Anaklia: The port of the future stuck in the political quagmire of the present

Anaklia port project

The Black Sea, a pebbled coastline, and a mild subtropical climate—Anaklia, a small town in western Georgia, could easily have become the local Riviera.

What’s more, Anaklia is an ideal location for building a deep-sea port, with the potential to transform not just the region but the entire country.

However, for several decades, Anaklia has been mired in domestic political conflicts and geopolitical games, preventing the realization of crucial international projects and disrupting the lives of the local population.

Today, the area resembles more of a ghost town than a seaside resort: unfinished and semi-ruined buildings, abandoned hotels, and a decaying wooden bridge that was once the hallmark of the place.

Just beyond the bridge, piles of sand and rusting construction equipment lie abandoned on the beach, slowly being washed away by the sea. The sand was dredged up from the seabed years ago when construction began on a port deemed vital for Georgia, intended to serve as a bridge connecting Europe and Asia and a key transportation hub for the West in the region.

However, the project, undertaken by an American consortium, was halted in 2020 by the Georgian government. Four years later, a Chinese company won the tender to construct the Anaklia port.

Some view this tiny coastal town as a symbol of Georgia’s shifting geopolitical direction. Its fate remains uncertain.

The Anaklia Port is the most controversial international project in Georgia in recent years.

On May 29, 2024, the Georgian government announced that a Chinese-Singaporean consortium would acquire a 49% stake in the Anaklia port.

While the investor is known, experts say the story is still shrouded in uncertainty, with many unanswered questions remaining.

Two failed attempts to start anew

Despite its wonderful climate and the rare sandy seabed, unusual for the Black Sea, Anaklia was never a popular resort.

During the Soviet era, it was merely a coastal village, difficult to reach due to poor roads. The local population primarily earned a living from livestock farming, not tourism. Visitors preferred the nearby Abkhazia, which was just “a stone’s throw away,” with its well-equipped sanatoriums and beaches.

“In my childhood, this place resembled a wild forest, and cows and buffalo grazed on the beach,” recalls Eliso Chikobava, a resident of the nearby town of Zugdidi.

Anaklia’s new chapter began in 2010, when then-president Mikheil Saakashvili’s government decided to fast-track the development of Anaklia and the neighboring village of Ganmukhuri.

Under Saakashvili’s initiative, a project was launched to build the country’s first deep-sea port in Anaklia. Moreover, Saakashvili planned to create Georgia’s second-largest city here, called Lazika, which would be declared a free economic zone.

For a few years, life in the sleepy provincial Anaklia was buzzing with activity. The shoreline was improved, several large hotels were built, and concerts and electronic music festivals were held. Local residents took out loans, started preparing their homes for tourists, opened beach bars, and built bungalows.

However, in 2012, after a change of government in Georgia, the approach to Anaklia shifted dramatically.

The new ruling party, “Georgian Dream,” keen to distance itself from Saakashvili’s legacy, halted nearly all the projects he had initiated, including the development of Anaklia.

“I’m still paying off the loan I took out back then. My friends and I built a bungalow for tourists; we did well the first season, but then everything stalled,” Aleko Kakulia, a resident of Zugdidi municipality, told JAMnews.

Nevertheless, the idea of a port in Anaklia eventually became important to “Georgian Dream” as well. In 2016, the party announced the revival of the project, calling it the “Project of the Century.”

That same year, a tender was held, which was won by the “Georgian-American Anaklia Development Consortium.”

The Anaklia port was expected to boost Georgia’s transit potential and become part of the so-called “New Silk Road,” connecting East and West.

Construction work began to deepen the seabed, dredging sand from it… However, the “Project of the Century,” which was supposed to attract millions in investments, create thousands of jobs, and bring enormous geopolitical benefits to the country, was halted in 2020 due to a dispute between investors and the government.

Criminal charges were brought against Mamuka Khazaradze, co-founder of the consortium and CEO of the country’s largest bank, TBC Bank. Against this backdrop, American investors also withdrew from the project.

The government cited the consortium’s failure to meet its obligations as the reason for terminating the contract: the Anaklia Development Consortium, which included Georgia’s TBC Holding, along with American, British, and Bulgarian companies, was unable to raise the necessary funds and thus delayed the project.

