The silk & steel road through the Caucasus
The Baku-Tbilisi-Kars (BTK) railway
The ongoing construction of a new ambitious railway, which will run from Azerbaijan to Turkey through Georgia, has raised great expectations and, at the same time, has become a new controversial factor in this already conflict-weary region.
The Baku-Tbilisi-Kars (BTK) railway is part of an ambitious international project. The idea is to link Azerbaijani and Turkish railways through Georgia, thus creating a less expensive and shorter alternative transport corridor from Central Asia via the Caucasus to Europe.
This economic project initially had an entirely political underpinning. Moreover, several unresolved territorial and ethnic conflicts, and in many ways, the opposite priorities and aspirations of the Caucasus countries and regions, turned out to be involved in this almost insoluble problem.
• The fate of Georgian-Russian transit trade through Abkhazia and South Ossetia
• Moscow-Sukhum/i-Tbilisi-Yerevan
Back in the 1990’s, during the initial discussions on the need for resumption of transportation to Turkey and Europe, two competing projects were considered: the Baku-Tbilisi-Kars rail line, which is being constructed now, and the Tbilisi-Gyumri-Kars railway. Despite the fact that two out of three points in those routes are the same, there is a great difference between them, which is fundamental for the parties concerned:
1. The Baku-Tbilisi-Kars project excludes Russia and Armenia, focusing on Azerbaijan. This rail line was initially viewed as an alternative to the Russian Trans-Siberian railway. In due time, this project was even referred to as the ‘Steel Silk Road’.
2. The Tbilisi-Gyumri-Kars excludes Azerbaijan, focusing on Russia and Armenia.
Finally, the Baku-Tbilisi-Kars project ‘won’ and kicked off in 2007. It includes the restoration of the available railway tracks and construction of additional sections.
Three countries that are involved in this project, Georgia, Azerbaijan and Turkey, are unanimous in the opinion that the ‘Steel Silk Road’ will serve as a strong impetus for rapid economic development of the entire region.
Meanwhile, Armenia mentions that it has been pushed aside, and therefore, this project is, on the contrary, disintegrating the region and increasing its conflictogenic context. Iran and Russia unofficially share this position.
Although the construction of the aforesaid railway is almost finished, the initial geopolitical conflict surrounding it hasn’t defused, but rather become more acute. Moreover, some new conflict elements have been added to the already available ones, including those contradicting the interests of Georgia and Azerbaijan.
We’ll take you through it step by step, presenting the Baku-Tbilisi-Kars project through the positions and arguments of the three regional countries concerned. We’ll start with Georgia, then hear Armenia’s position and finalize the review with the opinion of the initiator and key sponsor of the project- Azerbaijan.
GEORGIA
The inaugural ceremony of the Baku-Tbilisi-Kars railway project was held in Marabda settlement, Akhalkalaki district (the mountainous region of South Georgia), on 21 November 2007. It was a high-level ceremony, attended by the presidents of all three participating countries.
Marabda, 2007, PHoto: www.tabula.ge
In fact, it turned out that Georgia, like a meticulous bride, had to choose between the two competing projects. The external potentially influential political powers, like the USA and EU, had initially distanced themselves from both projects, allowing the region to have its own final say on the matter.
Georgia found itself in a difficult situation, since any choice would have ‘offended’ one of the neighboring countries.
However, in view of Georgia’s present-day political context, the Tbilisi-Gyumri-Kars railway rehabilitation project stood almost no chance of being selected.
Why Not Tbilisi-Gyumri-Kars?
1. Given the route geography, to make it functioning, Tbilisi should have agreed on equal participation of Abkhazia in the project. This region was an integral part of Georgia until the early 1990’s, when it declared its independence and is still insisting on it via Russia’s support. With Georgia’s categorical approach to its territorial integrity issue, it’s unlikely that it would accept Abkhazia as an equal partner.
2. Georgia desperately needs alternatives that will either reduce or move away its economic dependence on Russia. According to Sergi Kapanadze, a co-founder of the Georgian Reforms Association (GRASS), ‘Georgia’s economic, energy and even political independence, depend particularly on infrastructure projects bypassing Russia and strengthening Georgia’s role in regards to the functionality of its regional transit’.
