Baku-Tbilisi-Kars: Small project with great effects

Analysis Materials 27 July 2011 10:40 (UTC +04:00)

Azerbaijan will apparently become the largest transportation and transit center of the Caspian region and South Caucasus in the coming years, as evidenced by implementation of a number of infrastructure projects in sea, air and railway transportation. Capital reconstruction of the Heydar Aliyev International Airport, commissioning of international airports in Ganja and Lankaran in the recent past, construction of international airport in Gabala, the construction of sea port in Alat - this is an incomplete list of these projects. But especially one should underline the railway communication project on Baku-Tbilisi-Akhalkalaki-Kars route linking the three countries' railway systems.

The project is significant not only for further regional integration between Azerbaijan, Georgia and Turkey, which are already linked by energy corridor (Baku -Tbilisi- Ceyhan oil pipeline, Baku -Tbilisi- Erzurum).

After completing the construction transport chain China-Central Asia-South Caucasus-Turkey-Europe, or the so-called East-West Corridor will be activated. As the Turkish President Abdullah Gul said, this road will connect not only the three countries, it will connect China and London. The project will become one of the routes of historic Silk Road. First it is attractive due to the fact it will be the shortest among the existing routes of goods delivery from Asia to Europe, and therefore the most cost-effective. Already cargo volumes are growing every year: in 2009 about 6.7 million tons of cargo was transported through the territory of Azerbaijan, this figure was almost 9.5 million tons in 2010, and the first five months of 2011 the volume of transit cargo already totaled about 6.3 million tons. According to various estimates, this route will be possible to transport from 6.5 to 16 million tons of cargo and about 3 million passengers a year.

It is interesting that the project is implemented by means and funds of the three member countries, unlike oil and gas projects, where the Western companies have invested huge amounts of funds, although it is not inferior to them for its significance and potential. It was largely possible by the financial opportunities that Azerbaijan posses. Azerbaijan allocated two loans worth $200 and $575 million to the Georgian side for rehabilitation and construction of the Georgian section of the road.

A key factor in increasing the project's role was Kazakhstan and China's support for it, which expressed an interest in transportation of their goods to European markets through this route. Also, after completing the Marmaris project (laying railway lines under the Bosporus Strait ), the transport corridor will be linked directly with the European railway network.

Azerbaijan takes additional measures to ensure further amounts of goods transit from Asia. Reconstruction of the Baku-Boyuk Kesik railway section (border with Georgia) was launched in June. Construction of the sea port - the largest and most modern in the Caspian Sea- started in the Alat settlement. Its capacity will enable transshipping any amount of cargo from East to West and vice versa. As President Ilham Aliyev stressed, commissioning of the Baku-Tbilisi-Kars railway by late 2012 will be coordinated with the construction of the port. Also, Azerbaijan State Caspian Sea Shipping Company (CASPAR) and the Croatian Uljanik Shipyard have signed a contract in Baku to build new ferries for Azerbaijan in May 2011 . According to CASPAR head Aydin Bashirov, after opening the Baku-Tbilisi-Kars railway corridor freight traffic through Euro-Asian transport corridor TRACECA will significantly increase, and increased shipping fleet will be required to transport growing volumes of cargo.

Trade turnover between Asia and Europe increases every year, and now it reaches about 400 million tons of various cargo. Using an advantageous geographical position and initiating the project of the Baku-Tbilisi-Kars railway construction, Azerbaijan, as they say, entered the top ten, drawing off certain part of the intercontinental trade to this future transportation route. Improvement of customs procedures in Azerbaijan in accordance with European standards, is shorter than the Trans-Siberian main and, especially, sea routes from Asia to Europe, cargo transportation road - all these makes the small-scale project as a priority and strategically important in terms of international trade.

"It is not just a rail project; its value is much higher. It is a geopolitical move, the geopolitical initiative. It is a project that will turn Azerbaijan into the center of the region from a transportation point of view for many years ahead, and our country will receive both political and economic dividends from operation of this road for decades," Ilham Aliyev made this statement addressing at a meeting of the Cabinet of Ministers on the results of the socio-economic development in the first half of 2011.