Anti-Russian Sanctions Increase Transit Role of Georgia

The Western sanctions imposed on Russia due to its aggression against Ukraine include a ban on overland cargo transit through Russian territory. This situation has highlighted new promising prospects for Georgia as a transit country (see EDM, April 19, April 20, June 9). Indeed, Georgia has become one of the only land corridors for the European Union to reach Central Asia and China. Without fully employing Georgia’s transit potential, Europe’s access to the products and natural resources of Central Asia will continue to be significantly reduced.

Moreover, without Georgia, the EU’s access to Azerbaijan’s natural resources will also be limited. As evidenced by the recently signed agreement between Brussels and Baku on doubling gas supplies to the EU through the Trans-Anatolian Natural (TANAP) and Trans Adriatic (TAP) gas pipelines (Kommersant, July 18), everything points to Georgia’s growing transit role in the region (Radio Tavisupleba, August 12; Interpressnews, August 18).

The idea of further activating the Trans-Caspian International Transport Route (TITR, or “Middle Corridor”) that passes through Georgia has been revived, and Tbilisi is doing its best to capitalize on this opportunity. Consecutive visits of Georgian Prime Minister Irakli Gharibashvili to Uzbekistan, Turkmenistan and Kazakhstan, were aimed at discussing these opportunities, among other issues (Caucasus Watch, July 19; Rustavi-2, July 20, 1tv.ge, July 27). On August 18, Georgia, Turkey and Azerbaijan signed an agreement on preliminary data exchange to simplify customs transit procedures, which will contribute to the “smooth delivery” of international cargo to the Caucasus region and the joint management of the increased cargo flow (Agenda.ge, August 18). On August 23, Tbilisi hosted a high-profile meeting of Georgian Minister of the Economy Levan Davitashvili with the transport ministers of Turkey and Azerbaijan to discuss development and competitive growth for the transport corridors of Georgia, Azerbaijan and Turkey, especially the TITR’s potential. From this point of view, the Turkish participants underlined the importance of existing transport infrastructure, including the Baku–Tbilisi–Akhalkalaki–Kars railway, an international rail link project launched in 2017.

Amid the changing realities in the region, cargo turnover in the Georgian corridor has increased by 1 million tons, including an increase in both land and sea freight, as well as container cargo turnover (BMG.ge, August 23). On September 3, it was announced that, within the framework of the Kazakhstani president’s task, JSC NC KTZ, national operator of Kazakhstani railway transportation, will construct terminal networks in the ports of Iran, Azerbaijan, Georgia and Turkey by 2030 (Forbes.kz, September 3). Kazakhstani state oil company KazTransOil owns the oil terminal in Batumi Seaport.

Tengizchevroil, a joint venture led by oil giant Chevron, already began rerouting a small volume of oil by rail to Georgia’s port of Batumi in April 2022, and plans are underway to book more rail volumes in September and October. Recent reports indicated that Kazakhstan intends to transport 1.5 million tons of oil via Baku-Tbilisi-Ceyhan pipeline (BTC) starting in September to bypass Russia (Reuters, July 18, August 11). However, Kazakhstan’s Energy Ministry promptly denied these reports (Interfax-Kazakhstan, Forbes.kz, August 12; Azernews, August 13).

Apart from purely economic factors (e.g., low-spare capacity of BTC), some political implications are also affecting regional infrastructure development, including Russian influence. It is safe to say that full-scale rerouting of transport corridors to Georgia will take time. Additionally, Georgian transport infrastructure needs significant improvements to be able to cope with increased cargo turnover. Georgian transport infrastructure acutely lacks direct foreign investments, pundits say (Bm.ge, June 4). Here, we should recall the suspended construction of the strategically important port of Anaklia, which largely became the victim of political squabbles and clashes of interests.

While Western sanctions have effectively fenced off Russia’s important international transit corridors, the authorities of Georgia’s breakaway region, Abkhazia, will most likely try to maximize the territory’s own transit potential as a key source of revenue. The working group created by the “presidential” administration of Abkhazia proposed to unilaterally remove all restrictions on the passage and transit of goods across the administrative border with Georgia along the Inguri River. The ban was introduced in 2008 after the Russo-Georgian War, which led to the actual occupation of Abkhazia by Russia (Radio Tavisupleba, September 1). Some freewheeling Abkhaz analysts argue that, in the process of forming new transit corridors and new logistics hubs, it is highly unreasonable for Abkhazia, which has historically been a transit corridor, to stay inactive and remain captive to established stereotypes. According to the recommendations submitted by the working group, the Abkhaz railway, airport and seaports would profit by increased transit should the existing restrictions be waived.

In the first instance, the Abkhaz establishment turns an eye to Turkey as one of the main transport hubs in the region, given the already established informal trade economic relations. The Abkhazians are also considering possible transit deals with Armenia and the Georgian government, according to local sources. However, so far, no consultations regarding the transit agreements have taken place between Tbilisi and Sokhumi. Some Georgian politicians claim that this initiative is part of the joint Russian-Abkhaz scheme aimed at oblique recognition of Abkhazia’s independence and the attempt to circumvent anti-Russian sanctions by the uncontrolled flow of goods (JAMnews, Ekhokavkaza.com, September 2).

The reorientation of transport and energy corridors from Russia to Georgian territory holds significant opportunities in geopolitical and economic terms but also carries certain risks. It is unlikely that Russia will give Georgia free hands to accomplish these plans. Russia occupies about 22 percent of Georgian territory, including more than a 600-meter section of the strategic Baku-Supsa oil pipeline. The danger exists that a greater part of the pipeline will be in the occupation zone, should Russia continue to move the “border” with breakaway South Ossetia deeper into Georgian territory.

Since regaining state independence, Georgia has successfully marketed its strategic value as an indispensable transit partner in the region. However, its transit potential remains vulnerable due to political instability, economic challenges and military threats. The Ukraine war’s outcome will no doubt have a major effect on the potential of Georgia’s new transit perspectives.