Members of the consortium denied these accusations. Ted Jonas, a member of the supervisory board, openly suggested at the time that the Georgian government might be linked to Russia and was under pressure from the Kremlin.

Independent experts also believed that the real reason was geopolitical — Russia was opposed to American investments.

Why the Anaklia port is so important

The Anaklia port is of great significance to Georgia in terms of both its economy and security.

Currently, Georgia has two ports on the Black Sea — Poti and Batumi. However, due to insufficient depth, not all types of ships can dock at these ports, which makes them less competitive compared to Turkish or Russian Black Sea ports.

If the Anaklia port is built, this situation will change dramatically. According to the project, the new port will be able to handle ships with a capacity of 10,000 containers (while the country’s main port, Poti, can only accommodate ships with a capacity of 1,500 containers).

Additionally, this will help Georgia align itself more with the West and NATO. Having a deep-sea port near the Russian border, which could potentially host NATO vessels in the future, would enhance Georgia’s security.

Foreign adversaries and supporters of the Anaklia project

Russia is the primary foreign adversary of the Anaklia port project. The Kremlin has never hidden the fact that the construction of this port is not in its interest.

Moscow views the project as a geopolitical threat, as the deep-sea port, located near the administrative border with Abkhazia and supported by the US, could, if necessary, accommodate American and NATO military ships and submarines in addition to cargo vessels.

Furthermore, the port’s development is economically disadvantageous for Russia. It would create competition with Russian Black Sea ports, enable cargo ships to bypass Russia, and facilitate the flow of goods from Asia to Europe.

Washington’s strong interest in the construction of the Anaklia port was evident from statements made by high-ranking US officials.

In 2016, former US secretary of defense Donald Rumsfeld emphasized the port’s importance in an article, while then-US Secretary of State Mike Pompeo, during his visit to Georgia, expressed hope that Georgia would be able to complete the port project and avoid falling into the hands of Russia and China.

Yet, eight years after these statements, Georgia signed a strategic partnership agreement with China, and it turns out that a Chinese consortium will be the one to construct the Anaklia port.

The Chinese consortium: What do we know about it?

On May 29, 2024, it was announced at a special briefing that a Chinese-Singaporean consortium (China Communications Construction Company Limited and China Harbour Investment Pte. Ltd.) has been chosen for the construction of the Anaklia port. The subcontractors for this project will be China Road and Bridge Corporation and Qingdao Port International Co., Ltd.

A Swiss-Luxembourg company also met the tender requirements, but only the Chinese submitted a bid at the final stage.

In other words, the Chinese company was the sole candidate for the construction of the Anaklia port. Consequently, pro-government experts on state-affiliated Georgian channels often assert that the authorities had no other choice.

China Communications Construction Company Limited was founded in 2006 and is owned by the Chinese state enterprise SASAC.

According to American Forbes, the company earned over $106 billion last year. As of 2023, its total assets were valued at $218.8 billion. The company primarily engages in infrastructure projects, including the construction of ports, roads, bridges, and more.

Subsidiaries of China Communications Construction Company Limited [CCCC] (which has 35 branches) were sanctioned by the U.S. Department of Commerce in August 2020 for constructing artificial islands in the South China Sea.

Present and future of Anaklia

Four months have passed since the Georgian government selected a Chinese-Singaporean consortium as the investor for the construction of the port. However, the promise made on May 29 that China Communications Construction Company Limited and China Harbour Investment, both under U.S. sanctions, would be announced as the winners “within a few days” has yet to be fulfilled.

The government states that negotiations with the consortium are still ongoing but does not specify the issues that the Chinese and Georgian sides are unable to agree on.

“Another round of negotiations will be held, during which we hope the terms will be clarified. The winner will be announced only if the conditions meet the requirements of the tender,” stated Georgian Economy Minister Levan Davitashvili on August 2.

Tina Khidasheli, former Minister of Defense of Georgia and founder of the NGO “Civil Idea,” believes that what is happening around Anaklia is “another bluff by the government.”

“There is still no agreement with either the Chinese or any other company, and the issue of Anaklia remains unresolved,” Khidasheli says. Her organization has been monitoring China’s engagement in Georgia for the past few years.

According to Khidasheli, despite numerous requests, “Civil Idea” has been unable to obtain any documents from the Ministry of Economy confirming any agreement with the Chinese company.

