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THE CAUCASUS & GLOBALIZATION
Alexander DUDNIK
Ph.D. (Hist.), Senior Researcher for the Foundation of Ukrainian Presidents
at the Vernadsky National Library of Ukraine
(Kiev, Ukraine).
THE BAKU-TBILISI-KARS (BTK) RAILROAD PROJECT IN THE GEOPOLITICS OF THE CENTRAL CAUCASIAN COUNTRIES, TURKEY, AND RUSSIA
Abstract
This article reveals the positions of the Central Caucasian countries,1 neighboring countries—Russia and Turkey, as well as the U.S. and EU regarding implementation of the Baku-Tbilisi-Kars, BTK (Kars-Akhalkalaki-Tbilisi-Baku, KATB) transportation project.2
In particular, the research study determines the geostrategic interests (national, regional, and global) of the country that initiated building the BTK, as well as Baku's direct aspirations concerning the project. It also analyzes the economic and political factors of the interest of such member states as
1 The author takes the original principle of dividing the political space of the Caucasian region into three subregions as his basis: the Northern Caucasus (the administrative units of the North Caucasian and South Federal Districts of the Russian Federation); the Central Caucasus (the independent states of Azerbaijan, Armenia, and Georgia); and the Southern Caucasus (the northeastern ils of Turkey and the northwestern ostans of Iran) (for more on this, see, for example: E. Ismailov, V. Papava, The Central Caucasus: Essays on Geopolitical Economy, CA&CC Press AB, Stockholm, 2006; E. Ismailov, V. Papava, Tsentralny Kavkaz: istoria, politika, ekonomika, Mysl Publishers, Moscow, 2007).
2 In 2007, a framework agreement was signed by Azerbaijan, Turkey, and Georgia, according to which the initial name of the project—the Kars-Akhalkalaki-Tbilisi-Baku (KATB) trunk railroad was renamed Baku-Tbilisi-Kars (BTK) keeping in mind the current reality.
the Republic of Georgia and the Turkish Republic in the railroad. The author highlights the problems of Georgia's participation in the project and the reasons for the opposition to the construction of the BTK trunk line, primarily from Russia and Armenia, as well as the Armenian diaspora of the Javakheti region in Georgia. It shows the attempts by Moscow and Erevan to prevent implementation of the project.
Moreover, it reveals the relation between building the trunk line and the unsettled Armenian-Azerbaijani Nagorno-Karabakh conflict, as well as the world community's recognition of the Armenian genocide of 1915 in the Ottoman Empire. To this end, it highlights the reasons why such leading countries of the world as the U.S., as well as the EU countries, which are directly interested in the railroad, are refusing to participate in funding the project. It also draws attention to how their refusal has dissuaded other European and Asian states from investing in the construction.
It reveals the geopolitical and economic significance of the BTK project for both the Central Caucasian countries and the states of neighboring regions, as well as the European Union and the U.S. It sets forth the approaches toward the project of the initiator
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countries and its opponents. The article also sheds light on both the subjective and the
objective hurdles preventing implementation of the BTK project.
KEYWORDS: BTK project, KATB, Central Caucasus, transportation corridors, Euro-integration, regional ethnic conflicts, investments, Javakheti.
Introduction
The collapse of the Soviet Union and the Armenian-Azerbaijani Nagorno-Karabakh conflict led to Armenia's transport and energy isolation from Azerbaijan and Turkey. But Baku and Ankara have equally suffered, since they have also been deprived of direct land links to each other through Armenia. Since Soviet times, this transport link was provided by the Kars (Turkey)-Gum-ri (Armenia) railroad. However, the route has not been in operation at all since the mid-1990s. It was in need of major repairs and its rails had to be replaced to meet the European gauge standards.3 Erevan failed to carry out repair of the trunk line, but has repeatedly announced its willingness to restitute rail traffic with Turkey if that diplomatic relations are restored between the two countries and the Turkish-Armenian border is opened. Ankara was in favor of normalizing relations with Erevan but in turn demanded that Armenia cease its efforts to gain international recognition of the historical events of 1915 as "genocide of the Armenians"4 and withdraw its troops from Nagorno-Karabakh.
