The Silk-Iron Railroad of the South Caucasus

A new and ambitious railway line being built in the Caucasus – from Azerbaijan through Georgia and on into Turkey – has become both a great hope and a new conflict factor in this region.

The following article was originally published in Russian on

JAMnews

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A new and ambitious railway line being built in the Caucasus – from Azerbaijan through Georgia and on into Turkey – has become both a great hope and a new conflict factor in this region.

The Baku-Tbilisi-Kars line is part of an international ambitious project. The idea is to connect the railways of Azerbaijan and Turkey through Georgia and thereby create a cheaper and short alternative transport corridor from Central Asia through the South Caucasus to Europe.

However, this economic project has been complicated by political realities on the ground – including unresolved territorial and ethnic conflicts.

Initially, back in the 1990s, discussions on the need to resume transport through the devastated South Caucasus to Turkey and Europe, saw the completion of two projects: the Baku-Tbilisi-Kars road being constructed today and the Tbilisi-Gyumri-Kars railway. Despite the fact that two of the three points in these routes are the same, the difference between them is huge:

1. The current route Baku-Tbilisi-Kars: excludes Russia and Armenia, focuses on Azerbaijan. The main line was initially seen as an alternative to the Russian Trans-Siberian Railroad and the project was even once called the Iron Silk Road.

2. The competing route of Tbilisi-Gyumri-Kars: excludes Azerbaijan, focuses on Russia and Armenia.

карта подготовлена International Alert
карта подготовлена International Alert

As a result, the Baku-Tbilisi-Kars project “won” and in 2007 its implementation began,  which involved the resuscitation of existing routes and the construction of missing areas.

The three countries that are involved in the route – Georgia, Azerbaijan and Turkey – say that the “Iron Silk Road” will give a powerful impetus to the rapid economic development of the entire region.

But Armenia has reminded these players that it has been left completely on the sidelines, and therefore the project, on the contrary, separates the region and increases its conflict-related context. This position is unofficially supported by Iran and Russia.

Despite the fact that the railway is nearing completion, the initial geopolitical conflict around it has not only not faded, but has become sharper. Moreover, new ones have been added to the existing conflict components, including those in the conflicting interests of Georgia and Azerbaijan.

Here we will discuss these issues, presenting the Baku-Tbilisi-Kars project through the positions and arguments of the three countries involved in the region. We will start with Georgia, then we will listen to Armenia and finish the review with the opinion of the initiator of the project and its main financier – Azerbaijan.

Georgia

On November 21, 2007, a solemn ceremony of the launching the Baku-Tbilisi-Kars railway project was held in Marabda in the Akhalkalaki region in the mountains in the south of Georgia. The ceremony was held at the highest level – the presidents of all three participating countries attended.

In fact, it turned out that Georgia had to make a choice from two competing projects. External potentially influential political forces, such as the European Union and the United States left the region to make a decision on its own.

Georgia found itself in a difficult situation, since any choice would leave at least one neighboring country ‘offended’ and left out.

But proceeding from the political context in which Georgia is located, the project to restore the railway along the route Tbilisi-Gyumri-Kars probably did not have any chance of being chosen.

But why not the Tbilisi – Gyumri – Kars railway?

1. The geography of the route is such that, in order for it to work, Tbilisi would have had to agree to equal participation in the Abkhazia project – a region that was part of Georgia until the early 1990s, then declared its independence and, with the support of Russia, continues to insist upon it. With Georgia’s categorical approach to the issue of its territorial integrity, it could hardly be expected that it would accept Abkhazia as a parallel partner to itself.

2. Georgia urgently needs alternatives that will reduce or stop its economic dependence on Russia. One of the founders of the Association of Georgian Reforms (GRASS), deputy Sergi Kapanadze asserts that “the economic, energy, and political independence of Georgia depends on infrastructure projects that bypass Russia and affirm the role of Georgia as a state with a regional transit function”.

Baku-Tbilisi-Kars: details of the route and finances

Железная дорога Баку-Тбилиси-Карс предназначена, в основном, для перевозки грузов, а не пассажиров
Железная дорога Баку-Тбилиси-Карс предназначена, в основном, для перевозки грузов, а не пассажиров

The Baku-Tbilisi-Kars project provides for:

Rehabilitation and reconstruction of 178 kilometers of railroad tracks in Georgia – from Tbilisi to Marabda-Akhalkalaki station;

Construction of a new railway line from the Georgian station Akhalkalaki to the existing railway line in Turkey – a total length of 98 kilometers. From this new line, 30 kilometers is on the territory of Georgia, from the city of Akhalkalaki to the village of Kartsakhi on the border with Turkey.

