PM: EAST-WEST RAILWAY LINK SIGNIFICANT STEP

The New Anatolian, Turkey
Feb 8 2007

A key agreement on the Kars-Tbilisi-Baku (KTB) railway project was
signed yesterday at a ceremony with the participation of the Turkish
premier, Georgian President Mikhail Saakashvili and Azerbaijani
President Ilham Aliyev.

The project aims to provide continuous, safe and fast cargo and
passenger transportation between Asia and Europe.

Erdogan, at a press conference before his visit to Tbilisi,
characterized the project as a "significant step."

He stressed that the KTB railway project would yield new
opportunities. "I will also have bilateral meetings with Georgian
President Mikhail Saakashvili and Azerbaijani President Ilham Aliyev
during my stay. We will especially discuss recent developments in
the Southern Caucasus," he stated.

Erdogan added that he believed his visit would boost relations with
regional countries.

Erdogan will hold talks with Saakashvili and Aliyev and also attend
the inauguration of the Tbilisi International Airport, which was
constructed by Turkish-Austrian consortium Tepe-Akfen-Vie (TAV).

The KTB project aims to join the railroad networks of Georgia,
Azerbaijan and Turkey to further strengthen cooperation between these
three countries. Many analysts have described the project as important
as the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project.

The project aims at providing continuous, safe and fast cargo and
passenger transportation between Asia and Europe through connecting
the railways of the People’s Republic of China and Kazakhstan in the
east, through Turkey’s Marmaray (Commuter Rail Mass Transit System)
to the European railway system in the west.

Professor Suha Bolukbasi, who works on Caucasus and Central Asian
politics at Middle East Technical University (METU), told The New
Anatolian on Monday that Turkey has good relations among Azerbaijan
and Georgia, stressing that this project will help to strengthen and
deepen cooperation among these countries. He described the project
as a constructive step in Turkey’s regional interest.

"The project aims to unhook post-Soviet countries from the Russian
Federation’s impact. It also helps the European Union and the U.S. to
establish effective relations with post-Soviet countries," he said.

Bolukbasi stressed that the European Union attaches importance to the
initiative, saying, "Through the project, Turkey’s position with the
EU will be strengthened along with Caucasus relations. Turkey will
play a more influential role in its region."

The framework agreement for this wide regional cooperation project
will be signed tomorrow in Tbilisi, Georgia, with the participation
of Turkish Prime Minister Erdogan.

A total of 76 kilometers of the project will be built in Turkey. The
project’s infrastructure will be constructed as a double-track railway
line, while the superstructure will be realized as a single-track line.

The Turkish part of the project will cost an estimated YTL 380 million,
with YTL 40 million appropriated in the state budget for this year. In
1998 Turkish State Railways (TCDD) carried out a tender for the
project, but later cancelled it.

Azerbaijan will lend $200 million to Georgia to finance construction
of its portion of the railway linking Azerbaijan with Turkey, under
an agreement signed in Tbilisi last month.

Georgia will have to repay the loan with 1 percent annual interest
within 25 years. Georgian officials said last week that they plan
to use the revenues from the Baku-Akhalkalaki-Kars railway to cover
the loan. The construction of the KTB project is expected to begin
in June and finish in two years.

Armenian opposition Armenia, which has diplomatic problems with both
Turkey and Azerbaijan, has criticized the move. Armenian presidential
spokesperson Viktor Sogomonian branded the project as politically
motivated.

"Armenia has been always guided by the economic effectiveness of
projects," he said at a news conference last month, adding that
Yerevan will continue to oppose construction of the railway and will
use negotiations at different levels as a lever of influence.