The absence of direct land routes has caused trade and economic and even political difficulties for Azerbaijan and Turkey, which are strategic partners. By maintaining good-neighborly relations with Tbilisi, Erevan has access to the Black Sea and its ports, as well as land links with Russia. Admittedly, in turn, transportation between Armenia and Russia through Georgia depends on Georgian-Russian relations, which, since the collapse of the Soviet Union, are governed by the ethnic conflicts— South Ossetian and Abkhazian—in Georgian territory. In particular, the hostilities in these regions of Georgia at the beginning of the 1990s, as well as in 2008, caused a breakdown in transport links between Russia and Armenia.
In 2005, Azerbaijan asked Turkey and Georgia to assist in building the Kars-Akhalkalaki-Tbilisi-Baku (KATB) railroad. This project was developed by the Georgian-Turkish Transportation Commission in Ankara in 1993 as one of the most important sections of the Silk Road—Transport Corridor Europe-Caucasus-Asia (TRACECA)—elaborated by the European Union. However, the KATB route was not included in the international TRACECA program, since, according to the people in Brussels, it infringed on the interests and position of Armenia. The EU demanded that the Kars-Gumri railroad be launched within the TRACECA framework.5
Implementation of the KATB project will make it possible to establish a direct land link between Azerbaijan and Turkey bypassing Armenia. The new railroad through the Georgian city of Akhalka-laki will bypass Armenia from the north. In this way, Georgia will become a transportation artery not
3 A ready terminal for preparing trains for transferring to a different rail gauge has been built on the Armenian-Turkish
border.
4 During World War I in 1915, thousands of Armenians were brutally killed in the Ottoman Empire. Today, Armenia is trying to get the world community to recognize those events as genocide of the Armenian people by the Turks.
5 See: G. Hovhannesian, "Zheleznodorozhny proekt Kars-Akhalkalaki-Tbilisi-Baku v kontekste turetsko-gruzinskikh interesov," available at [http://www. noravank.am/upload/.../4.Gor_Hovhannesyan_21_VEK_03_2012],
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only for Russia and Armenia, but also for Azerbaijan and Turkey, that is, two pairs of states that are trying to dominate in the Central Caucasus.
Interests of the Azerbaijan Republic in Implementation of the Project
President of Azerbaijan Ilham Aliev, who is aspiring to turn the republic from an oil-producing country into a transportation bridge joining Europe and Asia, was the direct initiator of the KATB project. Azerbaijan is actively making use of the resources of the State Oil Fund accumulated in the past in order to develop and modernize the country' s infrastructure and that of the region as a whole.
Azerbaijan has associated three areas of geostrategic interests (national, regional, and global) with implementation of the KATB project.
The national aspect consists in restoring the current Baku-Tbilisi railroad and bringing the internal Baku-Ganja-Gazakh transportation artery into harmony with world standards.
The regional aspect focuses on reinforcing its economic and political position in the region by independently funding the national and regional project and incorporating its own traditional partners, Georgia and Turkey, into it, but leaving out Armenia. However, Baku notes that the KATB transportation corridor is not directed against the interests of any particular country or group of states, and thinks that any possible infringement of Armenia's interests to be insufficiently justified since Azerbaijan and Armenia are de facto in a state of confrontation. There is no agreement between the two countries on border recognition. The leadership of the Azerbaijan Republic recognizes the economic expediency of Armenia participating in KATB as a regional state, but thinks that Erevan should itself, without outside assistance, make its geo-economic choice in the Central Caucasus.6
Russian researchers believe that Baku, which is supported by the West, is putting political and economic pressure on Erevan. Therefore Armenia can only realistically participate in the KATB project after it returns Nagorno-Karabakh and the Azerbaijani territories occupied by Erevan to the jurisdiction of the Azerbaijan Republic.7
Baku contends that the project will aggravate Armenia's transportation isolation, which is why Erevan is trying to prevent its implementation as it did with other regional economic projects in the past. This is why it has been hindering the negotiation process for settling the Nagorno-Karabakh conflict.8 However, as the experience of implementing previous energy projects shows, Armenia's position can only have an effect on the rate at which KATB is implemented. At the same time, it will automatically lead Erevan into further self-isolation and create additional problems in the Central Caucasian region.
