JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in Georgia Progress in 2012 and recommendations for action Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS European Neighbourhood Policy: Working towards a Stronger Partnership
Date: 2013-03-20
Institutions: European Commission, High Representative of the Union
Subjects: European neighbourhood policy, Georgia, democratisation, economic integration, economic reform, educational reform, institutional reform, political cooperation, political reform, sustainable development, trade cooperation

EUROPEAN 
COMMISSION 

HIGH REPRESENTATIVE OF THE
EUROPEAN UNION FOR
FOREIGN AFFAIRS AND
SECURITY POLICY

Brussels, 20.3.2013  
SWD(2013) 90 final 

JOINT STAFF WORKING DOCUMENT 

Implementation of the European Neighbourhood Policy in Georgia 
Progress in 2012 and recommendations for action 

Accompanying the document 

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

European Neighbourhood Policy: Working towards a Stronger Partnership 

{JOIN(2013) 4 final} 
{SWD(2013) 79 final} 
{SWD(2013) 80 final} 
{SWD(2013) 81 final} 
{SWD(2013) 82 final} 
{SWD(2013) 83 final} 
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{SWD(2013) 85 final} 
{SWD(2013) 86 final} 
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1.  

OVERALL ASSESSMENT AND RECOMMENDATIONS 

This  document  reports  on  progress  made  in  implementing  of  the  EU-Georgia  European 
Neighbourhood  Policy  (ENP)  Action  Plan  between  1  January  and  31  December  2012. 
Developments outside this period are also considered when relevant. It is not intended to be a 
general review of the political and economic situation in Georgia. For information on regional 
and  multilateral  sector  processes,  please  refer  to  the  Eastern  Partnership  implementation 
report. 

There  was  intense  political  dialogue  with  the  Georgian  Government  in  2012,  including  a 
number of high-level meetings: Prime Minister Ivanishvili chose Brussels for his first foreign 
visit in November, President Saakashvili visited Brussels on several occasions, and a number 
of  high-level  EU  visits  to  Georgia  took  place.  These  included  visits  by  President  of  the 
European Council Herman Van Rompuy in July, Commissioner Štefan Füle in October and 
High  Representative  Foreign  Affairs  and  Security  Policy/Vice-President  (HR/VP)  Catherine 
Ashton in November. Finally, the Second Informal Eastern Partnership Dialogue was held in 
Tbilisi on 12-13 February 2013. 

The  October  parliamentary  elections  marked  the  first  democratic  transfer  of  power  in  the 
country’s history. The elections were widely recognised by election observation organisations 
as the most free and fair ever in Georgia. Their outcome brought with it the challenge new to 
Georgia  of  cohabitation  between  the  new  parliamentary  majority  and  the  Government  it 
supports  on  the  one  hand  and  the  President  on  the  other.  So  far,  cohabitation  has  been 
particularly  tense  and  no  agreement  has  been  found  yet  between  the  majority  and  the 
opposition  in  the  Parliament  on  basic  constitutional  changes  or  partial  amnesty  for  former 
officials proposed by the former. The elections themselves were held against the backdrop of 
a  very  tense,  polarised  pre-electoral  environment  with  some  instances  of  violence.  
Complaints  were  made  during  the  campaign  about  the  illegal  use  of  government 
administrative resources and private financial assets.  The complaints tended to overshadow 
discussion on political platforms and programmes. These shortcomings need to be addressed 
before the presidential elections of 2013. 

The EU remained committed to and continued to fully support Georgia’s territorial integrity 
and sovereignty  and  the  peaceful resolution of the conflicts  in Georgia through the work of 
the  EU’s  Special  Representative  (EUSR)  for  the  South  Caucasus  and  the  Crisis  in  Georgia, 
and  the  EU  Monitoring  Mission  (EUMM)  in  Georgia.  Georgia  continued  to  implement  its 
strategy  for  engagement  without,  however,  reviewing  restrictive  aspects  of  the  law  on 
occupied territories. Following the change of government, there are some encouraging signs 
of  possibly  more  effective  engagement  with  the  breakaway  territories,  and  a  more  relaxed 
implementation of the Law on Occupied Territories. 

Negotiations  on  an  EU-Georgia  Association  Agreement, 
including  a  Deep  and 
Comprehensive Free Trade Area (DCFTA), made significant headway during the year. As a 
result  of  progress  on  reforms  for  deep  democracy  and  respect  of  human  rights,  Georgia 
benefitted  from  an  additional  allocation  of  EUR  22  million  under  the  Eastern  Partnership 
Integration and Cooperation Programme (EaPIC) in 2012. In December, the EU and Georgia 
launched  negotiations  on  a  protocol  to  the Partnership  and  Cooperation  Agreement  on  the 
general principles for the participation of Georgia in EU programmes. 

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Georgia also made significant progress in implementing the visa facilitation and readmission 
agreements, and continued to implement reforms in the areas related to mobility in a secure 
environment.  The EU launched a visa dialogue with Georgia in June, and started preparing a 
Visa  Liberalisation  Action  Plan,  which  was  formally  handed  over  to  Georgia  by 
Commissioner Malmström on 25 February 2013. 

While Georgia continued to make progress in fighting corruption, more still needs to be done 
to  prevent,  detect  and  tackle  elite  corruption.  There  was  an  improvement  in  terms  of  the 
freedom of association and assembly, with a step back when protesters assaulted opposition 
lawmakers  on  8  February  2013  outside  the  venue  for  the  President’s  annual  address  to  the 
Parliament. Media access was improved under “must-carry/must offer” provisions during the 
pre-election  period,  although  media  sector  continued  to  suffer  from  undue  political 
interference. 

The  executive  remained  the  dominant  governing  force.  Parliamentary  oversight  remained 
weak and concerns persisted about insufficient independence of the judiciary, though the new 
government  has  voiced  the  intention  to  improve  the  institutional  checks  and  balances  as  a 
priority. The security and law enforcement system came under intense criticism following the 
release  in  September  of  videos  showing  prison  inmates  being  tortured  and  humiliated.  The 
national  preventive  mechanism  under  the  Optional  Protocol  to  the  UN  Convention  against 
Torture  should  be  further  strengthened.  Previous  cases  of  the  excessive  use  of  force  by  law 
enforcement agencies were not brought to court. Although the large prison population started 
to  decrease  by  the  end  of  the  year1,  the  excessive  use  of  administrative  detention  and  plea 
bargaining remained a concern. After the change in government, a number of initiatives were 
launched to address these issues. 

Georgia’s economic growth was strong in the first three quarters of 2012, benefiting from a 
generally  favourable  investment  climate,  improving  consumer  confidence  and  an  expanding 
tourist sector. Growing foreign exchange reserves, donor financing and an IMF precautionary 
programme should mitigate some external risks. The level of economic growth contrasts with 
high structural unemployment however. 