Turkey itself covers the costs of the project on its territory.

As a JAMnews correspondent was told in the Georgian state company Marabda-Kartsakhi Railway, which is directly responsible for all the work on the territory of Georgia, Georgia received a loan from Azerbaijan to build its part of the road.

In total this sum was 775 million dollars provided by the State Oil Fund of Azerbaijan, the company said, and the loan was received in two tranches:

In 2007: 200 million dollars for a period of 20 years at 1 percent per annum,

In 2011 – 575 million dollars for 25 years at 5 percent per annum.

At the same time, there is some discrepancy with the amounts that are given on the website of the State Oil Fund of Azerbaijan, which is a direct investor. The website reports that from the beginning of the project until April 2017, the Ministry of Transport of Azerbaijan as a whole was allocated 630.9 million dollars for the project, including 730 thousand dollars in the first quarter of 2017.

When will the Baku-Tbilisi-Kars railway launch?

According to the plan, the trains were supposed to go into action in 2010. But at the moment, of the $775 million mentioned, Georgia has acquired only 125 million.

Minister of Transport, Shipping and Communications of Turkey Ahmet Arslan visited Kars in April 2017 and there he told reporters that the Baku-Tbilisi-Kars railway would open in June 2017.

However, the Georgian state company “Marabda-Kartsakhi Railroad” told a correspondent of JAMnews that the new and final term of launching the Georgian section of the road is the end of 2018.

Срок сдачи дороги в эксплуатацию был сдвинут из-за комплекса финансовых и политических проблем
Срок сдачи дороги в эксплуатацию был сдвинут из-за комплекса финансовых и политических проблем

The same Ahmet Arslan in early 2017 gave a detailed commentary for the Turkish press and explained the reasons for the delay in the construction of a protracted litigation in Turkey – one of the companies that lost the tender for construction work sued, and while the proceedings were underway, construction came to a stand-still.

The Azerbaijani side named the change of power in Georgia in 2012 as one of the obstacles that forced them to make adjustments in the construction of the road on the territory of Georgia. The then Prime Minister Bidzina Ivanishvili publicly questioned the economic feasibility of this construction. He said, in particular, that after the commissioning of this road, the volume of cargo transportation via the Georgian railway and through the Black Sea ports of the country may decrease.

What does Tbilisi expect from the project?

When the construction was just beginning, the then Georgian President Mikhail Saakashvili called the project “a great geopolitical revolution” and stated that “all Chinese goods that are delivered today to Europe through the territory of Russia will follow this road.”

The design capacity of the project is 20 million tons of cargo – and for Georgia this means large-scale and stable revenues to the budget as transit fees.

Here, however, there is an immediate emotional “but” – at the initial stage the road will supposedly carry only 4-5 million tons per year.

At the opening ceremony of the project in 2007, Saakashvili said that Kazakhstan decided to redirect 10 million tons of its cargo to this new route. If this happens, it will greatly help to increase the profitability of the project. True, since then Kazakhstan has not publicly confirmed this decision.

Many Georgian economists have been seriously criticizing the project all these years. The main negative arguments are:

Argument 1.

At the moment, the main financier of the project is Azerbaijan. However, the allocated money is a loan, and when Georgia repays it in 25 years, it will be Georgia that will be the main financier of the project. However, the terms of the contract with Azerbaijan are signed in such a way that Georgia has no right to independently make decisions on its road segment.

“It would be much more beneficial for Georgia to find its own funds for the construction of its railway section. In this case, she could manage her site at her own discretion,” says Paata Tsagareishvili, an expert at the Hab Georgia Center for Transport Studies.

According to him, during the discussion of the idea, other projects for laying a road across Georgia were offered, which would cost $ 200-250 million – while the Azerbaijani project cost $775 million.

“Not only is Georgia taking this much larger amount on credit and must now pay for it, the problem is that as a result, the country can not exclusively manage a section of the road that passes through its territory”, Paata Tsagareishvili said.

What is the expression of this dependence of Georgia? Paata Tsagareishvili’s comment:

1. Azerbaijan has claimed that they will determine the tariff policy.

2. A narrow track is laid on the main section of the new railway line from the Georgian city of Akhalkalaki to the border with Turkey. In Georgia, there are no trains for such a gauge, which means only Turkish train trains will go here. Georgia will lose a large part of the potential income on this.