The global aspect of the KATB project lies in the fact that official Baku is building its regional policy in keeping with global geopolitical trends and is actively involved in the world processes. Baku regards the KATB trunk line as a link that will make it possible to join the transport terminals and ports of the Black Sea and Caspian basin countries, as well as the geostrategic North-South (Russia, Azerbaijan, Iran, and India) and East-West (Russia, Georgia, and Armenia) corridors. As of today,
6 See: "Renaming the Kars-Akhalkalaki-Tbilisi-Baku Project BTK is Significant," available in Russian at [http://www. nregion.com/news.php?i=9212#.TzT5zXqDF0I], 2 February, 2007.
7 See: N. Fedulova, "'Zamorozhennye' konflikty v SNG i pozitsiia Rossii," Mirovaia ekonomika i mezhdunarodnye otnosheniia, No. 1, 2008, p. 59.
8 In 2005, Robert Kocharian predicted a drop in negotiation activity with respect to settlement of the Nagorno-Karabakh conflict.
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Azerbaijan is already an important component of the South-North9 rail and road corridor from Asia to Europe initiated by Russia and Iran.
Since there was no hope of the Nagorno-Karabakh conflict being settled any time soon, the EU approved the signing of a framework agreement in 2007 among Azerbaijan, Turkey, and Georgia on building the KATB railroad. According to the agreement, the route was renamed Baku-Tbilisi-Kars (BTK), thus bringing the name into compliance with the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Er-zurum oil and gas pipelines, which was significant.10
Brussels and Washington, which compete with Russia in the Central Caucasus, believe that Azerbaijan will become a hub that draws the trans-Caspian export routes to it. This will open direct access, particularly for the EU, to the raw material resources of Turkmenistan and Kazakhstan, and at the same time significantly weaken Russia's economic and political position not only in the Central Caucasus, but also in Central Asia.11
Implementation of the project fits into the framework of the West-East energy transportation corridor being promoted by the EU, in which Azerbaijan is being given one of the leading roles. The BTK will strengthen Azerbaijan's transportation-transit position in this corridor, in which Georgia dominates and Armenia and Russia participate, while Baku still only plays an important role in the transportation of energy resources.
The BTK route will increase cargo turnover several-fold on the reverse Europe-Asia routes and to neighboring regions. Kazakhstan and Turkmenistan objectively need it since it will promote the development of their economic relations with Azerbaijan, currently realized through the ports of the cities of Baku, Turkmenbashi (Turkmenistan), and Aktau (Kazakhstan). The route will raise the importance of maritime transport in the Caspian Sea. Baku is already preparing for this by setting up a ship-building factory and ordering ferries for transporting train carriages across the Caspian.12 KATB will eventually link China and India.13
Moreover, the railroad is to become one of the links in America's Greater Central Asia project called upon to join Central and Southern Asia with the help of a common energy and transport infrastructure. While the international peacekeeping operation was unfolding in Afghanistan, Washington examined the possibility of transporting cargo by means of the so-called Caspian route through Georgia, Azerbaijan, the Kazakh port of Aktau, and on through Uzbek territory to Afghanistan.14
Baku believes that the economic interests of the BTK project participants will be quickly paid off by the increased activity of the hundreds of transport operators who will be working in the European and Asian directions within the framework of the European Union's TRACECA project.15
Position of the Turkish Republic in Implementation of the Project
KATB will help Ankara to realize several main vectors in the country's foreign political strategy—integration into the EU and establishment of a direct transport link with the Turkic states of
9 See: R. Mamaraev, "Rol Iuga Rossii v Kaspiiskom regione,"Mirovaia ekonomika i mezhdunarodnye otnosheniia, No. 1, 2009, p. 72.
