Issue 6, 2018. December-January

   

AMCHAM GEORGIA: TWO DECADES AS A VOICE FOR BUSINESS AND A LEADER FOR CHANGE

QVESATAURI

AmCham Georgia has been to Washington four times to speak with US government officials about the issues that are important to US-Georgia relations


In 1998, when AmCham Georgia was founded, Georgia was seven years into its reestablished independence.

Eduard Shevardnadze was president, there was no natural gas, electricity was intermittent, and corruption was rampant.

And U.S. Ambassador Ken Yalowitz had a problem.

There was a growing number of U.S. companies investing in Georgia, and he was spending an unsustainable amount of time dealing with the pressure, crime and corruption that were undermining them.

"When I got to Georgia, the corruption was very intense. Things were very, very bad. There were some American companies working in the country but as soon as they became even close to profitable, they were usually beset by either tax authorities or individuals demanding ownership," he said.

"It was always extremely difficult for them and I spent a fair amount of my time going to the Ministry of Economy, talking to the president, talking to the ministers on behalf of American companies. I really felt that an organized AmCham would be a very powerful addition to what I was trying to do. Having a business organization for American firms would enable them, instead of fighting all these battles individually, to come together and lobby."

So, the ambassador turned to two prominent members of the nascent American business community, Betsy Haskell and Leigh Durland.

Amy Denman, Mariella Cellitti Tefft, former US Ambassador to Georgia John Tefft, Gia Bazghadze


Betsy had already established Betsy's Hotel and Leigh was in charge of Absolute Bank, one of the first privately owned banks in Georgia.

Betsy recalls the ambassador reaching out to see if she was interested in establishing an AmCham in Georgia.

The situation was bad, she said, with tax officials threatening businesses.

Leigh convinced Amy Denman to push the effort forward and other active businessmen joined as well. Fady Asly can still remember the day Ambassador Yalowitz spoke to him about the Chamber and introduced him to Leigh.

"Initially the idea was to approach the government bilaterally, from the embassy on one side and the Chamber on the other side. The idea was to lobby for the investment climate, to lobby for the companies, to lobby for the international companies operating here," he said.

Betsy supported the nascent effort by paying the $385 registration fee out of pocket, and Amy started looking for members.

An aspiration and a sales pitch

There were no guarantees of success: well-established American and global companies were familiar with AmCham as a private voluntary association, but it was a new or unfamiliar concept for Georgian companies.

"When Leigh approached me, he said 'I don't know if this is going to work, but we need someone like you to get behind it and give it a try' ... It sounded like good fun to me. So I turned down a few other safe, well-paid job offers in the humanitarian aid arena to give it a go," she said.

Members of the AmCham Georgia Board of Directors and former US Ambassador to Georgia Ian Kelly.


The start was inauspicious; there was no office, no staff: Amy started working from her kitchen, driving around Tbilisi in her Niva and selling only an idea of a business association based on American standards and ideals.

"The American companies were first on board to take the risk. We had about 10 members early on that we knew were solid ... I went to them first and would explain that it was their duty as an American company or franchise to and I would go to them and I would say 'You are an American company or a franchise, it is your duty to become a member of AmCham,'" she said.

"I was selling a product that didn't exist."

Within a couple of months, Amy had signed on 10 member companies in addition to the five founding members, and AmCham Georgia had held its first meeting on December 15, 1998: Leigh Durland and Gia Bazghadze, who spoke about challenges in the business environment.

The challenges were intense: corruption, stifling tax rates, extortion and other crimes.

"We were working to improve the business climate, to change the laws that were detrimental, to curb the corruption because corruption was terrible at that time and, most importantly, to protect our members," Fady said.

"The AmCham members of that time were the nucleus of what became the international business community in Georgia," he noted.

Vano Nakaidze and Founding Advisor Betsy Haskell

Sarah Williamson, who would go on to serve two terms as president and be a member of the board for over a dozen years, became part of the Chamber when the business she co-owns, UGT, joined in 1999.

At the time, she said, there was a real need for a mechanism for the business community to influence the government in a way that would be positive and would help the Georgian economy and society "make the transition to be a Western-leaning society."

"Georgia for me, and AmCham as part of it, represents things that I never thought I would do or wanted to do... Georgia gave me the opportunity to realize lots of things that I would have never considered before, and AmCham also," Sarah said.

"Shortly [after I joined] I realized that AmCham was going to have a lot of responsibility in creating the basis for the business environment going forward, and I wanted to be part of it."

Despite the fact that it was new and relatively small, AmCham was able to make its mark almost immediately. Thanks to the supportive efforts of Ambassador Yalowitz and the U.S. Embassy, the Chamber was taken very seriously even with just 15 members.

Less than a year after it was established, in 1999, AmCham had its first successful lobbying campaign against a draft law in parliament.

While the law - which was an attempt to make joining the Georgian Chamber of Commerce a requirement for all businesses operating in the country - did not have a major impact on the business climate as a whole, it was a great opportunity for AmCham Georgia to flex its muscles and hone its lobbying skills.

