the Anaklia Port Project, is comprised
    of both Georgian and international investors. ADC is bringing its claim in the International Court of Arbitration
    of the International Chamber of Commerce (ICC). Mr. Meijer, a prominent Dutch businessman with a long
    record of successful investments in Georgia and worldwide, is bringing his claim in the International Centre for
    Settlement of Investment Disputes (ICSID), under the Georgia-Netherlands Bilateral Investment Treaty.
    Following a two-year campaign by the current Government and the ruling Georgian Dream Party to block ADC’s
    efforts to succeed with the Project, in January 2020 the Government unlawfully terminated the agreement and,
    in the process, caused ADC and it investors to lose the full sum of their investments, denying them future profits
    and causing them to be damaged financially and reputationally.
    Even though the Government had originally awarded ADC the sole right to develop the Project following a
    competitive and transparent selection process, and even though it was understood that Government support
    was necessary for the success of the Project in order to enable ADC to attract international investors and
    financing, in fact the Government changed course and undertook an overt and covert campaign to ensure the
    Project could never succeed.
    Representatives of the Government on numerous occasions criticized the Project and its shareholders, publicly
    and in private meetings, telling potential investors and lenders that the Government did not wish them to
    Anaklia Development Consortium.
    participate, and making clear to U.S. government officials that the Project did not have the support of the
    Georgian government. This aggressive campaign against the Anaklia Port Project by the Government caused
    great damage to ADC and its investors.
    Among the illegal and unethical actions of the Government and the Georgian Dream party was the launching of
    a baseless money laundering criminal investigation against Mamuka Khazaradze and Badri Japaridze, two
    prominent and successful Georgia businessmen who are principal investors in the Project. The intention of the
    slanderous allegations against Messrs. Khazaradze and Japaridze was to discourage any investors or lenders
    from supporting the Project. Such support was necessary for the Project to proceed. Unfortunately the
    Government’s campaign succeeded, insofar as investors and lenders withdrew their interest and declined to
    participate in the Project without a clear statement of support by the Georgian Government. Both the Public
    Defender of Georgia and Transparency International Georgia subsequently found that the charges against
    Messrs. Khazaradze and Japaridze were without merit.
    The following statement from ADC reflects the views of ADC and Mr. Meijer:
    “The investors of the Anaklia Development Consortium continue to believe firmly that the Anaklia Port
    Project and Special Economic Zone should be allowed to proceed, and that the Project will create
    unequalled economic opportunity for Georgia. However, that success can only come with the active
    support of the Government, and we remain committed to finding a way to get this Project back on track.
    “In the meantime, ADC and its investors must protect their interests. While we have made every effort
    to engage with the Government to explore possible solutions, we have been rebuffed at every step.
    “In a patriotic gesture, ADC paused in its filing of these claims during the height of the Covid-19
    pandemic, so as not to burden the Government with any distractions as it fought to protect Georgians.
    “Regrettably, the Government is forcing this decision to commence arbitration, and the Government
    must bear the responsibility for its consequences.
    “The Government would have everyone believe that it terminated the investment agreement because
    ADC failed to meet certain obligations under the contract. In reality, the Government deliberately acted
    to ensure that ADC could not succeed with Project development. In this instance the Government abused
    its power because the ruling party and its leader decided the Project’s success was contrary to their own
    political and economic interests. In the process, the people of Georgia are victimized by the
    Government’s conduct.
    “The reversal of the Government’s support for the Anaklia Port Project and ADC, and its aggressive
    campaign to undermine the Project, ADC and its investors (driven at the behest of the Georgian Dream
    party and its leader, Bidzina Ivanishvili) seem to be driven by several motives but there are two obvious
    ones. First, it would appear that Mr. Ivanishvili may have a vested interest in the development of the
    free industrial zone connected to Poti Port. Second, it would seem that Mr. Ivanishvili and Georgian
    Dream are sensitive to pressure from Russia, which has made clear its opposition to a deep water port at
    Anaklia (which is very close to the de facto border with Russian-occupied Abkhazia) and the western
    support that would come with it.
    “By its campaign to undermine the Anaklia Port Project and force it into arbitration, the Government is
    damaging the Georgian economy. Beyond the matter of foregoing the economic benefits that the
    Anaklia Port and economic zone would generate or the unnecessary considerable financial liability, the
    Government is in effect discouraging international investors from pursuing any investments in
    Georgia, facilitating the further loss of jobs and revenues by the country and stalling the momentum for
    placing Georgia on the map as a regional trade hub between Asia and Western Europe.
    “Finally, the manner in which the Government has conducted itself in its attacks on ADC, its investors
    and the Project itself could be in violation of one of the conditions of the proposed U.S. government aid
    to Georgia, under which 15% of the aid is withheld until the U.S. Secretary of State can affirm that the
    Government of Georgia has been, according to the legislation, ‘protecting the rights of foreign
    businesses to operate free from harassment and to fully realize all due commercial and financial benefits
    resulting from investments made in Georgia.’
    “The responsibility for these consequences rests solely with the current Government and the ruling
    party.”
    NOTE: ADC and Mr. Meijer are represented by a team led by Mr. Andy Moody at Baker McKenzie in London and
    Ms. Ketevan Kvartskhava at BLC in Tbilisi.
    Further details can be found at http://anakliadevelopment.com

Business News

The capital budget proposed 1 800 000 will be saved

The capital budget proposed 1 800 000 will be saved

City government 2015 budget amendments. It was presented by Mayor David Narmania said the budget ame...

Railway station to be opened in Batumi

Railway station to be opened in Batumi

Construction of a railway station started many years ago but terminated shortly after will come to a...

Prime Minister meets with businesspersons in Kakheti

Prime Minister meets with businesspersons in Kakheti

Georgia’s Prime Minister Irakli Gharibashvili visited eastern Kakheti region within the framework of...

The Official Value of Dollar – 2.2533 GELS

The Official Value of Dollar – 2.2533 GELS

The official value of US Dollar reached 2.2533 GEL (Lari). National Bank of Georgia set the official...

MOST READ

« October 2020 »
Mon Tue Wed Thu Fri Sat Sun
      1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31  

About

The News Agency,
NEWSDAY.GE is
a part of STARVISION
Media Group.
It made its first
appearance on the Internet..More

 

Contact

NEWSDAY Ltd.
Lechkhumi street.43

Georgia,Tbilisi

Phone: (+995 32) 257 91 11
E-mail: avtandil@yahoo.com

 

 

 

Social Media