Publication: Eurasia Daily Monitor Volume: 5 Issue: 196

Armenia and Georgia have pledged to strengthen their commercial and other links in hopes of overcoming the negative economic consequences facing both South Caucasus states after the recent Russian-Georgian war. Tbilisi has also officially expressed its overall satisfaction with Yerevan’s neutrality in the conflict.

Armenia, heavily dependent on Georgian territory for its import and export operations, has been anxious not to upset its most important neighbor and number one military ally, Russia. Its leaders remained conspicuously silent during the week-long heavy fighting in and around South Ossetia. It was not until August 14 that Armenian President Serzh Sarkisian called a meeting of his National Security Council to express his personal concern about the crisis and praise international efforts to resolve it.

Sarkisian has since repeatedly chided Georgia for its ill-fated August 8 attempt to retake South Ossetia. He reiterated the thinly veiled criticism during a September 30 visit to Tbilisi. “I believe that it is impossible to resolve existing problems through military intervention,” he said at a joint news conference with Georgian President Mikheil Saakashvili (Regnum news agency, October 1). At the same time, the Armenian leadership has refused to recognize South Ossetia and Abkhazia as independent states, despite apparent pressure from Russia.

After their talks Saakashvili publicly thanked Sarkisian for “expressing support for Georgia’s territorial integrity” and gave his Armenian counterpart an Order of Honor, a top Georgian state award. He stressed the importance of Georgian-Armenian economic ties and said that border crossing procedures for Armenians and Georgians traveling to each other’s country would soon be simplified. “We must review our relationship and do everything to improve it again. I am sure that we will really be useful to each other,” Sarkisian said (Caucasus Press, September 30).

More importantly, the two presidents announced the impending establishment of a Georgian-Armenian consortium that would seek to attract foreign funding for a new highway in southern Georgia that would significantly shorten travel from Armenia to the Georgian Black Sea coast. Armenian Transport and Communications Minister Gurgen Sarkisian gave details of the project at a subsequent news conference in Yerevan, saying that the planned road could be built within two years. He said it would pass through Georgia’s Armenian-populated Javakheti region and go all the way west to the Black Sea port city of Batumi. He added that the new route would cut the distance between the Georgian-Armenian frontier and Batumi by at least one third (Arminfo, October 4).

Armenia’s transport connections with Batumi as well as the other major Georgian port, Poti, have long used Georgia’s main east-west highway passing through Gori, a strategic town near South Ossetia that was bombarded and seized by Russian forces during the war. Traffic along that highway was disrupted as a result, seriously complicating vital cargo supplies to eastern Georgia and Armenia.

The planned road will be hundreds of miles away from South Ossetia and Abkhazia and therefore, in the event of renewed fighting, beyond the striking distance of Russian ground troops stationed in the two breakaway regions. According to Minister Sarkisian, the Manila-based Asian Development Bank has already expressed interest in financing the transport project; but neither the transport minister nor other Armenian officials have elaborated on the likely cost.

The Yerevan government’s strong interest in the project suggests that it continues to regard Georgia as landlocked Armenia’s most reliable conduit to the outside world, even after the Russian-Georgian war and despite its dramatic rapprochement with Turkey. The Turks keep making the opening of the border with Armenia contingent on a resolution of the Karabakh conflict, which may still be a long way off despite major progress in Armenian-Azerbaijani peace talks.

Interestingly, Russian Foreign Minister Sergei Lavrov welcomed the latest Armenian-Georgian agreements when he visited Yerevan on October 3. “I hope that these agreements will prevent a repetition of the situation during the Caucasian crisis that resulted in artificial obstacles on Georgian territory to the traffic of goods to Armenia,” Lavrov told journalists (a Jamestown representative was present, October 3). “I think these agreements will contribute to the economic development of our ally [Armenia],” he said

The Armenian government estimates the total damage inflicted on Armenia’s economy by the war at $670 million. That includes the cost of delays in shipments of fuel, basic foodstuffs, and other goods through Poti and Batumi. The two ports together handle at least 70 percent of Armenia’s external trade. Armenian officials say the damage also takes account of a resulting shortfall in import duties and other taxes as well as projects cancelled by foreign investors frightened away by the war. In an October 7 interview with the Azerbaijani online news service, Prime Minister Tigran Sarkisian said that the losses would have been even greater had Armenia not maintained “constructive relations” with Georgia.

The economic fallout from the Georgian crisis was reportedly high on the agenda of the Armenian premier’s talks late last week in Washington with Vice President Dick Cheney and other senior U.S. officials (Armenian Public Television, October 11). It was not, however, immediately clear what concrete U.S. assistance Yerevan seeks in coping with the problem.

Incidentally, Georgian Prime Minister Lado Gurgenidze was also in Washington to hold talks with U.S. officials and attend the annual meetings of the International Monetary Fund and the World Bank. The Georgian media, citing reports from the Georgian government press office, said that Gurgenidze would meet his Armenian counterpart there.