IRON ARTERY

The implementation of the Baku-Tbilisi-Kars railway project will drastically change the existing map of Eurasian transport corridors, promoting mutual integration not just between the economies of individual regions, but also as a good alternative to the already existing corridor through Iranian territory. In parallel, it will open an opportunity to transport goods from Ukraine and Russia to the Mediterranean coast and the Middle East.

What are the main prerequisites and economic importance of the West-East international transport corridor?

Firstly, this is the predicted growth in the trade turnover between Europe and Asia to 1,000 billion dollars in 2010. The time of transportation is the decisive advantage of railways, since the economic effect from sea transportation with a lower tariff is leveled by the need to "freeze" the assets of the consigner and consignee for a period that is twice longer than rail transportation. Moreover, sea transportation is characterized by complex logistics and a great number of operations, which increases risks to the cargo and requires expenses to insure the cargo and provide information support to track it. In rail transportation, consigners have no such problems.

The transport corridor that is being created should be oriented to container transportation. This meets international tendencies in developing transport markets - the pace of growth in container transportation is expected to be 7-10 per cent per year, which will increase the share of container transportation to 70 per cent by 2010. As a result, this will make rail transportation even more important, because the lack of the required number of sea ports is the biggest problem for suppliers. The Mediterranean region is already carrying out 25 per cent of all container transportation in the world, which makes the new route even more important.

Under the Soviets, there was a rail transportation chain Europe-Asia which delivered European goods to Armenia through Turkish territory. Then those goods were distributed in three directions - two of them went to Azerbaijan (Ijevan-Qazax-Baku and Kars-Gyumri-Yerevan-Naxcivan-Megri-Baku) and one went to Georgia (Kars-Gyumri-Marneuli-Tbilisi). The Soviet Union sent up to three million tons of cargo to the Middle East through Turkish territory.

However, the political events of the early 1990s, specifically the occupation of part of Azerbaijani territory by Armenia, drastically changed the transport map of the entire post-Soviet area. Ankara's decision to close two customs checkpoints (the Alican land checkpoint and the Akyaka rail checkpoint) on the Armenian border in April 1993 played an important role in this. The consequences of this step were ruinous not just for Armenia, but also for Turkey which was forced to find a more expensive way of supplies to Central Asia through Iranian territory.

Another blow to the Armenian economy was dealt by the Abkhaz conflict, as a result of which the North-South railway from Russia to Armenia was closed in 1992. It must be noted that Turkish politicians openly express their distrust in Yerevan. According to Ankara, even if the Turkish-Armenian border is opened, it will be impossible to rely on the only route through Armenian territory, and the alternative route - Baku-Tbilisi-Kars (BTK) - is a necessity.

BTK is also an excellent opportunity to create a shorter alternative transport corridor between Europe and China.

At the same time, the ferry link between Kazakhstan (Aktau) and Azerbaijan (Baku) opens an excellent opportunity to develop trade relations between Central Asia, China and the Middle East.

We should not forget about the transit component of this route, which will increase the geopolitical importance of Azerbaijan and Turkey. At the same time, Russian businessmen will get a chance to use a cheap route to supply their goods to the Mediterranean coast, which is also important.

China's participation in the project will make it possible to increase the freight traffic by the "Rail Silk Road" to 28 million tons per year by 2034. For comparison, the overall volume of the freight traffic on Turkish railways in 2006 totaled 19.5 million tons per year.

The implementation of the Kars-Akhalkalaki-Tbilisi-Baku project is undesirable not just for Armenia, but also for Iran, a country which controls the link between Turkey and Central Asia. In Ankara's opinion, Iran is creating obstacles to this by establishing high tariffs. 

Today the overall cost of freight traffic between Europe and Asia is estimated by specialists at 140 billion dollars per year. Tehran openly says that it intends to get from 5 to 10 billion dollars per year from cargo transit. With the commissioning of the Baku-Tbilisi-Kars project, this money is likely to go to Turkey and Azerbaijan.

Belated alternatives from the North

The most likely rivals of the new transport route are new corridors through Russia. However, despite the large scale of the Russian market and the favourable geopolitical situation of the Russian Federation, only 5 or 6 per cent of the overall transit between Asian and European countries goes through Russian territory, and there are real reasons for that. The freight traffic through Russia can increase only if national transport lines have modern access to international transport corridors, first of all European ones, which will take many years. We should not forget about the political component of the question - relations between Moscow and the West, which put a brake on the development of any medium-term trans-national project.

