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BAKU-TBILISI-KARS RAILWAY: POLITICAL AND ECONOMIC IMPLICATIONS

This article was published on 07 November 2017 at 06:05 PM. It has 37 views so far.

On October 30, a decade after construction began, one of the most debated transportation projects of the South Caucasus – the Baku-Tbilisi-Kars (BTK) railway line, was officially put into operation. Connecting Azerbaijan, Georgia, and Turkey, the 826-kilometer railroad is expected to function as a new Eurasian bridge between East Asia and Western Europe in the near future. BTK’s capacity of five million tons of freight a year at the earlier stages is planned to gradually increase to 17 million tons. It will also transport up to one million passengers annually.

Azerbaijani President Ilham Aliyev noted at the inauguration ceremony that BTK is the most reliable and shortest route between Europe and Asia: “This road will serve the development of tourism, stability and security, increase the amount of mutual investment, and strengthen the geopolitical significance of our countries.” As such, the project claims to be an alternative to Russia’s Trans-Siberian and Iran’s Razi-Sarakhs railways. Thus, besides being an alternative railway between China and Europe, BTK is to provide an alternative for the Central Asian countries to reach the European market without using the Russian or Iranian routes. This is probably why Georgia’s former president Mikheil Saakashvili enthusiastically called it “a great geopolitical revolution” in 2007 when its construction started.

BTK’s Economic Implications

BTK is of serious economic importance for the conflict-riven South Caucasus. It is expected to boost regional trade which has stagnated in recent years due to the decline in energy prices and a slowdown in the regional economies. The overall trade turnover between Azerbaijan and Georgia has declined around 50% from its peak level in 2013 ($1.36 billion) to $645 million in 2016. Azerbaijan’s trade turnover with Turkey has also undergone a similar fall in this period, declining from $2.9 billion (2013) to around $1.56 billion (2016). There is high optimism that the newly launched railroad will contribute to the expansion of the trade in the region and attract more investment.

During his visit to Azerbaijan on the occasion of the inauguration of BTK, the Turkish President Recep Tayyip Erdogan, stated that he believed that the trade turnover between the two countries would rise up to $5 billion. He also declared his expectation for a similar rise in mutual investments, which accounted for $23 billion as of late 2016: “We have the potential to bring the volume of our investments to $30 billion over five years.”

BTK’s Political Implications

It is the political implications for the construction of the BTK railway line, however, which are believed by some experts in the region to be the major motivation behind this project. The railway, which was initiated and largely financed by the Azerbaijani side, is believed to serve the purpose of boosting the geopolitical importance of Baku in the region and further isolating its enemy, Armenia.

The establishment of BTK sidelines the already existing, though no longer functioning, railway connecting Tbilisi and Kars through the Armenian city of Gyumri. The Tbilisi-Gyumri-Kars (TGK) railway line stopped operating after the Nagorno-Karabakh war as Turkey ceased its diplomatic relations with Armenia in protest to the latter’s occupation of Azerbaijani territories. Therefore, BTK came up as another regional geo-economic project, after the Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Erzurum (BTE) pipelines, that bypassed Armenia and severed its isolation.

This was why the EU and United States refused to financially support the construction of the railway regardless of the fact that it was to provide an alternative to the Russian route. A December 2006 act of the US Congress banned the US “Export-Import Bank” from funding the project. The initiators of the act argued that it would “drop out Armenia and continue the illegal economic blockade of this Caucasian nation.”

Consequently, the railway line, whose construction costs amounted to over $1 billion, has become the first international transportation project of the South Caucasus to be built without any external funding and largely financed by Azerbaijan. While Turkey covered all the construction costs in its territory, Azerbaijan provided a long-term loan worth $775 million to Georgia for the construction of the Georgian section of the rail link. Using its status of being the main funder of the project, the Azerbaijani side has unequivocally ruled out the possibility of Armenia’s use of the railway for the transportation of its cargo.

The Armenian political and expert community responded furiously to the opening of the railway. On the one hand, it isolates Armenia from regional transportation routes, on the other hand strengthens Georgia’s “monopoly” on Armenia’s exchanges with Russia and Europe and allows Tbilisi to sustain high custom tariffs with Armenia.

Some Armenians consider the BTK railway “another attempt by Turkey, Azerbaijan and Georgia to isolate Armenia”. Arman Vaneskegyan, a commentator at Sputnik Armenia, disputes the economic feasibility of the project and argues that:

In order to understand the importance and meaning of the launched Baku-Tbilisi-Kars railway project, one should look at the geographic map of the South Caucasus. It can be understood that the railway project, which is launched with Azerbaijan’s backing, is unequivocally a political project, and does not pursue any economic, logistical or any other goals.

Some political experts of the country also criticize the foreign policy making of the Armenian leadership for its unrealistic calculation of the regional geopolitical and economic balance. “The policy of Armenia in this issue was built not on pragmatism, but on the hopes that the disruptive circumstances would not allow the Baku-Tbilisi-Kars railroad to become a reality,” writes Armenian columnist Sargis Artsruni. “In Yerevan, they were obviously mistaken…”

Some Azerbaijani opposition members dispute the economic significance of the project, stressing its political motivations. For example, Natig Jafarli, executive secretary of the Republican Alternative (REAL) opposition movement believes that:

Azerbaijan, the primary donor for this project, spent about one billion dollars for its realization. In the early years, profits from this railway are unlikely to exceed 20-30 million dollars. In addition, there are significant natural obstacles to overcome on the road “from Beijing to London”; the ferry across the Caspian Sea, and changing the wheelbase before crossing through turkey to Europe, as it’s well known that the standards of Russian railways differ from those of Europe. All of this wastes time. It will be a miracle if the project starts to pay off in 20-30 years.

BY Kenan Abbasov