"Our first lobbying effort landed on our plate shortly after our founding, something that we did have good expertise on: the law on chambers of commerce in Georgia... AmCham is a voluntary organization and we are very, very proud of this fact. It is not a requirement that anyone join or register. Companies pay their annual dues and if AmCham does not deliver, the company strikes AmCham from it's budget," the Chamber's first executive director, Amy Denman, said.

"We met with many lawmakers, embassies and influential NGOs to explain why a private, voluntary organization is preferable over an obligatory/government Chamber... We defeated the draft law through extensive lobbying efforts. One of the benefits of this early effort was that we learned in better detail which Members of Parliament and Government were more 'western-minded', i.e. who we might count on in the future to be our change-agent partners."

That victory helped establish the Chamber as an effective organization that could speak up for business interests, even in a period of lawlessness and corruption in Georgia.

"One important role in our early years was to be very vocal about how deep and how widespread the problems were and to start drawing attention to begin to address them. AmCham wrote about the issues, held press conferences, informed the U.S. and other Embassies of the details. People we met would nod and say 'we know, we know' so we would start having meetings and calling for change. I think we were a forerunner in the movement to call for fixing the business climate - no matter how tough the challenge seemed," Amy said.

Former US Ambassador to Georgia John Bass and AmCham Georgia First Vice President Sarah Williamson

The Chamber also provided a platform to disseminate important information - like outreach for AES Telasi during its epic battles to bring in electricity, questions about the early oil pipeline or helping businesses understand what their rights as taxpayers were.

AmCham served as a role model for other NGOs and donor organizations on how to hold the government responsible and accountable, First Vice-President Sarah said. Betsy, one of the founding members of the Chamber, noted that AmCham's impact during the Shevardnadze government was, in part, psychological - it gave businesses confidence to know that an organization like the Chamber supported them.

"I think the Georgian businesses really loved having this organization to back them up. So in that respect I think it was incredibly useful, it gave them the nerve to carry on," she said.

A seat at the table

The real opportunity to improve the business climate happened after the 2003 Rose Revolution. The change of government was like the flip of a switch, Amy said.

Very early on it became clear that the new government was interested in reform.

Amy led a three-hour meeting with the Board of Directors and then President Mikheil Saakashvili: the new president wanted to know what the business community needed, she said.

"He was wide open to ideas, he wanted to hear what our top ten issues were, how we could grow the economy, how we can create jobs... our list was long but it started with tax," she said.

The Chamber quickly created a large tax committee, mostly volunteers, who worked for weeks at rewriting the tax code. In the end, most of AmCham's comments were included in the country's tax reform.

Soon, AmCham started to be able to "synthesize" problems across different sectors, which helped the Chamber become more effective at tackling the systemic issues that were harming the business climate.

"Things started to get much better once Misha came to power," Betsy recalled.

"We became much more issue-oriented. There were issues to deal with and there were positions that Misha's government took that we didn't agree with, so we started dealing with that, and helping them do the things they wanted to do to make Georgia better."
Over the years, AmCham has been able to bring about real change for Georgia, from tax reform and the overhaul of the customs code to e-governance and, eventually, the range of reforms that helped Georgia become the 6th best business climate in the world.

AmCham Georgia First Vice-President Sarah Williamson noted that one of the most powerful instruments AmCham has developed is its committees, in addition to the dedicated, pro-bono work members of the board do for the organization.

"AmCham Georgia is amazing in the fact that you have all of these people, most of the board and the committee chairs doing everything pro-bono, no one is paid, making changes that ... benefit the country, some are long-term, some are short-term - but when you really look over the trajectory of the country, the trajectory of the economy, it is all an upward slope.

"That resource has supplemented the hard work of AmCham Georgia's executive directors - Amy and the current executive director, George Welton," she said.

It would be impossible to list every accomplishment AmCham has made over the past 20 years - or even over the past 10 or five years, Sarah noted, adding that it has worked with successive governments, quickly forming working relationships with new administrations and new government leadership, because the Chamber is seen as constructive and non-partisan.

"AmCham is not an organization you are going to see on TV every night making brash statements. We have never worked that way, and we have never seen any other organization work that way and be successful. AmCham can meet anyone in any position at any time because they trust us. That is not because we are cheerleaders of one group or another. We work for Georgia, because we work for our businesses, and Georgia's success is AmCham's success," Sarah said.

The Chamber tries to work directly with the members of government that can bring about the necessary changes, whether that is a minister or the prime minister, she said.

"I can't say that we have gotten everything that we wanted over the last 20 years, but certainly we have been able to push through a lot of the things that are important for us - or stall things. It is too big to make a list, because it is on a daily basis," Sarah said.

George Welton, the current Executive Director of AmCham, agrees that this approach has allowed the organization to deepen its working relationship with government, even when governments change. This has been helped by institutions like the Investor Council, which AmCham helped to create, which provide a format for discussions on strategic economic issues with the Prime Minister directly every quarter.

