EVERYTHING IS TURNING FULL CIRCLE

History has the habit of repeating itself…When in the mid 1990s,  the Baku - Tbilisi - Ceyhan (BTC) and Baku - Tbilisi - Erzurum (BTE) projects began to be spoken of in Azerbaijan,  it seemed that half the world rose up against their implementation. Throughout the entire implementation period of these projects, numerous obstacles, put forward by Armenian lobbyists, were raised and the most pessimistic forecasts were given. In a word, everything was done to stop these pipelines from being built. But those who wished ill did not succeed in this. Unfortunately, they have not even drawn lessons from everything that happened and now they are waging the same propaganda campaign against another project of strategic importance for the region - the Baku - Tbilisi - Kars (BTK) railway project. The course of events shows that they will meet the same fate as they did with the BTC and the BTE projects.       

The First Breakthrough

It is clear even today before this project has even begun to be implemented that the BTK will enhance Azerbaijan's strategic importance. The new railway line will create the conditions for the revival of the historic Silk Road and for the development of a Europe - Caucasus -Asia transport corridor at a new level.  Direct transport links will be guaranteed between the Caspian region and Europe for the first time in history.  The benefits for Azerbaijan from the implementation of this project are obvious: the BTK will make it possible to increase the volume of freight which is carried and so the transit of export goods across the territory of the country.  Moreover, this will help to strengthen independence and make foreign economic ties more effective. 

Taking all of these facts into account, the parliaments of Azerbaijan, Georgia and Turkey ratified in turn a package of agreements on the construction and restoration of the BTK.  Such a state of affairs could, of course, not escape attention in a country such as Armenia, which through its own fault has remained outside such ambitious interregional projects. However, it is not just official Yerevan, but also numerous representatives of the Armenian lobby who come resolutely out against the construction of the new railway.  They think that when the BTK is up and running,  Armenia will become more isolated in transport terms and that the very construction of the BTK is "pointless because the Kars - Gyumri - Tbilisi - Baku railway line already exists and it would take a small amount of money to revive it".  Such furious opposition from Armenia could have remained unnoticed but for the fact that the attempts by the Armenian lobby to discredit the BTK in the eyes of the world community were partly successful. In particular, the US Senate once and for all blocked financial assistance for the project. That was in October 2006 on the last day of the session before the mid-term elections on 7 November.  The Senators thereby confirmed the decision taken by the Banking Committee of the Senate on 21 September which said that the US Export-Import Bank would not provide guarantees, loans or other possible finance for building a railway which bypassed Armenia. The European Union also refused to finance it. 

Meanwhile, the government of Azerbaijan has stated frequently that Azerbaijan, Georgia and Turkey are capable of building a railway bed by themselves without any outside help. This is what is happening. Thus, under the BTK project, it is proposed to build a new 105 km-long railway and also to carry out reconstruction work on the Tbilisi-Baku line. Seventy-six kilometres of new railway line will be built on the territory of Georgia and 29 km in Turkey which intends to finance independently the construction of the sector of the railway line which runs through its territory. Georgia will receive from Azerbaijan credit to the tune of 200 m dollars for 25 years at 1 per cent annual interest rate. The credit will be repaid from the income received from the running of the railway. Moreover, as part of the project, Georgia intends to carry out reconstruction work on the Akhalkalaki - Marabda - Tbilisi railway line. The total cost of building the BTK will be 422 m dollars. Speaking of financing the Azerbaijani sector of the railway, it should be noted that this year 50m manats (58m dollars) will be transferred from the State Oil Fund of the Republic of Azerbaijan (SOFAZ) to the state budget. Sahmar Movsumov, executive director of SOFAZ, said that these funds would be transferred in part. Minister of Transport of Azerbaijan Ziya Mamedov noted in turn that the initial reconstruction and construction work would be financed from these funds under the project. It is planned to provide the remainder of the funds after construction work has begun.  

At the same time, the European Bank for Reconstruction and Development (EBRD) has expressed the desire to cooperate with Azerbaijan on this project. Minister of Economic Development Heydar Babayev noted that the parties will determine this cooperation very soon. "In line with instructions from President of Azerbaijan Ilham Aliyev, the government of Azerbaijan will fully guarantee the funds needed for implementing the BTK project. And so we do not require any additional funds for implementing the project, including from abroad.  What is more likely is a need for the joint implementation of the project and the EBRD's interest in the project cannot fail to please us…This is a very sensitive issue as some international financial institutions, for no objective reasons, do not wish to be involved in this project. But the EBRD itself showed an interest in the BTK which led to a protocol being signed in Kazan on talks between Azerbaijan and the EBRD on supporting the BTK project," H. Babayev stressed. 

