Eurasia Daily Monitor, DC
Jan 19 2007
REGIONAL LEADERS SEAL KARS-AKHALKALAKI-TBILISI-BAKU RAILWAY DEAL
By Fariz Ismailzade
Friday, January 19, 2007
Last Saturday, January 13, representatives from the governments of
Azerbaijan, Georgia, and Turkey took a significant step forward in
the realization of the Kars-Akhalkalaki-Tbilisi-Baku railway project,
which will link Asia and Europe through the Caucasus. Representatives
of three parties met in the Georgian capital, Tbilisi, to finalize
the negotiations over the project and sign a preliminary agreement.
Azerbaijan’s Ministry of Foreign Affairs issued a statement on
January 16 welcoming the agreement and calling it `an important event
in regional trade and economic cooperation’ (Press Release, January
16). Georgian Prime Minister Zurab Nogaideli also welcomed the
project by saying that the railway link will become `a bridge between
Europe and Asia’ (Day.az, January 19).
Under the terms of the negotiated agreement, Azerbaijan will issue a
loan to the Georgian government in the amount of $220 million for
construction of a vital segment of the railway. Georgian Minister of
Economic Development Georgy Arveladze, however, put this number at
$300 million (Day.az, January 18). The loan will be virtually
interest-free and is to be repaid within a period of 25 years using
the profits generated by the railway. The Turkish government, for its
part, will improve some portions of the railway in its own territory,
to bring it up to the required standards.
Azerbaijan’s minister of transportation, Ziya Mammadov, told ANS-TV
on January 18 that construction would start in the second half of
2007 and be completed within two or three years. `I have no doubt
that this project will be realized,’ Mammadov added.
The project comes amid protests from the Armenian lobby and a
prohibition put in place last year by the U.S. Congress on financing
the project from U.S. government funds. While two other major
Caucasus projects, the Baku-Tbilisi-Ceyhan oil pipeline and the
Baku-Tbilisi-Erzurum gas pipeline, were strongly supported in U.S.
political circles, the railway project received a cold shoulder,
despite the fact that it will further deepen regional cooperation and
expand the East-West trade corridor.
The reason for such a negative attitude is the Armenian lobby in the
United States and its influence on U.S. policymakers. The railway,
bypassing Armenia, further links Georgia and Azerbaijan to Western
markets and puts Armenia behind the regional trade and economic
cooperation. Last week, the Armenian Foreign Ministry expressed
interest in joining the railway project, yet the Azerbaijani side
responded by saying that Armenia must first liberate the occupied
territories of Azerbaijan.
Nevertheless, despite opposition from Armenia and the lack of
financial support from the United States, the Azerbaijani, Georgian,
and Turkish governments are eager to move forward with the project.
`The U.S. can issue any decisions it wants, but there will be no
problems with financing the project. There are other sources,’ said
Georgian Minister of Foreign Affairs Gela Bezhuashvilli (Trend News
Agency, January 10). The increasing revenues from Azerbaijan’s oil
contracts with Western oil companies have provide the government with
sufficient means to finance the project with its own funds.
Estimates set the cost of constructing the missing 98-kilometer
section link of the Kars-Akhalkalaki-Tbilisi-Baku railway will cost
around $400 million and raise the trade turnover by rail to 15-20
million tons per year. It will allow the direct shipment of goods and
people between Asia and Europe and vice versa and further develop the
regional infrastructure. It will be an essential part of the Silk
Road strategy, which envisions the development of trade ties between
the countries along the ancient Silk Road. China and Kazakhstan have
also expressed interest in the realization of the railway project.
Given the recent political changes in Turkmenistan following the
death of long-time President Saparmurat Niyazov, some analysts think
that bilateral Azerbaijani-Turkmen relations will warm and revive
regional trade and cooperation between these two Caspian states. If
this scenario occurs, it will provide additional significance to the
Kars-Akhalkalaki-Tbilisi-Baku railway.
Negotiations among Turkey, Azerbaijan, and Georgia are expected to
resume in the next few days regarding the concrete details of the
project. After this, the parliaments of these three countries will
ratify the agreement and construction work will start. When
completed, the project will be a major victory point for both
Azerbaijan and Georgia, because both countries will increase their
economic linkages and trade turnover, but even more importantly the
railway will also reduce their dependence on Russian railways to ship
goods to European markets.