Georgia acted on most of the key recommendations in the last year's ENP progress report. It 
ensured  broadly  free  and  fair  parliamentary  elections.  It  also  strengthened  the  freedom  of 
expression and opinion; continued to reform the justice system and advanced sectoral reforms 
and  regulatory  approximation  to  the  EU  acquis.  It  actively  participated  in  the  Geneva 
discussions  and  took  measures  to  improve  the  living  conditions  of  internally  displaced 
persons  (IDPs),  with  the  support  of  the  EU;  it  also  renwewed  its  commitment  to  a  genuine 
engagement  with  the  breakaway  regions.    Progress  also  needs  to  be  made  on  the  remaining 
key  recommendations.  On  the  basis  of  this  year’s  report  and  with  a  view  to  sustained 
implementation of the ENP Action Plan in 20132, Georgia is invited to: 

•  Address  shortcomings  in  the  electoral  law  as  identified  by  the  OSCE  Office  for 
Democratic  Institutions  and  Human  Rights  (ODIHR).ahead  of  the  2013  Presidential 
election and 2014 local elections. 

•  Ensure  respect  for  the  roles  of  the  Prime  Minister  and  President  under  the  constitution; 
ensure  that  constitutional  amendments,  if  contemplated,  are  subject  to  comprehensive 

1 A decrease of over 15% from December 2011 to December 2012. 
2 The Action Plan should be replaced by the Association Agenda in the course of 2013. 

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consultation domestically and with the Council of Europe’s Venice Commission to ensure 
that they stand the test of time. 

•  Reform  the  justice  system  to  ensure  the  full  independence  of  the  judiciary,  bringing 
criminal justice policies and practices into line with Council of Europe standards; revise 
rules  on  administrative  detention  in  compliance  with  fair  trial  norms;  and  take  the 
recommendations of the Public Defender’s Office into account in policy-making. 

•  Ensure  that  criminal  prosecutions  are  conducted  in  a  transparent  and  impartial  manner, 

free of political motivation, in order to avoid any perception of selective justice. 

• 

Increase the accountability and democratic oversight of law enforcement agencies. 

•  Conduct a thorough, transparent, independent investigation into the use of torture and ill 
treatment in the penitentiary system; implement structural reforms to prevent future abuse; 
ensure effective internal and external monitoring of the penitentiary system for the early 
detection and prevention of abuse and ill-treatment. 

•  Maintain  and  improve  Georgia’s  constructive  participation  in  the  Geneva  International 

Discussions. 

•  Enhance  Georgia’s  engagement  policy  towards  the  breakaway  regions  and  improve 
reconciliation/conflict  resolution  by  finding  ways  to  cooperate  with  the  de  facto 
authorities providing financial resources for engagement; take pragmatic and constructive 
steps  (less  focused  on  form  and  more  on  content)  to  encourage  trade,  travel  and 
investment across the administrative boundary line; review the law on occupied territories. 

•  Continue to strengthen media pluralism and independence, and the freedom of expression 
and opinion; implement the law on transparency of media ownership; formally extend the 
duration of the 'must-carry/must-offer' principle. 

•  Continue  and 

intensify  dialogue  and  partnership  with 

the  International  Labour 
Organisation  (ILO),  and  build  on  specific  co-operation  with  the  ILO,  the  business 
community  and  trade  unions  in  preparing  amendments  to  the  labour  code,  leading  to 
improvements in labour rights and enhanced social dialogue. 

•  Adopt comprehensive anti-discrimination legislation; ensure that the rights of minorities, 

including religious minorities, are respected. 

•  Continue  to  advance  sectoral  reforms  and  ensure  good  quality  approximation  to  the  EU 
acquis  communitaire  in  order  to  pave  the  way  for  finalisation  of  the  Association 
Agreement, including the DCFTA. 

2. 

POLITICAL DIALOGUE AND REFORM 

Towards deep and sustainable democracy 

A  new  election  code  was  adopted  in  January,  incorporating  a  number  of  recommendations 
made by the OSCE/ODIHR and the Council of Europe Venice Commission.  In June, further 
amendments were made reflecting changes to constitution regarding citizenship requirements 

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for  electoral  participation,  as  well  as  reductions  in  age  limits  for  candidates.  These 
amendments also included 'must-carry/must-offer' provisions that gave at least an additional 
180,000  households,  or  almost  one  million  people  more,  extended  access  to  news.  While 
generally  welcomed  as  an  important  step  in  providing  greater  access  to  different  points  of 
view, the amendment attracted criticism for not extending the provision beyond the election 
period. 

In  March,  the  law  on  political  unions  of  citizens,  or  party  financing  was  amended.  The 
amendments reduced the number of entities affected by the law, and the amount of potential 
fines. However, between March and July, a large number of fines were imposed on the main 
opposition  parties,  giving  rise  to  criticism  for  selectivity,  for  the  perceived  lack  of 
proportionality  in  the  size  of  the  fines  and  for  the  lack  of  due  process,  from  the  Public 
Defender in May. 

The EU helped bolster the electoral process for the parliamentary elections with three specific 
capacity-building  projects  for  the  electoral  authority  and  for  civil  society.  The  ODIHR 
International  Election  Observation  Mission  including  the  representatives  of  the  European 
Parliament,  considered  that  the  elections  were  competitive  with  active  citizen  participation; 
and  that  freedoms  of  association,  assembly  and  expression  were  respected  overall. 
Nevertheless,  it  observed  that  certain  key  issues  remain  to  be  addressed,  including  the 
polarised pre-electoral environment with some instances of violence; the use of administrative 
resources and private financial assets in the campaign; the inequality of the vote; ambiguities, 
disproportionate sanctions and the biased application of the party financing law; the potential 
for  post-election  disqualifications;  pressure  on  district  election  commissions  as  they  tallied 
votes, and insufficient independence of the judiciary. 

While there have been some improvements due to the implementation of legislation on media 
transparency, the media sector still suffers from political and economic interference, pressure 
on journalists and self-censorship. Throughout the year, the Georgian authorities have faced 
criticism  from  media  rights  organisations  for  not  doing  enough  to  protect  journalists  from 
violence and obstruction. The main priorities in improving the media environment are better 
access  to  public  information  and  strengthened  media  pluralism,  improved  financial 
transparency and de-monopolisation of the advertising market. 

The  situation  improved  with  regard  to  the  freedom  of  association  and  the  freedom  of 
assembly.  This  was  partly  due  to  amendments  to  the  law  on  assembly  and  demonstrations.  
Most  demonstrations 
large 
demonstrations  during  the  tense  and  polarised  election  campaign.  Unfortunately,  on  8 
February  2013,  when  the  President  was  to  deliver  an  address  to  the  Parliament,  protesters 
verbally  and  physically  assaulted  opposition  lawmakers  and  politicians  in  front  of  the 
National Library, forcing the speech to be delivered from the presidential palace instead. 

in  an  orderly  atmosphere, 

including  very 

took  place 

Judicial  independence  remains  a  problem.  The  strongly  hierarchical  structure  of  the 
judiciary; the potential for inappropriate influence by the executive; the prosecution service’s 
lack  of  independence,  combined  with  insufficient  judicial  control  over  its  activities; 
insufficient transparency in the justice system: all these hamper the effective administration of 
justice.  The  Government  is  tackling  these  problems  with  proposed  legislative  amendments. 
The main problem is the high conviction rate, despite an increase in the number of acquittals 
compared with 2011. The high likelihood of being convicted if a case goes to trial has led to 
the  excessive  use  of  plea  bargaining.  In  the  first  nine  months  of  2012,  88%  of  all  criminal 
cases  were  resolved  through  plea  bargaining.  Severe  punishments  for  petty  crimes  and 

5 

 
 
consecutive sentencing are other reasons for the frequent use of plea bargaining. Polls show 
that  the  public  sees  plea  bargaining  as  an  unjust  way  of  getting  additional  money  for  the 
budget. This is an area in which the new Government is likely to implement reforms 

Shortly after the parliamentary elections, a number of local electoral commissions came under 
pressure  from  supporters  of  the  winning  party.  A  number  of  local  assemblies  around  the 
country  have  since  bowed  to  pressure  to  elect  new  heads  of  city  councils  and  local 
government  and  to  change  the  composition  of  local  administrations.  The  new  Government 
also began to implement its campaign promise to “restore justice” by launching a number of 
criminal prosecutions targeting members and officials of the previous Government. 

