Opinion: Georgia’s agreements with Central Asian countries are intentions

Georgia’s delegation led by Prime Minister Giorgi Kvirikashvili has completed its visit to Turkmenistan. The prime minister summed up the visit results spotlighting the hours-long meeting with President Gurbanguly Berdymukhamedov and discussion of regional transport projects, including the initiative of a transport corridor involving Turkmenistan, Georgia, Azerbaijan and Romania, and some energy transit projects. Not long before, the Turkmen leader travelled to Armenia. Delegations from Uzbekistan visited Georgia, while Kazakh and Kyrgyz ones visit Tbilisi so frequently that one can get an impression that they stay there constantly replacing in each other. A similar situation is in neighboring Azerbaijan.

Gia Khukhashvili, expert in economy, ex-advisor of Georgia’s prime minister, answers EADaily’s questions about the recently intensified contacts between South Caucasus and Central Asia regions.

Commenting on his visit to Ashgabat, the prime minister of Georgia said the talks covered a wide spectrum of issues, energy and transport projects, first of all. Would you comment on the major issues in more details?

It was about Silk Belt project. It is not new. It has been discussed for a long time already. The major idea is to organize certain energy system based on Turkmen gas supplies. Despite rhetoric of politicians, this project will not be implemented in the short-term outlook because of some absolutely specific problems. We know that it is practically impossible to lay pipe across the Caspian Sea since the shelf is not divided and the Caspian Sea region countries have disputes over it. I do not think that Iran or Russia may allow developments not meeting their interests. In short, there is little specifics and few prospects.

What about Turkmen oil supplies?

In Turkmenistan, oil is not as important as gas is. Another matter, supply of oil products, but it is connected with ferry shipments and we receive certain amount of oil products via Georgia. Georgia and Russia have their own quotas. However, these are not significant volumes. Perhaps, for some businesspersons these volumes are important, but not at the state level. These are very limited supplies.

Liquefied natural gas?

To take liquefied gas to Georgia, we need to develop infrastructures and agree with Azerbaijan rather than with Georgia. Baku has its own strategy. Supplies of energy resources from Turkmenistan to Georgia are possible only via Azerbaijan, which has its own policy and interests – political and economic ones that not always meet Georgia’s interests.

Do you mean that those interests run contrary to the interests of Turkmenistan too?

Yes, these supply schemes are not connected just with transportation, logistics and trading. There are certain discrepancies in the trade market – who will be supplying our gas? Countries have different ambitions, while the pie is not big for everyone to get a piece of it and avoid too stiff competition, as well as settle disputes through negotiations. As I have already said these are issues of mid-sized business. Who will earn from trading in Turkmen oil products? These issues are discussed in small circles, not at the government level. I mean this will neither increase nor decrease the country’s geopolitical role.

What did Turkmenbashi and Anaklia ports agreed upon under the partnership agreement signed by their leaders?

In Georgia, Anaklia port project is a kind of PR project so far. Construction of the port has not been launched yet, but contracts have been signed already. I suppose the consortium that will be building Anaklia port may face financial problems. That is why such contracts may pursue investments by financial institutions. This cannot be called illegal; such steps are a usual thing in business. Nevertheless, it is not reasonable making contracts ahead of the port’s construction.

Furthermore, it is not known when the construction will be launched, how competitive the port will be as compared to other Georgian ports. Consequently, all contracts are made through state lobbyist institutions just to help the consortium attract investments that it probably lacks.

What do you think of the transport route from China via Turkmenbashi port, Azerbaijan, and Georgia? This route passing by Russia has already been labeled as anti-Russian.

The main exports capacity of Turkmenistan is gas. To transport it, either a pipeline or liquefied gas technologies are needed. I think Russia has no reason for concern in the short-term outlook. Turkmenistan shows no interest in export of gas to the West, as it is focused on Eastern countries, India and China. The Western route appears to be interesting to politicians for imitation of negotiations with Russia and China, if the current supply terms are revised. However, this is a game and making such tactical steps too primitive, since it is very easy to miscalculate bluffing.

Getting back to the issue of Anaklia port, a delegation of Uzbekistan has travelled to Georgia and discussed the port’s operation terms.

Such talks are economically important, but it is hard to consider them strategic. Transportation of cargoes via Georgia trough this route is problematic. The transportation rates make the Trans-Caucasian corridor less competitive than the Russian one, since it is more expensive. These shipments have a great number of components. At first, cargoes are transported by railway up to the Kazakh port or Turkmenbashi port, afterwards, they are loaded on ferries and shipped. Afterwards, they are dispatched in Azerbaijan and shipped up to the Black Sea ports and transshipped again… This is a multi-component transportation and every action requires additional payment. Meantime, cargoes can be transported via Russia for a single rate.

To introduce a single rate on the Trans-Caucasian corridor, the Uzbek railway, Caspian shipping line, Azerbaijani ports and railway, Georgia railway and ports need to find a common language. To achieve an efficient competition with Russian railways having a single rate and “wiggle room,” these facilities need to achieve an agreement, which is unlikely to happen any time soon.