Georgia Risks Diminished Position in South Caucasus’s Connectivity

Georgia Risks Diminished Position in South Caucasus’s Connectivity

Executive Summary:

• On January 20, speaking at the World Economic Forum, Azerbaijani President Ilham Aliyev stated that cargo flows between Azerbaijan and Armenia could soon take a direct route that bypasses Georgia, intensifying regional transit realignments that threaten Georgia’s traditional transit role amid Armenia and Azerbaijan’s diplomatic progress.
• In December 2025, a dispute over Georgian tariffs on Azerbaijani oil traveling through Georgia to Armenia exposed growing tensions, weakening the Georgia–Azerbaijan partnership and fueling fears that Georgia may be marginalized in the evolving Middle Corridor transit system.
• While neighbors advance new connectivity projects, Georgia risks losing leverage by exclusion from key forums and tentative involvement in Russia-linked transit initiatives through its occupied territories, undermining Georgian sovereignty, credibility, and its long-term role in South Caucasian logistics.

On January 20, speaking at the World Economic Forum in Davos, Switzerland, Azerbaijani President Ilham Aliyev stated that cargo flows between Azerbaijan and Armenia would soon take a direct route that bypasses Georgia (Facebook/radiotavisupleba, January 21). According to Aliyev, Armenia has also raised the possibility of using Azerbaijani territory for cargo transportation between Armenia and Russia. Following the collapse of the Soviet Union, Georgia was Armenia’s only gateway to the outside world—primarily to Russia—for decades. Georgia played this role due to Armenia’s strained relations with Azerbaijan and Türkiye, which blocked alternative routes. Following the August 8 meeting in Washington between Armenia and Azerbaijan, however, the process of unblocking regional transit routes in the South Caucasus has intensified (see EDM, September 3, 8, 11, October 15, November 6, 2025). Georgia’s passive foreign policy and increased international isolation is leading Tbilisi to lose political and economic leverage as a key transit state.

Aliyev’s statement was met with a deliberately calm response from the ruling Georgian Dream party. Member of Parliament and Chairman of the Parliamentary Committee on Regional Policy and Local Government Irakli Kadagishvili stated, “Georgia will not lose any function.” According to him, the country will not be destroyed because of this and will remain part of the existing logistical chain. Kadagishvili also claimed that Aliyev’s statements were taken out of context and misinterpreted (Kvirispalitra.ge, January 22). Within the Georgian opposition, it is believed that the development of the Middle Corridor is unfolding in a way that risks Georgia losing its key role in the transit ecosystem of the region (Interpressnews, January 21). According to the “Lelo” party, Georgia faces a real risk of becoming a buffer zone between Russia and North Atlantic Treaty Organization (NATO) countries, without economic prospects or security guarantees (Interpressnews, January 22). The “United National Movement” went further, stating that “under the current regime, Georgia risks becoming a geographic dead end” (Gruziya Online, January 22).

Aliyev’s statement in Davos was preceded by a tariff dispute between Georgia and Armenia and Azerbaijan. In December 2025, Azerbaijani state media criticized the Georgian government, accusing it of acting against peaceful projects in the region. These media outlets claimed that Georgian customs officers were systematically mistreating Azerbaijani cargo (Minval Politika, December 5, 2025). Georgia reportedly requested a tariff of $92 per ton for the use of a 111-kilometer (69-mile) section of Georgian territory for the transit of Azerbaijani oil to Armenia (Minval Politika, December 5, 2025). Azerbaijani authorities did not openly acknowledge the dispute with Georgia, instead limiting their involvement through state-controlled media. In contrast, the Armenian Ministry of Economy officially confirmed the dispute over tariffs on the transit of Azerbaijani oil, saying that the rates proposed by Georgia were uncompetitive (Radio Tavisupleba, December 25, 2025). 

At the end of December 2025, relations between Azerbaijan and Georgia were seriously strained for the first time in history, when the Azerbaijani government, through its media, indirectly threatened the Georgian government. One of the headlines in the Azerbaijani media read, “Tbilisi is testing Baku’s patience” (Minval Politika, December 5, 2025). Such a tone appeared for the first time and may hurt Tbilisi–Baku relations in the future. The tariff conflict was later suspended by Georgian Prime Minister Irakli Kobakhidze, who announced that both countries were exempted from any tariffs for a one-time shipment, and the first cargo of Azerbaijani oil to Armenia was sent free of charge (Business Media, December 8, 2025; YouTube/@AnewZ_TV, December 18, 2025).

The strategic partnership between Georgia and Azerbaijan is rooted in shared economic interests and regional priorities, dating back to the 1990s. The first president of Azerbaijan, Heydar Aliyev, and the second president of Georgia, Eduard Shevardnadze, initiated this partnership (YouTube/@theeduardshevardnadzecente4725, November 19, 2025). Georgia and Azerbaijan have shared economic interests and play a significant role in ensuring Europe’s energy security. On January 16, the State Oil Company of Azerbaijan (SOCAR) announced the start of Azerbaijani gas deliveries through Georgia, Türkiye, Greece, Albania, and Italy to Austria and Germany (Facebook/SOCARofficial, January 16).