3. And, finally, Azerbaijan has already warned Georgia that it will not allow Armenian cargoes to be transported along the Baku-Tbilisi-Kars road. This is a very unpleasant aspect of the project for the Georgian-Armenian relations.

4. There is an unpleasant material aspect of Azerbaijan’s demand to completely exclude Armenia from the project – it is about 0.5-1 million tons of cargo, the loss of which is very significant for Georgia.

Argument 2:

Competition with Russian routes is very problematic

On December 13, 2015, the first experiment with a new route was launched. The train left the Chinese terminal of Lianungian and through all of China, Kazakhstan, Azerbaijan and Georgia reached Turkey by ferry from Poti after 15 days. This was then called the perfect result – a similar sea route would take up 40-45 days.

Nevertheless, this experiment remained an experiment for this moment. Chinese businessmen are increasingly enjoying the Chongqing-Dostyk-Moscow-Brest-Lodz-Duisburg route, which, by the way, is also called the “New Silk Road”. This railway connects China and Kazakhstan through Russia with Poland and Germany.

“By the Chongqing-Duisburg railway, in 2017, more than 100 trains have passed. While in Georgia from China, there are only two teams in the last two years”, Paata Tsagareishvili said.

Yes, the road through Georgia is shorter, and the transportation rate is lower: the cost of transporting one container across Russia is $4,000, and the territory of Georgia – $3,880. Nevertheless, the cargoes were not reoriented towards Georgia.

As Tsagareishvili argues, there are several reasons why this did not happen and, probably, will not happen.

On the Russian route there is a reverse freight traffic: trains both to China and from China are loaded, while from Georgia to China those trains are empty.

On the Russian side there are powerful logistics companies, which are very efficient in the search, distribution and transportation of goods. In Georgia, there is no such strong operator to this day. Many Central Asian countries are theoretically interested in this alternative direction. But there are still no guaranteed contracts.

Argument 3:

The problems of Armenian villages in the Samtskhe-Javakheti region in Georgia, through which the route passes.

JAMnews correspondents visited these villages and listened to people’s complaints.

A total of 14 local residents today claim that they have not received compensation for their land.

In the state property management agency of the Georgian Ministry of Economy, JAMnews said that each of the cases of unpaid compensation is disputable, and many present only Soviet-time documents as proof of property. Local residents say they can not understand the problem with the documents, because they do not know the Georgian (state) language and do not understand the legislation. For its part, neither the local authorities nor the structures in Tbilisi initiate the process of resolving the problem.

2. The railway track blocks access to pasture lands

The basis for the railway is raised almost five meters from the ground, and cows can not overcome this rise.

“Usually we release animals to pasture at the end of March. But now the only possibility is to lead them to the mountains, and there the snow comes down and grass appears only now, by the end of May. That is, almost two extra months the animals remain in the shed – and this is a matter of large stocks of additional hay for them,” says Edgar Tumasyan from the village of Dadesh. He said that he is now forced to buy hay in neighboring villages.

3. The railway track blocks the road from the villages to the city.

Very high rails block the main road that connects the village with the city. The road that was offered as an alternative is swamped 7-8 months a year. As a result, it has been six years since the second-hand dealers have come for potatoes and wonder how to deliver to the city and sell the crop has completely fallen on the shoulders of the villagers.

4. Houses took a hit

Because of the many explosions needed during the construction, many local residents suffered rather badly at home, sustaining cracks in the walls and in the roofs.

5. The explosions piled stones on arable land that is near the road, but was not taken under construction.

“We are villagers, most of us live off the land. A huge number of stones after the explosions scattered over our lands, no one cleared, no one cares. No matter how much we demanded – no reaction”, says Galust Manukyan from the village of Mamzara in the Ninotsminda district.

6. Аlready 10 years have passed since the beginning of the project, and during this time no local resident has received work.

Village residents told JAMnews that they do not have much hope that they will somehow be involved in servicing the road and its infrastructure, as construction companies – Turkish and Azerbaijani – prefer their own workforce.

None of the official structures involved in the project ever spoke openly about the fact that local villagers did not received jobs on the project because they are ethnic Armenians (in this part of the Samtskhe-Javakheti region the Armenian community is very prominent). But the categorical demand of Azerbaijan to exclude Armenia from the project suggests this idea.

To date, this railway has not brought any benefit to the village of Mamzar, local residents are indignant

“As I myself understood from conversations with local residents, they are not informed properly about the purposes of the railway, and this created strong negative stereotypes,” said Vahram Ter-Matevosyan, a senior fellow at the Institute of Oriental Studies of Armenia, who has been working for several years now. He has been studying the social aspects of the Baku-Tbilisi-Kars project.