Reform of the criminal justice system continued- though slowed down in an electoral year-, 
with  substantial  EU  financial  support,  covering  the  liberalisation  of  criminal  policies,  the 
promotion  of  non-custodial  measures  and  the  rehabilitation  of  offenders,  particularly 
juveniles. In March, the parliament adopted legislative amendments addressing the temporary 
assignment  of  judges,  disciplinary  procedures,  and  the  transparency  of  disciplinary 
proceedings.  2012  saw  a  positive  evolution  in  the  relief  of  prison  congestion.  This  was 
considerably boosted by the Amnesty bill passed in January 2013 which led to the release of 
around 10,000 inmates, and significant reductions of prison terms for most of the rest. January 
2013  also  saw  the  release  of  190  individuals  following  their  controversial  recognition  as 
political prisoners. 

Georgia continued to make progress in fighting corruption. The EU has been supporting anti-
corruption measures in Georgia for many years, including through an ongoing programme to 
reform  public  finance  management.  Transparency  International  ranked  Georgia  51st
  of  176 
countries on its corruption index in 2012. A 2012 crime, security and corruption survey put 
Georgia at the same level as the Nordic countries. However, measures to prevent, detect and 
address elite corruption still need to be taken. 

Other human rights and fundamental freedoms  

The security and law enforcement system came under intense criticism following the release 
of videos in September showing prison inmates including juveniles being tortured. The videos 
triggered  mass  demonstrations  and  had  an  immediate  and  possibly  decisive  impact  on  the 
parliamentary  elections.  Prison  abuse  had been documented by  the Public Defender  and  the 
issue  raised  by  international  organisations  and  the  EU  over  an  extended  period,  without  a 
substantial official response. After the prisoner abuse scandal, the previous Government acted 
swifty:  the  Corrections  and  Interior  Ministers  resigned,  the  Public  Defender  was  appointed 
new  Minister  of  Corrections,  members  of  prison  staff  were  dismissed  and  19  people  were 
prosecuted.  A  thorough,  transparent,  independent  and  effective  investigation  and  long-  term 
structural  reforms  including  a  sound  mechanism  for  internally  and  externally  monitoring  of 
prisons, are still needed, to ensure that ill treatment is fully eradicated. It is encouraging that 
the new Government has expressed its readiness to tackle this as a priority. 

In November, the parliament launched a process of identifying political prisoners in Georgia. 
A draft amnesty law, including a list of political prisoners, was adopted on 21 December and 
was subsequently vetoed by the President. The President’s veto was overturned by parliament 
and,  on  13  January  2013,  190  individualswere  released  having  been  identified  as  political 
prisoners. This process suffered from a number of flaws: the parliament did not involve the 
judiciary, which might normally have been entrusted with the role of establishing whether the 
individuals concerned were political prisoners according to objective criteria and international 

6 

 
 
norms.  In  addition,  the  Council  of  Europe’s  Venice  Commission  was  not  consulted  prior  to 
the  adoption  of  the  amnesty  law,  despite  its  opinion  being  sought  by  the  Parliamentary 
Assembly  of  the  Council  of  Europe.  The  Venice  Commission’s  opinion  states  that  the 
amnesty law failed to comply with certain fundamental principles of the rule of law, namely 
legality  (including  transparency),  the  prohibition  of  arbitrariness,  non-discrimination  and 
equality before the law. 

Concerns  remain  over  the  excessive  use  of  administrative  detention  of  up  to  90  days  for 
minor breaches of the law, such as defying police orders. Legal guarantees for administrative 
detainees are lower than for pre-trial detainees under criminal charges. 

After a law giving political parties financial incentives to improve their gender balance was 
brought in, the number of women on party lists increased in 2012. Women remain generally 
under-represented in public life. With the exception of some activities that benefitted from the 
support  of  international  organizations,  the  State  Anti-Domestic  Violence  Council  has  not 
delivered significant results in 2012. 

The Children's Action Plan (2012-15) is being implemented, with the mandatory licensing of 
child-care institutions and with child-care standards being revised with UNICEF support. The 
reduction of the number of children in institutions over the last five years, and the increase of 
the  number  in  foster  care,  is  an  important  achievement  for  Georgia.  The  pace  of  child-care 
reforms should be maintained. Significant gaps remain in the state’s identification and proper 
monitoring  of  child  abuse  cases,  although  the  EU  is  supporting  a  pilot  project  in  this  area. 
More attention should also be paid to early childhood development. Since September 2012, all 
children up to the age of five benefit from a state medical insurance scheme that gives them 
better access to affordable healthcare. 

Labour  rights  have  been  identified  as  one  of  the  principal  challenges  faced  by  the  new 
Government. Previous reports have noted the absence of substantive social dialogue, and the 
perception  that  the  authorities  were  obstructing  the  activities  of  trade  unions  and  putting 
pressure on trade unionists. In December 2011, the Supreme Court had ruled that trade union 
activists are not protected by the current labour code. Despite this, amendments to labour laws 
in June 2012 did not address this issue, nor did they address the right to collective bargaining. 
Following the change of power, numerous work-related conflicts across the country erupted 
into  strikes.  However,  the  new  Government  has  made  a  commitment  to  bringing  labour 
legislation into line with international and European standards and to working closely with the 
ILO  and  other  partners  to  this  end.  ILO  was  closely  involved  in  preparing  revisions  of  the 
labour  code,  which  is  a  significant  positive  development.  Amendments  on  individual  and 
collective labour relationships, and dispute settlement are being prepared with a view to their 
adoption in Parliament during the spring 2013 session. The quality of social dialogue has also 
been  enhanced;  in  December  2012,  the  Parliament  adopted  a  law  institutionalising  the 
Tripartite Social Commission under the chairmanship of the Prime Minister. 

All  major  political  actors  acknowledge  the  importance  of  civic  integration  in  Georgia. 
Minority  religious  groups  benefited  from  amendments  to  the  civil  code  allowing  them  to 
register as legal entities of public law. Some cases of religious intolerance were reported after 
the change of government. 

Ethnic  minorities  remain  under-represented  in  state  administration.  Georgia  has  not  yet 
signed  the  European  Charter  for  Regional  or  Minority  Languages  and  the  abolition  of 

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linguistically-segregated  schools  is  progressing  slowly.  Some  progress  was  made  on  the 
development of infrastructure in minority populated areas. 

