Israeli Ambassador Recommends Investing in Human Capital

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The FINANCIAL — The Israeli Ambassador to Georgia sees potential for strengthening cooperation in trade and tourism between Israel and Georgia. The Ambassador sees the importance of implementing export insurance in Georgia. In his words, increasing the volume of trade will encourage investors’ interest. While both countries are lacking natural resources, the Ambassador considers it important to invest in human capital.

“There was very important news in 2015 that a joint venture of the Israeli defence electronics firm ELBIT Systems and the Georgian state investment fund are building a factory in the outskirts of Tbilisi for the production of composite components for the civilian aircraft industry. The scope of the total investment amounts to USD 80 million. This is a unique investment with a quality which will lift this specific sector of Georgia’s to a new level. In addition to all of the benefits, like the creation of jobs, it will launch a high-tech oriented industry here which is otherwise lacking in Georgia. Georgia mainly needs investments that will create jobs, which will bring it to a new level of manufacturing and productivity. At the same time Israelis are investing in the real estate and tourism industries,” Yuval Fuchs, Ambassador of Israel to Georgia, told The FINANCIAL.

“It is important to remember that Israel is not huge and we do not have a huge economy. We are ahead of Georgia and we are proud to be one of the OECD developed countries, but Georgia has other partners that are playing a bigger role in investment here. So it should come as no surprise that Israeli investors are a way behind Azerbaijani, Turkish, Chinese or even Russian investors,” Fuchs added.

According to the Ambassador, Georgia is sometimes neglecting the very important component of trade between the two countries, which is significant to investors. “In a very good year the Israeli export to Georgia amounted to USD 130 million. Last year it stood at USD 113 million. This year the number went down and during the first ten months of 2015 it amounted to just USD 23 million. As for the export from Georgia to Israel, it generally stands at USD 3-4 million, which is quite a low figure. I believe that we can reach the number of USD 200-220 million in terms of trade. However, it seems harder than I thought three years ago. It takes more time and more effort. I would like to see more of a rise in export from Georgia to Israel. If Israel were to be a bigger trade partner to Georgia it would enhance investor’s activity. The total export of Israel last year amounted to USD 69 billion. So, the share of the Georgian market is really small. This is a field we have to work on. I would also like to see Georgians investing in Israel.”

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“Finding good partners; feeling economic stability; and opportunities for making money have always been very important factors for investors,” said Fuchs.

There are fields which Georgia and Israel should strengthen, believes the Ambassador. “Along with trade is tourism – which is standing on quite impressive figures. However, we would like to see more Georgian tourists visiting Israel. We would like to see trainings in agriculture, innovations and other fields should be strengthened further, as well as ministry to ministry or agency to agency cooperation and sharing practices,” he said.

“Georgia does not yet have export insurance. Many countries including Israel have it. If there was that, it would facilitate some mechanism such as financial protocol between the two relevant institutions, which would facilitate export. Insuring exporters of both sides from any scenario is important,” Fuchs said.

Q. What are your expectations for 2016, in relation to the fact that there are going to be government elections here?

A. I am looking at the tendency of fluctuation in export and import over the last seven years and how these changing graphs are not up to elections. It is quite difficult to predict how the situation in the world will develop. I believe we are to live with that fluctuation in trade. I communicate on a daily basis with the leaders of all political parties of Georgia. What we have to do is to continue the programmes that we have started. Many mechanisms were created between the Georgian and Israeli governments, in the fields of security, counter-terrorism, agriculture and other fields. Right now we have to fulfil these. They are not personalized issues, so it is not up to who will be the next minister of any field. On the contrary, it should be de-personalized.

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Q. We have heard a lot about Israel’s economic miracle. What can Georgia learn from your country?

A. Both Israel and Georgia have no natural reserves. What we do have is human capital. This is where we have to invest. Israel is number one globally by R&D spending. We developed a climate for new technologies and we are not afraid to go from agriculture and traditional industries, like textile, which dominated our export in the ‘60s and ‘70s, to modern high tech industries. This is an important lesson that Georgia can learn. Georgia has to put more money into the creation of more engineers, more developers. Even if we consider the agriculture sector today, it is more up to irrigation and other technologies. Georgia is traditionally an agricultural country, with many people involved in it. So this sector must be more productive here. Currently the contribution of agriculture to GDP is too low. In order to be more productive you should get more know-how and more technologies in it. Israel is quite productively contributing to the training of Georgian farmers and experts in this direction.

Q. The possibility of lifting the embargo over Iran has been welcomed by some Georgian businessmen and experts. Would it have any impact on Israeli-Georgian relations if Georgia were to resolve economic affairs with Iran?

A. The sanctions have not been removed yet. They are still valid and it is very important to be onboard and to be committed to the sanctions. The second issue is that Iran is engaged in supporting terrorism, destabilizing the whole region. So what we tell our partners is to be cautious and see how things will develop and watch very closely whether the deal signed by Iran will be strictly implemented. The other components, such as regional stability, terrorism, and attitude toward Israel also need to be followed. It is like the Olympic Games – who will come first to Tehran. We recommend our partners not to take part in the Olympics.

 

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