The trans-Siberian line, the Northern Sea Route and the North-South corridor are priority directions of developing Russia's transport lines. The Northern Sea Route (NSR) has yet to be recognized as an international transport corridor, though its length comprises almost half of the route to Japan through the Suez Canal. Moreover, the NSR can be used as a transport artery to carry mineral raw materials, oil and gas from Russia's Arctic regions which hold 35 per cent of world oil and gas reserves. It is cheaper to carry oil and gas by sea than to lay pipelines. The lack of the required number of icebreakers puts a brake on this project. Currently, Russia has only six nuclear and six diesel icebreakers in the Arctic region, which is not enough. Specialists from Russian scientific institutions and scientists from Germany and Finland are working on a programme to develop Russia's fleet of icebreakers. According to the programme, it is planned to build five nuclear and eight diesel icebreakers by 2017.

As far as the trans-Siberian line is concerned, this line can carry only 150,000 containers per year at the moment. After modernization work planned in the middle of the next decade, the railway will help transport 300,000 containers per year, according to specialists. It takes 11-12 days to carry cargo from the port of Vostochnyy to the Russian-Finnish border, 12.5 days to Brest and 14.5 days to Berlin. This is three times faster than when containers go to Europe through the Pacific, Indian and Atlantic oceans.

The development of the North-South corridor also entails a number of difficulties. For example, it is necessary to build a new bridge over the River Astara on the Iranian-Azerbaijani border and a station to replace mounted axles from Soviet to British track width accepted in Iran. According to the Russian Transport Ministry, the implementation of this project on Iranian territory (the construction of the 300 km Qazvin-Rasht-Astara railway) is rated too highly at the moment. Azerbaijan, Russia and Iran have set up an international consortium which intends to get loans for the implementation of this project. They will be repaid using transportation tariffs. But judging by the slow pace of the development of the cargo base, it is too early to invest in the establishment of an infrastructure in other countries.

We would like to point out that none of the aforesaid projects will become a real alternative to Baku-Tbilisi-Kars in the short term. BTK will have been transporting cargo from Europe to China for three years, while the implementation of the northern routes will start only after 2015 at the earliest.

No matter how big a campaign the opponents of the Baku-Tbilisi-Kars railway have launched, it is clear that the European Union, which embodies the economic interests of European countries, will not give up on a beneficial transport route. In this context, the main document that defines the transport policy of the EU is the White Paper (?) "European Transport Policy for 2010: Time to Decide", which was published in 2001. It pays great attention to the construction of the trans-European transport network, specifically, to the development of railways and roads on the territory of EU candidate countries and border regions.

Relations between Brussels and Moscow are not cloudless, and the Europeans, as never before, need a reliable and economically beneficial transport artery to the developing market of the East.

The locomotive of economic integration

Such a large-scale project was launched on 26-29 June 1993 when the joint transport commission of Georgia and Turkey decided that it is necessary to build a Tbilisi-Kars railroad. The sides soon realized the global importance of this issue, and the project became the central subject during Turkish President Suleyman Demirel's visit to Tbilisi (14 July 1997). Azerbaijan gave full support to the project.

Turkish Transport Minister Binali Yildirim said that in the first year of the project alone (2010), BTK will transport 6.5 million tons of cargo and 1.5 million passengers.

What is more important is that the new transport route from London to China would make it possible to carry more than 6 million tons of cargo per year from Europe to Asia, while Kazakhstan's participation in the project will double the volume of freight traffic.

The construction of a tunnel under the Bosporus is about to be completed, which will make it possible to launch an uninterrupted rail service to Europe and then to London through the tunnel under the English Channel.

The implementation of the project officially started on 25 May 2005 in Baku as the presidents of Azerbaijan, Georgia and Turkey signed a declaration "On the establishment of the Baku-Tbilisi-Kars international corridor". One million dollars were allocated for engineering and preparatory work which started on 15 August 2005. Ten days later, the three countries' transport ministers gathered in Istanbul to discuss the implementation of the project in detail. As a result, they decided to set up a trilateral consortium.

And finally, on 7 February 2007, the leaders of Turkey, Azerbaijan and Georgia signed the Tbilisi Declaration on the basis of which the three countries' transport ministers signed the final agreement on the construction of BTK.

Since relations between Georgia and Russia are tense and Tbilisi still depends on Russian energy supplies, the Georgian leadership is unlikely to change its position on the BTK project. Azerbaijani gas and electricity are of vital importance to Georgia which will not put its relations with Baku at risk in order to meet the demands of the Armenian community or Armenia itself.

Azerbaijan will get not just economic revenues from this project, but also a new impetus to the development of the country's economy. According to the forecasts of the country's government, by 2012 the overall volume of freight traffic in the country will increase in comparison with the planned indicator of 2007 by 39.4 per cent and total 221.4 million tons. Rail transportation in 2011 will reach 47.9 million tons of cargo (a growth of 66.8 per cent in comparison with 2007) and sea transportation - 14.8 million tons of cargo (a growth of 66.6 per cent).

This proves once again that the Azerbaijani leadership has chosen the right policy because it would be impossible to create a new transport artery in Eurasia without Azerbaijan's support. This policy has turned our country into a transport hub of the whole Eurasian region.