Some progress was made concerning discrimination on the basis of sexual orientation. The 
criminal code was amended to make homophobic motives for violent crimes an aggravating 
circumstance.  The  Constitutional  Court  ruled  that  the  constitutional  ban  on  discrimination 
covers discrimination based on gender identity. However, social acceptance remains limited. 
the lesbian, gay, bisexual and transgender (LGBT) demonstration on May 17 was physically 
attacked by a far larger counter-demonstration. 

Cooperation  on  Foreign  and  Security  Policy,  conflict  prevention  and  confidence 
building  

In  2012,  Georgia  aligned  itself  with  35  out  of  62  EU  CFSP  declarations  it  was  invited  to 
support (42 out of 82 in 2011). The EU remained committed to and continued to fully support 
Georgia’s  territorial  integrity  and  sovereignty  and  the  peaceful  resolution  of  the  conflicts 
there.  The  EUSR  for  the  South  Caucasus  and  the  Crisis  in  Georgia  co-chaired  the  Geneva 
Discussions and took the lead in other conflict resolution and confidence-building efforts. The 
EUMM  played  a  key  role  in  stabilising  the  situation  along  the  administrative  boundary  line 
for  the  conflict-affected  communities  during  the  tense  pre-electoral  period  and  the  Kavkaz 
2012 military exercises. 

Since  April  2012,  the  Incident  Prevention  and  Response  Mechanism  (IPRM)  for  Abkhazia 
has been blocked, after the Abkhaz de facto authorities declared the Head of the EUMM to be 
persona  non-grata.  Following  the  change  of  government,  there  are  some  encouraging  signs 
that the new authorities might do more to engage with the breakaway territories. Several EU 
projects  promote  conflict  prevention  and  confidence-building  measures,  especially  in 
Abkhazia. 

The  number  of  countries  that  accept  the  Status-Neutral  Travel  Documents  (SNTD) 
continues to increase, although only very few from Abkhazia and South Ossetia have shown 
interest  in  these  documents.  Some  of  them  are also  willing  to  admit  persons  residing  in  the 
breakaway  regions  of  Abkhazia  and  South  Ossetia  travelling  on  any  other  legal  travel 
document. 

In a surprise move of which the international community only learned some months later, on 
23  December  2011,  the  parliament  adopted  amendments  to  the  law  on  internally  displaced 
persons (IDP) law, A recent report by the UN Secretary-General welcomed certain changes 
but levelled a criticism that terminology and definitions were introduced with the amendments 
which  are  governed  by  political  considerations,  and  as  a  result,  not  all  internally  displaced 
persons as defined in international law and practice can enjoy benefits". 

On  13  June  2012,  the  Government  formally  adopted  the  2012-14  IDP  Action  Plan  for 
implementing the state strategy on internally displaced persons. The plan received continued 
support from an EU-financed reform programme. The Action Plan was brought into line with 
donors'  suggestions,  with  timing  and  costing  introduced.  Nonetheless,  a  more  strategic 
approach,  more  national  ownership  and  more  financing  will  be  needed,  if  the  Georgian 
Government is to effectively tackle the persisting problem of socio-economic integration and 
the development of IDP communities. 

8 

 
 
The  reporting  period  saw  the  rapid  resettlement  of  IDP  families  in  new  durable  housing 
solutions  (DUSO)  and  a  dramatic  upsurge  in  handing  over  private  ownership  of  DUSO  to 
IDPs.  While  international  standards  were  generally  adhered  to  during  resettlements,  more 
forward planning and the transparent selection of beneficiaries would increase efficiency and 
legitimacy. 

3.  

ECONOMIC AND SOCIAL REFORM 

Macroeconomic framework and functioning market economy3 

Georgia  retained  its  strong  economic  performance  in  2012  despite  the  worsening  global 
environment. GDP growth was at preliminary 6.1%, moderating from a 7.0% expansion in 
2011.  Economic  performance  in  2012  was  supported  by  surging  investment  and  growing 
domestic  demand,  rising  remittances  and  robust  credit  activity  as  well  as  a  booming  tourist 
sector.  However,  activity  weakened  significantly  in  the  final  quarter  of  2012  due  to 
uncertainties  associated  with  the  political  transition  following  the  October  elections  that 
weighed  on 
investments  and  consumer  spending.  The  worsening  global  economic 
environment also contributed to the moderation. 

In contrast with the high inflation in the previous two years, there was a slowdown in 2012, 
mainly due to lower global food prices, but due to the of appreciation of the local currency in 
the first half of the year. As a result, the annual consumer prices fell by 0.9% in the year. In 
the absence of inflation pressures, the central bank continued gradually softening its monetary 
stance throughout the year, lowering the key policy rate, to 5.25%. However, the effectiveness 
of  domestic  monetary  policy  remains  limited  by  the  high  –  albeit  declining  –  dollarization 
ratio.  The  intention  of  the  new  government  to  seek  the  replacement  of  the  Governor  of  the 
National Bank of Georgia well ahead of the expiration of his mandate raises concerns about 
the central bank's independence. 

The sound economic performance in 2012 keeps the 3.5%-of-GDP budget deficit target for 
the year within reach. This will be only a slight improvement from the 3.6% deficit in 2011 as 
the  strong  fiscal  consolidation  of  the  last  two  years  came  to  a  halt  ahead  of  the  October 
elections.  The  high  current  account  deficit  remains  a  source  of  vulnerability  at  11.8%  of 
GDP in the first three quarters due to growing imports of investment goods. Net FDI declined 
by a third in the period, but this was offset by rising debt capital inflows to several big local 
entities.  Growing  foreign  exchange  reserves,  donor  financing  and  an  IMF  precautionary 
programme agreed in April mitigate external risks in the short term. 

Social situation, employment and poverty reduction 

The  improvement  of  labour  indicators  in  2011  continued  in  2012,  with  a  decrease  in  the 
unemployment  rate  to  14.4%  expected  for  2012.  However,  the  Georgian  labour  market 
continues to experience a number of difficulties: high structural unemployment, a high urban 
unemployment rate, a high youth unemployment rate, and a rising unemployment rate among 
the  population  with  higher  education  suggesting  serious  mismatches  between  the  labour 
supply and demand. 

3 Figures on GDP, inflation, trade and employment are generally from Eurostat based on data supplied by the 
national statistical offices; or IMF or Commission Staff estimates, as indicated in the Statistical Annex. When 
other data sources are used these are then indicated. 

9 

 
 
                                                 
In this context a State Ministry of Employment was established in July, with a six-point plan 
including the creation of an employment data-base and the introduction of the 'legal status of 
unemployed'.  The  new  Government  announced  plans  to  integrate  the  State  Ministry  of 
Employment into the Ministry of Labour, Health and Social Affairs. 

In December the Parliament adopted a law institutionalising the Tripartite Social Commission 
under the chairmanship of the Prime Minister. 

