THE KARS-AKHALKALAKI RAILWAY: GOOD FOR GEORGIA?
M. Alkhazashvili

The Messenger, Georgia
June 22 2006

The Financial Committee of the U.S. Congress has forbidden American
companies from investing in the Kars-Akhalkalaki railway. However, even
if U.S. companies don’t finance the project it will be quite possible
to other sources of funding. Turkey is more than ready to bear the
cost, but just how beneficial is this project going to be for Georgia?

Economist Gia Khukhashvili argues that it is necessary to conduct
market research, as it could well turn out that the railway will
redirect cargo which had been passing through Georgian ports, which
would ultimately be detrimental to the Georgian economy.

"It may result in catastrophic conditions for Georgian ports. The
government has not thought the decision through. Serious analytical
works must be conducted; problems should not be created for our
ports, only if this is guaranteed will the project be beneficial"
said Khukhashvili in the newspaper Rezonansi.

Analyst Emzar Jgerenaia is far more skeptical. According to him
operating the Kars-Akhalkalaki-Tbilisi-Baku railway line won’t
bring any economic benefits for Georgia at all. "The construction
of the railway needs a lot of investment, the line runs through an
earthquake zone and additional works will be needed," Jgerenaia said
in Khvalindeli Dghe.

Some analysts believe that it would be more profitable to focus on
the needs of neighbouring Armenia. According to Akhali Taoba, Georgia
should consider Armenia’s concern over building the Kars-Akhalkalaki
railway and its interest in the reopening of the Sokhumi-Tbilisi
line. By discussing this issue with Russia, Georgia could find itself
in a stronger bargaining position on the conflict in Abkhazia.

"It is not ruled out that the Kars-Akhalkalaki project and the
reopening of the railway line in Abkhazia may have profound effects
on the reintegration process in Abkhazia," says the newspaper Akhali
Taoba.

But these statements are mostly conjectural, as there has been no
detailed costing of the proposed railway, and no funds have yet been
raised. The opinions are primarily conditioned by political, rather
than economic, attitudes to the issue.