10 See: "Renaming the Kars-Akhalkalaki-Tbilisi-Baku Project BTK is Significant."
11 See: N. Fedulova, op. cit., p. 61.
12 See: S. Mamedov, "Baku forsiruet stroitelstvo zheleznoi dorogi v obkhod Armenii," available at [http: //www. ng. ru/cis/2011-05-24/6_baku.html], 24 May, 2011.
13 See: "Renaming the Kars-Akhalkalaki-Tbilisi-Baku Project BTK is Significant."
14 See: N. Gegelashvili, "Kaspysky region v kontekste rossiysko-amerikanskikh otonosheny," SShA. Kanada. Ekonomika-politika-kultura, No. 12, 2009, p. 43.
15 See: "A Presentation of the Kars-Akhalkalaki-Tbilisi-Baku Railroad Construction Project is to be Given in Georgia," available in Russian at [http://www. news.gazeta.kz/art.asp?aid=223639], 21 November, 2007.
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Central Asia, which is still controlled by Russia and Iran. This route will also raise Turkey's significance as an important transit-transportation hub throughout the entire Eurasian region and allow it to become an indispensable element in both regional and global policy.16
Official Ankara has been actively supporting the project. In the spring of 2006, President of the Turkish Republic Ahmet Necdet Sezer said in Tbilisi: "Turkey is interested in establishing a railroad link with Georgia and Azerbaijan within the framework of the Kars-Akhalkalaki-Tbilisi-Baku project." While Head of the Turkish Ministry of Foreign Affairs Abdullah Gul said, "If the route is joined in the east with the proposed rail and sea routes between Baku and Aktau (Kazakhstan) and further with China, and in the west with the Turkish Marmarai project (the rail branch near the Bosporus), it will become an important part of the shortest route to Europe. Moreover, construction of the railroad will open up new opportunities in the context of cargo shipments between Asia and Europe and strengthen the transport positions of Azerbaijan and Georgia in the region, particularly by redirecting some of the cargo flows from the North-South transportation corridor to the West-East corridor,"17 which is not in the interests of Russia and Armenia in particular.
According to Turkish Prime Minister Recep Tayyip Erdogan, after implementation of the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum energy projects, building the KATB route will ensure a direct transportation link between the Caspian Region and Europe and accelerate integration of the Central Caucasian states into Europe. This will be a route on which trains can travel at up to 120 km an hour. The project will make it possible to carry out cargo and passenger movement and will become a new Silk Road on rails.18
Position of the Republic of Georgia Regarding the BTK Project
Official Tbilisi has also been supporting BTK railroad as a strategically important project that will allow the country to gain access through Turkey to the world, particularly European, market. Georgian Minister of Foreign Affairs Gela Bezhuashvili noted that it is important for Georgia to have as many transport links with neighboring countries as possible for joining the regions with the country's center. He also assured Erevan that the project would not lead to Armenia's further isolation, but, on the contrary, would help to expand regional cooperation and European integration of all three countries of the region. Furthermore, operation of the Kars-Gumri line would not eliminate the need for the KATB route.19 After all, in 2009 alone the trade volume between Europe and Asia reached $600 billion. According to the forecasts of the Organization for Economic Cooperation and Development (OECD), in the next 10-15 years, development of the world economy will be sustainable thanks to the high development rates, primarily of China and the East Asian countries. This will result in a 1.5-2-fold rise in the foreign trade circulation between the counties of Europe and Asia.20 It stands to reason that this requires acceleration of the region's economic development, particularly of its transport infrastructure, which will produce profit for the Central Caucasian countries and raise their role and significance in trade between Europe and Asia.
16 See: G. Hovhannesian, op. cit.
17 "The Kars-Akhalkalaki-Tbilisi-Baku Railroad: For and Against," available in Russian at [http://www.apsny.ge/ analytics/1150822399.php], 20 June 2006.
18 See: Ibidem.
19 See: S. Markedonov, "Zheleznodorozhny Baku-Dzheikhan," available at [http://www.politcom.ru/5484.html], 14 December, 2007.