During  the  first  half  of  2012,  poverty  reduction  and  pressing  social  issues,  mainly 
employment  and  social  assistance,  was  a  focus  of  the  parliamentary  elections.  All  political 
parties  made  affordable  free  health  care,  a  pension  increase  and  other  social  support  for 
vulnerable groups central to their major statements and programmes. Besides targeted social 
assistance,  the  authorities  declared  vocational  education  and  training  for  improved 
employability a priority, although a coherent programme or strategy is not in place yet. It is 
hoped  that  the  improved  atmosphere  of  social  dialogue  will  contribute  to  progress  in  these 
areas. 

4.  

TRADE-RELATED ISSUES, MARKET AND REGULATORY REFORM 

The EU is Georgia's main trading partner accounting for 26.8% of its trade volume in 20114. 
Bilateral trade flows increased and during the first eleven months of 2012 amounted to EUR 
2.4  billion.  However,  the  growth  of  total  trade  reflects  dynamics  of  EU  exports  to  Georgia 
which increased to EUR 1.85 billion during the same period. EU exports consisted mainly of 
mineral  fuels  and  related  materials,  machinery,  mechanical  appliances  and  transport 
equipment,  chemicals,  pharmaceutical  products  and  other  manufactured  goods.  EU  imports 
from Georgia slightly decreased to EUR 558 million during the first eleven months of 2012. 
EU  imported  from  Georgia  mainly  crude  materials  and  mineral/mining  products,  chemical 
products (fertilisers), food products (edible fruit and nuts), and mineral water and wine. The 
structure of Georgia’s export portfolio has not changed in the past year, and continues to be 
dominated by base products and displays limited diversification. 

Georgia  continued  to  benefit  from  the  GSP+  unilateral  preferences  for  processed  goods 
(mainly  agricultural)  to  enter  the  EU  market.  It  remains  bound  by  the  GSP+  obligation  to 
respect and implement a number of international conventions related to social, environmental, 
human rights and good governance issues. Georgia made some modest progress by amending 
its Labour Code to address limitations on duration of strike and the minimum threshold for the 
composition  of  trade  unions.  The  Government  also  somewhat  improved  its  dialogue  with 
social  partners.  Other  important  recommendations  reiterated  by  the  ILO  Committee  of 
Experts in its 2012 report remain to be acted on as a matter of priority. The new Government, 
following the October parliamentary elections, pledged to enhance its cooperation with ILO 
and  social  partners  and  to  address  recommendations  issued  to  Georgia  by  ILO  in  this  area. 
Implementation of these commitments continues to be vital for Georgia’s GSP+ beneficiary 
status. 

The  bilateral  Agreement  on  the  protection  of  geographical  indications  entered  into  force  in 
April.  A  comprehensive  EU-financed  reform  programme  on  agriculture  and  rural 
development also provides support in this regard. Following the progress made in preparatory 
reforms, the EU launched negotiations on a DCFTA with Georgia in February. The DCFTA 

4 Data for 2012 was not available at the time of writing. 

10 

 
 
                                                 
will  provide  a  framework  for  improving  trade  and  the  trade-related  environment  in  Georgia 
and  further  attracting  investment  to  the  country  to  strengthen  its  economic  competitiveness 
and diversify its export base. It is essential that Georgia continues to implement reforms in all 
trade-related areas in parallel to the DCFTA negotiations. Diversifying the economy and trade 
remains key to boosting Georgia's trade flows, not only with the EU but also with its partners 
in the region. 

Georgia continued to approximate with EU sanitary and phyto-sanitary (SPS) standards. In 
May,  it  adopted  a  new  Food  Safety,  Veterinary  and  Plant  Protection  Code;  the  EU 
communicated  to  Georgia  the  shortcomings  in  this  code  that  remain  to  be  addressed  in 
preparing for the future free trade area. The National Food Agency (NFA) continued to carry 
out  food  safety  inspections  in  establishments.  For  the  first  time  ever  an  animal  registration 
programme  is  being  introduced  and  state-funded  vaccination  campaigns  on  foot  and  mouth 
disease and anthrax have been run.  In July, the EU and the NFA agreed to support capacity 
building of the agency through the Comprehensive Institution Building programme. With EU 
twinning support, Georgia progressed in developing secondary SPS legislation and in building 
capacity on SPS border controls carried out by the Revenue service. In parallel to the DCFTA 
negotiations,  Georgia  should  continue  to  implement  SPS  related  reforms  on  the  basis  of  its 
food  safety  strategy.  Particular  attention  is  needed  to  ensure  quality  of  legislation  and 
consultations with stakeholders during the legislative process. 

Georgia  continued  to  implement  a  modern  customs  policy  and  further  capacity-building 
measures  (i.e.  to  create  the  right  conditions  for  livestock  in  transit,  veterinary  border 
inspections)  in  this  regard.  Since  the  implementation  of  tax  and  customs  reforms,  clearance 
times  and  costs  have  decreased.  The  overall  level  of  satisfaction  with  customs  procedures 
among domestic stakeholders remained very high. 

In  the  area  of  the  free  movement  of  goods  and  technical  regulations,  Georgia  adopted  a 
Code on product safety and free movement of goods in May. It aims to approximate Georgian 
law  to  two  EU  directives  (Consumer  Product  Safety  Directive  and  the  Defective  Products 
Liability  Directive)  with  regard  to  horizontal  rules  on  the  marketing  of  industrial  products. 
The  Georgian  Accreditation  Center  (GAC)  became  an  associated  member  of  the  European 
Cooperation  for  Accreditation  (ECA).  The  EU  continued  to  provide  technical  assistance  in 
this  sector  through  the  Comprehensive  Institution  Building  programme.  Two  twinning 
projects, one on standardisation and metrology and one on accreditation, continued to support 
the  GAC  and  Georgian  National  Agency  for  Standards  and  Metrology.  A  Technical  and 
Construction  Inspection  Agency  became  a  legal  entity  of  public  law  under  the  Ministry  of 
Economy  and  Sustainable  development  in  September.  This  agency  may  play  a  market 
surveillance  role,  but  more  details  on  its  envisaged  role  and  strategy  are  not  available  at 
present. 

Georgia continued to improve its business climate and moved up to 9th place (out of 185) in 
the ease of doing business ranking in the World Bank’s ‘Doing Business 2013’ annual report. 
Despite  major  improvements  so  far,  aimed  mostly  at  reducing  red  tape  and  accelerating 
administrative  procedures  for  businesses,  some  barriers  remain.  More  needs  to  be  done, 
especially in areas closely linked to law enforcement: the protection of property rights, access 
to  the  courts,  the  impartiality  of  judiciary  authorities,  appeal  procedures,  the  protection  of 
creditors and taxation issues. 

The  financial  services  sector  continued  to  expand.  Capitalisation  in  the  banking  sector 
remained high, with the capital adequacy ratio exceeding the minimum Basel requirements. A 

11 

 
 
significant  feature  of  the  financial  system  is  the  high  dollarisation  level,  which  hinders  the 
effectiveness  of  monetary  policy.  In  the  non-banking  sector,  the  National  Bank  of  Georgia 
focused on continuing to improve its legal and regulatory framework, including strengthening 
of  the  securities  market.  The  Parliament  amended  the  Law  on  Activities  of  Commercial 
Banks, authorising them to engage in additional types of banking activities, namely providing 
payment services, operating payment systems and acting as a settlement agent. 

