COMMENT: Georgia hopes to use China's One Belt, One Road project to break its dependence on Russia

COMMENT: Georgia hopes to use China's One Belt, One Road project to break its dependence on Russia
Georgia has historically been at the edge of empires.
By Emil Avdaliani in Tblisi January 31, 2018

Georgia has historically been at the edge of empires. This has been both an asset and a hindrance to the development of the country: an asset because Georgia’s difficult geography and a distant location from global centres made it hard for major powers to invade and keep the country permanently under one’s rule; a hindrance because Georgia’s geography requires major investments to override its mountains, gorges, rivers etc.

This geographic paradigm has been well in play in shaping Georgia’s geopolitical position since the breakup of the Soviet Union in 1991. Ever since, Georgia has been playing a rebalancing game through turning to other regional powers to counter the resurgent Russia. Turkey, Azerbaijan, partly Iran and bigger players such as the EU and the US are the counterweights, which have their own share of interest in the South Caucasus. However, over the past several years yet another power – China with its still evolving Belt and Road (BRI) initiative – has been slowly emerging in the South Caucasus.

Despite the fact that China is rapidly increasing its economic presence in Georgia, which ultimately could turn into bigger Chinese security involvement, Beijing’s investment and interests in the region still lags behind what China has been doing in the Central Asia, Pakistan or other parts the BRI initiative is encompassing.

Another interesting aspect to the Chinese influence is Georgia’s balancing act whereby Tbilisi wants to use growing Chinese influence to further balance Moscow’s military power. However here too not everything is that clear-cut as Moscow and Beijing could also cooperate in the South Caucasus as they currently do in other regions, for example Central Asia.

China has close trade contacts with all the South Caucasus countries and has invested extensively into the region. Among those relationships the Georgian-Chinese cooperation does indeed stand out but is not a particularly recent phenomenon. After the collapse of the Soviet Union, Chinese immigrants to Georgia were driven by the Chinese state-owned investment activities in the region. In the early 2000s, the majority of the migrants were involved in corner shop and market vendors’ businesses, as well as the restaurant businesses, whereas after 2010, construction workers became the dominant portion of the Chinese migrants.

For Georgia China is now its third-largest trade partner (first two places - Turkey and Azerbaijan; fourth place – Russia). Actually the trade between the two countries significantly increased over the past 10 years. If in 2002, bilateral trade was just about $10mn, in 2014-2015 it reached $823mn. Moreover, in 2017 China and Georgia finally signed a free trade agreement during the visit of the Georgian delegation to China in May. The country also hopes that its position at the Black Sea with several ports such as Batumi, Poti and Anaklia will make it a logistics hub for the entire region and particularly for China’s BO initiative.

China only recently set its sights on the South Caucasus’ transit potential and valuable infrastructure. This interest is largely conditioned by China’s One Belt, One Road (OBOR) initiative, which is a multi-billion-dollar project, according to which the country’s east will be reconnected (as in ancient times) to Europe through the shortest distance, whether of southern Russian, Central Asia, or the South Caucasus and the Black Sea (although that is not the only corridor the Chinese are working on).

As said above, Georgia can boast of its Black Sea ports, east-west highway, which essentially connects Azerbaijan and the Black Sea coast, and existing and upcoming railway projects (Baku-Tbilisi-Kars). Indeed, from the Chinese perspective the two most valuable projects Beijing is eyeing in the South Caucasus are related to Georgia:

1) The upcoming opening of the Baku-Tbilisi-Kars railroad, which will allow 45% faster delivery of containers and freight and passengers from Asia to Europe;

2) Expanding the East-West Highway, Georgia’s main land road transport, in cooperation with the World Bank, the Asian Development Bank, and other organisations.

China has been testing the South Caucasus route since the announcement of the OBOR initiative in 2013. For example, in 2015 the connection efficacy between the Xinjiang province of China to the port of Poti in Georgia, via Kazakhstan and Azerbaijan, was tested. Railway cargo loaded in China on 29th of January and arrived in Georgia on 6th of February of the same year. However, almost a third of the time in transit was spent handling administrative obstacles. Several other tests too were carried out to prove the possibility of the trade and transit route through the South Caucasus.