“We regularly monitor this topic and send a letter to the Ministry of Economy every two weeks to inquire whether a contract has been signed, whether there is any decision from the selection committee, and we request a copy of that decision. And with every letter, we are told that a decision has not yet been made, work is ongoing, the committee is deliberating, and as soon as something is known, they will inform us.

The last such response we received was a week ago. So, even a week ago, the committee had not made a decision about the winner. I’m not even talking about the signing of the contract and the subsequent process. In other words, the government is bluffing again,” Khidasheli explains.

In her view, the reason for this “bluff” lies in geopolitics:

“The reaction of our real strategic partners, namely the West, to the ‘foreign agents’ law was so sharp and had such serious consequences that [government representatives] decided—in their view—to deliver a final blow to the Americans. And then the prime minister comes out and says: ‘Yesterday you were interested in this project, and today we are handing it over to the Chinese.’ It looks like a little child throwing a tantrum and breaking something.”

The Anaklia port project has been stalled for four years. Experts believe that during this time, in addition to the lost financial benefits, the country has also suffered serious reputational damage.

“Enormous political capital based on partnership and trust has been wasted. The government will change, the port in Anaklia will be built, but it will take Georgia a long time to recover from the immense damage to its reputation and to become as reliable a partner for the West as it was before,” predicts Tina Khidasheli.

She believes that the Anaklia port project was sacrificed due to the lack of strategic vision among the government’s top officials and their narrow party goals and ambitions.

Geopolitical factor

Georgian experts see a connection between the arrival of the Chinese company in Anaklia and recent developments within the country, including the adoption of the “foreign agents” law.

“It is completely clear what we are dealing with. We [Georgia] have passed a law that our Western partners have explicitly stated will exclude integration with the European Union if adopted. We have enacted the ‘offshore law,’ which has also been said to facilitate money laundering.

At the same time, there are Kremlin-invented narratives that the enemy of Georgia is the West, not Russia, and that the West is a party to a global war that seeks to drag Georgia in.

In this context, when we see that an American company has been ousted from Anaklia and a Chinese one brought in, everything becomes clear. The declared goal of ‘Georgian Dream’ is to make Georgia the backyard of Russia,” says researcher Shota Gvineria.

“This is a geopolitical statement. How can you see yourself as a partner of the West and a center of Western interaction while providing the company from a country that is in direct confrontation with the West the only and most powerful trump card you have? This is a loud geopolitical statement confirming the foreign policy agenda of Georgian Dream and dealing a serious blow to Georgia’s transit role,” the expert adds.

Tina Khidasheli believes that the Georgian government is primarily focused not on pleasing Russia, but on maintaining its power:

“When we say that the Georgian government adheres to the Russian narrative and is on the Russian wave, it does not necessarily mean that it receives directives from Moscow. But they think that if Russia wins the war against Ukraine, we will be next. That is why they have devised this scheme to appease Russia, hoping that the Kremlin will appreciate their loyalty and help them stay in power as long as possible.

This government has no strategic vision. The founder of ‘Georgian Dream,’ Bidzina Ivanishvili, lacks such vision and a sense of reality to the extent that he still believes that Russia is defeating the ‘collective West’ in this terrible war,” Khidasheli explains her viewpoint.

She believes that China’s implementation of strategic projects like the Anaklia port poses a threat to Georgia. If China ultimately “takes control” of Anaklia, it will bring significant security risks:

“Not only Georgia but also many large countries, including European ones, face the threat of economic absorption and loss of sovereignty. Italy, a G7 member and one of the largest economies in the world, has realized it is at risk of falling into this trap and has begun the process of exiting strategic partnerships.”

According to Khidasheli, it is crucial for Georgia to navigate its relations with China correctly:

“This is entirely impossible without the support that can be gained through close cooperation with the United States and the European Union,” Khidasheli states.

She observes that the geopolitical situation and the relationship between China and Russia are changing in ways that will significantly impact Georgia and the region:

“Russia is increasingly taking steps that will soon make it a client state of China. That is, it will be entirely dependent on China and will serve its interests and desires, implementing its strategy.

Russia is becoming a repository of resources for the strategic visions and interests of China. Therefore, the narrative that if China comes to Anaklia, it will help Russia, is fundamentally incorrect, as China is stronger than Russia.”

However, Khidasheli adds that the interests of authoritarian states often align, and they assist each other if their core strategic interests are met.