By constructing the Baku-Tbilisi-Kars railway, Georgia will serve as a hub in the region. Experts consider the project as the main guarantor of the power of the Georgian economy.
The strategic railway construction will bring Georgia an economic dividend; there are also political benefits that will ensure security and stability in the region.
Restoration, reconstruction, and building of the 180-kilometer Marabda-Kartsakhi railway are planned in the framework of the new railway line project.
The project consists of recovery and reconstruction of 153 kilometers of the Marabda-Akhalkalaki line and construction of the 27 kilometers of Akhalkalaki-Kartsakhi (Turkish border). Its estimated throughput is one million passengers a year and 6.5 million tonnes of cargo. The increase in the capacity of this transport corridor is possible in the future, reaching three million passengers and up to 20 million tonnes of cargo per year.
The history of the railway project began in 1993. Three years later, on April 4, 1996, at the meeting of the Presidents of Georgia and Turkey, a declaration of the design and construction of the Tbilisi-Kars railway linking the two countries was adopted.
A new contract was signed in January 2005, but the US and EU refused to fund the project then. Azerbaijan expressed its readiness to finance this project with a long-term loan for 25 years so that works could be carried out on the territory of Georgia. Finally, a trilateral agreement on a new Baku-Tbilisi-Kars railway was signed in Tbilisi on February 7, 2007. Presidents Ilham Aliyev, Mikheil Saakashvili, and Prime Minister Recep Tayyip Erdogan signed the document.
The deadline concerning the construction extended several times because of financial, relief, and political difficulties.
The Baku-Tbilisi-Kars railway officially opened on October 30, 2017, in Baku. The length of the railway is 826 kilometers, 254 kilometers of which is on the territory of Georgia, 27 kilometers is an entirely new section - from Akhalkalaki to the village of Kartsakhi.
A loan granted from the State Oil Fund of the Republic of Azerbaijan totaling $ 775 million, finances the construction of this section. Credit is split into two tranches. Azerbaijan extended a $ 200 million loan to Georgia for a 20-year term at a 1% annual rate in 2007, $ 575 million in 2011, for a 25-year term and a 5% annual rate. Debts of Marabda-Kartsakhi Railway Ltd will be covered by net profit from the operation of the railway.
According to the Georgian side, after Baku-Tbilisi-Kars railway construction is completed, Azerbaijan and Georgia will form a joint venture, which will determine the rules of operation of the railway and the tariff policy.
The Baku-Tbilisi-Kars railway route, the so-called Iron Silk Road, may turn Georgia into a flagship of railway transport.
The railway is being built based on an agreement between three countries - Azerbaijan, Georgia, and Turkey.
The heads of all three states believe that this project is a historic step and speak about the potential of the Baku-Tbilisi-Kars project for the region.
Giorgi Gakharia, the Prime Minister of Georgia, about two years ago, while still holding the post of Minister of Economy and Sustainable Development, noted that the project had economic, political, and global significance.
"We think that after the railway is fully launched, the economic impact will be very significant," Giorgi Gakharia, the Prime Minister of Georgia.
According to Ilham Aliyev, the President of Azerbaijan, the Baku-Tbilisi-Kars railway is the shortest and most reliable route between Europe and Asia.
"This road will promote tourism development, stability and security, increase the amount of mutual investment and strengthen the geopolitical significance of our countries," Ilham Aliyev said.
Recep Tayyip Erdogan, the President of Turkey, views the Baku-Tbilisi-Kars railway as a "historic step." According to him, the results of the strategic partnership will benefit not only the two countries but the entire region.
"We will continue our efforts with the support of Georgia to maintain peace and stability on our common Black Sea," Recep Tayyip Erdogan said.
"Bridgebuilder between Asia and Europe," Natia Turnava, the current Minister of Economy and Sustainable Development of Georgia, said that the country's ability to increase economic interdependence requires stronger transport links between Asia and Europe.
The Minister emphasizes the importance of the Baku-Tbilisi-Kars railway as the best example of stimulating links and cooperation in the region and notes that the project will create an effective railway corridor from the Caspian Sea to Europe.
According to the leaders of the partner countries, this is a new life for the New Silk Road Project, but still, challenges are remaining.
Javid Gurbanov, the Chairman of Azerbaijan Railways, commented on the matter. According to him, China plans to ship 10 billion tonnes of cargo a year through the Baku-Tbilisi-Kars rail corridor, which is a significant figure.
The exact period when Baku-Tbilisi-Kars railway will operate at full power is yet unknown, but experts agree on the benefits the project will bring to the region and the rest of the world. The largest freight traffic in the world is between Europe and China. The process is carried out by sea and requires an average of 25-30 days. After the launch of the Baku-Tbilisi-Kars railway, the time will be reduced almost twice, up to 12-15 days.
"Things that the railway is going through now is an evolution in the region, in which Baku-Tbilisi-Kars plays a key role," Emzar Jgerenaia, the economist stated.
The only problem that affected the completion of the project, according to the economist, is the complex terrain, but this issue can be dealt with technically.
"The railway has global importance not only for us but for the development of the region, as the main accent is made on Azerbaijan, Turkey, and Georgia. I expect the project to boost the economy and bring countries closer. Virtually it is the second Silk Road and a way to ensure political stability.. Logistics are changing completely. The future will show us how technically well-equipped, modernized the road will be, and how easy it will be to move freight from China to Europe, given the competitors. It is imperative to improve the technical specifications of the railway and maintain competitive tariffs to remain a leader in this business.. It is important that all three countries equally participate in the tariff setting process. As for the dividend of the project, it will be income and political security," Emzar Jgerenaia told report.ge.
Gia Khukhashvili, the analyst also talks about political benefits.
"The function of Baku-Tbilisi-Kars is developing the East-West connection hub, which makes us interesting for the world. The project is important for enhancing the geopolitical function of the region, what follows this project is a political dividend," Gia Khukhashvili told report.ge.
According to Giorgi Ghaganidze, the Dean of the Faculty of Economics and Business of TSU, the country will benefit from the created opportunities.
"The main advantage of Georgia in the implementation of the project is its location. It is an important security guarantee as well, for those companies that are particularly interested in the country's security. As for the economic benefits, the revenue will increase as soon as the cargo turnover starts to increase. The most important thing is how well the country will use its capabilities. The fact is that it will help the development of the region if the cargoes move quickly to neighboring countries. Besides significantly reducing the time needed to ship freight between Asia and Europe, there will also be the possibility of attracting additional freight," Giorgi Ghaganidze told report.ge.
There is very little time left before freight switches to new rails in the region. The Baku-Tbilisi-Kars railway route will attract more and more international attention in terms of regional transportation.
Lastly, international recognition is also essential -the Baku-Tbilisi-Kars railway is recognized as one of the most strategic projects in the world among the 100 global projects.
Маri Chitaia
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