Georgia sets out to wow China with Black Sea trade nexus dream

Georgia sets out to wow China with Black Sea trade nexus dream
Large-scale works in building Anaklia Deep Sea Port commenced last September.
By Emil Avdaliani in Tbilisi March 20, 2019

Little Georgia sat at the crossroads of Europe and Asia is batting its eyelids at officials of China’s multi-billion-dollar and multi-continental Belt and Road Initiative (BRI) to deliver modern-day infrastructure-for-trade. As things stand, the nation does not figure in Beijing’s BRI plans, but the project is an evolving one and a flurry of development along Georgia’s Black Sea coast could very well cause the Chinese to think again.

Georgia’s current flagship infrastructure investment aims to create a deep-sea container port in Anaklia, which the Anaklia Development Consortium markets as sitting on the shortest trade route from China to Europe. Just lately, the European Union made a decision to financially support the realisation of Anaklia Deep Sea Port, to boast a water depth of 16 metres allowing for vessels with a capacity of up to 10,000 twenty-foot equivalent units (TEU). A European Commission document on the development of the Trans-European Transport Network states that €233mn has been allocated to finance the second phase of the port’s development (in all the TBC Holding-led consortium, made up of investors from Georgia, the US, UK and Bulgaria plans to roll out nine phases with an aggregate investment of around $2.5bn).

The document also notes that hundreds of millions of euro have been assigned for the construction of railways and highways throughout Georgia, a country of 3.8mn, which will lead to the port hub. What’s more, the German Development Bank (DEG) together with its Dutch counterpart have also decided to invest in Anaklia.

Multimodal plans in Poti
Further south, in Poti, a decision on whether to construct a multimodal transit terminal is awaited. The facility would, for instance, have modern equipment allowing for the storage of up to 60,000 tonnes of fertilizers. Wondernet Express, the international logistics company behind the project, would invest $20mn.

International port operator APM Terminals, along with Poti New Terminals Consortium, have submitted a conceptual design for the expansion of APM Terminals’ Poti Sea Port. The project would entail a 14.5-metre water depth by a 700-metre quay wall. Some 25 hectares of land would be utilised for the bulk operation yard and covered storage facilities for various cargo types, including grain, ore, and minerals.

Meanwhile, the US Overseas Private Investment Corporation (OPIC) has issued a loan of $50mn to Pace Group to develop the planned multi-functional marine terminal at Poti.

Moving even further south, to Batumi, the Black Sea port located there is to be developed with the construction of an additional terminal.

Adding to the excitement over Georgia’s prospects as an indispensable nexus for intercontinental trade between China, Central Asia and Europe, Georgian Minister of Economy and Sustainable Development Giorgi Kobulia said recently that talks on establishing a ferry line between Georgia and the EU have been renewed.

Marked progress
Overall, these decisions amount to marked progress in making the development of Georgia’s Black Sea ports an integral part of the world maritime network. The global financing flowing from both Europe and the US demonstrates that major geopolitical players see the South Caucasus, and Georgia in particular, as offering plenty of economic potential.

One might also surmise that the geopolitical projection of the global companies backing infrastructure investment in Georgia is based upon the idea that the situation in the country will remain stable and that Georgian-Russian relations—roiled by Europe’s first 21st-century war in 2008 when for five days Moscow and Tbilisi faced off over breakaway territories in northern Georgia—are unlikely to take a confrontational turn for the worse (at least from the mid-term perspective).

Those plotting the development of China’s BRI—sometimes called the Silk Road Economic Belt and the 21st-century Maritime Silk Road and often viewed suspiciously by Trump administration officials who see it as part of Beijing’s strategic push for dominance in global affairs—will reckon with new transport corridors arising across the Eurasian landmass. The BRI, rather than being a static initiative, is in fact a model which is to constantly adjust to emerging opportunities.

Original “silk roads”
Going back to ancient and medieval times, the changeability of the original “silk roads” was mainly conditioned by the course of the political and economic climates across entire regions of the Middle East and Central Asia where the “roads” lay.

Back then, Georgia rarely featured as part of the major “silk roads” and so here too it could be argued that for the first time in its history the country has real potential to be part of Chinese-European connectivity.

But one would be foolhardy to forget the complex geopolitics of Georgia. The country, pressured by Russia from the north, quite naturally seeks a balancing act with western states as well as with Turkey, partly through its aspirations to join the Nato defence alliance. This strategy, however, is not always successful as the Russo-Georgian war 11 years ago so rudely reminded onlookers.

In other words, another recipe for stability is needed for Georgia and the whole South Caucasus, taking in neighbours Armenia and Azerbaijan. I would argue that one scenario in which the region benefits sees all the regional and global actors securing an economic interest in keeping Georgian territory as secure and safe as possible.
The essential conclusion is thus that as many major powers as possible should gain a stake in the Georgian economic corridor. It would provide a certain modus vivendi for Georgia’s future development and perhaps be the final rebuttal to those who argue that the only solution to the dilemma of strategically but precariously located Georgia will one day necessarily be a military one. The expansion of the country’s Black Sea ports could prove the first significant sign towards a peaceful outcome that offers all players a win.

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.