A new Law on Payment Systems and Payment Services entered into force in July. Its purpose 
is  to  facilitate  the  functioning  of  the  payment  system,  including  securities  clearing  and 
settlement  systems.  The  law  also  introduced  the  concept  of  financial  collateral,  entitling  a 
creditor to preferential satisfaction of his claim before other secured and unsecured creditors. 

No development is noted in the area of company law. 

Other key areas 

The alternative tax audits introduced in 2011 allowed the recruitment of private auditors for 
tax  audits.  However,  Ministry  of  Finance  is  considering  repealing  this  modality  in  2013  in 
line with the position of the IMF. Georgia made it easier to pay taxes by improving the use of 
electronic systems and providing more services to taxpayers. The Mediation Council handled 
an  increasing  number  of  disputes  between  taxpayers  and  the  relevant  departments  of  the 
Revenue Service. 

In  line  with  its  Competition  Strategy,  Georgia  adopted  in  May  a  framework-law  on  Free 
Trade  and  Competition.  The  law  addresses  the  core  principles  of  antitrust  and  state  aid. 
Georgia continued to strengthen the capacity of the Agency for Free Trade and Competition, 
which since January 2012, is merged with the State Procurement Agency. This single Agency 
is receiving EU support. 

The  effective  protection  of  intellectual  property  rights  remains  a  key  issue  in  Georgia.  A 
law  on  border  measures  related  to  intellectual  property  rights  enforcement  was  amended  in 
December  2011.  Since  2012,  a  single  registration  at  Sakpatenti  is  enough  to  obtain  border 
protection without having to also register at the Revenue Service. The EU provided support 
through TAIEX instrument and ad hoc assistance in order to increase the capacity building of 
the Georgian Copyright Association (collective management society). 

The State Procurement Agency was merged with the Free Trade and Competition Agency in 
January. The facility for framework agreements was introduced in the electronic procurement 
system. It still lacks support for other modes that are obligatory under the EU acquis, such as 
the restricted procedure and the negotiated procedure. 

Georgia continued to implement its mid-term strategy (adopted in December 2011) to develop 
and improve national statistics. New methodologies were applied in the computation of the 
Consumer Price Index. Major changes concerned the revision of weights, including the use of 
national accounts data, and the composition of the consumption basket. The methodology for 
the  Producer  Price  Index  was  changed  to  focus  on  products.  In  April  Geostat  submitted  the 
plan for implementing the population census to the Government Working Group. Georgia is 
encouraged to conduct its population census in 2014 at the latest and to follow international 
recommendations  in  this  regard.  Georgia  developed  an  online  data  collection  system  for 
businesses that will reduce the response burden and improve the quality of the data. A global 
Assessment of the Georgian statistical system was carried out. 

12 

 
 
Georgia’s  enterprise  policy  aims  to  create  favourable  conditions  for  all  enterprises  and  the 
business  climate  was  steadily  improved.  There  is  no  specific  policy  for  small  and  medium-
sized  enterprises  (SMEs)  and  they  have  little  role  in  policy-making,  (as  opposed  to  larger 
companies)  although  there  are  signs  of  emerging  dialogue  and  co-operation  with  the  SME. 
Economic  initiatives  are  taken  in  the  context  of  regional  development,  a  reform  area  which 
receives  continued  EU  support.  The  State  Strategy  for  Regional  Development  encourages 
entrepreneurship and innovation, emphasizing competitiveness. The Partnership Fund, set up 
in mid 2011 with the aim to contribute to the financing of private sector projects, continues to 
be operational under the new government and focuses on filing the gap for long-term capital 
in the country. 

The  Parliament  amended  the  “Law  on  Public  Internal  Financial  Control”  in  December 
2011. It requires that Internal Audit Units, to be set up in all Ministries and other State bodies, 
function  according  to  internal  audit  standards.  The  Heads  of  the  Internal  Audit  Unit  are 
authorised to determine the type of audit, scope of activities, their frequency and the number 
of internal auditors. The requirements of the law are met by most of the line ministries; law 
enforcement ministries have to establish internal audit units from 2013. 

In  the  area  of  external  audit,  the  State  Audit  Office  (SAO)  conducted  financial  audits 
according to the  new Financial Audit  Manual, in the ministries of Finance, Energy, Culture 
and Education and Science. A comprehensive EU-financed programme supports these public 
finance  reforms.  The  Quality  Control  department,  created  during  2012,  conducted  quality 
control  of  already  conducted  financial  audits  and  issued  a  report  according  to  ISSAI  1220 
standard. However, since January the SAO monitors political party financing and has the right 
to  investigate  and  to  impose  fines  on  political  parties  and  affiliated  groups.  Types  of  cases 
treated  by  SAO  and  the  methods  used  have  raised  numerous  questions  among  NGOs  and 
opposition parties. 

5. COOPERATION ON JUSTICE, FREEDOM AND SECURITY 

The EU-Georgia Mobility Partnership continued to be implemented smoothly. 

Georgia  prepared  a  draft  2013-15  Migration  Strategy  that  should  soon  be  approved  by  the 
Government.  The  draft,  which  takes  account  of  national  interests  and  international  practice, 
deals  with  legal  migration;  combating  illegal  migration;  asylum  policy  and  humanitarian 
status; the return and reintegration of Georgian citizens, and migration and development. 

The  EU-Georgia  visa  facilitation  and  readmission  agreements  that  entered  into  force  in 
March  2011  were  satisfactorily  implemented.  The  EU  therefore  started  a  dialogue  on  visa 
liberalisation with Georgia in June 2012, with the aim to discuss the conditions for visa-free 
travel  to  the  EU  for  Georgian  citizens.  It  agreed  the  terms  of reference of  the  visa  dialogue 
with Georgia in August and preparations for a Visa Liberalisation Action Plan (VLAP) were 
subsequently  made.  The  VLAP  was  formally  handed  to  Georgia  on  25  February  2013  by 
Commissioner Malmström. 

A Border Police Order was issued in April on establishing competent persons for carrying out 
the  investigation  of  crimes  in  the  maritime  space  of  Georgia  under  the  jurisdiction  of  MIA 
border  police.  Georgia  updated  its  border  management  strategy  and  the  associated  Action 
Plan.  It  signed  and  implemented  bilateral  agreements  on  border  police  cooperation  with 
Turkey, Latvia, Moldova, Estonia, Bulgaria and Germany.  

13 

 
 
 
 
The 2010-12 cooperation plan between the Ministry of Internal Affairs (MIA) and FRONTEX 
continued to be implemented. The MIA participated with observer status in joint FRONTEX 
operations at the land, sea and air borders. A joint statement of cooperation between the MIA 
and the European Union Border Assistance Mission was drafted. Under the EU-funded South 
Caucasus  Integrated  Border  Management  Programme  (SCIBM),  the  MIA  and  the  State 
Border  Guard  Service  of  Azerbaijan  prepared  an  agreement  on  the  activities  of  border 
representatives. 

To  facilitate  the  flow  of  people  at  border-crossing  points,  Georgia  installed  e-gates  for 
Georgian biometric passport holders at Tbilisi and Batumi international airports The Sadakhlo 
and Red Bridge border-crossing points were re-build and refurbished. 

