18 November 2017

Saturday, 19:38

CURRENCY

TRAINS ARE FREE TO MOVE

Baku, Tbilisi and Ankara connect Beijing with London

Author:

01.11.2017

Started with the Baku-Tbilisi-Ceyhan pipeline more than a decade ago, the union of Azerbaijan, Georgia, and Turkey was strengthened with one more steel junction this week. The launch of the Baku-Tbilisi-Kars railway (BTK) opens up new perspectives in relations of these countries with a wider region. In fact, the scope of projects jointly implemented by Azerbaijan, Georgia, and Turkey so far goes beyond the region.

For Azerbaijan, which promotes good-neighbourly relations and mutually beneficial cooperation with all bordering states (except Armenia, which remains self-isolated due to its territorial claims to neighbour states), relations with Turkey and Georgia are of particular significance. Ankara remains Baku’s main ally due to ethnic and cultural affinities of the two peoples while Azerbaijan’s relations with Georgia are based on a centuries-old neighbourhood, common history and, of course, the mutual interests of both countries.

 

The Axis of Baku-Tbilisi-Ankara

The Baku-Tbilisi-Ceyhan oil pipeline (BTC) was the first joint project of the three states, which secured the access of Azerbaijani oil to international markets. The same pipeline spurred the entire political and economic boom in Azerbaijan turning it to the leader of the region. Eventually, the similar views of political elites in all three countries has contributed to the development of global economic projects.

The Baku-Tbilisi-Erzurum gas pipeline (BTE) was a logical corollary of this cooperation. Securing the access of Azerbaijani natural gas to Georgian and Turkish markets, BTE plays an instrumental role in ensuring the energy security of Baku’s two close allies. The implementation of the South Gas Corridor project (SGC) adds a significant value to successful trilateral cooperation. In the first stage of this large-scale infrastructure project, it is planned to deliver Azerbaijani gas to Europe through the territories of Georgia and Turkey. In future, it is likely to transit the natural gas from the eastern coast of the Caspian Sea, Iraq, and Iran.

The energy cooperation between Baku, Tbilisi, and Ankara also activated the political cooperation of the three countries. Thus, the foreign ministers of the three countries hold regular meetings since 2012. Twice a year, the ministers compare their achievements on hot topics of the regional policy. The same mechanism is established between the defence ministries of Azerbaijan, Georgia, and Turkey, which also agreed to hold joint trilateral military exercises.

Thus, the trilateral format of relations, which began purely with energy cooperation, has eventually led to even closer relations in political, economic, transport and investment areas. In particular, Turkey and Georgia have become the main beneficiaries of Azerbaijani investments. The share of Azerbaijan in Turkey currently reaches more than $10 billion. The main driver of Azerbaijan’s investment policy here is the State Oil Company (SOCAR), which owns the large petrochemical complex Petkim and constructs the STAR oil refinery. Azerbaijan's investments in Georgia are estimated at $3.4 billion. SOCAR has a large network of gas stations in the country and an oil terminal in Kulevi.

 

From the Iron Will to the Railway

Yet another vector of trilateral cooperation is the Baku-Tbilisi-Kars railway project designed to link China to Europe. The parties agreed on the construction of the railway in 2007. Railways have long connected Azerbaijan and Georgia but it was necessary to construct extra 26 km of railways to connect with Turkey. The overall length of construction in Turkey was 68 km.

Considering the importance of the project for the regional economy, Azerbaijan has lent several long-term loans ($775 million) for the completion of construction works in Georgia until Kars, as well as the repair of the Akhalkalaki-Marabda railway (153 km). Adding the cost of construction works on the Turkish side, the total cost of construction of the Baku-Tbilisi-Kars railway was $1.1 billion. In parallel, Azerbaijan invested in upgrading its railway system from Baku to the border with Georgia, hence increasing the train speed by 50% (120 kph). Also, several Alstom and Stander locomotives and sleeping cars were purchased for the Baku-Tbilisi-Kars route.

As stated by the President of Azerbaijan Ilham Aliyev at the opening ceremony of the route, the construction process never did run smooth. "Many, especially in some foreign countries, did not believe in the construction of the Baku-Tbilisi-Kars railway. They said that the project would not be implemented due to technical and financial obstacles. However, three countries have proved that this was possible," said Aliyev.

The importance and delivery performance of the BTK project are obvious, considering the launch of the global Chinese project One belt - one way known as the new Silk Road. With the commissioning of BTK, shippers will be able to send goods from China to any European country including the UK, thanks to a net of Turkish railways connected with Europe.

"Now London and Beijing have a direct railway communication with each other. For the past 15 years, Turkey has been making efforts to use the available opportunities. In Istanbul, we opened the third bridge connecting the European and Asian parts of the city. Other projects are on the way. These projects further strengthen the significance of BTK. We connect Europe with the ports of Aktau and Turkmenbashi in Kazakhstan and Turkmenistan. BTK will transport 6 million tons of cargo and 1 million passengers. By 2030, these figures will reach 17 million tons of cargo and 3 million passengers. Currently, the volume of cargo transportation from China to Europe is more than 240 million tons annually. If at least 10% of this volume passes through BTK, it will make 24 million tons," said the Turkish President Recep Tayyip Erdogan at the opening ceremony of the BTK.

BTK also has a huge potential for passenger transportation. In fact, one can get on a train in Baku and reach Istanbul in a couple of days, or many other European capitals if so does he or she wish. Either way, a journey on train will cost you significantly less than a plane ticket. In addition, you can carry incomparably more baggage with you on a train than on an aircraft. In other words, BTK will significantly promote tourist flow along the planned route, which was also noted by Georgian Prime Minister Georgy Kvirikashvili. "This project will change the existing economic reality. Today we launch a new Eurasian bridge. With the commissioning of the new railway route, the transport and trade status of the region will change," said Kvirikashvili at the opening ceremony.

