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Sunday, 23 October 2016


Walking on the railway ties to Europe: unprofitable route for Georgia

2008-12-18 12:12

0/5/8/1058.jpegGeorgia's Minister of Economic development Lasha Zhvania ascertained that the construction of the railway corridor Baku-Tbilisi-Kars (BTK) would not be suspended because of the financial crisis. Tbilisi is sure that this project implementation started in 2007 will reconcile duty and pleasure: the money will flow in spite of the crisis and the alternative transport route bypassing Russia will diminish Moscow's influence.


BTK railway is the third joint transport project of Baku, Tbilisi and Ankara. The "Russia-free" oil line "Baku-Tbilisi-Dzheykhan" (BTD) and gas line "Baku-Tbilisi-Erzerum" (BTE) are already operating. However unlike those mentioned above the BTK project was not supported by the USA. The Congress refused to fund it. According to the official version - due to the threat of "Armenian blockade reinforcement". The stakeholders explain this refusal by the "Armenian lobby" effect. The thing is the route under construction will bypass Armenia and consequently deprive it of the prospects of economic development that the states taking part in the project will acquire. In fact the blockade of these very prospects is implied.

As for the project "financial blockade" by Washington, Georgia, Azerbaijan and Turkey depend on their own resources.

Yet before the launch of the project at discussion stage Armenia expressed its willingness to participate in it. It even considered a possibility to open a border with Turkey in order to join the BTK and proposed to complete the route with Gyumri town. But Baku was against this idea - on account of unresolved "Karabakh issue".

Here are more details on the project itself. The length of the route is 105 km. Turkey and Azerbaijan construct their sites at their own cost. Georgia's principal lender is Azerbaijan.

The new railway will deliver passengers and cargo to the European countries due to "Marmaray" megaproject under implementation by Turkey involving the tunnel construction under the Bosporus. This route will have a much higher flow of traffic at much lower tariffs than the current transport routes.

This all looks good but many experts are convinced that the Georgian authorities repeatedly place their stake on politics neglecting economics. They say the BTK, as a recently constructed oil line Baku-Tbilisi-Dzheykhan under the auspices of the USA is designed to cut Russia off South Caucasus and reduce its influence in the region.

"However, - the economic expert Georgy Khukhashvili states, - Georgia's economic benefit from participation in the project is rather doubtful". According to him financially Georgia will even lose. "Implementing this route, - the specialist explains, - Georgian ports in Poti and Batumi will be out of work. As the cargo flows will be redirected".

Niko Orvelashvili, a colleague of his, gives the following calculation on the subject. "Tbilisi-Poti railway line capacity is 18 mln t that is equal to our ports' capacity. BKT capacity is 15 mln.t. That means that when the shipments will be redirected to the new railway line Poti and Batumi ports will be left with bread crumbs. And the government is unlikely to pay the forfeit".

By the way the amount of the credit facility that Azerbaijan has lent to Georgia is 200 mln dollars.

Both Turkey and Azerbaijan according to the Georgian economists win both financially and politically. The cargo turn-over will surely grow in their ports. Baku stops being a simple exporter of power resources and is turning into a transit country indispensable for many states for a long time. This will provide for fast rapprochement with Europe. The same is true for Turkey.

In the meantime Georgian prospects seem quite vague...

Irina Ptashkovskaya


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