Georgia  continued  drafting  an  anti-drug  strategy.  In  the  context  of  the  international  border 
police  conference,  a  meeting  was  held  in  April  on  cooperation  between  border  and  other 
relevant units in the fight against drugs smuggling. The MIA concluded bilateral international 
agreements on drugs cooperation with Bulgaria, Estonia, the Slovak Republic and Turkey. An 
EU dialogue on drugs with Azerbaijan, Georgia, Moldova and Ukraine was held in Brussels 
in April. 

With regard  to judicial cooperation  in  civil matters, a number  of  international conventions 
on  legal  cooperation  and  family  law  drawn  up  by  the  Hague  Conference  on  Private 
International Law remain unsigned. 

The  new  Georgian  data  protection  law  entered  into  force  in  May  2012,  with  provisions 
related  to  administrative  responsibility  for  violation  of  its  provisions  entering  into  force  in 
January  2013,  and  with  its  part  applying  to  the private sector  entering  into force in  January 
2016. 

6. 

TRANSPORT,  ENERGY,  ENVIRONMENT,  THE  INFORMATION  SOCIETY,  RESEARCH  AND 
INNOVATION 

Georgia made progress in harmonising its transport legislation with that of the EU. Georgia 
made  serious  efforts  in  implementation  of  the  EU-Georgia  Common  Aviation  Area 
Agreement signed in 2010. The first meeting of the EU-Georgia Joint Committee overseeing 
the implementation of this agreement took place in September 2012 in Tbilisi. In December, 
Georgia  took  another  step  towards  deeper  integration  with  the  EU’s  aviation  system  by 
signing  the  instrument  of  accession  to  Eurocontrol.  Georgia  is  encouraged  to  continue  all 
aviation-related  reforms  with 
the 
implementation of the agreement of 2010. The EU is ready to support this work with technical 
assistance. 

the  same  high-level  commitment, 

in  particular 

The  inspection  mission  to  Georgia  to  verify  compliance  with  the  international  maritime 
training  and  certification  requirements  of  the  International  Convention  on  Standards  of 
Training, Certification and Watchkeeping for Seafarers took place in October 2012. Georgia 
has made considerable efforts to comply with the requirements of the Convention. Depending 
on the readiness of the Georgian authorities to resolve the remaining issues, the Commission 
could put forward a positive proposal by the end of 2013 so that certificates of the Georgian 
seafarers could be recognised again by EU Member States. 

14 

 
 
Georgia became a Contracting State to the Convention concerning International Carriage by 
Rail (COTIF) and Member of the Intergovernmental Organisation for International Carriage 
by  Rail  (OTIF)  in  May.  This  is  an  important  step  for  its  integration  with  the  EU  and 
international rail structures, facilitating the transport of freight by rail. Georgia continued to 
develop its potential as a transit country by investing in infrastructure. The EU supported this 
work  through  a  EUR  20  million  grant  from  the  Neighbourhood  Investment  Facility  to 
reconstruct a section of the East-West motorway. The development of the Baku-Tbilisi-Kars 
railway that will help connect the Central Asian and European markets advanced in 2012. 

Georgia remained a reliable energy partner for the EU in developing the Southern Corridor. 
Georgia  and  Ukraine  are  working  on  a  new  multilateral  inter-governmental  agreement  to 
develop the Euro-Asian Oil Transportation Corridor (EAOTC). In the electricity sector, work 
on  the  Georgian  side  of  the  Black  Sea  Energy  Transmission  Network  (Azerbaijan-Georgia-
Turkey)  is  progressing  well.  The  construction  of  an  electricity  interconnection  with 
Azerbaijan and related infrastructure were completed. Renovation of the large Enguri hydro 
power plant progressed. In January, Georgia and Turkey signed a cross-border agreement on 
electricity  trade  across  new  interconnections  between  them.  Georgia  remained  an  active 
observer in the Energy Community. In January 2013 it submitted an application to become a 
full  member.  Georgia  is  encouraged  to  strengthen  the  energy  regulator’s  independence  and 
capacity  and  to  continue  working  on  gas  market  reform,  including  unbundling.  It  is  also 
encouraged  to  step  up  efforts  on  renewable  energy  and  energy  efficiency  including  by 
adopting legislation in these areas. 

In  the  field  of  climate  change,  the  draft  third  National  Communication  for  the 
implementation  of  the  United  Nations  Framework  Convention  on  Climate  Change 
(UNFCCC)  is  focussing  on  the  territory  of  the  Autonomous  Republic  of  Adjara. Georgia 
participated  in  preparations  for  the  forthcoming  regional  EU  Clima  East  Project  (EUR  18 
million)  that  will  be  implemented  in  the  period  2013-2016.  The  Regional  Environmental 
Centre  for  the  Caucasus  (REC-C)  continued  implementing  an  EU  funded  project  on 
adaptation to climate change. Georgia is encouraged to build capacity and engage in the new 
carbon  market  mechanism  to  be  developed  following  the  17th  and  18th  the  sessions  of  the 
UNFCCC Conference of the Parties. Georgia is also encouraged to make additional efforts to 
fully  implement  the  Cancun  and Durban  agreements  and  in  particular  devise  a  low-carbon 
development strategy. 

In the field of environment, Georgia adopted the second National Environmental Action Plan 
for  2012  to  2016  and  made  a  new  report  on  the  state  of  the  environment  available.  It  also 
adopted  a  national  strategy  and  2012-2014  Action  plan  on  environmental  education  for 
sustainable development. Following the amendment to the environmental framework law, the 
revision  of  the  forest  code  and  the  facilitation  of  hunting  red  list  species,  Georgia  is 
encouraged  to  strengthen  its  environmental  legislation  and  administrative  capacity,  to  apply 
procedures for environmental impact assessment consistently and to pay particular attention to 
public  participation.  Georgia  is  also  encouraged  to  ratify  the  Espoo  Convention.  Georgia 
committed  to  implementing  a  country  study  on  TEEB  (The  Economics  of  Ecosystems  and 
Biodiversity)  aiming  to  improve  knowledge  of  and  recognize  the  value  of  the  country's 
natural capital. Under the new Government, several areas of responsibility transferred to other 
Ministries  will  be  re-integrated  into  the  renamed  Ministry  of  Environment  and  Natural 
Resources which is preparing to strengthen its capacity. 

The  REC-C  continued  its  activities.  Its  financial  and  institutional  sustainability  still  need 
strengthening. 

15 

 
 
In  the  area  of  civil  protection,  Georgia  continued  to  participate  in  the  EaP  flagship 
programme  on  prevention,  preparedness  and  response  to  natural  and  man-made  disasters 
(PPRD  East).  As  a  part  of  the  programme  Georgia  is  contributing  to  the  development  of 
Electronic  Regional  Risk  Atlas.  The  National  Environmental  Agency  (covering  all  natural 
hazards) is involved from the beginning in the establishment of the atlas and the development 
phase is close to completing in the country. Georgia is encouraged to take advantage of the 
guiding document on Risk Assessment Policy for the EaP region produced under the PPRD 
East programme. 

