Publication: Eurasia Daily Monitor Volume: 4 Issue: 14

Thanks in large measure to Azerbaijan’s rapidly growing economic strength, the Kars-Akhalkalaki-Tbilisi-Baku (KATB) railroad-building project can soon become a reality. The project had stalled for more than a decade, due to a lack of funding for the Georgian stretch of the line. Now Azerbaijan is able to finance that part of the project.

On January 13 in Tbilisi, Georgian Economic Development Minister Giorgi Arveladze and Azerbaijan’s Transport Minister Zia Mamedov signed the relevant credit agreement on highly preferential terms. Azerbaijan is providing a $220 million loan, repayable in 25 years, with an annual interest rate of only 1%. This agreement will be followed by an inter-bank agreement between the two countries and then a tender to select the construction companies.

The line’s overall length is 258 kilometers (about 160 miles), of which the Georgian section is the most challenging. There, 30 kilometers from the Turkish border to Akhalkalaki must be built from scratch and another 120 kilometers of existing tracks need full rehabilitation. Turkey will build a 68-kilometer line from Kars to the Georgian border from scratch, at a cost of more than $200 million. KATB’s overall cost is estimated at up to $600 million. Construction work in Georgia is expected to start in the third quarter of 2007 and to require two-and-a-half years. The railroad’s anticipated capacity is 10 to 15 million tons annually by the third year of operation and up to 20 million tons annually afterward.

KATB has been conceived as a linchpin in the projected trans-Eurasian railroad that would connect the European railroad network, via Turkey and Georgia, to the Caspian Sea at Baku, continuing with ferryboat lines to the eastern Caspian shore. There, the KATB line can connect in the future with the proposed China-Kazakhstan-Europe railroad.

Even before the trans-Kazakhstan railroad from China becomes a reality, the KATB itself with a trans-Caspian connection will be the first major project that implements the European Union’s vision of a Transport Corridor Europe-Caucasus-Central Asia (TRACECA), popularly known as the “new Silk Road” from Europe to China. The EU had launched TRACECA in the South Caucasus in the mid-1990s amid great expectations, but practically abandoned it afterward. The EU is not investing in KATB, although it is aware of its potential benefits, according to a statement issued by the German embassy in Baku on behalf of the EU’s German presidency (Az.day, January 17).

Absent EU involvement, the United Nations Economic Commission for Europe (UNECE) had considered supporting the KATB project in the 1990s, but eventually opted out as well. Ultimately, in May 2005 Presidents Ilham Aliyev of Azerbaijan, Mikheil Saakashvili of Georgia, and Ahmed Necdet Sezer of Turkey signed a declaration of intent to build the KATB railroad.

The United States is officially taking a bystander’s attitude toward this project, “neither opposing it nor actively promoting it.” In the latter part of 2006, Armenian lobbying organizations succeeded in amending the U.S. Export-Import Bank Reauthorization Act to prohibit Eximbank funding to the KATB project, on the grounds that it “isolates” Armenia. In Moscow, empire-rebuilding advocate Andranik Migranian applauded the Congressional vote: “This is a well-thought-out step on the part of the American authorities” (Rustavi-2 Television, December 8, 2006). President George W. Bush signed the Act into law in December 2006 after both chambers of Congress had passed it in that form.

Yerevan and its supporters call for reopening and overhauling the existing railroad from Kars to Gyumri in Armenia and using it instead of KATB. Turkey had closed the Kars-Gyumri line in response to Armenia’s seizure of territories in Azerbaijan in 1994. The United States and the EU are urging Turkey to reopen the border with Armenia, including the Kars-Gyumri railroad, as part of efforts to promote a settlement of the Armenia-Azerbaijan conflict.

Irrespective of this political context, however, Kars-Gyumri is essentially a local line, in no sense a substitute for the KATB project of transcontinental relevance. From the standpoint of Turkey, Georgia, and Azerbaijan, KATB provides their most direct as well as politically safest link to the EU on one side and to Central Asia on the other, as well as an inter-connector among the three Western-oriented countries.

KATB has special significance to Georgia. The railroad can bring economic development to the deeply impoverished, Armenian-inhabited Javakheti region and ensure political stability there. It will also provide Georgia with a reliable outlet to the outside world, following Russia’s decision in 2006 to shut off transport communications with Georgia.

With U.S. leadership faltering on this issue and EU leadership absent, Azerbaijan is now demonstrating that it can take the initiative in making the KATB railroad possible.

(Turan, Today.Az, Messenger, Civil Georgia, Turkish Daily News, PanArmaniaNet, January 14-17; see EDM, November 9, 2006)