Akhalkalaki or Gyumri?
by Emil Danielyan

Transitions Online, Czech Republic
July 6 2006

6 July 2006

Armenia is irked by a proposal for a new cross-Caucasus railroad that
would bypass the landlocked and blockaded country. From EurasiaNet.

Plans for the construction of a major railway linking Turkey to
Azerbaijan via Georgia are prompting mounting concern in Armenia.
Officials in Yerevan, fearing the completion of the railway would
further isolate Armenia, have pressured Georgia to pull out of the
multimillion-dollar project. The railway also is facing objections
from the United States and the European Union.

Azerbaijan, Georgia, and Turkey revealed their intention to pursue
the railway project in May 2005 during the ceremonial opening of the
Baku-Tbilisi-Ceyhan (BTC) oil pipeline. The presidents of the three
nations said the rail link, estimated to cost roughly $400 million,
would promote regional economic integration and create a new transport
corridor between Europe and Central Asia.

The project essentially boils down to laying an almost
100-kilometer-long rail track between the eastern Turkish city
of Kars and the southern Georgian town of Akhalkalaki. Armenian
officials insist that the project makes no economic sense, pointing
to the existing railroad running from Kars to the northern Armenian
city of Gyumri and on to the two other South Caucasus countries. The
Kars-Gyumri link has stood idle for over a decade due to the continuing
Turkish economic blockade of Armenia.

The Armenian government argues that that Turkey, Georgia, and
Azerbaijan should make use of this Gyumri hub instead of spending
hundreds of millions of dollars on building a new one. As an incentive,
Yerevan has indicated that it would make the Gyumri hub available
without insisting that Turkey lift its economic blockade. "Armenia is
ready to let Turkey, Georgia, and Azerbaijan use the existing railway
line on Armenian territory without Armenia’s participation," Armenian
Foreign Minister Vartan Oskanian reiterated during an official visit
to Tbilisi on 27 June.

The issue was high on the agenda of Oskanian’s talks with Georgia’s
President Mikheil Saakashvili and Foreign Minister Gela Bezhuashvili.
A statement issued by the Armenian Foreign Ministry said Oskanian
"stressed the economic and political importance of the operation of the
Kars-Gyumri-Tbilisi rail line." Armenian officials took little comfort
in Bezhuashvili’s public assurances that the Turkish-Georgian-Azeri
project is "purely commercial." They fear that the new railway
would deepen Armenia’s economic isolation. Aggressive statements
made recently by Azeri officials, including President Ilham Aliev,
have helped fuel worries in Armenia.

The landlocked country has already been left out of regional
energy projects such as the BTC pipeline, due to the unresolved
Nagorno-Karabakh conflict.

Influential Armenian lobbying groups in the United States have joined
Yerevan in trying to thwart the project. They were instrumental in
securing a U.S. congressional committee’s 15 June vote to endorse an
amendment that would prohibit the U.S. Export-Import Bank from funding
the railway’s construction. "With this amendment, we are sending a
message to the governments of Turkey and Azerbaijan that continually
excluding Armenia in regional projects fosters instability," said
U.S. Representative Joseph Crowley, a member of the Democratic Party
from New York who is the measure’s main sponsor.

The amendment is expected to be considered by the full House of
Representatives later this year. Similar legislation is pending
in the U.S. Senate, and the Bush administration has not voiced
objections to either bill. The ambassador-designates to Armenia
and Azerbaijan assured pro-Armenian U.S. legislators during recent
congressional hearings that Washington is against the construction
of the Kars-Akhalkalaki-Tbilisi railroad. Without Export-Import
Bank backing, U.S. companies would likely be reluctant to invest in
the project.

The European Union seems to take a similar view. "A railway project
that is not including Armenia will not get our financial support,"
the EU’s external relations commissioner, Benita Ferrero-Waldner,
said in Yerevan last February.

Turkey and Azerbaijan appear undaunted by U.S. and EU expressions of
displeasure. Turkish Foreign Minister Abdullah Gul discussed the issue
with Aliev during a late June visit to Baku. The Turkish Daily News
newspaper quoted Gul as telling the Azeri leader on 20 June that
"Armenia can also join these projects if it wants." However, the
Turkish Foreign Ministry spokesman, Namik Tan, clarified the next
day that this could happen only after a resolution of the Karabakh
dispute. The Karabakh peace process is currently stalemated.

Tan also downplayed the significance of likely U.S. funding
restrictions. "I think the three countries have enough funds. We can
finance [the railway’s construction] in one way or another," he said.

Baku had hoped to begin work on the railway later this year and
have it completed by 2008. But with Turkey, Georgia, and Azerbaijan
having yet to agree on the sources of funding, this time frame seems
unrealistic. Furthermore, the Georgian government is having what Gul
reportedly described as "serious hesitations." This might explain why
a planned meeting of the transport ministers of the three states, which
had been planned for late June, has been postponed until late July.

The director general of Georgia’s state-run rail network, Irakli
Ezugbaya, publicly questioned earlier in June a feasibility study that
was conducted and released by a Turkish company recently. The Caucasus
Press news agency quoted him as saying that the study failed to predict
the anticipated volume of cargo traffic along the would-be railway.