20 See: R. Mamaraev, op. cit.
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In this respect, Co-Director of the Institute for Policy Studies in Tbilisi George Tarkhan-Moura-vi wrote that the Central Caucasus is becoming a transport hub between Central Asia and the West and could acquire the same significance for the North-South route.21
However, there were also doubts about how economically expedient the route would be for Georgia. In particular, Minister for Economic Reforms Kakha Bendukidze did not see indices in the project that would guarantee the country large amounts of profit. Moreover, the project might deprive the Georgian ports in Batumi and Poti, through which Azerbaijani and Turkish cargo is currently transported, of income. So, of all the project's member countries, it is least advantageous for Georgia. For example, the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines currently in operation have brought only $50 million into the country's treasury, whereas $300 million were expected.22
According to Georgian economists, the route could become an additional source of income for the country only if Turkey or Azerbaijan assumes responsibility for total funding of its construction and operation. That is, Tbilisi supported the project at the political level, but was unable to participate in its construction financially, so it held talks with Kazakhstan and China as potential investors in the project.23
Russia and the BTK Route
Russia and Armenia have been actively opposed to building the KATB (BTK) route from the very beginning. Moscow could not allow strategic transportation routes to bypass it through the territory of neighboring states. The Kremlin also thought that the BTK would compete with the Russian Trans-Siberian route, which is essentially the only railroad currently joining Europe and Asia. Despite the fact that the throughput capacity of KATB will be small compared to the Trans-Siberian route (Transsib), the flows of cargo delivered from the Central Asian countries to Europe might change direction. The route will make Georgia and Azerbaijan less politically and economically dependent on Russia, which will ease their integration into the European structures. In the 1990s, during the first Chechen war, Moscow lost its influence on the Central Caucasian countries, tacitly supporting the separatist movements in Azerbaijan and Georgia and closing the borders with these countries, which aggravated their economic position. Therefore Baku and Tbilisi strove to reduce their dependence on
Russia.24
According to Russian experts, spending on the route will not be paid off for another few decades, while there will be nothing to guarantee the volumes of cargo flow. They are also convinced that the interest of Turkey and Azerbaijan in establishing a direct land link bypassing Armenia is in no way economic, but military-political in nature. After all, relations between Baku and Ankara are gradually acquiring signs of a strategic alliance and could reach a qualitatively new level, which the Kremlin wants to avoid. Moscow also thinks that politicized and economically unpromising transport projects will never become a foundation for peace and stability in the Caucasus. So the Kremlin suggested reopening the rail link between Armenia and Turkey. Moscow believed that this would make it possible to establish communication among Russia, Turkey, and Iran and give a boost to trade
21 See: I. Pashkovskaia, "Deiatelnost Evropeiskogo soiuza na Iuzhnom Kavkaze," Mirovaia ekonomika i mezhdunarodnye otnoshenia, No. 5, 2009, p. 59.
22 "A Presentation of the Kars-Akhalkalaki-Tbilisi-Baku Railroad Construction Project is to be Given in Georgia."
23 See: Ibidem.
24 See: "Kars-Akhalkalaki-Baku is in No Way an Economic, but a Military-Political Project," available in Russian at [http://www. atc.az/forum/showthread.php?t=5451&page=9/], 26 November, 2007.
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and economic development of all the states of the region without exception within the framework of the North-South transportation corridor.25 But the Kars-Gumri route cannot operate without settlement of the Nagorno-Karabakh conflict. That is, Moscow is leery of a project that, in addition to weakening its political influence in the region, will also be of economic detriment, but it is not rushing to resolve the indicated conflict.