Many Azerbaijani experts think that the EBRD's desire to be involved in the project to build the BTK is a victory for Azerbaijan over the Armenian lobby.

Let's discuss the details

Meanwhile, sittings of the working group composed of plenipotentiary representatives of the three countries (including the heads of the railway departments) are held regularly in Azerbaijan and Turkey to discuss all the issues connected to implementing the BTK project.  One thing is clear: it is no simple tasks to build the new railway. The ambassador of Turkey to Azerbaijan, Huseyin Avni Karslioglu, said that a number of sectors of the railway will pass through tunnels in the mountains. At the same time, an additional tunnel will have to be built on the Turkish-Georgian border. "That is why the parties are discussing these questions so long and so thoroughly," the ambassador noted. 

No matter what, the construction of the Turkish sector of the railway bed will begin very soon. The process of buying up plots of land which the railway line will run along is under way at the moment and this process will finish by the end of June. Then Azerbaijan and Georgia will be presented with the complete project of the construction of the railway from the Georgian border to Akhalkalaki and with all the tender documents. After these proposals have been studied jointly and if there are no comments, a tender can be announced for putting this work out to contract and the planned work on the project to reconstruct Akhalkalaki station can be started. This provides for an area for changing railway carriage wheels (from European standard to ex-Soviet standard and vice-versa). This also provides for the technical examination of the rolling stock, the tracks, carriages and engines. It is planned that Turkish experts will draw up the Akhalkalaki project in July. Money has already been allocated from Turkey's state budget for the construction work. 

Work on Georgian territory may begin at the end of August. There, as in Turkey, projects are being drawn upfor acquiring the plots of land through which the railway will run.  

Twenty million tonnes?  It's a reality!

Work is under way in Azerbaijan as part of the preparations for the project of the State Programme for the Development of the State Railway of Azerbaijan in 2007-2010.  This document stipulates that the railway infrastructure, carriages and engines will be brought into line with international standards. Besides this, international transportation along the BTK is expected to increase.  Over 1 bn dollars will be invested in implementing the programme. Thus, preliminary research carried out jointly with the World Bank showed that over 600m dollars will be required for the measures up to 2010, but the amount increased later as a result of some other measures being included in the programme, including work on the BTK. Azerbaijan State Railways (ASR) notes that funds from international financial structures will be used to finance the state programme. Let us note that at present from 5m to 8m tonnes of freight are transported annually along the ASR. Experts think that this figure may grow to 20m tonnes with the commissioning of the BTK linking railway, mainly thanks to including countries of South East Asia in the project. It is an open secret that in the long term, Kazakhstan and China intend to join up to the BTK and it is a known fact today that the railway will allow the countries of this region to deliver freight to southern Europe at lower tariffs. That is why Kazakhstan announced it would transport 10m tonnes of cargo along the BTK annually.  The calculations of Kazakhstan and China can also be justified by the fact that in the long term the BTK railway should link up to the European and Asian railway networks, including with those that exit on to ports in the Mediterranean and the Black Sea.  It is natural that Azerbaijan, Georgia and Turkey try to entice the countries of the Caspian with the prospects which are being opened up, so that these countries use to the full extent the route through Baku as an alternative to the Russian "window on the world" with the corresponding through-flow of cargo. And then, the restoration of regular container railway shipments along the Dostyk - Almaty - Aktau - Baku - Poti route is being actively discussed today (Dostyk is a station on Kazakhstan's border with China - author).  Such shipments were organised back in 1996 on the initiative of the European Union under the TRASECA programme but later stopped.  Today Azerbaijan is reckoning on transporting freight through Baku not only in the direction of Kars but also to Poti. Incidentally, the BTK project has not been implemented yet but Azerbaijan is already holding talks with Turkey on building a branch railway line from the main BTK line. It is planned to pass through the Turkish town of Igdir and then on to the Naxcivan Autonomous Republic. President of Azerbaijan Ilham Aliyev said at a ceremony to open a memorial to the Azerbaijan Democratic Republic that "the implementation of this project will make it possible to ensure railway transportation between Baku and Naxcivan and to remove the blockade around the republic".