Georgia  is  among  the  168  governments  that  adopted  the  "Hyogo  Framework  for  Action: 
Building the Resilience of Nations and Communities to Disasters", but work on Disaster Risk 
Reduction  is  still  only  at  the  beginning  and  it  will  require  considerable  further  effort  to 
develop capacities and processes. 

With regard to the information society, the Georgian telecoms market developed very rapidly 
over  the  last  few  years.  Market  growth  in  2012  was  stable  in  all  areas  (mobile,  broadband, 
fixed wireless telephony, etc.). Georgia introduced mobile number portability across all four 
mobile operators. Mobile penetration reached 112% by September. Georgia made progress in 
developing e-government. The country is a regional leader in this area (ranking 72 out of 190 
in  the  2012  UNPAN  e-government  development  survey,  compared  to  100  in  2010).  The 
creation of the data.gov.ge portal made it easier to access public e-services. An EU twinning 
project, begun in November, aims to further improve the e-government and inter-operability 
frameworks, strengthen cyber security capacity and contribute to the preparation of an overall 
e-strategy for the country. 

In  the  area  of  audiovisual  policy,  Georgia  amended  its  broadcasting  law  and  abolished  the 
license  requirement  for  transit  broadcasting  in  May.  With  this  amendment,  transit 
broadcasters will only need to receive authorisation to provide their service. 

Georgia  ranked  71  out  of  141  countries  on  the  Global  Innovation  Index  in  terms  of  its 
innovation capabilities and results. Its expenditure for research and innovation over the last 
few  years  remained  below  1%  of  GDP.  Besides  some  light  tower  initiatives  with  limited 
prospects for sustainability, like the Batumi Institute of Technology, internal research funding 
increased  the  dependence  on  external  research  funding  such  as  EU’s  Seventh  Framework 
Programme (FP7). Since 2008, Georgia has become increasingly involved in the FP7 through 
31  projects  covering  infrastructural  and  networking  measures  and  to  a  lesser  degree,  pure 
research, in the areas of health, information technology and communication, the environment, 
social sciences and humanities. A total EU contribution to these projects amounts to EUR 156 
million,  more  than  EUR  3  million  of  which  is  given  to  the  26  Georgian  public  and  private 
institutions participating in these projects. 

7.  

PEOPLE TO PEOPLE CONTACTS, EDUCATION AND HEALTH 

The new Government announced its intention to 'de-politicise' the education and youth sectors 
and to improve the autonomy of schools and universities and the quality of education. Since 
the beginning of 2012, Georgia has encouraged the setting up of adult education centres in 
the suburbs of Tbilisi in the context of its 2010 'Adult Education Strategy'. The strategy was 
developed  in  close  cooperation  with  the  Adult  Education  Association  of  Georgia  and  the 
European  Training  Foundation  as  a  way  of  encouraging  a  more  coherent  and  structured 

16 

 
 
approach to life-long learning. Georgia started preparing to participate in the EU's e-twinning 
programme for secondary schools. 

In the area of higher education, it made considerable progress in implementing the Bologna 
principles on legislative and regulatory terms. However, the affordability of university studies 
for Georgian students remained a problem. 

The  new  Government  recognised  vocational  education  and  training  (VET)  as  a  key 
priority. Work on the VET follow-up strategy for the period after 2012 was accelerated. The 
new leadership took steps to increase the involvement of social partners in the governance and 
management of the VET sector and plans to increase financing for this purpose in the revised 
state  budget  for  2013.  With  a  substantial  increase  in  the  budget  for  VET  student  vouchers, 
better  curricula  and  the  resulting  better  quality  of  several  public  VET  and  community 
colleges,  the  number  of  students  admitted  more  than  doubled  in  2012.  The  Ministry  of 
Education and Science and the National Centre for Educational Quality Enhancement started 
systematically reviewing occupational standards. The development of the national system for 
the  validation  of  non-formal  and  informal  learning  continued  with  the  setting  up  of  an 
operational  mechanism  and  methodology.  These  VET  reforms  receive  support  from  an  EU-
financed reform programme. They also complement the EU-Georgia Mobility Partnership and 
policies for the integration of returning migrants willing to have professional skills acquired 
during their employment abroad formally attested. 

Georgia participated in EU higher education cooperation programmes. Twelve projects were 
selected  under  the  Tempus  IV  programme.  It  benefitted  from  12  new  scholarships  for 
Erasmus Mundus joint Masters Courses and one scholarship for an Erasmus Mundus Joint 
Doctorate.  It  was  also  given  another  298  grants  for  short-term  mobility  organised  within  a 
university consortium. The first ever pre-departure orientation event for Georgia took place in 
July. The participation of Georgian universities in the Jean Monnet programme still needs 
to be improved. European Studies are currently taught at only two Tbilisi-based universities. 
The Marie Curie programme still needs to be advertised more among Georgian scholars and 
higher  education  institutions.  To  this  end,  and  to  further  integrate  the  Georgian  scientific 
community into the European Research Area, two projects focused on Georgia were selected 
under the ERA-WIDE initiative of FP7. Marie Curie actions to support researchers’ training, 
mobility and career development, funded nine institutions and six individual researchers from 
Georgia. 

Young  people  and  youth  organisations  continued  to  benefit  from  the  Youth  in  Action 
programme.  The  European  Neighbourhood  Policy  Instrument  (ENPI)  provides  additional 
funds to the Youth in Action programme for 2012 and 2013 to increase cooperation among 
young  people,  youth  workers  and  youth  organisations  from  the  European  Union  and  the 
Eastern Partnership neighbouring countries. In 2012, the setting up of the Eastern Partnership 
Youth  Window  within  the  Youth  in  Action  programme  led  to  a  significant  increase  in  the 
number of young Georgian participants. Their number more than doubled compared to 2011. 
In 2012 462 projects were selected involving 1439 young Georgians. Georgia also hosted the 
EU-Council of Europe youth partnership symposium 'Well-Being of Young People in Eastern 
Europe  and  Caucasus'  on  11-12  June  in  Tbilisi,  in  which  all  Eastern  Partnership  countries 
took part. 

Cooperation between the EU and Georgia on culture as an economic resource for tourism is 
intensifying. A twinning project supporting the Georgian National Museum was finalised in 
September  and  another  twinning  project  with  the  Georgian  National  Agency  for  the 

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Protection of Cultural Heritage started in November. During the reconstruction of the Bagrat 
Cathedral in Kutaisi the UNESCO Office issued a warning that it might have to renounce its 
status  of  World  Cultural  Heritage  if  the  work  was  not  carried  out  according  to  UNESCO 
principles. Art historians and civil society activists repeatedly complained about the primacy 
of economic aspects over securing the authenticity of immovable cultural heritage. 

Georgia is implementing its 2011-15 Healthcare Strategy by focusing on patient’s rights and 
improving the quality  of services, primary healthcare  including regional primary  healthcare, 
the development of hospitals and health insurance coverage. The new Government announced 
an  update  of  the  strategy.  From  September,  state  medical  insurance  was  extended  to  all 
pensioners  and  people  with  disabilities.  Georgia  implements  programmes  on  HIV/AIDS, 
mental health and the promotion of healthy lifestyles. 

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