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Eurasia Daily Monitor
February 9, 2007 -- Volume 4, Issue 29
KARS-TBILISI-BAKU RAILROAD: AZERBAIJAN AS LOCOMOTIVE OF REGIONAL
PROJECTS
by Vladimir Socor
Azerbaijan's President Ilham Aliyev, Georgian President Mikheil
Saakashvili, and Turkish Prime Minister Recep Tayyp Erdohan witnessed on
February 7 in Tbilisi the signing of a tripartite agreement to launch
construction work this year on the railroad connecting their countries. The
presidents signed a declaration on a `Common Vision for Regional
Cooperation' on this occasion.
The three countries' regional cooperation far transcends the South
Caucasus, as it entails projects of intercontinental scope. These are: the
recently inaugurated Baku-Tbilisi-Ceyhan oil pipeline, with a planned
trans-Caspian link to Kazakhstan; the now-operational Baku-Tbilisi-Erzurum
gas pipeline, which can reach via the Nabucco project into Central Europe;
and the Kars-Akhalkalaki-Tbilisi-Baku (KATB) railroad, which will link not
only the three countries with each other, but also the South Caucasus
directly with Europe in the near term and potentially with Central Asia not
long thereafter.
Azerbaijan can be said to function as the locomotive of the railroad
project, as well as the path-breaker in initiating the oil and gas
extraction projects with their westbound export routes. The KATB railroad is
now being turned into reality thanks to Azerbaijan's financing of the
project's longest and most challenging sections, both in Georgia: 30
kilometers to be built from scratch from the Turkish border to Akhalkalaki
and another 160 kilometers to be repaired and modernized from Akhalkalaki to
the Georgia-Azerbaijan border. Azerbaijan will also modernize the railroad
on its territory, while Turkey will build a 68-kilometer line from Kars to
the Turkish-Georgian border from scratch.
Azerbaijan is providing a $220 million loan, repayable in 25 years,
with an annual interest rate of only 1%, for the construction work on
Georgian territory. Georgia plans to repay the loan by using its share of
the transit revenue, once the railroad becomes operational. The credit
agreement, signed last month, is to be ratified by the two parliaments and
to be followed by a bilateral inter-bank agreement and a tender to select
the construction companies. This railroad has become vital for Georgia in
the wake of Russia's 2006 decision to impose a blockade on Georgia's
transport communications.
Azerbaijan's Transport Minister Zia Mamedov, Georgian Economic
Development Minister Giorgi Arveladze, and Turkish Transport Minister Binali
Ildirim signed in Tbilisi on February 7 the agreement on construction work.
The work in Georgia is expected to start in the third quarter of 2007 and to
require two-and-a-half years. The railroad's anticipated capacity is 5
million tons per year initially, 10 to 15 million tons annually after the
third year of operation, and ultimately up to 20 million tons annually. The
KATB railroad will connect Azerbaijan and Georgia via Turkey with the tunnel
crossing under the Bosporus Strait to Europe.
The KATB project was held up for more than a decade by a lack of
funding, mainly for its Georgia section. Azerbaijan is now taking the lead
in this transport project thanks to revenue from oil projects that
Azerbaijan itself had initiated during that past decade. During the signing
ceremonies, Saakashvili paid tribute to the late Azerbaijani president
Heydar Aliyev for laying the foundations of these integration projects. A
section of the Mtkvari River's embankment in central Tbilisi was renamed
after Heydar Aliyev in the presence of the three state leaders on this
occasion. The Georgian president also called on his nation to `never forget'
Azerbaijan's decisions to supply Georgia with gas during the Russian energy
blockade of January 2006 and again this winter, despite Russian cuts in gas
and electricity supplies to Azerbaijan in retaliation.
The presidents also inaugurated a state-of-the art terminal at Tbilisi
airport, built by a Turkish-Austrian consortium in one year. Concurrently,
Turkey is building on its territory a highway that should reach the Georgian
border near Batumi by the end of 2007, while Georgia is building a highway
from Tbilisi to Batumi. Cumulatively, these developments are rapidly
ushering in what Saakashvili called a `new era' in the South Caucasus.
Armenia continues to oppose the KATB project. Yerevan insists that
Turkey should instead use the existing Kars-Gyumri (Armenia) railroad link,
which Turkey closed in 1994 after Armenian forces had seized extensive
territories of Azerbaijan. However, KATB and Kars-Gyumri are in no way
comparable. While KATB is a project of transcontinental scope, Kars-Gyumri
is merely a local link.
Armenia's opposition to KATB, against the interests of three
neighboring countries, looks like a replay of Yerevan's long, ultimately
futile resistance to the Baku-Tbilisi-Ceyhan oil pipeline project. In the
case of KATB, however, Armenian lobbying groups have succeeded in blocking
U.S. loans to the railroad project. Even from Yerevan's own standpoint, this
attitude ignores the interests of the ethnic Armenian population in
Georgia's deeply impoverished Akhalkalaki area, where this railroad brings
hope of economic development. More broadly, Yerevan's opposition to KATB
significantly complicates the U.S. administration's efforts to pull Armenia
out of its quasi-isolation and into regional integration projects.