"We have a seat at the table, both literally (with the Investor Council) and figuratively, because we work diligently and professionally," George said.

"That makes us fairly unusual. I work with a group called AmChams in Europe, which covers around 40 countries across the EU, Eastern Europe and the Caucasus. Most of the members of that group would love to have the influence and access that AmCham Georgia has. We are unusual because we have been in this role more or less since the birth of the nation, because of the importance of the US-Georgia relationship to successive governments, and due to our approach to engagement," he said.

A Voice in Washington

Today, AmCham speaks for business interests in Georgia - and for Georgia's potential as an investment and trade partner with the US.

"I follow all the things that the Chamber does ... I am very, very pleased with the way it has developed. I think it has become a real force for voicing the concerns of American business," Ambassador Yalowitz said.

While he is no longer based in Georgia, the ambassador is active in US-Georgian relations, sitting on the board of the Georgian-American Business Council, among other activities.

In Washington, the ambassador said the work of Sarah Williamson and other members of the AmCham board to reach out to US policymakers has been impressive.

"I am very, very pleased with what they are doing, their activism," the ambassador said.

The regular trips to Washington have brought AmCham's work to another level, Amy said.

Knowing that other European AmChams sent regular delegations to D.C., during Sarah's terms as president of AmCham they decided it was time for AmCham Georgia to do the same.

AmChams in Germany, France, Spain and the UK were going to Washington to keep their "countries, economies and the value of doing business" in those countries on the radar, she said.

It was campaign season in Georgia, she recalled, and there was a lot of disinformation about the state of reforms in the country.

"The West did not know what to do with the results of the 2013 presidential election," Sarah noted.

"We decided that we were a very steady and trusted source to be able to go to Washington in this atmosphere of disinformation," Amy said.

"We went there to offer them an explanation or answer any questions they might have about what is really happening on the ground with businesses in Georgia. Our goal was not only to lead a 'ground truth' mission to D.C. but also to remind them of the longstanding partnership between Georgia and the U.S. as well as the value of U.S. support to Georgia."

"That started a tradition that I am very proud of," Sarah said.

AmCham has been to Washington four times, including the 2013 trip. "Every time we go, we get more interest and get to build a little more on the reputation and the relationships that we have already formed. On our last trip, we had around 50 meetings in three days - mostly with Congressmen and Senate staff. When we met with John Bolton a month ago, we knew some of his National Security team from previous trips to D.C.," George said.

"The influence that we have in Washington also makes the work we here also easier. The fact that we have direct lines to the White House, to the State Department, to the Treasury and all over the Hill, means that when we speak to the government here, it is important for them to listen," Sarah noted.

A new standard

Two decades ago, Georgia was a struggling country, newly independent and riddled with corruption. Over the course of the last 20 years, AmCham Georgia has played a strong role in crafting a business climate that has become a model for developing economies around the world.

"We have always been and continue to be the strongest foreign chamber in the country ... When we bring something up as an issue, we are well listened to. This is due to the fact that when we bring up [an issue], it has been researched and it has been talked about and it has been put in the kind of language that the government can work with," Amy said.

"The government knows, the lawmakers know, and the embassies know that if we come to them with something, it is important and something that they need to listen to and should probably work on. That is our biggest legacy: we are trusted. We are a trusted partner of the lawmakers of Georgia and we are a trusted partner of businesses."

Executive Director George Welton continues, "Part of the reason that the country has been so successful is because it engages widely. This helps the government to shape business-friendly policy and helps avoid some of the negative unintended consequences that can be created when the private sector is not part of the conversation."

The Chamber is also playing a "balancing role" as Georgia moves forward with the Association Agreement with the EU, which includes the Deep and Free Trade Agreement, and as it continues to work toward a Free Trade Agreement with the US, First Vice-President Sarah noted.

"Georgia is still a developing economy, we are not the US, we are not the EU, and we can't handle the same regulations, therefore it is necessary to balance the European Union's demands for increased regulations with Georgia's needs to grow its economy. We are a big part of the balancing act, as we desire the Westernization of the business environment, but know that the economy needs to stay nimble. A lot of organizations and government agencies look to us to be the balance there, and I think we are playing that role," she said.

"I think that AmCham continues to have a big role to play in making sure investors know what they are doing and know where they are and what to expect. The reverse of that is making sure the government knows what we expect, what investors expect. It is a compliment to them that we expect more than we used to and they need to rise to those levels and we need to continue to raise the bar. I think that is always the mission of the Chamber," Sarah said.

Betsy, one of the founders of AmCham Georgia, noted that thanks to AmCham's work and reputation, the Chamber has helped create a standard for businesses operating in the country.

"We have made a difference in terms of demonstrating the appropriate way to operate as a business ... we have demonstrated that process and legal remedies work," she said.

"We have represented the way that Americans do business."

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