“State structures and various institutions of Georgia should work more with the local Armenian population and do not give thought to the idea that this project contradicts their interests. For the stability of the project, it is very important that local communities become its number one beneficiary. ”

Many village residents on whose lands the road passed told JAMnews that they understand its importance. But they insisted that their welfare as citizens of Georgia should be no less important for the country.

Армения

In Armenia, the mention of the Baku-Tbilisi-Kars railway project usually calls up one association – the competing potential of the cross-national transport project Tbilisi-Gyumri-Kars.

The Armenian authorities do not miss the opportunity to remind the world about the unilateral decision of Turkey to stop the operation of the Tbilisi-Kars-Gyumri railway, and concerns about it are expressed almost every year by the highest-ranking figures in Armenia.

Political scientist Sergey Minasyan believes that the Armenian government’s message in this case is directed not at Turkey, but at superpowers.

“I do not think that Turkey is not familiar with the specifics of this issue. This information is more aimed at Europe, the US as a way to tap levers that have more influence over Turkey than Armenia has, “he said.

A few years ago there was a time when it seemed that there would be a turning point. In 2008, a process was launched that was given the historic name of “football diplomacy”. On September 8, a match was scheduled in Yerevan between the national football teams of Armenia and Turkey. The match was attended by the then President of Turkey Abdullah Gul. And at the initiative of the Armenian side, unprecedented work was begun on the 12-kilometer Armenian section of the Gyumri-Kars railway.

Why the Armenian plot is being restored is not said, but it was clear to everyone: if the political dialogue between the sides succeeds, one of the first results will be the opening of the railway, which is of great importance for Armenia.

However, the whole process came to naught and sank into oblivion. And with it the road Tbilisi-Gyumri-Kars.

Baku-Tbilisi-Kars is not an economic project, but a political project that promotes Azerbaijan,” said Alexander Iskandaryan, a political scientist and director of the Caucasus Institute.

“Official Tbilisi has already shown that it can not affect the companies investing in the project, and they themselves dictate the rules of the game. Strengthening the influence of Azerbaijan and Turkey in Georgia is a threat to Armenia,” said Johnny Melikyan, a researcher at the Center for Regional Studies of the Academy of Public Administration of Armenia.

The Georgian side, in the opinion of Armenian political scientists, will not in itself oppose the involvement of Armenia in the Baku-Tbilisi-Kars railway project. But for this, official Yerevan should show great activity, lobbying through Washington, Brussels and other geopolitical centers for the possibility of its participation in the project.

In the “confrontation” of the transport corridors in the South Caucasus, the motor road under the conditional name “North-South”, which is being actively constructed now, will contribute a route connecting the Persian Gulf and the Black Sea and passing through the territory of Georgia.

Some of its sites have already been put into operation. As expected, this direction is further intensified after international sanctions were lifted from Iran and its accounts were unlocked.

Azerbaijan

“The launch of the Kars-Tbilisi-Baku railway is one of our main tasks, and we will achieve this. In this case, Turkey and Azerbaijan will be connected by rail, all freight traffic will be carried out along this route. At the same time, it is also clear that the country, occupying our lands, aggression against us, Armenia will remain excluded from all these projects. ”

This is a quote from the speech of the President of Azerbaijan, Ilham Aliyev, at the Second World Azerbaijanis Congress on March 16, 2006.

Economist Ilham Shaban says that this railway is “a great contribution to the growth of trade turnover and is of exceptional importance for the Georgian and Turkish markets right up to the Balkans and the Black Sea basin.”

In the long term, Azerbaijani officials forecast an annual profit for the country from the transportation of goods along this route at at least $50 million.

It is supposed that the railway will help to deliver the products of Azerbaijani enterprises to Turkish and European markets, including the currently under construction Karbomit and SOCAR Polymer refineries, which will produce raw materials for many spheres of the economy – from water pipes and textiles to medical equipment .

The report of JAMnews correspondents about what the Georgian section of the railway looks like today:

The city of Ninotsminda has a power transmission system, electric poles, a cable has been laid.

In the Akhalkalaki district there are no poles or cables. The construction of the transition of trains from the European standard railways (1435 mm) to the existing Soviet-standard tracks (1520 mm) has not been completed. The system of communications, sewerage, drainage canals has not been carried out.

Ana səhifəNewsThe Silk-Iron Railroad of the South Caucasus