Baku-Tbilisi-Kars: route details and funding
The Baku-Tbilisi-Kars railway is mainly designed for freight rather than passenger transportation.
The Baku-Tbilisi-Kars project provides for:
[yes_list]- renovation/reconstruction of a 178 km railway line in Georgia between Tbilisi and Marabda-Akhalkalaki railway station;
- construction of a new 98 km railway line from the Akhalkalaki Georgian railway station to the operating railway line in the territory of Turkey, with 30 km of that new railway line covering the territory of Georgia from Akhalkalaki town to Kartsakh village, on the border with Turkey.
Turkey individually covers all project-related costs in its territory.
As JAMnews was told in the ‘Marabda-Kartsakh Railway’ state-run company, which is directly in charge of all works executed as part of the project in the territory of Georgia, Azerbaijan had granted Georgia a loan for the construction of the Georgian section of the railway.
According to the railway company, the State Oil Fund of the Republic of Azerbaijan allocated Georgia a total of USD 750 million, which came in two parts:
In 2007 –USD 200 million at an annual 1% rate for a period of 20 years;
In 2011-USD 575 million at an annual 5% rate for a period of 25 years.
However, there is a certain discrepancy in the figures provided on the website of the State Oil Fund of Azerbaijan, which stands as a direct investor. As is pointed out on the Fund’s website, USD 630.9 million were allocated to the Azerbaijani Transport Ministry since the launch of the project until April 2017, including USD 730 thousand in Q1, 2017.
When will the Baku-Tbilisi-Kars railway start operating?
Initially, it was planned to launch the trains in 2010. However, at this stage, Georgia has used only USD 125 million out of the aforesaid USD 750 million loan.
Ahmet Arslan, the Minister of Transport, Maritime Affairs and Communications of Turkey, visited Kars in April 2017. As he told journalists then, the Baku-Tbilisi-Kars railway would be put into operation in June 2017.
However, as JAMnews was told in the ‘Marabda-Kartsakh Railway’ LLC, which is directly responsible for all work carried out in the territory of Georgia, a new and final date of the launch of the Georgian section of the railway is at the end of 2018.
In other words, instead of the initially planned three years, the railway construction will take at least 11 years.
Its commissioning has been rescheduled due to the whole set of financial and political problems
In early 2017, the Turkish Transport Minister, Ahmet Arslan, gave a detailed statement to the Turkish mass media, explaining the reason for the delay in construction by a lengthy litigation with one of the companies. The construction company, that lost the tender for the execution of construction works, filed a lawsuit and the construction works were stopped during the litigation.
Meanwhile, the Azerbaijani side said that construction of the Georgian section of the railway was hampered, among others, by an uncertainty that occurred against the background of change of power in Georgia in 2012, which actually made the parties adjust the project. The then Prime Minister of Georgia, Bidzina Ivanishvili, publicly questioned the economic viability of this construction, saying that commissioning of the railway might lead to a drop in cargo transportations via the Georgian railway and through the country’s Black Sea ports.
Apart from that, some technical problems also emerged. During the construction of a tunnel, linking Georgia with Turkey, it turned out that it might run through a landslide area. So, the parties had to adjust the route.
What does Tbilisi expect from the project?
When the construction works were launched, the then president of Georgia, Mikheil Saakashvili, termed it as ‘a great geopolitical revolution’, claiming that ‘all Chinese cargo, formerly transported via the territory of Russia, will now go to Europe via this railway route’.
The estimated capacity of the railway project is 20 million tons of cargo, which implies that Georgia will get large-scale and stable budget proceeds as a payment for transit.
However, there is an emotional ‘but’- only 4-5 million tons of cargo will presumably be transported via this route at the initial stage.
As Mikheil Saakashvili stated at the inaugural ceremony of the project in 2007, Kazakhstan decided to divert an additional 10 million tons of its cargo along this new route. If that happens, the project efficiency may increase considerably. However, there hasn’t been any public confirmation of the aforesaid decision on part of Kazakhstan so far.
Throughout these years, many Georgian economists have seriously been criticizing the project, putting forward the following key arguments:
Argument 1.