Azerbaijan and Armenia’s desire to establish direct cargo traffic also appears logical, given their shared land border. At the moment, however, the infrastructure in these countries is not ready for the immediate resumption of direct rail cargo transportation. Armenia is also proposing that Baku begin cargo transportation to Russia, and vice versa, which naturally affects Georgia’s interests. The only official land border checkpoint with Russia, however, operates in a limited mode and cannot ensure the timely delivery of goods to their destinations (Facebook/ExpressNews.ge, January 21). At the same time, when announcing new transit routes, Aliyev did not indicate any intention to halt logistical connections with Georgia. He noted that the new routes are meant to complement, not replace, existing ones, and that Georgia remains an important transit partner. Georgian expert and Director of the Transport Corridor Research Center Paata Tsagareishvili believes that ultimately, as the pan-Turkic countries accelerate the transformation of transport routes, a route may emerge within the Middle Corridor that could become a competitor to the Georgian route (Interpressnews, January 22).

For the second year in a row, Kobakhidze has not received an invitation to the World Economic Forum in Davos. In January, the newly established “Board of Peace”  invited Armenia and Azerbaijan to participate, while Georgia was excluded. Georgian Dream has, in recent years, emphasized its commitment to peace as a central achievement, regularly claiming that Georgia has remained the only country in the region without war during its rule. Opposition politician and former president of the National Bank of Georgia, Roman Gotsiridze, sees Georgia’s non-invitation—at a time when even many authoritarian countries were invited—as evidence of Georgia’s complete international isolation, leaving the country without friends or allies (Interpressnews, January 22). Leaders of Georgia’s ruling elite, however, explain the exclusion by noting the absence of an ongoing war in Georgia. Vice Speaker of the Georgian Parliament Giorgi Volski claimed that the countries invited to the peace council are those experiencing severe conflict-related processes (Facebook/Mtavarinow, January 21). Nevertheless, these developments underscore that relying solely on peace rhetoric without active diplomacy and participation in shaping the region’s new security and logistics architecture risks Georgia’s marginalization and the loss of diplomatic significance in the South Caucasus.

Georgia is increasingly becoming involved in Moscow’s transit initiatives while its neighbors develop regional transit projects. Earlier reports have raised the possibility of transit routes from Russia through Georgia and, in the opposite direction, through Georgia’s Russian-occupied breakaway territory of Abkhazia. There is even a customs terminal being constructed on the occupied territory of Abkhazia near the part of Georgia under Tbilisi’s control. According to available information, the project is being implemented with the support of the Russian non-governmental organization Assembly of the Peoples of the World, headed by former head of the Federal Customs Service of Russia, Andrey Belyaninov  (Ekho Kavkaza, January 21). Local media reports that former Georgian Minister of State Security Igor Giorgadze, who was sentenced in absentia in Georgia for organizing a terrorist act against Shevardnadze, is the deputy chairman of the Assembly of the Peoples of the World. In the 1990s, Giorgadze fled to Russia, where he remains in hiding. For many years, he stayed in the shadows, appearing only occasionally in Russian state media, particularly during the rule of former Georgian President Mikheil Saakashvili, whom he regularly criticized. Now, however, Giorgadze has again drawn attention as one of the leaders and active organizers of the terminal between Abkhazia and the part of Georgia still under Tbilisi’s control. 

It appears that the customs terminal in Abkhazia is not an isolated case (Ekho Kavkaza, January 21). In another occupied region of Georgia—the Tskhinvali region, also known as South Ossetia—another, equally notable transit project is also being discussed. As with the Abkhazian customs terminal, official Georgian Dream representatives have not confirmed their participation. The authorities of breakaway South Ossetia, together with the Russian state development corporation VEB.RF, are working on a Transcaucasian railway project planned to run from Russia through South Ossetia and the rest of Georgia, then continue toward the Middle East. The leader of Russian-occupied South Ossetia, Alan Gagloev, claims that this route could become the shortest connection from Russia to the Middle East (Kvirispalitra.ge, January 6).

Georgia seeks to strengthen its role as a transit hub and compete with neighboring countries while attempting to incorporate Russian-occupied territories into its logistics plans. This creates the appearance of concern for restoring Georgia’s territorial integrity and of having some form of agreement with Russia. In reality, this undermines the country’s sovereignty. As a result, the pursuit of transit advantages may ultimately conflict with Georgia’s national interests. Internal instability and questions about the legitimacy of the Georgian Dream government place the country at a disadvantage when implementing geoeconomic projects. Connectivity projects increasingly involve dubious actors from Russia and the occupied regions, since an unstable Georgia is a less attractive partner for other international partners.