(Civil Georgia, Georgian Public Television, ANS, Turan, Anatolia News
Agency, February 6-8; see EDM, January 19)
--Vladimir Socor
February 9, 2007 -- Volume 4, Issue 29
KARS-TBILISI-BAKU RAILROAD: AZERBAIJAN AS LOCOMOTIVE OF REGIONAL
PROJECTS
by Vladimir Socor
Azerbaijan's President Ilham Aliyev, Georgian President Mikheil
Saakashvili, and Turkish Prime Minister Recep Tayyp Erdohan witnessed on
February 7 in Tbilisi the signing of a tripartite agreement to launch
construction work this year on the railroad connecting their countries. The
presidents signed a declaration on a `Common Vision for Regional
Cooperation' on this occasion.
The three countries' regional cooperation far transcends the South
Caucasus, as it entails projects of intercontinental scope. These are: the
recently inaugurated Baku-Tbilisi-Ceyhan oil pipeline, with a planned
trans-Caspian link to Kazakhstan; the now-operational Baku-Tbilisi-Erzurum
gas pipeline, which can reach via the Nabucco project into Central Europe;
and the Kars-Akhalkalaki-Tbilisi-Baku (KATB) railroad, which will link not
only the three countries with each other, but also the South Caucasus
directly with Europe in the near term and potentially with Central Asia not
long thereafter.
Azerbaijan can be said to function as the locomotive of the railroad
project, as well as the path-breaker in initiating the oil and gas
extraction projects with their westbound export routes. The KATB railroad is
now being turned into reality thanks to Azerbaijan's financing of the
project's longest and most challenging sections, both in Georgia: 30
kilometers to be built from scratch from the Turkish border to Akhalkalaki
and another 160 kilometers to be repaired and modernized from Akhalkalaki to
the Georgia-Azerbaijan border. Azerbaijan will also modernize the railroad
on its territory, while Turkey will build a 68-kilometer line from Kars to
the Turkish-Georgian border from scratch.
Azerbaijan is providing a $220 million loan, repayable in 25 years,
with an annual interest rate of only 1%, for the construction work on
Georgian territory. Georgia plans to repay the loan by using its share of
the transit revenue, once the railroad becomes operational. The credit
agreement, signed last month, is to be ratified by the two parliaments and
to be followed by a bilateral inter-bank agreement and a tender to select
the construction companies. This railroad has become vital for Georgia in
the wake of Russia's 2006 decision to impose a blockade on Georgia's
transport communications.
Azerbaijan's Transport Minister Zia Mamedov, Georgian Economic
Development Minister Giorgi Arveladze, and Turkish Transport Minister Binali
Ildirim signed in Tbilisi on February 7 the agreement on construction work.
The work in Georgia is expected to start in the third quarter of 2007 and to
require two-and-a-half years. The railroad's anticipated capacity is 5
million tons per year initially, 10 to 15 million tons annually after the
third year of operation, and ultimately up to 20 million tons annually. The
KATB railroad will connect Azerbaijan and Georgia via Turkey with the tunnel
crossing under the Bosporus Strait to Europe.
The KATB project was held up for more than a decade by a lack of
funding, mainly for its Georgia section. Azerbaijan is now taking the lead
in this transport project thanks to revenue from oil projects that
Azerbaijan itself had initiated during that past decade. During the signing
ceremonies, Saakashvili paid tribute to the late Azerbaijani president
Heydar Aliyev for laying the foundations of these integration projects. A
section of the Mtkvari River's embankment in central Tbilisi was renamed
after Heydar Aliyev in the presence of the three state leaders on this
occasion. The Georgian president also called on his nation to `never forget'
Azerbaijan's decisions to supply Georgia with gas during the Russian energy
blockade of January 2006 and again this winter, despite Russian cuts in gas
and electricity supplies to Azerbaijan in retaliation.
The presidents also inaugurated a state-of-the art terminal at Tbilisi
airport, built by a Turkish-Austrian consortium in one year. Concurrently,
Turkey is building on its territory a highway that should reach the Georgian
border near Batumi by the end of 2007, while Georgia is building a highway
from Tbilisi to Batumi. Cumulatively, these developments are rapidly
ushering in what Saakashvili called a `new era' in the South Caucasus.
Armenia continues to oppose the KATB project. Yerevan insists that
Turkey should instead use the existing Kars-Gyumri (Armenia) railroad link,
which Turkey closed in 1994 after Armenian forces had seized extensive
territories of Azerbaijan. However, KATB and Kars-Gyumri are in no way
comparable. While KATB is a project of transcontinental scope, Kars-Gyumri
is merely a local link.
Armenia's opposition to KATB, against the interests of three
neighboring countries, looks like a replay of Yerevan's long, ultimately
futile resistance to the Baku-Tbilisi-Ceyhan oil pipeline project. In the
case of KATB, however, Armenian lobbying groups have succeeded in blocking
U.S. loans to the railroad project. Even from Yerevan's own standpoint, this
attitude ignores the interests of the ethnic Armenian population in
Georgia's deeply impoverished Akhalkalaki area, where this railroad brings
hope of economic development. More broadly, Yerevan's opposition to KATB
significantly complicates the U.S. administration's efforts to pull Armenia
out of its quasi-isolation and into regional integration projects.
(Civil Georgia, Georgian Public Television, ANS, Turan, Anatolia News
Agency, February 6-8; see EDM, January 19)
--Vladimir Socor