Azerbaijan is a key sponsor of the project at this stage. The funds have been allocated as a loan, so when Georgia covers it in 25 years, it will become a major sponsor of the project. However, the conditions of a contract concluded with Azerbaijan are such that Georgia is not entitled to single-handedly make decisions with regard to its railway section.
“It would have been much more beneficial for Georgia to raise individual funds for construction of its railway section. In this case, it could have managed its section at its own discretion,” says Paata Tsagareishvili, an expert at the HUB Georgia Center for Transport Studies.
In his words, when discussing the idea, some other projects on construction of railway through the territory of Georgia were also proposed, that would have cost Georgia USD 200-250 million, while the Azerbaijani project totaled USD 750 million.
“The problem is not just that Georgia took this considerably large loan and now has to pay it off, but also that the country can’t exclusively manage the railway section that runs through its territory,” said Paata Tsagareishvili.
In what way is Georgia’s dependence manifested? Paata Tsagareishvili commented as follows:
1. Azerbaijan has claimed the right to determine the tariff policy.
2. A narrow-gauge track was laid on a major section of the new railway, between the Georgian town Akhlakalaki and the Turkish border, which implies that ONLY Turkish trains will run on this section. As a result, Georgia is going to lose a considerable portion of income.
3. Azerbaijan has already warned Georgia that it wouldn’t allow the transportation of Armenian freight on the Baku-Tbilisi-Kars railway, which is a rather ‘vexing’ aspect of the project for Georgian-Armenian relations.
4. Azerbaijan’s demand to fully exclude Armenia from this project is also associated with an unpleasant material aspect – the matter concerns about 0.5 – 1 million tons of cargo, which is a considerable loss for Georgia.
Argument 2:
It’s hard to compete with the Russian transport routes
The first test train was launched on a new route on 13 December, 2015. A cargo train started from the Chinese Lianyungang terminal, travelled through the entire territory of China, Kazakhstan, Azerbaijan and Georgia, and finally reached Turkey by ferry from Poti sea port, all in 15 days. It was termed as a ‘perfect result’ then, since the same journey by sea would have taken around 40-45 days.
Nevertheless, this route has so far remained in the experimental stage. The Chinese businessmen give more preference to the Chongqing-Dostyk-Moscow-Brest-Lodz-Duisburg route, which, by the way, is also referred to as the ‘New Silk Road’. This railway connects China and Kazakhstan with Poland and Germany through Russia.
“More than 100 trains travelled on the Chongqing-Duisburg railway route in 2017 alone, while there were only two trains from China passing through Georgia over the past two years,” said Tsagareishvili.
The railway route through Georgia is certainly shorter and the transportation tariffs are lower: the cost of transportation through the territory of Russia amounts to USD 4 000 per container, while through the territory of Georgia – USD 3 880 per container. Nevertheless, freights weren’t diverted to Georgia.
Tsagareishvili argues that there are several reasons why that didn’t happen and probably won’t happen in future:
- There is reverse freight traffic on the Russian route: trains travelling both to and from China are loaded, whereas those travelling from Georgia to China are empty.
2. There are strong logistic companies operating on the Russian route. They ensure timely tracking, distribution and transportation of freight. Georgia doesn’t have such a strong operator yet. Many countries in Central Asia are, in principle, interested in this alternative route. But there haven’t been any guaranteed contracts so far.
Argument 3:
The problems of Armenian villages in Georgia’s Samtskhe-Javakheti region, where the railway route runs
The railway runs through four villages in Akhalkalaki district of this region, namely: Kartsakh, Dadesh, Bozali and Sulda villages. The rail line here is approximately 25 km long and actually passes through the arable lands.
JAMnews correspondents have visited the abovementioned villages and listened to the locals’ claims.
- Overall 14 locals claim they have not received compensation for their land plots.
As JAMnews was told in the National Agency of State Property of the Ministry of Economy and Sustainable Development of Georgia, each compensation case was quite disputable, since many residents submitted just soviet-time documents to prove their ownership. According to the locals, they can’t deal with the document-related problems, since they don’t know the Georgian (state) language and have no idea about the country’s legislation. On the other hand, neither the local authorities nor the relevant agencies in Tbilisi try to solve their problems in any way.