However, despite those advantages Georgia has as a transit country there are still numerous questions. It could be said that overall China still remains ambivalent about the Caucasian stretch of the Silk Road. True, Beijing is interested in the strategic relevance of the region, but it nevertheless recognises that commercial engagement remains tentative. The South Caucasus route still remains out of major transit and trade routes China is heavily investing in.

Analysts do forget that the South Caucasus route does not feature much in the following corridors anticipated under the BRI initiative:

1. China to Europe through New Eurasian Land Bridge;

2. China-Mongolia-Russian Corridor;

3. Central and West Asian countries.

The 21st Century Maritime Silk Road, mainly relies on Chinese coastal ports:

4. China-Indochina Peninsula Corridor and link China with the South Pacific Ocean through the South China Sea;

5. China-Pakistan trade corridor;

6. Bangladesh-China-India-Myanmar trade route.

Compared to major Chinese-financed infrastructure and energy works completed in Russia, Kazakhstan, and Uzbekistan in the past two years, state-owned Chinese companies have yet to secure any similar scale projects in the Caucasus region. Indeed, Chinese are building major road and railway infrastructure in Uzbekistan and are extensively investing in Kazakhstan and Kyrgyzstan. In Georgia, for the moment, Beijing is largely interested in the existing and upcoming infrastructure and is investing into construction in Tbilisi, Kutaisi and other major cities.

Tbilisi sees intensive relations with China as yet another tool to somehow diminish Russian resurgence. With its pro-western course maintained, the country dearly needs Chinese investment as its will foster creation of jobs and other economic opportunities.

So far the Chinese have built a new city at the outskirts of Tbilisi, have invested in Kutaisi – the second-largest city in the country, and own three quarters of the shares of Poti’s free industrial zone. Although it is difficult to see the importance of investments in Tbilisi and Kutaisi, Poti’s possession is a significant one.

An ordinary observer could see a clear east-west line to the Black Sea spotted with Chinese presence all along. Surely it is for the moment difficult to ascertain what Chinese moves will be in the future, but it is also clear that as the Russian forces move the demarcation line of the breakaway South Ossetia to the south, closer to the east-west highway, China will be more worried as it endangers its economic interconnection with Europe. Beijing will either have to find a consensus with Russia or get more involved security-wise. And there is already a precedent for China getting involved militarily in the territories important to its OBOR project. For example, in Central Asia China has made some steps, which potentially could challenge Russia's economic and political influence in the region. We know that China is already the largest trade partner of each of the Central Asian states and that Beijing has deepened its military and security ties with Tajikistan and partly with Kyrgyzstan mainly by holding military exercises and building military infrastructure on the Tajik-Afghan border.

For Tbilisi it will be a boon to its security if China is more involved in the South Caucasus. However, for the moment it might be only wishful thinking that China will openly confront Russia anytime soon. Even in Central Asia, despite inroads, Moscow still does not say it openly that Beijing is compromising the existing order.

Another reason to think that Georgia will not so easily become a land for the confrontation between China and Russia is the fact that the country is only a small piece in China's OBOR. Also, although Beijing will pay more attention to the region it may not actively invest resources into Georgian security beyond law enforcement and counterterrorism cooperation, as in Tajikistan and Kyrgyzstan. This would be the case especially if its actions would clash with Russia's. There are simply several other transit routes too in China’s BRI grand project.

Thus the situation for the moment could be characterized as mixed. Beijing is definitely increasing its economic influence in Georgia. However, the investments are not on a par with Chinese actions in the Central Asia or Pakistan. Beijing is rather interested in the existing and upcoming infrastructure, while its relations with Russia are unlikely to be compromised if Russia does not threaten the major East-West highway.

Emil Avdaliani teaches history and international relations at Tbilisi State University and Ilia State University. He has worked for various international consulting companies and currently publishes articles focused on military and political developments across the Eurasian continent.