The Georgian Times, Georgia
Jan 27 2007

Bleak Prospects for Armenia’s Involvement in Karsi-Akhalkalaki-Baku
Railway Project

As Georgia and Azerbaijan are pushing ahead with
Karsi-Akhalkalaki-Baku railway, Armenia has raised its voice for its
involvement in already third big regional project.

Armenian Deputy Foreign Minister said Thursday Armenia is ready to
open the border with Turkey and give a kick to
Kars-Guimri-Akhalkalaki railway which has been idle since 1992.

Although Armenia’s inclusion in the railway project would be a real
bonanza to the regional cooperation in South Caucasus, it seems too
implausible with the presence of the Nagorno-Karabgah conflict.

On January 15, Minister of Economic Development of Georgia Giorgi
Arveladze and Azerbaijan’s Transport Minister Zia Mamedov signed an
agreement in Tbilisi to provide much-needed funding for
Kars-Akhalkalaki-Tbilisi-Baku railway. Georgia will receive 220m USD
loan from Azerbaijan for a maturity of 25 years at a 1-percent annual
interest rate.

The Kars-Akhalkalaki-Tbilisi-Baku railway will run for 258kms
crossing the three countries. Georgia needs 200 M USD to rebuild
Marabda-Akhalkalaki and Kartsakhi-Akhalkalaki railway link and
construct running gears shop in Akhalkalaki.

The signing comes less than a week after Matthew Bryza reiterated the
US support to Armenia’s involvement in the project.

PanARMENIAN.Net quoted him as saying: `We would like the railway,
which connects Turkey with Baku, to pass through Armenia, since it
reflects our policy. Second, from economic point of view it is more
expedient to connect Turkey and Georgia through Armenian territory.
But we cannot make decisions on that issue. Investors themselves push
forward investment plans, which are more profitable for them. If
Azerbaijan, Turkey and Georgia want to construct a railway, of
course, we cannot object. But we do not particularly support that
project. We hope that in near future we will see such a
transportation scheme, which includes all the countries of the
region,’ said Bryza.

The Armenian-American lobbies successfully lobbied the US Senate last
year to ban funding Turkey-Georgia-Azerbaijan rail link which would
bypass Armenia. The amendments approved by the Senate Banking,
Housing and Urban Affairs Committee to the Export-Import Bank
Reauthorization Act, states that `The Bank shall not guarantee,
ensure or extend (or participate in the extension of) of credit in
connection with the export of any good or service relating to the
development or promotion any railway connection that does not
traverse or connect with Armenia and does not traverse or connect
with Baku, Azerbaijan, Tbilisi, Georgia and Kars, Turkey.’

Turkey thus fur has snubbed calls by the US and Europe to reopen the
border with Armenia, including Kars-Gyumri railway which was
predominantly used for passenger transportation in the Soviet times
and was the only railway immediately connecting the USSR with Turkey.

Although Turkey was one of the first countries to recognize Armenia’s
independence from the USSR, it has seen its relations with Yerevan
marred by 1915 genocide allegations. Yerevan asserts that some 1.5m
Armenians were killed in 1915 in Turkey and seeks international
recognition of the genocide.

Yet another motivation for Turkey to keep the border closed is its
solidarity with Azerbaijan, which came to war with Armenia over
Nagorno-Karabagh region. Turkey imposed a blockade on Armenia in 1993
during the armed conflict between Azerbaijan and Armenia.

The Nagorno-Karabagh conflict remains the main glitch not only in the
relations between Ankara and Yerevan but more importantly in the
regional cooperation between the three South Caucasus countries and
the reason for increasing isolation of Armenia.

The world politics has witnessed a resurgence of regionalism since
the late 1980s and there are calls for strengthened regionalist
arrangements. The South Caucasus emerged as a single region in 1990s
with the collapse of the USSR, as it detached itself from the
dominant power Russia in the north, and from Turkey and Iran in the
south. There is certain cultural proximity between the three
countries, the presence of the common Soviet legacy; geographical
settings bind Georgia, Azerbaijan and Armenia in a single region. The
international community would like to see a tighter regional
association and the EU’s decision to include Azerbaijan and Armenia
into the European Neighbourhood Policy due to Georgia’s Rose
Revolution can be cited as an example.

No wonder there is a strong desire from the West to see enhanced
cooperation, trade and prosperity in the region. The World Bank even
commissioned a research to identify the `peace dividends’, examine
the likely- short-term impacts of the lifting of blockades. The
report called `Changing Trade Patterns after Conflict Resolution in
South Caucasus’ says: `Potential peace benefits are highest for
Armenia, the country that suffers most from the blockades. Armenia
would annually save 6-8m dollars on the transport costs of non-energy
imports and 45m dollars on switching the flows of natural gas and
petroleum to new sources. The increase in experts may lead to up to
30-38 percent of GDP growth. Azerbaijan could increase its exports
by 100m dollars, or 11 percent of current level, slashing the trade
deficit by a quarter. As a result GDP would increase up to five
percent… Georgia might face a reduction of transit through its
territory. Nevertheless, it is unlikely to exceed a quarter of the
freight service surplus in the bop, or 1.5 percent of trade deficit.’

By Keti Khachidze,