- The railway track completely blocks the entrance to the pastures.
The railway-bed is elevated almost by 5 meters from the ground and the cattle can’t climb this ascent.
“We usually send our cattle to graze on pastures at the end of March. The only opportunity we have now is to take them to the mountains, but there the snow melts and the grass appears only by the end of May. It means that we will have to keep the livestock in the barn for two more months, which requires considerable reserves of extra hay for them,” said Edgar Tumasyan, a resident of Dadesh village. In his words, now he has to buy hay in the neighboring villages.
- The railway track blocked the road leading to the town
High-set tracks blocked the main road, linking the village with the town. Although an alternative road has been constructed, it is waterlogged for 7-8 months a year. As a result, the resellers haven’t come to the village to buy potatoes for 6 years already. So the villagers have fully assumed the heavy burden of delivering their crop to town and selling it there themselves.
- Houses have been affected.
Many locals’ houses have been seriously damaged; the walls and roofs have been cracked as a result of numerous explosions required during the construction work.
- The arable lands nearby the railway, that were not subjected to construction, have been heaped up with stones as a result of the explosions.
“We are rural people, and most of us earn our living through cultivating land. There have been numerous stones scattered around our land after the explosions, but nobody clears them, no one cares. We demanded it many times, but there hasn’t been any response so far,” says Ghalust Manukyan, a resident of Mamzara village, Ninotsminda district.
- Ten years have passed since the launch of this project, but not a single villager has been employed as part of it during that time.
As the villagers told JAMnews, they didn’t pin much hope that they would be engaged in servicing the railway and its infrastructure, given that the Turkish and Azerbaijani companies, that are involved in the construction works, prefer to use their own labor force.
None of the official agencies, engaged in the project, have ever openly stated that the locals had not been employed as part of the project because they were ethnic Armenians (this part of Samtskhe-Javakheti region is densely populated by the Armenian community). However, Azerbaijan’s categorical demand to oust Armenia from the project makes one think so.
The railway has brought no benefits to the village of Mmamzara, locals complain.
“As far as I’ve understood from what the locals told me, they aren’t duly informed on the major goals of the railway project, and this has given grounds to rather negative stereotypes,” Vahram Ter-Matevosyan, a senior research fellow at the Institute of Oriental Studies, told JAMnews. He has been studying the social aspects of the Baku-Tbilisi-Kars project for several years.
“Georgian public agencies and various institutions should work more with the local Armenian population, so as to prevent rooting of an idea that this project contradicts their interests. It’s very important for the project’s stability to ensure that the local communities are the #1 beneficiary.”
Most of the villagers, whose lands were covered by the railway, told JAMnews that they realized the importance of the project. Yet, they insisted that their well-being should be equally important for Georgia, since they are citizens of this country.
ARMENIA
In Armenia the Baku-Tbilisi-Kars railway project is usually associated with the competing Tbilisi-Gyumri-Kars potential international transport project.Here’s briefly what it’s all about:
Kars-Gyumri, the Turkish segment of the railway, 2013. Photo from a private collection in Armenia
On 7 February, 1899, the first train arrived from Tbilisi (at that time it was called Tiflis) in the present-day Gyumri (then Alexandropol), Armenia. “Despite a chilly day, thousands of townspeople and military men came to meet that train,” said Khoren Avetisyan, 88, a hereditary railway worker.
The Tiflis-Kars railway was built by order of the Russian Emperor, Nickolay II, and was used mainly for cargo transportation. It was actively employed during the soviet period.
The first dramatic developments in the Armenian-Azerbaijani conflict over Karabakh took place in 1989. In 1993, Turkey decided to stop the railway as a sign of solidarity with Azerbaijan.
There was another railway, connecting Armenia with Russia at that time. It passed through Abkhazia, which claimed independence from Georgia. The Georgian-Abkhaz war broke out and the railway was partially blown up and ruined.
Thus, Armenia lost all railway communication with the outer world.The Armenian authorities never miss a chance to remind the world of Turkey’s unilateral decision to suspend the operation of the Tbilisi-Gyumri-Kars railway. And Armenian top officials express concern over the aforesaid practically every year.
