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  • Azerbaijan, Georgia launch rail project

    AZERBAIJAN, GEORGIA LAUNCH RAIL PROJECT
    By Dmitry Avaliani in Tbilisi, Nurlana Gulieva in Baku and Diana Markosian in Tbilisi

    Institute for War & Peace Reporting, UK
    May 18 2006

    As Azerbaijan hails a new railway project for the Caucasus, the mood
    in Georgia is less enthusiastic, and the Armenians are openly hostile.

    An ambitious new project to create a rail link between the Azerbaijani
    capital Baku and Turkey has had a lukewarm welcome in Georgia, through
    whose territory the line would run, while Armenia has expressed
    opposition to the scheme.

    "Construction of the Baku-Tbilisi-Kars railway may start in 2006,"
    Azerbaijani president Ilham Aliev told a cabinet meeting on May 10.

    "This railway is badly needed - it will connect Europe with Asia."

    The project envisages construction of a new railway between Kars in
    eastern Turkey and the town of Akhalkalaki in southern Georgia, and
    an upgrade to the existing Akhalkalaki-Tbilisi line. The Tbilisi-Baku
    section already exists.

    The project's backers say it will create greater integration in the
    south Caucasus, which is divided politically as well as economically,
    and boost trade.

    "Launching of this line will guarantee Azerbaijan's national
    interests," said Aliev. "We are prepared to assume financial
    obligations immediately."

    Turkey has been actively promoting the project and has played host
    to the negotiations. However, the verdict on the economic rationale
    for the plan has been cooler in Georgia, while Armenia's reaction
    has been extremely negative.

    With the conflict over Nagorny Karabakh unresolved, major projects
    undertaken in the region have bypassed Armenia. These include the
    Baku-Tbilisi-Ceyhan oil pipeline inaugurated last year, and the
    Baku-Tbilisi-Erzerum gas pipeline which has almost been completed.

    Armenia objects that there is already a railway line in existence from
    Kars via the Armenian city of Gyumri to Tbilisi. The line has been
    closed since 1993, when Turkey formally closed its border with Armenia
    because of the Karabakh conflict. But experts say that the railway
    is in quite a good state of repair, despite the many years it has
    stood idle, and that it could be refurbished with little difficulty.

    "If there's a railway which serves the same aim, building a new one
    and spending so much money is simply pointless", Armenian foreign
    minister Vardan Oskanian said in January.

    "If Turkey, guided by some political considerations, does not want
    Armenia to earn profits from the operation of the existing railway,
    we are prepared not to use it. But the service would promote trade
    between the two countries."

    According to preliminary calculations, the new project is likely to
    cost between 360 and 400 million US dollars, but many believe these
    estimates will grow. One Georgian section of track, between Marabda
    and Akhalkalaki, is in very poor condition and will probably need to
    be replaced entirely.

    Finance for the project has yet to be found, with only the Asian
    Development Bank pledging funds so far.

    Matthew Westfall, head of the bank's Baku branch, recently told
    journalists that "Azerbaijan has the highest rating among the South
    Caucasus countries, and if the government applies to us for help,
    the Asian Development Bank is prepared to provide a credit for
    construction of this thoroughfare".

    After the latest round of talks about financing, held in Ankara on May
    4-5, Georgian officials said several questions remained unanswered. "We
    were interested in the Turkish side's calculations about transporting
    freight other than that belonging to Azerbaijan, Georgia and Turkey,"
    Irakli Ezugbaia, head of Georgian Railways, told IWPR. "It's still
    premature to say what Georgian railways will get out of the project."

    Georgia, Azerbaijan and Turkey signed a declaration on creating an
    international transport corridor last May, pledging that the new
    railway would be put into commission in 2008.

    "Technical work will continue until the end of 2006, and during that
    period the financing issue will be resolved as well," Nazim Kasumov,
    a senior official in Azerbaijan's transport ministry, told IWPR.

    Armenian opposition politician Hovhannes Igitian said it was only
    to be expected that his country was not involved in the project, as
    "other states cannot afford to wait for Armenia to solve its problems
    and start acting as a transit country".

    But others in Armenia highlight the dangers of drawing a new dividing
    line across the Caucasus.

    "If it's a priority for the international community not to create
    dividing lines in the region, but to ensure harmonious development,
    it cannot agree to a railway being built that detours Armenia,"
    said Gagik Minasian, who chairs the Armenian parliament's finance
    and budget committee.

    There have also been vocal protests against the new railway in
    Armenian-majority areas of the Georgian region of Samtskhe-Javakheti,
    through which the line will run.

    Many locals say they fear for their security if there is a growing
    Turkish presence here. Another concern, voiced by Akhalkalaki mayor
    Nair Iritsian, is that "people are afraid the Turks will buy up all the
    land here, leaving the locals no other option but to work for them".

    Georgian economic expert Gia Khukhashvili is concerned that the new
    railway could damage rather than benefit his country.

    "The route cannot be profitable if the annual volume of freight carried
    is less than ten million tons," said Khukhashvili. "But I doubt that
    ten million tons of dry cargo to meet that capacity can be found in
    this region.

    "If it's a question of oil and petroleum products going to Europe
    [from Azerbaijan], Georgia would make more of a profit by using its
    Black Sea ports rather than building a new railway," he said.

    Khukhashvili said the railway would provide Georgia with a healthy
    income only if Turkey shouldered all the construction and running
    costs.

    Turkish investments in Georgia have risen strongly over the past
    year. Last June, the two countries signed an agreement to share use
    of Batumi airport, which is now being rebuilt by the Turks.

    Negotiations are also under way to hand over management of Batumi's
    port facilities to Turkish companies.

    Some analysts argue that even if Armenia is not involved in the
    project, it will still benefit indirectly.

    Yerevan-based political analyst Alexander Iskandarian said he is sure
    the Kars-Baku railway will at worst have no impact on the Armenian
    economy, and could even have a positive effect.

    "Roads between Armenia and Turkey are currently closed, and will
    remain so for the next two to four years," Iskandarian told IWPR.

    "The new project will facilitate transportation of freight from Turkey
    to Armenia and vice versa, as the highways [now in use] from Turkey
    via Georgia are in a poor state".

    Iskandarian disagrees with those who say Armenia will find itself
    totally isolated as an "island-state" once the railway comes into
    use. "If the second railway works, that doesn't mean the first one
    can't as well," he said, referring to the now idle Kars-Gyumri-Tbilisi
    line.

    Georgian political analyst Paata Zakareishvili agreed, saying, "The
    projects that are already under way cannot be stopped or changed even
    if Armenia and Azerbaijan become reconciled with one another.

    "But their success will beneficial to the entire region including
    Armenia".

    Dimitry Avaliani is a correspondent with 24 Hours newspaper in
    Tbilisi. Nurlana Gulieva is an independent journalist in Baku. Diana
    Markosian is a correspondent for the A1+ television company in Yerevan.
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