The joining of Kazakh and Uzbek prime ministers to the BTK ceremony demonstrates an active interest of Central Asia in this route. Hence, the first cargo train with 32 containers from Kazakhstan on the BTK route. The representatives of the U.S. and the EU also supported the launch of the BTK. "The Baku-Tbilisi-Kars project is another important step in creating stronger trade, commercial and transport links across the whole of Eurasia. This project is a critical component of the Great Silk Road project," said the U.S. Ambassador to Azerbaijan Robert Cekuta.

The head of the EU mission in Turkey, Christian Berger, said that the new railway track corresponded to the spirit of EU’s Eastern Partnership program and European strategy in Central Asia. Mr. Berger stressed that Brussels has always supported projects bringing candidate countries and neighbouring partner countries together such as EU's support for the Southern Gas Corridor.

Thus, the new railway will allow deliveries of goods from China to Europe in 12-15 days, while the southern and northern marine corridors extend this period to 45-50 days.

At the same time, Baku, Tbilisi and Ankara agreed on a single transportation tariff, which makes the BTK turnover even more profitable. The delivery cost of goods is $37.9 per ton, $2279 per wagon, and $529 per a 40-foot container. In addition, the existing route will be a new alternative to existing routes, which is very important in the current geopolitical conditions in the region.

Afghanistan is very optimistic of the prospects of BTK, as it hopes to join the East-West corridor through the Lapis-Lazuli transport project, which is designed for the transit of goods through Turkmenistan to Azerbaijan and further through BTK. "We are grateful to the Government of Azerbaijan for supporting the project. This route is very important for Afghanistan," said the Afghan Ambassador to Azerbaijan Muhammad Taghi Khalili in his interview to Region Plus last year.

 

East-West and North-South

The combination of the North-South route from Iran to Russia with BTK further strengthens Azerbaijan's position as a regional power. Iran has already expressed interest in the delivery of goods via the BTK. The launch of BTK was memorable for yet another event - the Iranian and Azerbaijani Astara were connected by railroad. For the full-fledged launch of a single railway along the North-South route, it is necessary to complete the reconstruction of the section between Resht and Astara in Iran. Azerbaijan is considering an option to allocate a $500 million loan to Iran for this purpose.

Incidentally, the presidents of Azerbaijan, Russia and Iran are planning to hold trilateral discussions about the North-South route on November 1, 2017 in Tehran. Azerbaijani Foreign Minister Elmar Mammadyarov said that during the summit, the parties would also negotiate the terms of lending to Iran to complete the construction of the railway section between Resht and Astara.

Cargo transportation from the Iranian port of Bender-Abbas to Russia and back is ongoing. There is a certain section of the route in Iran when the goods are transported on trucks until the border with Azerbaijan. Iran has been actively interested in transporting its cargo not only to the north, but also to the west via the BTK. Similarly, it will now be possible to send goods from Europe in the opposite direction - to Iran, India and the Gulf countries.

Thus, the regional axis of Baku-Tbilisi-Ankara opens wide prospects for cooperation on the vast space between the Caspian, Black and Mediterranean seas, connecting various projects to Europe and Asia.

 

Armenia is overboard

The only one left behind this regional initiative is Armenia, which occupied 20% of the territories of Azerbaijan. Moreover, the launch of North-South and East-West routes will completely bury Yerevan's illusory hopes to attract at least some cargo as a transit country. In Yerevan, they could still harbour hopes for launching a railway communication with Iran, with the possibility of seceding through Georgia to Russia. However, the railway that connects Georgia with Russia passes through separatist Abkhazia, and Tbilisi does not want to have any official contacts with the self-proclaimed authorities in Sukhumi.

According to the First Information Portal of Yerevan, the launch of BTK completely buries all hopes of Yerevan to catch at least a thin trickle of large-scale cargo turnover in the region: "Armenia is left behind regional integration, and the Baku-Tbilisi-Kars railway is one of the key manifestations of this process. By and large, this unfavorable conjuncture is a logical consequence of the absence of an independent and self-sufficient foreign policy of Yerevan. Armenia is unilaterally dependent on Moscow, which led to the dispersion of the subjectivity of our country and the waste of the foreign policy potential. While Tehran addressed various proposals on cooperation to Yerevan, Armenia's policy is clearly constrained by the Russian factor. But Azerbaijan intensively uses also the Iranian direction - with the aim of aggravating the political and economic isolation of Armenia. A few days later, the second summit of the presidents of Russia, Azerbaijan and Iran will be held, and within the framework of the trilateral cooperation the railway bridge Iran-Azerbaijan will soon be implemented, which, by the way, will further emphasize the political and economic significance of the Baku-Tbilisi-Kars railway. And now there is no need to cherish the illusions that Iran considers it preferable to deal not with Azerbaijan, but with Armenia, in regional projects. Even if this is true, Iran cannot wait endlessly for Armenia's counter-initiatives. If we look at regional processes in a more global context, it is obvious that Yerevan's policy of maintaining the status quo in the Nagorno-Karabakh issue, in fact, has no prospects, leads to the isolation of our country and the creation of a dangerous demographic situation inside Armenia. However, the quality of the current Armenian authorities does not give rise to hopes for a revision of the policy either in the Armenian-Russian relations or in the Karabakh issue. Thus, the regional isolation of Armenia is getting more and more real".

So well put!



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