According to Sergey Minasyan, a political analyst, in this case the Armenian authorities’ message is addressed more to the superpowers, rather than to Turkey. “I don’t think that Turkey is unaware of the specific aspects of this issue. This information is aimed more at Europe and the USA, as a means of using leverage that has more influence on Turkey than Armenia has,” he noted.
There was a moment a few years ago, when it seemed that a turning point had been reached. A process that got a historical title ‘football diplomacy’ was launched in 2008. A football match between the Armenian and Turkey national teams was scheduled in Yerevan for September 8. The then Turkish President, Abdullah Gül, arrived to attend the match. The Armenian side initiated the unprecedented restoration of the 12km long Armenian section of the Gyumri-Kars Railway.
The reason for restoring the Armenian section wasn’t voiced, but it was quite clear for everyone: If the parties succeeded in a political dialogue, the opening of the railway, that was so important for Armenia, would be the first outcome.
Nevertheless, the entire process went to naught and sank into oblivion. And the Tbilisi-Gyumri-Kars railway shared the same lot.
According to Alexander Iskandaryan, a political analyst, Director of the Caucasus Institute, the Baku–Tbilisi–Kars line isn’t an economic- but rather a political project, promoted by Azerbaijan.
“Tbilisi has already demonstrated that it’s unable to influence the companies investing in the project. They are dictating the game rules. Increasing the influence of Azerbaijan and Turkey in Georgia is a threat to Armenia,” believes Johnny Melikyan, a Research Fellow at the Center for Regional Studies, the Public Academy of the Republic of Armenia.
Armenian political analysts believe the Georgian side itself won’t be against Armenia’s involvement in the Baku–Tbilisi–Kars railway project. However, to achieve that, Yerevan should be more actively lobbying opportunities for its participation in the project through Washington, Brussels and other geopolitical centers.
A high-speed road under a conditional name ‘North-South’ highway is also going to contribute to this ‘confrontation’ of the South Caucasus transport corridors. The highway, that will pass through the territory of Georgia, linking the Persian Gulf with the Black Sea, is being actively constructed now.
Separate sections of this highway have alreadybeen put into operation. This route is expected to become more activate after international sanctions against Iran are lifted and its accounts are unblocked.
AZERBAIJAN
“One of our major tasks at the moment is to connect Turkey and Azerbaijan with railway, to put the Baku-Tbilisi-Kars railway into operation. In this case, Azerbaijan and Turkey will be linked by the railway, all transportation will be implemented through this route. At the same time, it is also clear that Armenia, an invasive country that has occupied our lands and showed aggression against us, will stay away from all those projects.”
This is a quote from the Azerbaijani President, Ilham Aliyev’s speech at the 2nd Congress of World Azerbaijanis, on 16 March, 2016.
According to Ilham Shaban, an economics expert, this railway will ‘greatly contribute to a boost in the trade turnover and it is of particular importance for the Georgian and Turkish markets, as well as for the Balkans and the countries of the Black Sea basin’.
The project analyzed by: Elhan Shahinoglu, a political columnist; Ilham Shaban, an expert-economist; Natiq Jafarli, an economist
In the long run, the Azerbaijani officials’ projection is that the country’s annual profit from cargo transportation on this route will total at least USD 50 million. The railway is expected to facilitate the delivery of goods, produced by the Azerbaijani enterprises, to the Turkish and European markets. Among such enterprises are Karbomit and SOCAR Polymer oil refiners, which are being constructed now and that are expected to produce raw materials for various fields of economy, including water-pipes, textile and medical equipment.
In September 2016, closed joint-stock company Azerbaijani Railways bought from Swiss firm Stadler 30 couchette cars for the trains that are to ply between Baku and Kars in future. Each carriage accommodates 10 to 20 to 32 passengers
JAMnews correspondents’ report about the current state of the Georgian section of the railway
A power transmission line system has been laid, the electric poles have been installed and the cable is being laid to Ninotsminda town.
There are neither poles nor any cable in Akhalkalaki district. The construction of interchanges for guiding trains from the European-standard (1435 mm) tracks to the available soviet-standard (1520 mm) tracks hasn’t been finished yet. The communications and sewage systems haven’t been laid, and drainage canals haven’t been built so far.
