Economy
Posted: 4 months ago

Georgia’s Transit Problems: Confusing News from the Transit Frontline

The superficial peace turned out illusive there, where everything seemed to be in order. Georgia’s new state function for becoming a bridge between Europe and Asia is facing obstacles in the fields that were considered the most reliable directions.

The first challenge – Anaklia seaport. Pessimism is a bad friend in our age and half-full glass is always better that half-empty one, but the reality shows that the Anaklia seaport construction perspectives are questionable.  

In this situation there is serious temptation to shift all the responsibility onto the Authorities, even more so, this situation has coincided in time with unclear special operation against the TBC Bank founders. This would be very simple and comfortable – the Authorities have deliberately thwarted the strategic project implementation on behalf of Russian Federation.

However, for good or for ill, this turned out only coincidence and there are other reasons behind the current problems.

International banks that are to finance the project request the impossible and no Authorities will accept similar requests. They demand that no civilized country will ever discuss – insurance of commercial risks.

To say simply, they request that the Georgian Authorities cover the 400 million USD credit if the seaport fails to work valuably and to attract due volume of cargoes.

Anaklia project is a very sophisticated and risky project. One thing is to expand the existing seaport and invest in its modernization, because there are less risks. And another thing is to build a new giant seaport on an empty place.

Any business that starts from zero is very risky, even more so such a huge project without guaranteed clients, which will have to fight for its niche on high-competitive market.

Investors’ fears have some grounds – we talk about 400 million USD. However, no Government and no country, even more so a poor one, will ever insure this 400 million USD investment.

Negotiations are continued, but in reality, the seaport construction perspectives remain unclear.

Meanwhile, unexpectedly, problems arose there, where nobody expected – the Baku-Tbilisi-Kari railroad.

At a glance, a very positive fact has taken place – Russia has expressed intention to join the railroad route, while this country objects to any transport project in South Caucasus as a competitor direction to the Asia-Europe corridor.

Suddenly Russia changed the position and decided to join the project. This is a positive tendency in terms of financial benefits and, as a rare exception this is a case, when the common sens reigns, instead of dark imperial instincts.

However, it turned out the imperial approaches have never disappeared. We can only suppose what has happed. The most realistic scenario is that Russia has promised other actors of the project to join the route if the logistics center for changing the railway platforms will be in Turkey, not in Georgia.

In terms of practical aspects, it does not matter for Moscow where it will change the railroad platform, in Georgia or in Turkey, but the possibility that Georgia may act as an equal partner somewhere is absolutely unacceptable for Russians.

Someone may consider this consideration as an unimportant factor, but not Russia, that is poisoned with imperial disguise towards neighbors.

Seemingly, Baku and Istanbul have accepted the Russian offer and they did not invite Georgia to the memorandum signing ceremony.

There is nothing surprising. We can only try to guess what offer Russia has made to Azerbaijan and Turkey – Russia’s engagement in the project with huge financial benefits for all parties.

Russia – as permanent, major and stable client of Baku-Kars project – could be any other better proposal for Turkey and Azerbaijan?

And there is a weak country on the other side that is unable to protect its interest in this deal.  

There is a simple option – accepting Russia as a partner and ignoring Georgia’s interests or respecting Tbilisi and losing Russia. What do you think – which option is more acceptable for Baku and Istanbul? The answer is clear.

The weak always loses – this is the law of nature.

However, as noted above, half-full glass is better than half-empty one. And Baku-Karsi project will work – with or without logistics center. It is of vital importance for Georgia that this project work and bring benefits.  

By Tengiz Ablotia