The ‘Big Game’ Around Georgia’s Deep-Water Ports

Last March, Georgian Prime Minister Irakli Garibashvili announced that his government would post a new tender for the construction of the Anaklia deep-water port (Report.ge March 31; Netgazeti, March 4). This mega-project, originally envisioned by former president Mikhail Saakashvili (in power 2004–2012), is the most ambitious in Georgian history. Several years ago, the country’s parliament even amended the constitution to facilitate its development, obligating any future government to build a deep-water port on the Black Sea coast of Georgia. The completion of such a port promises to upend the geopolitical and geo-economic situation of the Caucasus, Central Asia, and the Black and Caspian Sea regions (Jam-news.net, January 1, 2020).

In January 2020, the government of the ruling Georgian Dream (GD) party canceled the preexisting contract with the Anaklia Development Consortium (ADC), which had been tasked with building the country’s first deep-water port (Agenda.ge, January 9, 2020). According to Minister of Infrastructure and Regional Development Maia Tskitishvili, the reason behind annulling the agreement was that the consortium had not fulfilled its obligations to bring in investments of $400 million (Jam-news.net, March 5, 2021). However, many Georgian politicians and experts believe that the “war” of GD and its founder, billionaire Bidzina Ivanishvili, against the Anaklia project is motivated by an attempt to weaken successful businessman and former chairperson of ADC Mamuka Khazaradze. He now leads the political faction Lelo, one of the most popular new Georgian parties.

On January 8, 2019, the Georgian Prosecutor’s Office opened a criminal case against Khazaradze, accusing him of laundering $17 million. But the latter categorically denies his guilt and has characterized the charges as politically motivated (Civil.ge, May 14, 2020).

Despite the announcement this spring of a new tender for the construction of the deep-water Anaklia port, the Georgian government is simultaneously taking actions that further complicate the implementation of this “project of the century.” One of these is the expansion of the rival port of Poti. This project cannot be a real alternative to Anaklia due geographic limitations of the coastline surrounding Poti. Unlike Anaklia, Poti will likely never be able to handle as much as 100,000,000 tons of cargo per year. Nonetheless, continued resources allocated to the development of the smaller-scale Poti could dilute investor interest in Georgia’s real potential deep-water facility (Netgazeti, May 3, 2019)

Recently, the non-governmental organization Transparency International–Georgia spotlighted this issue, while connecting it to domestic political machinations (Transparency.ge, April 21, 2021). In particular, the authors of the report identify political donations made to the GD election campaign by firms/individuals associated with the Poti project as a quid pro quo to kill Anaklia in favor of Poti.

Transparency International–Georgia notes that, in 2017, CEFC China Energy took control of 75 percent of shares in the Poti Free Industrial Zone (Agenda.ge, January 16, 2017). And in February 2018, Georgia’s then–former prime minister Irakli Gharibashvili was appointed an advisor to the Supervisory Board of the Euro-Asian Management Group, a company administering CEFC’s regional projects (Business Media Georgia, February 12, 2018). Gharibashvili received a remuneration of 410,704 lari ($120,790) from this firm. On February 22 of this year, he was again appointed prime minister of Georgia (Transparency.ge, April 21, 2021)

The major companies involved in the $93 million Poti port enlargement project are connected with GD’s founder, Bidzina Ivanishvili. The port expansion is being implemented by Georgian firm Pace Group. The owners of Pace Georgia LLC donated a total of 620,000 lari ($180,000) to Georgian Dream and its presidential candidate, Salome Zurabishvili, in 2017–2018. In addition, three months after receiving the land-use permit for the expansion of the Poti port, the corporation donated another 200,000 lari ($58,000) to the ruling party (Transparency.ge, April 21).

Economic expert Giorgi Khukhashvili said, in a May 5 interview with this author, that the development of the Poti port would hinder the Anaklia project. But the real reason why the Georgian government is promoting Poti versus Anaklia stems from the geopolitical games that began immediately after 2012, when then-president Saakashvili announced the construction of a deep-water port on the Black Sea coast of Georgia.

This port, as Khukhashvili noted, was supposed to be able to receive large warships and submarines. “Russia’s current position in the Black Sea basin is very strong—especially after the annexation of Crimea. And so the Western Alliance [the North Atlantic Treaty Organization—NATO] needed access to infrastructure on the eastern coast of the Black Sea, in Georgia, which is considered a NATO ally,” he underscored. But in turn, Khukhashvili noted, Moscow also recognizes that, “in addition to its trade and logistics function, Anaklia will have military-strategic importance. It can be assumed that the attempt by the Georgian authorities to interfere with the construction of Anaklia precisely reflects this interest of Russia [to see the port project thwarted]” (Author’s interview, May 5).

The expert explained the active participation of Chinese companies in the Poti expansion project by the fact that China respects Russia’s regional interests but would like to maintain small alternative transit nodes along one of the “offshoots” of Beijing’s trans-Eurasian “One Belt, One Road” (also known as the Belt and Road Initiative—BRI).

A much more complicated question is why the previous United States administration chose to participate in the Poti port enlargement project, if the Anaklia Deep-water port more properly matched US and Western interests. In 2019, the US governmental agency Overseas Private Investment Corporation (OPIC—since merged with the Development Credit Authority) invested $50,000,000 in the construction of a new terminal in Poti. This was the largest OPIC investment in Georgia since independence (Interpressnews, February 21, 2019; Agenda.ge, May 16, 2019). Local analysts believe the decision by the US government could not have been a mistake: such a large investment meant the Donald Trump administration was not confident in the usefulness of the Anaklia project for the security of the United States and its long-term interests (Civil.ge, June 12, 2019; Georgiatoday.ge, June 13, 2019). “Maybe Washington feared that the deep-water port of Anaklia could [additionally] be used not only by Russia and China but also by Iran, which is trying to build a special trade relationship with the European Union. The American fleet completely controls the Persian Gulf, but so far it cannot influence the situation in the Black Sea area,” David Avalishvili, of the information-analytical magazine Nation.ge, posited in a May 5 interview with this author.

The uncertain situation around Anaklia may become clearer only at the end of summer, when the fate of the project becomes decided. So far, potential investors have shown no urgency to participate in a new tender announced by the Georgian government.