Russian researchers also believe that Russia ranks lower than the West in the hierarchy of Azerbaijan's foreign policy priorities. Today, Western capital, technology, pipelines, and the raw hydrocarbon sales market tie Azerbaijan to Europe. Baku associates it with hopes of accelerated modernization of its economy and a civilizational breakthrough. It is also important that the share of West European countries in Azerbaijan's foreign trade turnover is higher than similar indices with Russia. In particular, in 2006 this index for the EU countries reached 60%, while for Russia it was 15%.26
Armenia's Position Regarding the BTK Project
Official Erevan thought that building the BTK (KATB) railroad had a political objective from the very beginning, i.e. Armenia's complete isolation. However, keeping in mind the difficult terrain through which it will pass and the existence of the Kars-Gumri-Tbilisi route and terminal for transferring trains to the European gauge standard, the project has been deemed economically unsubstantiated, expensive, and inexpedient both for Armenia and for the entire region. In the summer of 2005, Armenian Prime Minister Andranik Margarian said during a visit to Georgia that Erevan considers Georgia's participation in the KATB project to be Tbilisi's internal affair.27 However, some Armenian researchers believe that the project will show again that Georgia is turning from a subject of international policy into its object.28
At the same time, the Armenian opposition asserted that the BTK would either not influence Armenia's economic development at all, or would have a positive impact. On the whole, Armenia will not find itself in complete isolation and will not become an island-state. The opposition discerned the relation between constantly postponing settlement of the Nagorno-Karabakh conflict and building the railroad, since other states are unable to wait until Armenia resolves its issues and begins operating as a transit country.29
Georgia's Armenian Diaspora and the BTK Route
The Armenian diaspora of the Javakheti region of Georgia in the form of the leaders of the Armenian Union of the Intelligentsia of Javakheti and the Armenian Javakhk movement thought that implementation of the project would help the Turks, their language, and their culture to penetrate the
25 See: "Kars-Akhalkalaki: A Delayed Time Bomb in Armenian-Georgian Relations," available in Russian at [http:// www.azg.am/palm/?lang=RU&num=2007031306azg daily/], 13 March, 2007.
26 See: N. Fedulova, op. cit., p. 60.
27 See: S. Markenonov, op. cit.
28 See: G. Hovhannesian, op. cit.
29 "A Presentation of the Kars-Akhalkalaki-Tbilisi-Baku Railroad Construction Project is to be Given in Georgia."
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region. Furthermore, the local Armenians would lose land, settlements, communication means, and their culture, and they would not be hired to fill the new jobs, if only from the standpoint of security. They could not allow this, since Turkey does not want to open the border with Armenia or recognize genocide of the Armenians. So only the Turkish government is interested in building KATB. Representatives of the Armenian Union of the Intelligentsia of Javakheti also claimed that implementing the project would aggravate Armenian-Georgian relations.30
Such severe statements by representatives of Georgia's Armenian diaspora show that there is a real threat to this project, the implementation of which requires certain security guarantees.
Feasibility Report of the Project, Its Initial Cost, and Leading Investors
The feasibility report of the BTK railroad project was drawn up by Turkey's Yuksel Domonik Company, which spent $1 million on it. According to the feasibility report, the final budget of the project amounts to $360 million. The railroad is 104 km long. Seventy-five kilometers pass through Turkey, and 29 km through Georgia. According to the project, a terminal will be built in Akhalkalaki for transferring trains with a Soviet rail gauge of 1,520 mm to the European standard of 1,435 mm,31 and 183 km of the Akhalkalaki-Marabda-Tbilisi railroad have been reconstructed. The cost of the project, keeping in mind the infrastructure, is estimated at between $400 and $800 million, and even as high as $1 billion, according to different data.32 The route will make it possible to transport 10-15 million tons of cargo every year. The throughput capacity of the project in different sections will amount to between 15 and 30 million tons of cargo a year.
