GEORGIA AND THE “NEW SILK ROAD”

The Transport Corridor of Europe-Caucasus-Asia [TRACECA] — a European Union-sponsored project involving Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan, Azerbaijan, Armenia, and Georgia, which is also known as the “New Silk Road,” was launched in Brussels in 1993. By 1996, Ukraine and Mongolia had also signed on to the initiative. A transport corridor from Western Europe to China is to be developed, passing through Eastern Europe, the Black Sea, Transcaucasus, the Caspian Sea, and Central Asia. It is to be based upon road, rail and sea communications. The first stage of the project started in 1995, and includes the restoration of transport links along this route and the harmonization of local customs and legislative regulations in participating countries.

TRACECA could be an important contribution to the long-cultivated idea of a common Eurasian geopolitical and economic space, of which Georgian President Eduard Shevardnadze is a fervent proponent. Forced to maneuver within a labyrinth of complex, and even contradictory, geostrategic interests, Shevardnadze is promoting TRACECA’s north-south route, which would involve Russia and reopen the important road and railway communications through Georgia’s breakaway region of Abkhazia. He may be looking for new economic incentives, both to reach a compromise in Abkhazia, and to appease Russia, which sees TRACECA-related projects as a challenge to its influence in the region.

The Georgian political leadership is trying to use TRACECA to keep itself on the Western democracies’ mental and political “radar screen,” and thereby to accelerate the resolution of ethno-regional conflicts in the country, to prevent the eruption of new ones, and gradually to incorporate Georgia into the European family.

And if one takes into account the fact that the Central Asian countries are rich in raw materials and the prospect of attracting shipments from China and Indochina, even a rough calculation will confirm that Georgia stands to benefit greatly once the TRACECA project is completed.

Transportation and Political Rivalries Moscow, meanwhile, does its utmost to weaken Georgia’s transit potential. It has advanced competing projects, and threatens to destabilize the situation in potentially vulnerable regions of Georgia.

In addition to various subversive political activities, Moscow has resorted to purely economic measures. This May, Russian Prime Minister Sergei Kirienko ordered the Russian oil transit rates to be reduced by 20 to 30 percent.

This move put Georgia in a difficult situation. According to the contract the Georgian government concluded this March with Chevron Overseas, the sea port of Batumi (capital of the Ajarian Autonomous Republic) was to become one of the major transit points for delivery of Chevron-extracted Kazakh oil to Europe. Besides, the contract gives Chevron Overseas exclusive right to exploit the pipeline route from Khashuri (in eastern Georgia) to Batumi.

In order to cope with the growing demands of TRACECA, Georgian railroads and the Batumi seaport had significantly increased their transit capacity. In six months, they transferred 865,000 tons of Chevron’s crude oil from Kazakhstan’s Tengiz oil field to the European market. Chevron plans to transport via Georgia 7-8 million tons of oil this year.

Since Russia had reduced its transit rates, Chevron thought that it would be worthwhile to re-route oil transit away from Georgia who had much higher rates. Richard Matske, the president of Chevron Overseas, called on the Georgian government to take drastic measures in order to reduce their rates.

But Matske, though a businessman, still had to reckon with the US political interests in the Caspian region, which favor a common security policy plus common economic interests. This security policy excludes permanent oil transit through Russia or Iran.

The Georgian government nevertheless decided to yield to Chevron’s demand. The State Minister Niko Lekishvili said that the rates would be reduced. But the formal process requires at least two months to draft the reductions and get them approved by the parliament.

Another TRACECA project led to political tension, both within Georgia itself and between Georgia and neighboring Armenia.

On August 14-15, 1996 in Tbilisi, Shevardnadze and Turkish President Suleiman Demirel finalized a project to build a 120-kilometer railway from Kars to Akhalkalaki to Tbilisi. This railway, which is due to be put into operation in 1999, will be the shortest route from the Central Asian countries and Azerbaijan to Turkey. For the Caucasus, this line will be the cheapest transportation route to Europe.

On May 15-16, 1998, a delegation from Turkish Transport Ministry agreed with its Georgian counterparts in Tbilisi on conditions for speeding up construction on the high-capacity railroad line.

At present, twelve foreign companies are competing to win the tender on construction. Turkish Eximbank expressed readiness to allocate a soft credit of $200 million for building the Georgian portion of the railroad. Construction is to begin this July and is planned to be finished in three years. The cost of Turkish branch is estimated to be $350 million. This railroad route is expected to be one of the key communications of TRACECA.

But some experts in Tbilisi fear that once the railway is in operation, it may lead to cargo being redirected in favor of Turkish ports. And the influential Armenian community in Akhalkalaki (the center of Georgia’s border region of Javakhetia) sees the venture as the prelude to a Turkish economic and political invasion. They demand political autonomy for the region and threaten that if the railway starts to operate, there will be serious repercussions.

The development of Georgia’s transit potential has also raised concerns among certain circles in neighboring Armenia. On June 19, Armenia’s semi-official newspaper Respublika Armenia published an article entitled “The Transit Yard of the Common Caucasus Home.” The article expressed discontent with Georgia’s growing economic cooperation with Turkey and Azerbaijan within the framework of TRACECA and oil-transit projects, saying that the restoration of the “Silk Route” is the part of a big strategic game which serves “Turkish infiltration” into the region. Moreover, the article considers this tripartite alliance to be “the instrument of restriction of Russian influence within CIS,” directed “against the Armenian nation.” This appears to be a sign of contradictions within the Armenian political establishment, since it is well-known that landlocked Armenia actively seeks access to international communications, and especially to the Black Sea through Georgian seaports.

This June, Tbilisi has reduced transit fees for Armenian cargo transferred via Georgia. Besides, Georgia and Armenia have achieved an agreement in principle on construction of a highway connecting Armenia to the Georgian seaport of Batumi, apparently in exchange for Yerevan’s neutrality toward the separatist movement in Javakhetia. For Armenia, this main highway is the long-desired access to the Black-Sea. At the same time this highway will allow Georgia to transfer its goods to Iran and the Persian Gulf countries via Armenian territory. Armenian-American billionaire Kirk Kerkorian will invest $85 million in the construction of this highway. Armenia, Georgia and international organizations have yet to work out the details of the project, which will be implemented within the framework of TRACECA.

The ongoing power struggle between Tbilisi and the Ajarian Autonomous Republic, whose leadership strives for maximum independence from the central government, has also emerged as a political obstacle to plans to develop Georgia’s transportation sector. Though construction of a railroad/ferry-line complex has started in the major seaport of Batumi (the capital of Ajaria), Tbilisi is still wary of strengthening Batumi, since doing so would give additional economic leverage to the regional government.

GEORGIA: A TRANSPORTATION HUB