Since implementation of the project was indeed economically expensive and, more important, was politically charged, this caused an unambiguous reaction among international investors. For example, the Asian Development Bank (ADB) and Japanese financial institutions announced their willingness to finance construction of the route. At the same time, the EU European Commission at first refused to fund the project, explaining this by the fact that it was not included in the TRACECA program, although the route itself is not on the approved program map. But later, at the beginning of 2008, the EU said it was willing to financially support the BTK (KATB) project, but only if it was of regional importance, that is, if all the countries of the region, including Armenia, were incorporated into it.33
The American establishment was unable to reach a consensus on this issue. Congressmen were against further intensification of Armenia's isolation by means of new large-scale regional transport projects and forbid American companies from participating in funding the project in order to thus promote stability, or to be more exact maintain the status quo in the Central Caucasus. However, in contrast to the congressmen, the U.S. presidential administration was essentially not against building the route. Therefore, some researchers assessed the statement by U.S. Assistant Secretary of State Matthew Bryza about Washington's negative attitude toward the
30 See: "Building the Baku-Tbilisi-Akhalkalaki-Kars railroad is Being Revived," available in Russian at [http://www. trans-port.com.ua/index.php?newsid=12830], 12 May, 2010.
31 See: R. Grdzelian, "Po kakim soobrazheniiam Azerbaidzhan sokratil finansirovanie zh/d Kars-Akhalkalaki?" available at [http://www.analitika.at.ua/news/po_kakim_soobrazhenijam_azerbajdzhan_sokratil_finansirovanie_zhd_kars_ akhalkalaki/2009-10-17-15771], 17 October, 2009.
32 See: "Kars-Akhalkalaki: A Delayed Time Bomb in Armenian-Georgian Relations."
33 See: "The EC is Still Refusing to Finance Construction of the Kars-Akhalkalaki-Tbilisi-Baku Railroad," available in Russian at [http://www. regnum.ru/news/953042.html/], 6 February, 2008.
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BTK (KATB) project on the eve of signing the agreement on its implementation as the U.S.'s political flirt with Russia.34
The decisions of the U.S. Congress and the EU did nothing to help finance the BTK (KATB) by the Baltic states, Kazakhstan, Turkmenistan, and China interested in it. This led to Azerbaijan and Turkey drawing up and financing the project using their own funds.
Since Tbilisi was unable to participate in implementing the project for financial reasons, Baku issued Georgia the first loan for $200 million for 25 years at a 1% interest rate. Furthermore, Tbilisi can extend the loan payback time by means of income obtained from operating the route in its own territory.35
Conclusion
The revitalization of trade and economic relations between the Central Caucasian states and the European and Asian countries was the main reason for building the BTK (KATB) route. One of the regional factors promoting construction of the BTK was the unsettled Armenian-Azeri Nagorno-Karabakh conflict. The route will reduce both Georgia and Azerbaijan's transport dependence on Moscow and the latter's position in the region as a whole. It goes without saying that Russia and Armenia stand to lose somewhat from this project, while Azerbaijan and Georgia, which will become important strategic transport hubs in the Central Caucasus, will gain a certain amount of economic profit. It stands to reason that this factor will promote the European integration of the project's member countries.
The route will significantly reinforce Turkey's transportation-transit position both in the region and on a global scale. It will help to establish a direct link between Ankara and the Turkic states of Central Asia.
The project, in which many states of Europe and Asia are interested, will be implemented keeping in mind common and objective world economic factors and complies in particular with the European transport energy East-West corridor project. Thanks to the BTK (KATB), shipments of goods will also increase in the Caspian Sea basin.
The project is being carried out by Azerbaijan and Turkey without the financial and political support of large Western countries, which indicates an increase in the political and economic significance of these states as important and independent regional players.
The route will not lead to an increase in Armenia's transportation isolation, but nor will it promote either an improvement in Armenian-Turkish relations or settlement of the Nagorno-Karabakh conflict. One of the main threats to implementation of the project is the position of Georgia's Armenian diaspora in the Javakheti region, through which the route will pass.
The transportation and economic significance of the BTK project is obvious. But in the future, even in conjunction with the Kars-Gumri route, it will not be able to provide for the constantly growing need for cargo transportation both from Asia to Europe and in the opposite direction. Both railroads will continue to be in demand.
34 See: G. Inandzh, "Doroga Kars-Akhalkalaki-Baku mozhet pereiti pod control Rossii," available at [http://www. abhazia.com/snews.php?action=news&id_cat=3&id_mess=5938], 3 February, 2007.
35 See: S. Markedonov, op. cit.
